Monday, February 04, 2013

Coal is Back

According to James Hanson, climate warmist and chief prophet of doom, coal is the single biggest danger to the planet and our survival. He called coal fired power plants “factories of death” and has suggested that the continued use of existing coal fired energy, never mind expansion, would  set the planet on a course for an ice-free state, with sea level 75 meters higher than at present. He concluded that coal is the single largest threat to the future of the planet (1)

Current installed and actively used coal fired power plants is substantial and, world wide, they are set to expand with an additional 1,401,275 megawatts of coal fired power to be produced in the period 2013-2015. India and China between them account for over 1 million megawatts of new facilities in this time (2).
The primary reason for this is the industrialization of China and India and the expansion of industry in the emerging economies. Just as coal fired the industrial revolution in the West, so it is firing the emerging economies and their dash for growth.

Interestingly, in Europe some of this expansion is displacing renewable energy. Germany is a good example. Following the tsunami in Japan, Germany made a decision to close all of its nuclear facilities. While it was hoping to replace nuclear with renewables, the cost of doing so are substantial: energy prices have risen so high in Germany because of renewables that companies are moving to lower energy cost jurisdictions. German firms and policy makers have realized that, as the average energy cost rise relative to other countries, Germany becomes  less competitive. When  a  country less competitive, it tends to use less oil. The extra oil tends to go to a more competitive country, and may help raise coal usage – 12,600 megawatts of coal power is under construction in Germany, driven by energy economics. Power utilities in Germany, on average, lose €11.70 when they burned gas to make a megawatt of electricity, but earn €14.22 per MW when they burned coal.

Most of eastern Europe is also expanding coal use – especially Poland, the Ukraine and Russia. The amount of electricity generated from coal is rising at annualized rates of as much as 50% in some European countries, according to the International Energy Agency.

In North America the situation is very different. At its peak, in 1988, coal provided 60% of North America’s electricity. Even in 2010, when the shale-gas boom was well under way, it still accounted for 42%. By the middle of 2012, though, gas and coal were roughly neck-and-neck, each with around a third of power generation. With new shale gas finds and improving technologies, coal will continue its decline as a major source of energy. 

Coal, natural gas and shale gas are competitively priced, abundant and proven commodities. While each has environmental consequences, the shine is going from wind power and solar power due to costs, reliability and performance – we are at peak renewables in terms of their attractiveness from a policy and practice point of view. In these conditions, conventional energy sources become attractive. We will see the continuing expansion of coal use globally.

A key factor in these developments is the inability of governments to focus on energy policies and strategies that secure the competitiveness of nations balanced with environmental responsibilities. As Roger Pielke Jr, climate change policy specialist based in Denver, suggests: economic needs always trump climate change policies, as we can see in the European Union and US at this time. With unemployment high, economic growth slow and structural challenges to the developed economies of the world largely unresolved, energy strategy will be to maintain low cost energy and to minimize cost impacts of energy on firms and consumers. Emissions targets, renewable subsidies and plans for renewable expansion will be sacrificed in the name of economic growth and necessity. Shale gas, natural gas and coal are attractive energy forms in this reality. Coal will continue to see a renaissance as an energy source.

James Hansen, now in his seventy first year, will end his career convinced that the world is doomed. He is like that – a pessimist. Coal will be his nemesis.


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