Saving coal is like saving Titanic, only harder | RenewEconomy

Saving coal is like saving Titanic, only harder

Coal’s long term prospects do not look good in the US, or for that matter anywhere else


EEnergy Informa

Before any alternative facts, let’s look at the actual facts.

According to the Energy Information Administration (EIA), coal production in the US totaled 739 million short tons (MMst) in 2016, an 18% decline from 2015 and the lowest production level since 1978 (Figs below).

Since nearly all coal produced in the US is used to generate electricity – exports are not significant – the drop in coal production more or less ends up as a drop in coal-fired electricity generation.

If natural gas prices rise in 2017-18, as some predict, one might experience a small rebound in coal consumption, but don’t expect any miracles, nor will they be permanent.eee

Moving to China, the world’s biggest coal consumer – accounting for roughly half of global usage – coal production fell 9% in 2016, as reported by the Chinese National Bureau of Statistics. Apparently this is not an aberration.

It is the third consecutive annual drop as China is shifting away from over-dependence on coal and gradually moving towards more renewables and nuclear.

China is cracking down on inefficient, polluting and often illegal coal mining. More than 315 Mt of coal production capacity was cut in 2016 with another 250 Mt expected in 2017.

Another hopeful sign – for those concerned about climate change – is that National Energy Administration (NEA), China’s energy regulator, has ordered 11 provinces to stop more than 100 coalfired power projects with a cumulated capacity of more than 100 GW, to curb pollution.

In November 2016, China announced that it was delaying or eliminating at least 150 GW of coal-fired power projects by 2020 while capping the country’s coal-fired capacity at 1,100 GW from around 970 GW in 2015. Simultaneously, the country is aiming to add roughly 130 GW of solar and wind capacity by 2020.

Similar efforts are underway in an increasing number of other countries including Canada, UK and Germany to phase out and/or reduce reliance on coal. These efforts are reflected in projections of future global coal demand reported by BP and others.

The Trump White House is apparently on a different page when it comes to coal, greenhouse gas emissions, or climate change – perhaps they are looking at “alternative facts,” or no facts at all.

In a blog titled Will Trump Negotiate a Better Coal Deal for Taxpayers? posted on 23 Jan 2017, Meredith Fowlie of University of California, Berkeley Haas School writes:

“As President Trump took the oath of office last Friday (20 Jan), the White House website was transformed to reflect the arrival of the new administration. References to climate change were removed. During Senate hearings for his Cabinet, there was no indication this administration intends to make action on climate change a priority.”e2

“But a refusal to acknowledge the existence of this problem does not make the problem go away. On the contrary, halting progress toward a meaningful policy response just makes it a harder hill to climb when members of a future administration inevitably resolve to roll up their sleeves and deal with the problem.”

Presenting the results of the research, Fowlie adds (emphasis added):

“In a recent study, my coauthors and I calculated the climate change-related damages from burning Powder River Basin coal (which accounts for most of federal coal production). We use the monetized climate damages of $44 per ton of CO2 based on the median U.S. government social cost of carbon. We found the estimated climate impacts are about 6 times the current market price. Royalty payments could be increased to reflect some of these damages.”

So far, the indications coming out of the new Administration is to reduce, not increase, royalty payments for coal mining companies operating on federal lands. There have also been indications that many regulations for the protection of streams and landscape will be relaxed or eliminated.e3

Most knowledgeable observers would agree that including virtually any reasonable cost on coal to account for its environmental and health damages – forget climate change – would make it uneconomic. One must assume that the Trump Administration is working with alternative facts, or knows something that the rest of us do not know.

As for job creation, the Trump Administration also seems to be looking at the wrong places for the wrong reasons.

A recent report by the Solar Foundation puts US solar industry second only to oil/petroleum in termsof total employment in 2016, growing 25% last year. Solar already accounts for 18% of total jobs in the energy sector despite the fact that it currently represents a mere 1.3% of US power generation. Nearly everyone projects continued growth potential in the years to come – suggesting that solar jobs may soon eclipse those in the petroleum sector.

Adding wind, combined heat and power (CHP) and hydro, the renewable energy sector accounts for roughly 1/3rd US of energy sector jobs, and growing. Coal jobs, by contrast, represent less than 8% of the total, roughly half in coal mining and half in coal power generation. Neither shows any signs of sustained growth, nor does the nuclear sector.

Fereidoon Sioshansi is president of Menlo Energy Economics, a consultancy based in San Francisco, CA and editor/publisher of EEnergy Informer, a monthly newsletter with international circulation. He can be reached at [email protected]

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  1. RobSa 4 years ago

    Its great to hear about the declines in coal production. Does China’s smog problem affect its solar array capacity?

  2. TomTX 4 years ago

    Just remember that EIA can’t predict their way out of a paper bag.

    Good source for data on the past, absolutely terrible at guessing what will happen in the future for a dynamic market.

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