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Why Coal will Remain the Basis of Electricity Generation for Most of the World

By Dave Summers | Wed, 29 January 2014 22:51 | 5

As the President moves further into his second term, he appears to be growing more willing to tackle the concerns that his supporters have over projected Climate Change over the next century. Given the makeup of the Congress it is likely that this will be through additional regulation and Executive orders. There have been a number of reports that have documented the projected costs of climate change. Some of these have been relatively modest in statement. The Copenhagen Consensus Center, for example, noted:

Climate change is real and man-made. It will come as a big surprise that climate change from 1900 to 2025 has mostly been a net benefit, rising to increase welfare about 1.5% of GDP per year. Why? Because global warming has mixed effects and for moderate warming, the benefits prevail. The increased level of CO? has boosted agriculture because it works as a fertilizer and makes up the biggest positive impact at 0.8% of GDP. Likewise, moderate warming avoids more cold deaths than it incurs extra heat deaths. It also reduces the demand for heating more than increases the costs of cooling, totalling about 0.4%. On the other hand, warming increases water stress at about 0.2% and negatively impact ecosystems like wetlands at about 0.1%. Storm impacts are very small, as the total storm damages (including naturally caused storms) are about 0.2%.

As temperatures rise, the costs will rise and the benefits decline, leading to a dramatic reduction in net benefits. After year 2070, global warming will become a net cost to the world, justifying cost-effective climate action.

This, of course, led The Guardian to stress the post-2070 part of the comment. On the other hand there are the projections of the latest IPCC report (available here) that suggest that costs are already present in the global economy and that they see impacts ranging from a possible fall of 2% in global economic growth, as well as impacts on health and agriculture.

The projections, of which there are many, have focused on the need to cut greenhouse gas emissions and have moved governments around the world to take steps to reduce gas emissions, without a lot of comment from the industries most affected by the proposed regulatory changes. It appears that this relatively low key approach is going to change as a new report prepared for the American Coalition for Clean Coal Electricity (ACCCE) provides some strong factual discussion points that argue rather for the benefits of carbon use, and contrast these with the costs.

It has become politically popular in recent years to increasingly demonize the fossil fuel industries, and particularly the coal industry. And I have suggested, in the past, that this was an over-reaction. However it is of value to rational discussion of the issue to recognize the points that Management Information Services have put forward in this report.

Related article: Chinese Regulator Warns about Credit Risks of Coal Companies

Much is made of the increased fuel use that continues to power the Industrial Revolution as it continues to spread into under-developed countries and brings their standards of living up to those enjoyed by many in North America, Europe and the more well-developed countries. The transition to the better standards of life is considered to need an energy consumption, per capita, of 4,000 kWh per year.

The UN Human Development Index and per Capita Electricity Use
Figure 1. The UN Human Development Index and per Capita Electricity Use (America's Power )

When one considers the relative benefits of the use of power it sometimes help to recognize the mind-set of those making the comparison. The view of someone just gaining access to electric power, and who built a windmill to provide that power, reflects a greater recognition of the benefits of electricity than sometimes seems to be currently politically correct.

The benefits brought by the available power that is now in individual hands as a result of the Industrial Revolution are manifest in virtually every aspect of our daily lives. To maintain and spread that wealth of benefits through the expanded use of electricity to an increasing global user market the IEA projects that there will be an increase in virtually all power sources for electricity over the next twenty-five years.

Projected Electric Power Generation by Energy Source
Figure 2. Projected Electric Power Generation by Energy Source (America's Power )

However one of the impacts of increasing regulation, and the drive to switch to alternate, renewable power sources in Europe has already been an increase in the cost of that power. This is already leading the European Union to review their policies since increasing power costs lower the competitive position of European industries relative to those of countries (such as the USA) with lower power costs.

Related article: Report Says Clean Coal Tech Not Present-Day Reality

Within the United States the report concludes that there is a negative correlation between electricity prices and the economy with a suggestion that a 10% increase in electricity prices will cause a 1 % drop in GSP. (This is an awkward argument to make given that the economies of places such as Massachusetts are significantly better with an energy cost of over $0.14/kWh that those of West Virginia where the cost is about $0.08 per kWh – though the argument is about relative change).

But the increases in power costs do not just impact the competitive advantage of industry. As prices rise, so the poorer segment of the community find it harder to meet all their living needs. There is a graph that shows their choices:

Potential Health Impacts of Increased Energy Costs on Low Income Persons
Source: National Energy Assistance Directors’ Association. Figure 3. Potential Health Impacts of Increased Energy Costs on Low Income Persons (America's Power )

It is the broad use of coal that keeps the prices of power in many countries low, and the ability of many to utilize a domestic resource allows developing countries the opportunity to climb the ladder faster than the rates that they would be able to achieve without this resource. It should be remembered that over the course of the changes brought by industrialization since 1750 (as the report notes):

From 1750 to 2009, global life expectancy more than doubled, from 26 years to 69 years; global population increased 8-fold, from 760 million to 6.8 billion; and incomes increased 11-fold, from $640 to $7,300. . . . . . . in the U.S. from 1900 to 2009 population quadrupled, U.S. life expectancy increased from 47 years to 78 years, and incomes (denoted “affluence”) grew 7.5-fold while carbon dioxide emissions increased 8.5-fold.

The reality of the next decades is that coal and the other fossil fuels will, over the next twenty-five years, remain the basis for electricity generation for a significant portion of the global economy. This is likely to be particularly true for those nations that will grow the most in population and GDP over that interval.

By discounting the benefits that these improvements in life will bring to those countries, and focusing more on the hypothetical costs of anticipated problems the Administration has made a case for changing the energy mix. It is interesting to see that the industry that is likely to be most changed by their policies is now beginning to publically and with facts, show willing to rebut some of those arguments.

By. Dave Summers

About the author

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  • Engelhardt on January 30 2014 said:
    The US President represents the class of wishful thinkers who believe they have not only the right to their own opinions, but also the right to their own facts.

    Disillusionment follows.
  • Ken on January 31 2014 said:
    It's telling that the author cites claims that climate change will be good for agriculture. Studies that show how extra CO2 increases plant growth have taken place in greenhouses where researchers can tightly control experimental conditions. To assume that holds true in the fields that grow the world's crops is to imagine a world where climate-induced water stress and extreme weather have no negative impacts on our crops. Sounds like wishful thinking to me!
  • Ciaran Mundy on February 03 2014 said:
    I think this piece needs a more realistic perspective. Society, the economy and energy policy can only exist within the physical bounds of the environment we all depend on for survival. The facts on the ground about what is physically happening due to use of coal and other fossil fuels is not properly considered.

    The analysis put forward is in part based on the publications of the Copenhagen Consensus Centre. This group are set up in opposition to the vast majority of experts looking at climate models and the social and economic impacts that would follow. This is no basis for a serious approach.

    Economist Sir Nicholas Stern put it best about where most orthodox economic analysis is:

    'I got it wrong on climate change – it's far, far worse'

    www.theguardian.com/environment/2013/jan/27/nicholas-stern-climate-change-davos

    Prof K. Anderson Tyndal Centre Deputy Director:

    "Current [2009] Met Office projections reveal . . . has set the world on a path towards potential 4C rises as early as 2060, and 6C rises by the end of the century. Anderson, who advises the government on climate change, said the consequences were 'terrifying'. 'For humanity it's a matter of life or death,' he said. 'We will not make all human beings extinct as a few people with the right sort of resources may put themselves in the right parts of the world and survive. But I think it's extremely unlikely that we wouldn't have mass death at 4C. If you have got a population of nine billion by 2050 and you hit 4C, 5C or 6C, you might have half a billion people surviving'."[12]


    The article is not without truths, but conflates things such as poverty and the aggregate cost of energy in a very unhelpful way. Further, to say that the Fossil Fuel industry are mute on proposed regulations attempting to limit emissions is bizarre! Millions are spent undermining public opinion and policital action.
    http://www.theguardian.com/environment/2013/feb/14/funding-climate-change-denial-thinktanks-network
  • Monique Constant on February 09 2014 said:
    If you spend time observing nature, you will see what follows. Nature is always a step ahead. Nature will not let us ride this out freely, there are checks and balances, causes and effects. With damaged soil, less forests, and more spaces taken up by urbanization, and greater populations, the side effect of this creates manifestations of disease, climate disasters, infestations, resource shortages, etc., an introduction of thinning our population.

    As for humans living longer, that may be so, doesn't mean it's a dignified way of living. Many of our elderly waste away in institutions (old age homes), hospitals and palliative care. That's not a way to live. And why would we try to lengthen our time by living beyond our means, knowing there is limited water, resources and land.

    A final note, to say emitting more carbon in the atmosphere is okay because plants will process it, and it yields greater results for agriculture is giving permission to coal companies and other polluting industries to not have to take ownership of their excrement. Dog poop can be beneficial to grass, fertilizing it, but it doesn't give the dog guardian permission to overlook it and not pick it up on the basis of it's potential benefit. It's picked up out of respect for others, their children, and responsibility.
  • JD Polk on February 09 2014 said:
    The same argument was used at turn of Century "Well that Darn Auto-Mo-Bile (oh and by the way the first ones were all electric) "it will never replace the "Good ole Horse and Buggy"
    The point I am making here is that "yes the status Que likes to keep on dominating the industry at which it has previously dominated". and Renewables will find it hard to over come that obstacle.
    But let us not through the baby out with the bath water...cause LIKE IT OR NOT 25, 50 100YRS DOWN THE ROAD WE WILL HAVE BURNED UP ALL THE FOSSIL FUELS AND AT THE GREATEST COST UNMITIGATED DEGRADATION TO AIR, SOIL AND WATER WORLDWIDE...
    I say leave all that "Extractive Energy" in the Ground... let me show you a better way...because like it or not... the better way will be the only one left in the end..

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