Sunday, November 4, 2012

The War on Coal

     One of my friends asked me to blog about the War on Coal.  Well, you don't have to ask me twice. 

    The War on Coal is the US government's response to a perceived environmental crisis, for which their response is to dramatically increase environmental standards (both for mining and for power plant emissions)  to the point at which existing power plants and coal mines are forced to cut back  or even be shut down.  This is done through the Environmental Protection Agency, which is permitted to issue regulations, as authorized by the Code of Federal Regulations

     The great hope is that coal fired plants will be replaced by solar power or wind power or some other renewable source of energy.  But the fact of the matter is that renewable energy is horrifically expensive.  While rich folks can afford keep their houses warm in the winter with it, industries simply can not make a profit if they are forced to use expensive electricity (Kennel's Conundrum of Solar Energy is that no solar cell production facility can exclusively use solar-generated electricity to produce silicon cells because it is just not economically competitive.  You need fossil fuel energy in order to achieve practical economics).   Renewable energy is great philosophically, but it just does not conform to economic reality as we currently understand it.

   The true alternative is natural gas, which has emerged as an incredibly cheap and plentiful alternative due to massive new discoveries in the Marcellus  and Barnett shale formations,  with less environmental consequence than coal.  So all new power plants will probably be built using natural gas, at least for the next ten years.  No new coal plants will be build in the US, and existing coal plants are going to be phased out, it's just a matter of timing.
     Shutting down existing coal plants immediately does not alleviate any true environmental emergency.  It does make your electric bill higher and increases the risk of power outages.  Those concerned about carbon dioxide emissions need to face the reality of China, which now emits much more carbon dioxide than the US. Other economies (notably India) are eager to follow China's example and achieve economic growth with coal.    

     If the US were to drop its emissions to zero (which of course is not possible)China alone would make up for that within about five years if their growth continues and there is no international agreement for others to follow our excellent self-sacrificing example.  And in fact simple laws of supply and demand dictate that if we simply drop our demand to zero, the existing supply will be utilized by others.  So how exactly are we going to influence the rest of the world to abandon the prospect of trillions of dollars worth of gross domestic product fueled by fossil energy?  Perhaps a global economic depression is the surest path to environmental success.  American politicians seem determined to bring this about, so perhaps there is hope.   
     Nevertheless, whether or not it makes a real difference, I guess we feel better about ourselves as a country if we are cutting carbon emissions and eliminating coal jobs.  We can probably afford to do so as long as natural gas stays at its incredibly cheap level.   Our current leadership hopes that we can continue to borrow vast amounts of money for a while to continue importing oil and other basic commodities.  And that's our real energy plan.  Borrow, borrow, borrow.  Got it? 

    In energy states, the local authorities (especially Republicans but also fiscally conservative Democrats) are generally more friendly to new natural gas drilling, offshore oil drilling as well as shale oil projects, especially at the state level.  
     Irrespective of government desires, private industry has produced so much natural gas and oil using new drilling techniques that America has reversed its long term trend of more imports.  We can argue whether it is because of the government or in spite of it, but the US has actually cut back its imports of petroleum over the past few years while increasing domestic production.

     In the long run, I think the future of coal will be as a substitute for petroleum.  Coal can be thought of as a super heavy crude oil.  If chemical engineers put their mind to it,  they can convert it into oil via a number of processes, and at an acceptable cost.  In China, there are several processes being introduced.  Many of these processes were developed originally in the US, but not pursued because of the easy option of increasing imports.

      On the far right, the Libertarians oppose any government involvement in Energy, and would like to abolish the Department of Energy altogether.  They would like to turn everything over to industry.
     The Greens, on the other hand, seem to regard energy as a conspiracy, and especially the private sector. They would like to extend the war on coal to become the war on coal, oil and natural gas. If we punish the energy companies enough, renewable energy sources will be allowed to flourish and they will get what they want.   

   In summary, the War on Coal is a real feature of the current energy plan for America, although that term is not used by advocates.  But both major parties favor increased market share for natural gas and decreased market share for coal, with the major disagreement being on the rate at which coal utilization should decrease.  The Libertarians and Greens, in my opinion, are both in favor of destroying the economy, although each party has a different idea on how to best accomplish that goal.  

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