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How Do We Wean a Coal-Power Addiction Without China?

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David Gaier is a communications professional, former spokesman for NRG Energy and PSEG Long Island, and consultant to energy advisory agencies. His 30+-year career includes crisis communications...

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Coal, historically the longest-used source of fuel for generating electricity, has been under withering fire in the U.S. for more than a decade as the single largest source of both carbon and criteria pollutants in the power sector. Admittedly, its share of the generation market has decreased substantially, starting with the plunge in natural gas prices that began in June 2008, when the Henry Hub spot price was $12.69 per MMBU, falling in August 2009 to $2.99, and currently at $2.71 according to the US EIA.

Piled on top of this sustained commodity market change were new federal clean air rules, including the 2011 Cross-State Air Pollution Rule (CSAPR), updated in 2017, requiring certain eastern states to reduce pollution from upwind states in order to maintain National Ambient Air Quality Standards. The Mercury and Air Toxics Standards (MATS) rule, also enacted in 2011, replaced the previous, court-vacated Clean Air Mercury Rule, setting federal air pollution limits that individual coal- and oil-fired electric generating units (EGUs) with a capacity of 25 megawatts or greater must meet by 2015.  It required many generators to invest in and install wet and dry scrubbers, dry sorbent injection systems, activated carbon injection systems, and fabric filters. And the Clean Power Plan (CPP) was unveiled in 2015, requiring a reduction of carbon emissions from electricity generation of 32% by 2030, relative to 2005 levels. The Trump administration’s EPA challenged the rule and tried to replace it with the so-called Affordable Clean Energy Rule, while staying the CPP. But on January 19, 2021, the District of Columbia Court of Appeals ruled the Affordable Clean Energy Rule violated the Clean Air Act but did not reinstate the Clean Power Plan, punting the matter into the hands of the new Biden Administration.

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In the meantime, pure economics, the age of many existing coal plants, and the development of new, much cleaner natural gas-fueled generation, especially combined-cycle plants, ate away at the market share of U.S. coal generation, which went from about 33% in 2015 to about 20% in 2020. At the same time, energy efficiency, demand response, and more recently the pandemic have slowed the growth in electricity demand—energy consumption fell faster than gross domestic product in 2020, and the pace at which both will return to 2019 levels remains uncertain, according to U.S Energy Information Administration. And local, state, and national social and political activism by environmental groups, especially the Sierra Club, likely contributed to the closing of operating coal plants that were on the bubble of profitably or especially controversial, especially on the basis of environmental justice.

At the same time, a report from Morgan Stanley issued on January 1st asserted that renewable energy, including utility-scale solar and wind power will provide nearly 40% of U.S. electricity by 2030. Still, even as the new administration rolls out what appear to be aggressive actions against fossil generation as well as a markedly ambitious green energy plan, Morgan Stanley forecast that coal-based power production would actually increase this year by 2%. Moreover, the horizons for financing, siting, permitting, and construction of large-scale renewables suggest that many of those resources won’t be online for several years more.

But even if the US makes great strides in the closing of old, high-emitting coal plants and adds massive renewable sources, the global nature of the problem is a daunting obstacle in the race against global warming. According to studies by Global Energy Monitor (GEM) and the Centre for Research on Energy and Clean Air (CREA), the outlook is bleak in the territory of the largest offender: Even including decommissions, China reportedly put 30 GW of new coal capacity online in 2020, with 88 GW of coal power under construction and 247 GW under development. Yet according to Colorado-based BTU Analytics as reported in POWER Magazine, the U.S. has just 236 GW of coal-fired generation capacity in its entire fleet, across 267 plants, as of the fourth quarter of 2020.

Ironically, many observers note that capacity factors of existing Chinese coal plants are typically much lower than baseload, with new construction focused on national infrastructure investment rather than filling a capacity need on the grid. And according to Boston University’s Global Development Policy Center, forty percent of China’s overseas power plant financing and direct investment is in coal-fired power plants, highly concentrated in Southeast Asia (40 percent), South Asia (31 percent), and Africa (16 percent). Notably, according to a report on February 2d in Climate Home News, China’s own Central Environmental Inspection Team (CEIT) “slammed China’s energy authority [the National Energy Administration], for failing to apply environmental standards on rampant coal power expansion across the country.

At the same time, China continues to tout its investment in renewables, and according to government data doubled its construction of new wind and solar power plants in 2020 from 2019. But its investment in and construction of coal plants continues in parallel, and despite pledges by Chinese President Xi to become carbon neutral by 2060, China hasn’t submitted a climate plan to the Nations to back up his promises, prompting the MIT Technology Review to ask, just last summer, “If China plans to go carbon neutral by 2060, why is it building so many coal plants?

If it wanted to keep that promise, even over a 30-year window, China could make a big difference: According to Climate Action Tracker, “If China were to achieve its announced goal of achieving carbon neutrality before 2060, it would lower global warming projections by around 0.2 to 0.3°C, the biggest single reduction ever estimated by the Climate Action Tracker.” The organization added, “It’s clear that China needs to re-examine its economic recovery and aim it at more low-carbon projects if it wants to reach the carbon neutrality goal before 2060.”

Nonetheless, strides against the coal fleet are real and measurable. For example, according to The Guardian, “Renewable energy generated by wind, sunlight, water, and wood made up 42% of the UK’s electricity last year compared with 41% generated from gas and coal plants together” and Britain’s power-generation carbon intensity declined to the lowest level ever recorded last year. Ember Climate reports that EU-27 coal power has halved since 2015, generating just 13% of Europe’s electricity in 2020. Florida Power & Light shuttered its last coal plant in the state last New Year’s Eve and is converting another to natural gas. Out west, Arizona’s Navajo Generating Station along with its feeder Kayenta Mine and the Reid-Gardner plant in Nevada have closed, ostensibly to be followed by the San Juan Generating Station in northwestern New Mexico in 2022.

But the Global Energy Monitor made it a point to say recently that “To decarbonize the power sector by 2050, a recent study by the Center for Research on Energy and Clean Air and the Draworld Environment Research Center found that Chinaʼs coal fleet should fall 38%, from the current 1,095 GW to 680 GW by 2030.

I’m not taking that bet right now.

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Matt Chester's picture
Matt Chester on Feb 5, 2021

But even if the US makes great strides in the closing of old, high-emitting coal plants and adds massive renewable sources, the global nature of the problem is a daunting obstacle in the race against global warming. 

This is interesting, and I'm reminded of the quote from NextEra's CEO that came out yesterday

“There is not a regulated coal plant in this country that is economic today, full period and stop,” he said. 

So, realistically, not much needs to be done other than getting out of the way and coal will close in the U.S. But the calculations, as you note, likely look different in other countries. 

Daniel Duggan's picture
Daniel Duggan on Feb 8, 2021

An imbedded NOx, SOx and CO2 tax on imports would address this topic.  To be effective, the tax would have to be a multiple of the cost of the input from the dirty power plant or steel mill.

Matt Chester's picture
Matt Chester on Feb 8, 2021

Is there good analysis on really how to verify those emissions on imports? I fear that that might be a weak link when the strategies go more international, but would love to see where progress is being made on that question

Michael Keller's picture
Michael Keller on Feb 8, 2021

Pretty arrogant on our part to attempt to tell China how to provide energy for their economy.

Pretty dumb on our part to spend trillions of dollars on green energy based on an essentially religious belief.

Deploy reasonably priced and reasonably clean methods for energy production and use. 

 

Daniel Duggan's picture
Daniel Duggan on Feb 10, 2021

 China can produce electricity, steel and other inputs as clean or as dirty as they chose, however when exported Chinese products enjoy an advantage over domestic products due to differing emissions standards the result is clean producers go out of business, or move to locations where standards are lower, or best of all, low and not enforced.  A tax on embedded pollution is one possible answer to this problem, can anyone suggest a better one?

As for green energy being a quasi-religious belief, I have to agree.  Is the belief well founded, only time will tell.

China is deploying clean methods for energy production and use, however the overall energy use is growing at such a rate that coal burning is increasing in parallel, hence ever more pollution is embedded in the total volume of Chinese products.  As well as building more coal plants in China, Chinese companies export their dirty energy philosophy to developing counties in Africa and Asia where hundreds of low tech coal units are under construction or planned.  These plants may in many cases power Chinese factories out-sourced to low-cost labour locations with even lower standards than those enforced back home.  Without action by western consumer countries, the pollution imbedded in the products we buy increases and the environments of developing countries are seriously damaged.

Michael Keller's picture
Michael Keller on Feb 10, 2021

The West’s dim-witted CO2 reduction efforts are irrelevant on a global scale and only serve to provide China with greater competitive advantages. Taxing Chinese goods only inflicts greater hardship on consumers who actually end up paying the tax.

Concentrate on technology innovations created to increase profitability in a competitive world. Such processes are inherently more efficient in the use of energy and materials, thus ultimately reducing environmental impacts. Older, obsolete and polluting machines are replaced as driven by the economics of profitability. Imposing ill conceived regulations, subsidies, and taxes only serves to create more environmental problems by thwarting innovation.

The approach I suggest will be (and is being) adopted by China because of competitive forces.

There is no good reason to hysterically overreact and be stampeded into taking actions that only serve to line the pockets of those selling inferior products unable to compete.

Daniel Duggan's picture
Daniel Duggan on Feb 11, 2021

The cruel truth is when air and water pollution impact is ignored coal is the lowest cost form of energy available most places on planet earth, therefore it's the 1st choice of 3rd world countries aiming to move up to middle income status.  Electricity in countries leading the charge to high tech green alternatives is approximately three times more expensive than in coal dependent countries, a price the developing countries are not able or willing to pay because of the brake it places on the efforts to drag the country out of poverty.  With the exception of nuclear power generation built in a nuclear-friendly regulatory environment, and large-scale hydro, there are to date no clean energy technology innovations which compete on price with coal fired power generation.  Under ideal conditions solar and wind may produce kWhs at a cost close to coal, however 100% gas turbine or other back-up, plus interconnection and grid stabilization lead to electricity at 300% the cost of a coal powered grid.  For this reason only a high price on embedded pollution will force a move to clean energy technology in China and in poor countries planning to modernise by exporting goods to customers in developed countries..

Matt Chester's picture
Matt Chester on Feb 11, 2021

For this reason only a high price on embedded pollution will force a move to clean energy technology in China and in poor countries planning to modernise by exporting goods to customers in developed countries..

I agree that this would be necessary for such a clean energy pathway in developing countries, but then you get into the hard equity questions. Is it fair that regions that are looking to electrify for the first time don't get to benefit from the rapid urbanization that coal enabled in much of the rest of the world? Is it better to leave them in the dark just because electrifying might take some carbon-intensive practices? These are questions to grapple with and I think show exactly why it is imperative for nations like the U.S., who have benefitted for decades from cheap coal power, to lead and support energy tech in these developing regions. 

Michael Keller's picture
Michael Keller on Feb 11, 2021

Gas turbines produce the lowest cost energy, and by a significant margin. They also have minimal environmental impacts, which is not the case for renewable energy.

Coal can be made cleaner by gasification technologies, but the costs balloon upward.

Ultimately, nations are free to pursue energy production as they see fit. Totalitarian regimes do more or less as they please, largely ignoring the wishes of those under their suppressive yoke.

If the West is meaningfully concerned about the environment, stop doing business with the polluters.

As far as the “poorer” nations are concerned, many of these countries are not democracies, being run by thugs and despots. Stop doing business with them.

There are democratic nation’s struggling to better the lives of their citizens. Cut them some slack, recognizing energy is a key to their development. Do not demonize them if coal is an economically solution for them.  Longer range, they will embrace cleaner technical advancements as they are better able to afford the higher cost.
 

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