Why Global Warming is Helping Coal
June 26, 2017
by William P. Meyers

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For environmentalists concerned about global warming, coal is public enemy number one. Coal is close to 100% carbon, in contrast to natural gas and petroleum, both of which have substantial amounts of hydrogen attached to a carbon backbone. Per unit of energy produced, coal produces more carbon dioxide than any other energy source.

“The excess carbon dioxide scorching the planet rose at the highest rate on record in 2015 and 2016. A slightly slower but still unusual rate of increase has continued into 2017.” [Carbon in Atmosphere Rising, New York Times, June 26, 2017]

So why would I argue that global warming is increasing demand for coal at a time when governments are trying to slow global warming by reducing coal consumption? Because that is where the facts point.

Many nations have plans to move as much energy production as possible to renewables, primarily solar, wind, and hydro power. In 2016 global coal demand was down 1.7% from 2015, and use in the United States declined much faster. Does that not prove that coal demand will keep dropping, and is basically doomed to go to zero in our lifetimes?

While environmental regulations and government subsidies to renewable energy projects, have had some impact on the coal industry, the real reason coal appears to be on the ropes is old fashioned capitalist competition.

Fracking and related technologies like horizontal drilling have greatly increased the supply of natural gas, both globally and in the United States. That has made natural gas cheap, so cheap that burning it to make electricity is cheaper than burning coal. New electricity plants built in the U.S. in the past five years have almost all been natural gas, while many coal burning plants have been closed.

Right now, natural gas is cheaper to extract than coal, but that may not always be the case. If the most accessible natural gas is extracted, then the expense for new gas fields would increase. Coal still has vast deposits that are relatively easy to reach, but since it is a solid, it is more expensive to extract and transport than gas, which flows through pipelines.

In the longer run coal would be competitive again for electricity generation if natural gas rises in price. That is more likely than not, though predicting the timing won’t be easy. As natural gas fired electricity plants are built, the demand rises, and other uses are ramping up as well [See Shale Revolution’s Staggering Impact]. If demand catches up with supply, the price will rise. Just as we have seen large swings in the price of gasoline since the automobile age began, we are likely to see large swings in natural gas prices in the future. Since the price is currently low, the next swing is likely to be up.

Environmentalist optimists hope that renewable sources will replace both gas and coal, but looking at the numbers, that seems unlikely. Most of the electricity classified as renewable, at this time, comes from hydropower. While new dams are being built, there are limited places for them. Even with government subsidies, the up-front costs for solar and wind are very high. The last time there was a gap in the U.S. subsidies for wind power, the industry essentially shut down until the subsidies were reinstated.

In complex situations it sometimes helps to identify key variables. The key variable is demand for electricity. The problem for environmentalists, and all earthlings, is that demand is likely to keep climbing. It appears to be climbing faster than solar and wind power can be installed. As a result, there will be more fossil fuel fired plants built, regardless of the Paris Accord or the good intention of governments with regard to global warming. To see that, let’s look at three regions of the globe: India (which will also stand in for much of the developing world), China (now the largest carbon source) and the U.S. (which can also stand in for Europe, and which is the largest historic contributor to greenhouse gasses).

"India's climate is warming up at a very fast rate. It is warming at a much faster rate than thought previously. Our analysis looks at temperature trends in the country - both annual and seasonal - from 1901 till recent years. And it finds that the country has been getting warmer continuously, consistently and rapidly," Chandra Bhushan of the Centre for Science and Environment, a New Delhi-based environmental NGO, told DW.” [Sizzling heat wave hits hard India’s poor]

As I write it is a hot day in New Delhi. The expected high on June 25, 2017 is 102°F (38°). India has a large and growing middle class, and they are acquiring the kind of things the U.S. middle class acquired in the 1950s: cars, refrigerators, washing machines, and air-conditioners. Air conditioning is very electricity-intensive. When it gets hot, whether in Jacksonville, Florida, or in Kolkata (Calcutta), electric demand goes up. Coal-powered and gas-powered plants run at capacity, and even then may not be enough. In the U.S. running out of electric capacity is rare, but in India it is normal. When everyone in India tries to turn on their air conditioner, the utilities cut some people off. In fact electricity is often rationed even on normal days, much the same as the rest of the developing world.

India is building hydroelectric plants in Nepal and has big plans for wind power and solar. Officials boast they will build no more coal plants, and eventually start closing the ones they have. They are going to cut their greenhouse emissions. They have good reason to: it is already hot in India, sometimes deadly hot, and it has a long coastline subject to flooding from rising sea levels.

They could be right, but I don’t believe it. India is a place where progress is sometimes made, but official plans are suspect. How many anti-corruption campaigns have taken place since independence, and how much corruption is there now?

So it is with coal consumption in India. India both produces a large amount of coal and imports large amounts. India wants to be less dependent on coal imports. The government announced it does not want to build new coal-fired electricity generators. But many such plants were built in the past ten years, and despite the shortage of electricity in India, they are running under capacity. Add in the need for more capacity as electricity becomes available to poorer people, and increased demand per person in the middle class as appliances are used more. The result is generating capacity is inadequate. It is unlikely that new plants, be they hydropower or natural-gas fired, will be able to keep up. Throw in an extra hot summer, which is now almost every summer due to global warming, and those coal-fired plants will need to be run at higher capacity to keep all those air-conditioners running.

As to solar and wind, great idea, but currently they produce only % of India’s electricity. Adding more will help meet increased demand, but not put coal plants out of business. I think it is likely that as consumers demand more electricity, the government will allow the building of coal-fired plants to resume.

Over where the realists live, in the global capitalist class, the bets are on India using more coal. A huge new mine is opening in Australia soon to meet the increased demand. This also requires expansion of a port to ship the coal. The entire project requires billions of dollars to be invested before the first coal shipment. Of course, people who risk large sums of money are wrong sometimes, just like governments.

Over where the realists live, in the global capitalist class, the bets are on India using more coal. A huge new mine is opening in Australia soon to meet the increased demand. This also requires expansion of a port to ship the coal. The entire project requires billions of dollars to be invested before the first coal shipment. Of course, people who risk large sums of money are wrong sometimes, just like governments.

China differs only in details from India. In China the main concern about coal burning has been the local pollution effects. The Chinese government has taken steps like closing some plants near Beijing during the worst pollution episodes, mandating more pollution controls on operating plants, and discouraging the building of new coal-fired plants. All fine for the moment, since too much generating capacity was built too quickly. But Chinese like air conditioning too, and the economy grows 6 to 7% per year. When current capacity is soaked up and electrical shortages appear, will the Chinese government say to its people, sorry about the brownout or blackout, or will they burn more coal? Like India, there is an ambitious plan to add solar and wind power, but it appears to be trivial compared to overall demand growth.

Finally, we have the United States, where coal production has fallen drastically. It is simple economics: natural gas is cheaper, and will remain cheaper for years. That is global. But again, it is getting hotter. This week air-conditioners in California, Nevada and Arizona have been running 24 hours a day. When the demand is high, the electricity must come from somewhere. The higher-cost coal plants get fired up. Since the utilities can throw up a natural gas fired plant fairly quickly, I do expect an overall continuing decline in coal use in the U.S. until natural gas supply and demand come back into balance. When natural gas become more expensive than coal, it is highly likely that coal will rise again. Only the timing is uncertain.

Most people in the U.S. (and Europe and Japan) already have modern electrical appliances and air conditioning. The greater increase in demand for coal will be in the developing world.

While natural gas is cheaper than coal and produces less carbon emissions per unit of energy, it still causes global warming. So the more natural gas is burned, in the long run, the more need for air conditioning. Add that to the development of second-tier economies, and global demand will continue to rise at a strong pace. When prices become better balanced, coal will become competitive with natural gas again.

It is already happening. Between when I started writing this article and today, this report came out: Coal Power Jumps in China, India after 2016 downturn.

Environmentalists might also want to note that banning fracking would quickly reduce natural gas production, resulting in a price increase. Then coal would be the cheaper alternative, as it was in the past. Most environmentalists seem to be under the delusion that solar energy can quickly be substituted for fossil fuels. They do not understand the enormity of that project. They tend to see figures showing the growth of solar from a small base. That base is just 0.05% of global electricity production. In pro-solar propaganda this is usually rounded up to the phrase “less than 1%.”

The only way to decrease greenhouse gas emissions is to decrease demand for energy. That would require either a smaller population or people willing to conserve more by, for instance, giving up air conditioning. Preferably, both. Sadly, I don’t see either of those two things happening.