Coal, There’s Just No Alternative

Robert Bryce at the Institute of Public Affairs in Melbourne on September 9 might have been stressing the ‘bleeding obvious’, as business-press guru Terry McCrann put it in his thank-you speech. Bryce’s HV McKay lecture at the RACV was titled “More Energy, Please: How Increasing Energy Use Promotes a Richer, Freer World.”

It is indeed bleeding obvious to the sapient that there is currently no viable substitute for coal-fired electricity generation. But throughout the Western world other people are campaigning to ‘save the planet’ by shutting coal-power down and thus reducing purportedly dangerous C02 emissions.

Bryce’s energy analyses have appeared in publications including the Wall Street Journal, Atlantic Monthly and National Review. Texas-based, he’s the author of five energy books, the latest being Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong. Bryce didn’t discuss the merits of the catastrophic human-caused global-warming hypothesis. He just delineated the irrationality of draconian global and national targets to cut CO2 emissions, given the developing world’s determination to use electricity to lift its people from poverty:

“I’m a resolute agnostic about the climate issue. Tell me CO2 is good, tell me it’s bad. I’m bored with the nastiness.

“The question that too few people are willing to ask is this one: where, how, will we find the energy equivalent of 27 Saudi Arabias and have it all be carbon-free?”

He began by remarking that Thailand, Vietnam and Indonesia have a total population of 400m. Since 1985, Indonesia and Malaysia have both piled on coal consumption by more than 5000%.  Vietnam has increased electricity use by nearly 2500%; Thailand has had the world’s fastest growth of CO2 emissions at 603%. Yet their per capita GDP is still only $6000, one-eleventh that of Australia. “The residents of Thailand, Vietnam, and Indonesia don’t need less energy, they need more,” he said.

“It’s apparent to me from the levels of energy poverty and the continuing growth in global energy consumption, that the countries of the world, cannot, will not, ever agree to cut hydrocarbon use to the levels that the IPCC claims are necessary to prevent major climate change.”

Globally there are still more than 1.2 billion people without electricity at all.

Over the past decade alone, global energy consumption has increased by about 28 percent, or 56 million barrels of oil equivalent per day, that’s an increase of nearly seven Saudi Arabias. Total daily global energy use is now about  31 Saudi Arabias of oil production per day. About 21 Saudi Arabia’s worth, or 87%, is from hydrocarbons.

Despite the campaigns against CO2 in the past decade, global CO2 emissions have increased by about 29%.  CO2 emission in the Middle East is up by 58%; Asia, up 74%; 
Africa, up 30%. But
Europe is down by   4% and US  down  6.5%. The hard reality is that the path to electrification — the path to increased wealth — depends on hydrocarbons. Countries with cheap, abundant, reliable supplies of electricity can grow their economies and educate their citizens. They can build their manufacturing bases and export goods.

“The countries that lack electricity can’t. Period. Full stop,” he said.

Between 1990 and 2010, about 100 million Indonesians gained access to electricity —  and coal provided more than half of that  growth. Over that same time period:

• Indonesia’s per-capita GDP rose by 442%.
• Life expectancy increased by 8 years.
• Infant mortality fell by 45%
• Child malnutrition fell by 65%
• Illiteracy declined by 77%

None of this is a coincidence. And yet, today the average Indonesian uses only about 630 kilowatt-hours per year. The average American uses that much electricity in three weeks, he said. The average Australian uses about 9,600 kWh of electricity per year — four times greater than the average resident of Thailand (2500 kWh/yr.) That’s eight times more than the average Vietnamese (1,125 kWh/yr). and fifteen times more than the average Indonesian (629 kWh/yr.)

Australia GDP: $1.5 trillion. Indonesia: $828B. Australia’s population: 23 million. Indonesia: 247 million.

“You have one-tenth of the people of Indonesia, and yet you have twice the GDP .Why?” Bryce wondered.

One clear factor is electricity use. in 2013, Australia generated about 245 TWh. Indonesia produced about 216 TWh. Electricity is a reliable proxy for wealth and wealth creation, as Bryce noted. “If I put a slide up here, showing the top 20 countries ranked by GDP and the top 20 ranked by electricity generation, the two columns would match almost identically,” he said.

Given the dire need for more electricity, it’s no surprise that Indonesia is building more generation capacity.  Indonesia is planning to build at least four gigawatts of new coal-fired capacity.”

Texas has about one-seventh of Pakistan’s population, but four times as much generation capacity. That translates into wealth. The GDP of Texas is roughly $1.4 trillion. Pakistan’s GDP is one tenth of that figure: $138 billion. Pakistan is planning to build 15 new coal-fired power plants, with a total capacity of about 15 gigawatts. The new capacity is needed to alleviate dire electricity shortages and blackouts. Urban areas in Pakistan routinely have blackouts lasting ten hours per day; rural areas often face power outages lasting 15 hours per day. Shortages of electricity are imposing heavy costs on the Pakistani economy — as much as $12.5 billion per year, or 6% of the country’s GDP.

Africa is the dark continent. Why? Because it’s dark.

There are 1.1 billion Africans today. They use about the same amount of electricity as 35 million Canadians. The GDP of Africa is $2.3 trillion.  Canada’s GDP is $1.8 trillion. Africa has 30 times as many people as Canada. And yet, Canada’s GDP is nearly as large as Africa’s.

“Moving beyond electricity, let’s look at natural gas and geopolitics.  Ukraine is one of the poorest members of the old Soviet bloc and Putin and his band of kleptocrats want to keep them poor by making their energy more expensive.

Meanwhile, Germany has hitched its economic wagon to the Kremlin. At the same time, it has implemented a renewable-energy strategy that is crippling its economy.

Europe, needs more energy. More specifically, it needs more cheap energy, if it wants to remain competitive. But it is instead, largely doing the opposite.”

The global energy story of today is coal.
Since 1973, coal use has grown faster than any other form of energy. Indeed, in absolute terms, it has grown faster than oil and natural-gas consumption, and it continues to grow at a remarkable clip. In 2013 alone, coal use rose by 2 million barrels of oil-equivalent per day. That was about 50% more than the growth in petroleum and nearly three times the growth seen in natural gas last year.

Further, it was three times the contribution of ALL global solar.

“I’m adamantly pro natural gas. I’m adamantly pro nuclear.

But the global energy story is coal. And it has been the story for the last four decades.”

 By 2018 or so, according to the IEA, coal consumption is likely to increase by about 12 MMbbloe/d. If that occurs, global coal use will total about 92 MMbbloe/d, or nearly 10.4 Saudis of coal.

If that occurs, coal could surpass oil in total share of global energy. “That’s a stunning development. The last time coal consumption in the US was greater than that of oil was in 1949.”

Coal demand is growing because the fuel is abundant, deposits are widely dispersed, supplies cannot be manipulated by any OPEC-like entities. And more than any other factor, it’s cheap. Between 1990 and 2010, about 1.7 billion people gained access to electricity. Of that number, about 800 million gained access due to coal, while some 65 million gained access due to solar and wind.

Coal will remain a major player in the global electricity mix for decades to come. And given that, we need to be encouraging the most advanced combustion technologies, super critical, ultrasupercritical and other techniques. The punchline is obvious, as Bryce noted:

“We cannot rely on renewable energy to supply the vast quantities of electricity that are needed to bring the billions of people who are now living in dire energy poverty in the modern world. We will need hydrocarbons. And lots of them.

And that takes me to the Big Fib. What is the big fib?

It’s the repeated claim by the big environmental groups and lead environmentalists that we can quit using hydrocarbons over the next couple of decades and replace them with renewables.”

Greenpeace claims that renewable energy, “smartly used, can and will meet our demands. No oil spills, no climate change, no radiation danger, no nuclear waste.”

Sierra Club has a campaign called “beyond coal,” another called “beyond oil” and another called “beyond natural gas.”

350.org has launched a campaign called “fossil free” and it is aiming to convince colleges, universities, and entities that have pension-type investments, to divest their portfolios of companies that produce hydrocarbons. They are welcome to push that agenda. But the reality is that renewables can’t even keep up with the growth in global electricity demand, much less displace significant demand for hydrocarbons. “That’s not an opinion,” said Bryce. “It’s a fact.”

Over the past three decades or so, global electricity generation has been increasing by about 450TwH per year. That’s the equivalent of adding one Brazil (which used 485 TwH of electricity in 2010) to the electricity sector every year. And the International Energy Agency expects global electricity use to continue growing by about one Brazil per year through 2035.

What would it take to just keep up with the growth in global electricity demand – 450 terawatt-hours per year — by using wind?  The global wind industry would have to nearly match its current existing capacity in a year, and it would have to do so every year. That would mean covering a land area of about 240,000 square kilometers every year. That’s a land area roughly the size of the United Kingdom.  And remember, it will have to do so every year. Put yet another way, in order to merely keep up with the pace of growth in global electricity use, the global wind industry will have to cover nearly 660 square kilometers, or about 11 Manhattan Islands — with wind turbines, and it will have to do so every day.

What would it take to just keep up with the growth in global electricity demand – 450 TwH per year — by using solar?

“Well, Germany has more installed solar-energy capacity that any other country, with about 36,000 megawatts of installed photovoltaic panels. In 2013, those panels produced 30 terawatt-hours of electricity.

Thus, just to keep pace with the growth in global electricity demand, the world would have to install 15 times as much photovoltaic capacity as Germany’s total installed base, and it would have to do so every year.

We have to move past the Big Fib and accept the reality that hydrocarbons are here to stay.”

 Bryce says that iteration means innovation.
To improve something, you have to do  it a lot. That’s true whether you are talking about a golf swing, a backhand in tennis, or manufacturing   solar panels.

“Why did the shale revolution happen in the US? The shortest explanation is that the US is drilling lots of wells. Since about 1950, the US has been drilling an average of 41,000 wells per year.

Shale is the most abundant form of sedimentary rock on the planet.

Lots of other countries have shale. China, Argentina, Algeria, Canada, Mexico, and Australia have huge shale gas (and shale oil) resources.

But the rest of the world is a decade, or maybe two decades behind the US when it comes to shale because the US is drilling lots of wells.

With each well that’s drilled, the companies that do the prospecting are learning things and applying them to the next well. And they learn a little more, and they apply that learning to the next well.

The coal industry keeps improving its processes, cutting costs, because it has not just a decade of experience, but centuries of experience. It is iterating.

I’m adamantly pro-nuclear. But one reason why we aren’t seeing much improvement in nuclear technology is that we aren’t building reactors.”

Construction on the Watts Bar Unit 2 nuclear owned by the Tennessee Valley Authority, began in 1973.  In 1988, work on the project was stopped. Bechtel resumed work on the reactor in 2007, with a projected cost of $4.2 billion to finish the reactor. The aim is to begin producing electricity at Watts Bar Unit 2 at the end of 2015.  That’s 42 years from start to finish.

There are two other nuclear plants underway: Vogtle and Summer, in Georgia and South Carolina. They might be finished by 2018 or so.

“Thus, in the next four or five years, the US will finish five reactors. Over that same time, we’ll drill maybe 200,000 oil and gas wells.

And with each well, each iteration, the industry improves, just a little bit.”

 Wind and biofuels both desperately need subsidies and/or mandates. And both   take too much land. The power density of wind energy is only 1 watt per square meter.

“Here in Australia, you have roughly 30 gigawatts of coal-fired capacity.  To replace that coal-fired capacity with wind, at 1 watt per square meter, would require 30 billion square meters, or 30,000 square kilometers. That’s a land area two and a half times the size of Greater Sydney.

“And here’s the kicker: because of the noise the turbines make, no people could live on that land.

“The energy sprawl that comes with wind has spawned a backlash in countries around the world.

“Despite what you hear from the wind industry boosters and groups like Friends of the Earth Australia, noise is a real problem.

“Biofuels? I’m a long time critic of corn ethanol. The fundamental problem with biofuels, besides the fact that their use means taking farmland out of food production and into motor-fuel production, is low power density. The power density of biofuels is fractions of a watt per square meter. The biofuel boom is over.
”

So what is the frontier for some type of disruptive energy innovation?  Clearly, as Bryce observed, it’s in nuclear, solar and batteries.

“I am pro-nuclear. If you are anti-carbon dioxide and anti-nuclear, you are pro- blackout.

“I’m anti-blackout. I’m in favor of cold beer and air conditioning for everybody.

“But there are two key problems with nuclear: First and foremost: It’s WAY too expensive.

“Second, we aren’t building reactors.

“We have a multitude of promising designs – molten salt reactors, modular reactors, thorium-fueled reactors, integral fast reactors. And we are seeing new venture capital investment in the nuclear sector, with companies like Terra Power, NuScale, and Transatomic.”

The frontier area for renewable-electricity deployment will be solar and storage. If panel prices can be made far cheaper, and batteries get far cheaper, then the deployment of electricity to energy-poor economies will be accelerated.

Bryce is  bullish on solar:

“I have 3,200 watts of solar panels on the roof of my house. I’m opposed to subsidies. Unless I am getting them.
Why did I put solar panels on my house?
 Because I got a big fat subsidy. The city of Austin paid 2/3 of the cost. The price of solar panels is falling dramatically.

Since 1980, we’ve seen the cost of photovoltaic panels decline from more than $20 per watt to less than $1/watt. The largest PV producer in the US, First Solar, claims that it will be producing solar panels for $0.40/watt by 2017.”

In a recent report, Bloomberg New Energy Finance projected that solar will be the fastest-growing form of generation capacity through 2030.  BNEF expects some $2.5 trillion will be spent globally on renewables. And solar is going to be the big winner. Asia alone will add 800 GW of solar PV. The US and Japan alone are projected to spend about $350 billion on rooftop solar.

“Thanks to the ongoing boom in solar, we will see a lot of iteration. Thousands of homes and businesses will add solar panels to their roofs. And with that iteration will come innovation, which in turn, should allow better performance and lower costs.

“Batteries are still too finicky and their energy density is too low. On a gravimetric basis, gasoline contains about 80 times as much energy as the best lithium-ion batteries.

“Furthermore, batteries don’t like extreme hot or cold and they aren’t very durable.

“We can store large quantities of coal, oil, and natural gas with relative ease. But our ability to store electricity is laughably small.”

Globally, people are now consuming 22,000TwH every year.

“If we could somehow collect all of the world’s car batteries – there are about 1 billion automobiles on the planet – and string them all together, the amount of electricity they could hold would only provide about 30 minutes worth of our global electricity needs.”

 The global market for batteries is huge because the global market for electricity is enormous. Global electricity sales are worth roughly $1.8 trillion per year.  Given the value of the electricity market, we will see lots of iteration in batteries, big and small. And as solar improves, as batteries improve, we will be able to bring more people out of the dark and into the light.

“Over the past few years, we have been inundated by claims that we are using too much energy. This is wrong. If we are interested in promoting wealth and freedom, we should be focused on providing more energy to more people, everywhere.

“We have to move beyond this single-minded concentration on reducing emissions to one which recognizes that energy availability is the key to human fulfillment and freedom.”

That cheap and freely available energy is the cornerstone of wealth should not have to be stressed. Yet today, as green nostrums dominant policy, hike electricity prices and bring the threat of blackouts, it is a near-revolutionary idea. Strange days indeed.

Tony Thomas blogs at tthomas061.wordpress.com