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Renewables Won’t Easily Replace Coal Usage

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The Biden Adminstration’s Infrastructure program encompasses a wide variety of policies and goals, many of which are laudable while others arguably could do with more scrutiny (translation: cost/benefit analysis). The expenditure of $15 billion to build 500,000 electric vehicle charging stations, and an additional $26 billion for supporting infrastructure, sounds rather Antoinettish to me, as in “Let them eat organic cake baked in solar ovens.” It has been widely noted that the cost of electric vehicles tends to limit their market to the upper middle and wealthy classes, which hardly conforms to the ‘social justice’ goal of the energy program. Nor does it seem like the highest priority target.

Because it is an Inconvenient Truth (one of many) that the United States is still consuming massive amounts of coal: in 2019, pre-pandemic, over 500 million short tons were burned by electric utilities. This is definitely the low-hanging environmental fruit, in terms of costs and benefits, while GHG reductions from electric vehicles are somewhere between the highest hanging fruit and fruit pie-in-the-sky.

I have nothing against coal miners, but—despite my family supposedly having the rights to some coal deposits in West Virginia—the mining and burning of coal seems to me to be something whose time has passed. Hillary Clinton’s argument that miners should be retrained for other jobs seems the best approach: coal mining jobs have been declining for decades, despite stabilizing under President Trump. The figure below shows the change in power generation capacity by major fuel (I left out wood and other minor sources) and coal’s decline has been significant.

As can be seen, wind and solar together added 23% more capacity over a decade than was lost to coal capacity reductions, and 40% more than was added by natural gas producers. Unfortunately, as anyone paying attention should know, sun and wind have much lower capacity factors than both coal and gas plants, so that the change in power produced from the different sources, in the figure below, paints a different picture. The added solar and wind power output equaled only 37% of the reduction in power produced from coal, and only 44% of the additional power produced by natural gas. Worth noting: wind and solar required massive government assistance, natural gas produced massive government revenue.

A rough calculation suggests that shutting down all remaining coal used in power generation would require an increase in wind and solar power equal to seven times the production level in 2019, and, an increase in new production by five times the growth seen in the past five years. (Figure below.) By contrast, natural gas production would have to increase by twice the rate of the past five years.

The power sector’s recent experience also highlights a major weakness of the current populist pressure to zero out fossil fuel consumption. The figure below shows coal consumption if natural gas use for power generation had not occurred since 2009: coal consumption would be twice the actual level now.

Another complicating difference with natural gas generation is the productivity curve for wind and solar: not all sites produce equal amounts of power, depending on the levels of wind and solar intensity, implying that the costs of a massive expansion in these renewables would likely inflate significantly. Even more tellingly, unlike natural gas power, solar and wind require large amounts of expensive backup to offset their variability. At present, this is mostly filled by natural gas power plants; storage remains much more costly, despite plummeting battery prices. A future column will discuss the investment needed to accomplish phasing out the remaining coal usage under different approaches.

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