Energy I analyze energy economics and related public policy issues.
- The claim that aggressive climate change mitigation programs helps the poor is egregiously misleading.
- The coal industry will remain essential to human flourishing long into the future, and reports of its impending death have been greatly exaggerated.
The reigning narrative of impending global environmental catastrophe dominates the airwaves and print media. Short of a drastic reduction in the use of fossil fuels, it is asserted, we are fast approaching the “end of days”. The demonization of fossils fuels in general, and coal in particular, has been wrought under pressure from special interests groups and organized lobbies of the climate-industrial complex where aspects of economic reality are caricatured or presented out of context. Complex trade-offs in energy policy are spun into tales of spurious simplicity, leading to misleading conclusions. Nowhere is this more apparent than in the debate over the role of coal-fueled power generation in Asia.
Opposition to the building of coal power plants in the poorer countries has been justified by environmental activists, banks and multilateral development agencies such as the World Bank in two key ways. The first revolves around the claim that climate change mitigation programs carry “co-benefits” for public health in developing countries. The second utilizes the assertion that renewable energy such as solar and wind power are effective substitutes for centralized grid electricity generated by fossil fuels.
Climate change policy does not help the poor
The claim that aggressive climate change mitigation programs helps the poor is egregiously misleading. Modern coal plants are a success story, as pollutants emitted have fallen dramatically with technological improvements over the past several decades. Key pollutants that adversely affect human health include carbon monoxide, lead, sulfur dioxide (SO2), oxides of nitrogen (NOX), ground level ozone and particulate matter (PM). A new pulverized coal plant, with flue gas scrubbers, fabric filters, catalytic reduction and other control equipment and processes, reduces NOX by 83%, SO2 by 98% and PM by 99.8% compared to a similar plant without such pollution control features, according to the US Department of Energy.
The myth of renewable energy
The second misleading claim is that intermittent sources of renewable energy can replace the need for grid-supplied power based on fossil fuels. An endless litany of “green” success stories permeate the mainstream media with the erroneous believe that that wind and solar power are “already competitive” with fossil fuels. Rigorous economic analyses of the hidden costs of unreliable, weather-dependent solar and wind power have countered such claims as an exercise in magical thinking. According to data reported by energy generators to regulatory authorities in the US, wind and solar power are two to three times more expensive than existing coal or gas-fuelled power.
Perhaps the best response to the renewable energy hype is provided by the example of Dharnai, a small village in India’s Bihar state, which lacked access to the country’s electricity grid. In 2014, Greenpeace activists set up a solar-powered microgrid for the village to much fanfare. Almost immediately, problems emerged with the load put on the village solar “grid” as households began to hook appliances such as rice cookers, electric water heaters, irons, space heaters and air coolers. On the day of inauguration of the solar power system in the village, its inhabitants protested with banners stating “we want real electricity, not fake electricity”. As explained by the reporter at the location, “By ‘real’, they meant power from the central grid, generated mostly using coal. By ‘fake’, they meant solar”. In wonderful irony, the embarrassed government VIPs present for the gala opening of the Greenpeace-promoted solar showpiece ensured that the village was shortly connected to the coal-fired power grid.