Where is coal and carbon today?
Economics are the ultimate policy driver
On a trip through central and western Montana this summer I spied a couple of long, westbound coal trains, and a switchyard full of them in Missoula (like the ones below). Wondering where they were headed I consulted a RR map of Montana and concluded they were likely bound for British Columbia, Canada, or one of the last remaining coal plants on the U.S. west coast.
However, there are no existing west coast coal plants that will run past 2020, and others have converted to biomass to live out their electric generating life. No one can build a new one for three reasons: 1) They are more costly than all gas turbines. Renewables like solar PV and wind turbines are cheaper, so banks see gas as a non-performing asset. 2) They take too long to site and permit than generation that’s fueled by less carbon intensive fuels, and they commonly meet with environmental push back. 3) They may not run for their expected lifespan because state policies are running away from them—regardless of what you hear these days from Washington, D.C. They will become stranded assets with uncertainty whether they will be able to generate enough revenue to recover their investment. The operative mathematical principle here is LCOE, the “levelized cost of electricity” (the revenue per unit of electricity generated that’s required to recover the costs of building and operating a generating plant during an assumed financial life and duty cycle).
Ten states plus the District of Columbia have adopted policies for over 50% renewable electricity by 2030, with three at 100% carbon-free by 2040 or 2045. There is no viable path for new carbon-based electricity in such states. Among those states not so ambitious, utility lobbyists are searching for subsidies to continue operating uneconomic coal-based assets and to raise customer rates to pay for them. The common political mantra is “stranded assets,” meaning that the utility loses on its original bet.
Two questions stand out. Why should investor-owned utilities bear no risk and ratepayers cover the potential losses? What part of that scenario matches up with the term “free markets?”
The generic coal plant diagram (previous page) shows the functioning of a steam turbine that turns a generator to make electricity. Coal is the fuel to make the steam by the heat of combustion while ash, emissions, and hot water are the waste products. Plants like this have the best chance of paying for themselves and keeping ratepayer costs low when they run full-time as base load generators (meaning they run at a constant 100% of capacity). If they don’t, the cost of producing their electricity rises.
In electricity mathematics, renewables have a tremendous advantage. Their fuel is always free and it creates no emissions or waste products. Renewable electricity plants are quicker to permit and tend to run longer than the life cycle of fossil fuel plants because the intense heat to make steam wears out boilers, steam pipes and condensers.
The common rap on renewables is their inherent intermittency (no sunshine at night and wind may be too strong or not strong enough to let turbines rotate). But thanks to rapidly advancing Lithium ion battery storage with power converters/inverters to match, renewable generation can be stored without pollution and can be called on more quickly than any other generation method to meet grid demand peaks. Utilities are already siting it at transmission bottlenecks where voltage drops would otherwise be more likely. Power tools and electric cars have accelerated such Lithium-ion battery development.
The coal that I saw this week may be headed to a foreign port in Canada and then across the sea to be burned somewhere else. This may reduce localized pollution in the U.S. but does not keep CO2 out of the atmosphere, threatening us all via global warming. International cooperation such as the Paris Climate Accords is the path of progress, but unfortunately our current president rescinded our participation shortly after taking office in 2017.
Just today, stories hit media outlets that a continental Antarctic area called the Thwaites Glacier is accelerating its seaward travel and may deposit an ice shelf the size of the state of Florida into the sea, while reducing friction on neighboring glaciers that will accelerate, too.
Carbon is our enemy and those who preserve its use are not our friends. Let’s help the economics drive its demise by adopting smart policy to save civilization.