Why Coal Simply Can’t Solve Energy Poverty
April 4, 2016
On 11 March, panic struck engineers at a giant power station on the banks of the Ganges river in West Bengal state.
Readings showed that the water level in the canal connecting the river to the plant was going down rapidly. Water is used to produce steam to run the turbines and for cooling vital equipment of coal-fired power stations.
By next day, authorities were forced to suspend generation at the 2,300-megawatt plant in Farakka town causing shortages in India’s power grid. Next, the vast township on the river, where more than 1,000 families of plant workers live, ran out of water. Thousands of bottles of packaged drinking water were distributed to residents, and fire engines rushed to the river to extract water for cooking and cleaning.
Shortage of Water
The power station – one of the 41 run by the state-owned National Thermal Power Corporation, which generates a quarter of India’s electricity – was shut for 10 days, unprecedented in its 30-year history.
“Never before have we shut down the plant because of a shortage of water,” says Milan Kumar, a senior plant official.
“We are being told by the authorities that water levels in the river have receded, and that they can do very little.”
Further downstream, say locals, ferries were suspended and sandbars emerged on the river. Some 13 barges carrying imported coal to the power station were stranded midstream because of insufficient water. Children were seen playing on a near-dry river bed.
Nearly a trillion dollars — $981 billion to be exact. According to a report released today by the Sierra Club, CoalSwarm, and Greenpeace, Boom and Bust 2016: Tracking the Global Coal Plant Pipeline, that is the estimated amount that could be spent on the global coal plant pipeline. It is also more than one-and-a-half times the cost to end energy poverty according to the International Energy Agency’s (IEA) Energy for All Case.
But instead of solving a global crisis, those trillion dollars may go down the drain, supporting potentially stranded assets in the dying coal industry.
Today’s report is an update to last year’s report on new and proposed coal plants worldwide. Last year, we found an industry in peril, with two proposed plants shelved or canceled for every one completed. The news isn’t any better for the industry this year.
Worldwide coal use has dropped for the past two years, but the industry continues to ignore this trend and build new coal plants. This is not surprising, given that no industry wants to admit it is obsolete, but the staggering lack of foresight will only accelerate the collapse of coal. Nowhere is this more evident than in China, which is still building new plants even while use of its existing fleet has fallen below 50 percent. And China is not unique. We are seeing utilization rates fall among big coal consumers, including the European Union, the United States, and India.
Coal generation was previously tied closely to coal capacity, and knowing how much power could be generated from coal used to be a good way to estimate how much energy would be generated from coal. Not anymore. With utilization rates plunging, investments in new capacity could quickly turn into stranded assets — and investors know it.
Big banks like JPMorgan Chase, Bank of America, Citigroup and Morgan Stanley are backing away from coal. In Indonesia, the world’s largest exporter of coal, mining companies are asking for public subsidies and a raid of the country’s pension fund to keep business afloat. Research shows coal mines in Australia, the second largest exporter of coal, are one of the riskiest investments in the world, while banks acrosstheglobe are rejecting the flagship Carmichael coal mine in Australia’s Galilee Basin. In the U.S., Peabody has warned it may file for bankruptcy, following in the footsteps of Alpha Natural Resources, Arch Coal, and Patriot Coal. In March, China ordered a halt in new coal plant permits in 13 provinces, a move that follows the announced closure of a thousand coal mines earlier this year.
While the economics of coal falter, clean, renewable energy is booming. Coal is not cheap, and we are already seeing renewables like wind and solar beat fossil fuels in the energy market. Solar costs less than coal in parts of India. Unsubsidized wind is the cheapest energy in the UK and Germany. These trends will only continue as renewable technology advances, making the decades-long investment necessary to build a new coal plant a poor choice in comparison.
Last year, for the first time, renewables accounted for a majority of new electricity-generating capacity added around the world, according to a recent United Nations report. More than half the $286 billion invested in wind, solar and other renewables occurred in emerging markets like China, India and Brazil — also for the first time. Excluding large hydroelectric plants, 10.3 percent of all electricity generated globally in 2015 came from renewables, roughly double the amount in 2007, according to the report.
The average global cost of generating electricity from solar panels fell 61 percent between 2009 and 2015 and 14 percent for land-based wind turbines. In sunny parts of the world like India and Dubai, developers of solar farms have recently offered to sell electricity for less than half the global average price. In November, the accounting firm KPMG predicted that by 2020 solar energy in India could be 10 percent cheaper than electricity generated by burning coal.
These are all hopeful signs. They suggest that reductions in carbon emissions can be achieved more quickly and more cheaply than widely believed. And they provide hope that nations will be able to achieve the ambitious goals they set for themselves at last December’s climate summit meeting in Paris — to keep warming below the threshold beyond which the world will be locked into a future of devastating consequences, including rising sea levels, severe droughts and flooding, widespread food and water shortages and more destructive storms.
Replacing coal-fired plants or avoiding new ones will have major health benefits as well, especially in heavily polluted cities in China and India where ground-level pollutants like soot and smog make the simple act of breathing a major undertaking. Those benefits will be even greater as gasoline-powered cars are replaced with electric vehicles that draw power from wind and solar farms.