The argument that we can’t do anything about global warming because our living standards would plummet as coal is so much cheaper than renewables is so last decade. The cheapest source of electricity in the US now is wind power.
In the case of solar power in the US, utility-scale solar power contracts are being signed to deliver power at between 5 and 7.5 cents per kWh, even after removing the investment tax credit worth roughly 2 cents per kWh. So that before the tax credit, solar is now competitive with gas and new coal plants. Then there’s this (from a utility company’s annual report!). Extraordinary.
Even without a carbon tax, fossil fuels are no longer “cheap”. Even 3 years—2 years! —ago, you could have made that point and been correct. But the collapse (there is no other word) in the price of renewables is so dramatic that renewables are either cheaper or soon will be cheaper than fossil fuels. And if you add in the externalities (and you should) all the fossil fuels are much more expensive than renewables. Gas is still viable (though expensive), because peaking-power plant using gas can be easily and quickly started up when needed and then switched off later. Coal is no good for that (think of how long it takes you to get a coal fire going)
The coal spruikers go on and on about the “variability” of renewables. But the output of widely separated wind farms is uncorrelated, which means that two wind farms separated by five or six hundred kms can in effect act as base-load power generators. And wind and solar power are negatively correlated if there is any correlation at all: it’s often windy when the sun isn’t shining (for example, when a cold front comes through, or during a thunderstorm)
Be that as it may, there are already several places in the world where renewables provide more than 40% of electricity generation without grid instability: for example, the state of South Australia, Denmark, Spain, and many where renewables are over 25%. And that’s before batteries have started to play a role in stabilising the grid and provided for periods when both sun and wind are absent. But—and this is key— battery costs are falling by 15-20% per annum. When Tesla’s gigafactory is completed in 2017, battery costs will fall by 2/3rds. Grid storage will be cheaper than installing new base-load capacity.
Coal is finished, even without a carbon tax/cap-and-trade. Last year, for the first time in 15 years, total coal demand in China fell, by 3%, and CO2 emissions by 1%. This at a time when real GDP grew by 7.6%, an extraordinary decline in the energy:GDP intensity of nearly 9%. In one year!!!!! And China is choosing renewables not just or even because it knows global warming is real and dangerous (it has no demented plutocrats funding denialist websites and political campaigns) but because renewables are clean and cheap and coal is filthy, and because renewables give China energy independence. China is by far the world’s largest consumer of coal, and of course, the world’s largest emitter of CO2. Most of the world’s 10 largest solar panel and wind turbine manufacturers are Chinese. It makes sense from every possible point of view for the Chinese to switch to renewables. And they already are.
In India, the great hope of coal barons, 25% of the population is not even connected to the grid. And they prolly never will be, because for under $100, small solar panels with an inbuilt battery, mobile phone charger and LED light are being sold to peasants outside the grid. Who needs an expensive to build and maintain grid? In addition, India plans to install 100 gW of solar (currently 3 gW capacity is installed) to feed in to the grid. Of course, actual production from solar panels in those latitudes is only 30 – 40% of nameplate capacity, but already about 30% of India’s electricity is generated by renewables/hydro. This percentage will only rise—at the expense of coal.
No doubt existing coal-fired power stations globally will continue to pollute until they reach the end of their safe working lives. But no one is going to build new coal power stations, because the cost of the renewables triad (wind, solar, batteries) is falling inexorably and rapidly. No prudent investor will provide funding for the 30-year life of a new power station. Frankly, no prudent investor would buy or invest in a coal mine. Certainly, I hold none in the portfolios I manage.
The denialists are still fighting last decade’s battles. No rational and informed person doubts the reality of global warming, and given the variability in likely outcomes, with risk multiplied by cost clearly to the upside (risk alone is not the best metric: saying temps will rise 2 C plus or minus 1 C doesn’t show that 2+1 is much more costly for the world than 2-1) prudent ppl will incline towards renewables especially if they are already cheaper.
The fall in renewables costs is so rapid that we keep on being surprised. The latest data show incontrovertibly that even without a carbon tax, renewables are viable. And the crackpot climate change denialists have become irrelevant (though they remain infuriating) because the push towards replacing fossil fuels with renewables is no longer driven just by sentiment or ethics or fears about the state of the world or by the greens (I vote Green by the way) but by relentless economics. Hard-headed and -hearted finance and business people and politicians will choose renewables because that decision makes sense—despite the shrill denunciations of the coal-funded denialists. If these hard-headed people can clothe themselves in virtue doing profitable things which also stop global warming they surely will.
I am not a scientist let alone a physicist. But I have been managing money for 40 years, and I can see an emerging trend. That is how I make money for my clients and myself. I don’t fully understand the technicals of climate science. But the broad thrust of the argument is (a) crystal-clear and (b) borne out by the data. Equally, the march of renewables is (a) obvious, (b) inevitable and inexorable and (c) driven by a compelling economic logic.