Coal's end on the horizon

Source: Carbon Brief

From IEEFA:

The world’s electrical utilities need to reduce coal consumption by at least 60 percent over the two decades through 2030 to avoid the worst effects of climate change that could occur with more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) of warming, the Intergovernmental Panel on Climate Change announced Monday.

Such a target seems wildly ambitious: Even Bloomberg New Energy Finance, which tends to be more optimistic than other analysts (and more accurate) about the speed of energy transition, expects coal-fired generation to increase by 10 percent over the period. Hold on though. Is it really such a stretch?

After all, U.S. coal-power generation decreased by about a third in the seven years through 2017, to 12.7 billion British thermal units from 18.5 billion, based on data from energy-market consultancy Genscape Inc. In the European Union, black-coal generation fell by about the same proportion over just four years through 2016, according to Eurostat, to 385,925 gigawatt-hours from 544,279 GWh.

Across Europe and the U.S., the decline in coal output recently has averaged close to 5 percent a year. If the world as a whole can reach 7 percent a year, it would be on track to meet the IPCC’s 2030 target. 

The conventional wisdom is that this isn’t possible, as rising demand from emerging economies, led by China and India, overwhelms the switch from fossil fuels in richer countries. That may underestimate the changing economics of energy generation, though.

The mainstream view is still that we can’t decarbonize our electricity system fast enough to meet the IPCC’s targets. But a decade ago, the current situation of plateauing demand for coal and car fuel and cratering renewables costs looked equally outlandish. Given the way the world’s energy market has changed in recent years, it’s a good idea to never say never.

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Renewables continue to get cheaper.  In many places, the total cost of new renewables is close to or below the operating cost of coal power stations.  So in my view, the switch from coal to wind and solar is likely to continue.   Suppose, however, you wished to accelerate that process?  One obvious way would be to impose a carbon tax.  A $10 per tonne of CO2 emitted would add $10/MWh to the cost of electricity.  The EU's carbon cost is already  €20/tonne of CO2, which is US$23.  To make it fair, all imports from countries which do not have a carbon tax or similar carbon-pricing scheme would also be taxed.  This would prevent countries "outsourcing" their carbon emissions to other countries.   A carbon tax would soon spread worldwide, if that were done.  And CO2 emissions would start to fall fast.