Lazard's Levelized Cost of Energy, 2021

 

A solar farm with battery storage in Gannawarra, Australia (click here for the article).

In my opinion, one of the most useful tools for understanding what it will take to make the necessary transition from carbon-intensive to non-emitting fuels is the annual report of the levelized cost of energy issued by the financial firm Lazard.  I discussed the 2020 version of the report in a previous blog post, and now I’m going to talk about the report that was issued in October 2021.  There weren’t any dramatic changes in cost this past year, which I suppose can be looked at as glass-half-full given all the supply chain issues caused by the pandemic.  New utility scale solar ($28-41/MWh) and wind ($26-50/MWh, with a drop from $83 to $80/MWh for offshore) continue to be very cost competitive compared to new gas ($45-74/MWh) and especially to new coal ($65-152/MWh).

However, the very substantial drop in the cost of wind and solar over the last decade is leveling off (see the figure for “Levelized Cost of Enrgy Comparison — Historical Renewable Energy Declines”). In addition, the caveat of intermittency remains with both solar and wind. That is, they can’t produce a steady stream of energy over all times of the day. So in order to go to a fully renewable energy sector, some amount of storage in the form of batteries will be needed. And the cost of renewables plus battery storage still remains remains fairly high, ranging from $85-158/MWh for a solar farm that can generate 50 MW of power while storing 200 MWh. This is a lot higher than the cost of renewables without storage, but still cheaper in general than new nuclear ($131-204/MWh), the only source of power that is both non-emitting and non-intermittent.  Nuclear can generate energy at a cost of only $29/MWh once the construction of the plant is paid off, though.  This means that it makes good economic and environmental sense to keep the existing plants going if they are operating well and do not require major renovations.  However, the nuclear industry still has to show that new plants can produce clean energy more cheaply than renewables even with storage taken into account if it wishes to remain relevant in the long term.  Right now, the burden of proof is on them.

Some storage is necessary and inevitable, but barring a major breakthrough in battery costs, a modernized grid that readily transports electricity across the country or continent in order to minimize the total amount of needed storage would likely save a lot of money compared to more localized generation and storage.  A system designed to never produce too little energy would sometimes produce more electricity than it can store, however.  This raises the question of what to do with the excess energy.  On a small scale, the island of Orkney to the north of Scotland uses excess renewable energy to electrolyze water into hydrogen, a clean fuel.  That process shows considerable long-term promise, but hydrogen is an alternative fuel with many factors to consider.  It deserves at least one blog post on its own, and hopefully I’ll get to that next.

The Keeling Curve in 2021

In the late 1950s, a scientist named Charles Keeling placed instruments designed to monitor the amount of carbon dioxide in the atmosphere at research sites that were chosen for the relative cleanness of their air.  The first was on the summit of Mauna Loa in Hawaii, and the second was in Antarctica.  As the fifties segued into the sixties, two patterns emerged from the resulting data.  The first is the natural annual cycle.  Carbon dioxide levels in the atmosphere peak every May.  As spring advances in the Northern Hemisphere, the global increase in photosynthesis (due to the fact that the Northern Hemisphere holds most of the world’s land) starts to remove carbon dioxide from the air, and global CO2 levels go down.  But in the Northern Hemisphere autumn, when the leaves fall, decay, and release their stored carbon, the CO2 levels start to go back up.  The second pattern Keeling observed was the steadily increasing trend in CO2 amounts on a year-to-year basis.  Keeling’s data were clear enough by 1965 that the increase in CO2 and its implications for global temperatures were mentioned in a broad report of the effects of air pollution presented to President Lyndon Johnson by his Science Advisory Committee.  Frank Ikard, president of The American Petroleum Institute, would bring the issue to the attention of the Institute’s members in its annual meeting the following month.  “The substance of the report is that there is still time to save the world’s peoples from the catastrophic consequence of pollution,” Ikard said, “but time is running out.  One of the most important predictions of the report is that carbon dioxide is being added to the Earth’s atmosphere by the burning of coal, oil, and natural gas at such a rate that by the year 2000 the heat balance will be so modified as possibly to cause marked changes in climate beyond local or even national efforts.”

Figure 1

Ikard drew that conclusion based on a relatively small amount of data, but as Figure 1 shows, concerns about the trend in atmospheric amounts of carbon dioxide (along with their subsequent effect on climate) proved to be very well-founded.  In 1960, the Mauna Loa device recorded 320 parts per million (ppm) of carbon dioxide in the atmosphere for the first time.  (Basically, if a slice of the atmosphere could be broken into one million equally sized cubes, carbon dioxide would fill up 320 of those cubes.)  In 2013, the site recorded 400 ppm for the first time.  And this May, it recorded 420 ppm for the first time.  

Figure 2

 

So yes, carbon dioxide levels have increased by a lot over sixty years.  But has the rate of increase slowed down, at least?  And has the global drop in emissions that resulted from the pandemic noticeably affected this rate?  To answer this question, we are going to look at the Keeling curve in another way.  Figure 2 shows the change in the measured monthly mean of CO2 measured at Mauna Loa relative to the previous year’s amount for the same month.  The first thing that sticks out is the general increasing trend; this means that the rate of increase has, for the most part, accelerated.  But the curve is not a smooth one, and both natural and artificial events emerge from the data if you know what to look for.  Note the large spikes in 1998 and 2016.  These coincided with major El Niño events, and there is a physical explanation for that correlation.  There was also a prolonged period in the late 1980s and early 1990s where the rate of increase steadily dropped, although it did not disappear.  This coincided with the collapse of the Soviet Union and the Eastern bloc.  As for the past year, the rate of increase is a bit low relative to recent years.  This can be easily explained by the pandemic, but it is worth noting that atmospheric levels of carbon dioxide still increased at a rate that would have been considered high in the decade of the 2000s.  

At this point, you might be wondering why events which produce a noticeable drop in emissions do not decrease the amount of carbon dioxide in the air.  The primary answer is that carbon dioxide, once put in the air, can hang around for a very long time.  To be specific, it has a half-life in the air of about fifty years.  So roughly half of the CO2 emitted in 1971 years ago is still in the air, and half of the emissions caused by the electricity and transportation we use today — unless a cost-effective means of direct removal is developed in the meantime — will still be there in 2071.  This means that it will take a prolonged, substantial reduction in emissions before we can slow down, and ultimately reverse, the increase of CO2 in our atmosphere.  

There is another factor to consider as well.  The permafrost, or tundra, stores carbon dioxide in the ground for very long periods of time.  But when the permafrost starts melting due to rising temperatures, the carbon dioxide gets released back to the air.  This is an example of a positive feedback, where warming creates an effect that leads to more warming.  So the warmer we allow the temperature to reach, the harder it will be for nature to bring carbon dioxide levels back down near pre-Industrial levels should we ever stop emitting CO2.

We are therefore still a long way from getting atmospheric amounts of CO2 under control.  While there is grounds for optimism regarding the cost of transitioning to clean sources of energy, the transition needs to be implemented with much greater urgency.  A major climate conference is happening in Glasgow, Scotland beginning on October 31.  Emissions reductions will be discussed.    Whether the discussion will lead to serious action remains to be seen.

Emission-Free Airplanes: Present and Future

 

Harbour Air's electric airplane (from www.harbourair.com)

Where coverage of reducing the amount of carbon dioxide in our atmosphere is concerned, the big headlines often go to big names backing big solutions. Artificially sucking carbon out of the air, and covering the entire the entire sky in a shroud of sun-reflecting aerosols, have garnered quite a lot of press for technologies that don’t really exist yet.  But plenty of people are looking at practical ways to eliminate emissions from the most challenging sources, instead of accepting that their emissions must continue indefinitely.  The emissions source that poses the biggest challenge is the airplane. The quest to develop emissions-free airplanes doesn’t get a whole lot of attention.  Perhaps people assume that it’s going to be too hard, even though large-scale carbon removal or dust-spreading are not any more technologically feasible right now. (On a more cynical note, artificially removing carbon dioxide or filling the stratosphere with particles allows for the possibility of fossil fuels continuing to burn — while if airplanes don’t need fossil fuels, what does?) However, there are some interesting recent articles on emissions-free airplanes that give a good assessment of what can and can’t be done presently, and what the obstacles for future development are.

One article published by Energy Monitor in May talks about a western Canadian seaplane company called Harbour Air.  They have been making regular test flights of a prototype commercial electric airplane since 2019, and they have recently announced a partnership with a battery supplier.  Their long-term goal is to fully electrify their fleet.  What makes this article particularly interesting is the way Harbour Air CEO Greg MacDougall (who doubles as the test pilot) discusses the logistical hurdles.  These hurdles include mundane things like obtaining certification from the Canadian government, but they also include weight- and space-efficient heat shielding for the batteries (with airplanes, every pound and cubic foot counts a lot), to the advantages of retrofitting old aircraft over building new ones.

In other news, NASA is openly soliciting demonstrations of electric flight.  Cross-country jet flights won’t happen tomorrow — the needed battery power is not only too heavy at present, it would take up the whole plane — but smaller electric aircraft traveling relatively short distances are already viable.  NASA’s objective is to stretch the carrying capacity of these flights from a few people to up to a hundred by the end of the decade.  Green air technology is still very young, and NASA wants to see who has the best ideas.

I also decided to take a look into what people have done with solar-powered flight, and I found a couple of good articles on the subject.  The first was published just this January.  It begins by acknowledging the accomplishments of two Swiss aviators who crossed the globe in a solar powered aircraft.  But from the perspective of commercial flight, there is a major drawback: the plane’s maximum speed was 75 km/hr, or 47 mph — slower than a car at highway speed, and much slower than a jet.  The plane also needed batteries accounting for 25% oof the plane’s weight to keep running at night.  Factor in trying to fly when the sky is not crystal clear, and there are some major hurdles that need to be overcome.  The second article is a response to a question posed to the faculty at the MIT School of Engineering.  There are a couple of engineering issues if you wish to maximize the energy that solar panels generate.  The first of these is that the angle that the sunlight makes with the panels is a lot more variable than it would be for a stationary object.  The second is that the energy need to maintain cruising speed varies with the cube of the speed (i.e., if you double the speed it will take eight times as much energy to maintain it).  Third, and perhaps most obviously, is that flights powered entirely by solar energy would be limited by the weather.  So while solar planes can be and are used for applications like data collection that can be done at low speeds and high altitudes, commercial flights relying solely on the Sun for power are not likely.  But solar power can still conceivably be used in tandem with other energy sources.

For some small-scale applications, like island-hopping along the Pacific Coast in Canada, emissions-free airplanes are already viable enough to start carrying passengers.  But commercial jet travel without emissions remains a daunting obstacle.  My guess is that short-range flights for business trips will eventually be phased out in favor of high-speed rail; the technology exists, and the trains are as clean as the energy that powers them.  Mid-range flights, on the order of 500 to 1000 miles, will require a significant improvement in the energy density of the batteries.  People are working on that, and NASA’s interest speaks for itself, but the technology does not exist now.  As for longer flights, solar might have a supportive role to play.  The planes would have to get to a high altitude, much like what has been proposed for a new generation of supersonic jets.  Going above the ozone layer would not only reduce the air drag that a plane would need to overcome in order to maintain speed, but it would also give solar panels access to the UV radiation that gets absorbed in the ozone layer.  That could reduce the burden on the batteries significantly, but as I said before, the energy density of the batteries will still need to increase substantially for this to become feasible.  (And, obviously, such flights couldn’t happen at night).

One thing that people need to keep in mind with airplanes, though, is that they account for only 2% of total global emissions of carbon dioxide.  If we seriously act to make electricity generation emissions-free over the next 15 years and electrify our other sources of transportation as well, we will have nearly solved the climate crisis.  And hopefully, by the end of that time, low- or no-emissions flights will be much closer to becoming a reality.

Big Ideas in a Small World

 The French TGV is an all-electric high-speed rail (photo from http://e-sushi.fr/tag/tgv-sncf).  Will we see something similar in this country?  And will it even come to Long Island?

Last month, Long Island’s newspaper Newsday published an article about a proposed $105 billion project to bring high-speed rail to Long Island.  The rail would connect New York City to Boston by first traveling across Long Island and then crossing back to the mainland via a tunnel underneath the Long Island Sound. Zipping along for large stretches at speeds up to 200 mph, a train leaving Penn Station would arrive in Boston in one hour and 40 minutes.  The planners of this project are hoping that the proposed American Jobs Plan initiated by President Joe Biden will make the necessary funding available for the ambitious endeavor. There are definitely some pros and cons to consider given the size of the project, but it has support from politicians like Hartford mayor Luke Bronin, US Representative Tom Suozzi from Nassau County, and Suffolk County Executive Steve Bellone (all Democrats). I am going to look at it here from the perspective of sustainability and addressing the climate crisis, and make three general points that come in to play in this proposal.  Based on these three points, I am going to conclude that this is not the best use of our resources as a whole, but that parts of it are worth looking into.  

1.  High-speed rail is a very good thing, when the train travels from city center to city center.  The obvious reason for this is that high-speed rail would obviate the need for short-distance commercial airplane flights. Air travel contributes 2% to the total carbon dioxide emissions, and it's going to be the most challenging aspect of our transportation system to eliminate emissions from.  A significant percentage of the fuel consumed in a given flight comes during takeoff and landing, and the shorter the distance of the flight, the higher that percentage becomes.  But if you can get from New York City to Boston in under two hours via train, without having to go through all the additional security measures and baggage checks and boarding processes that you need to do in airports, then flights from New York to Boston (or a number of other cities on the eastern seaboard) will not be necessary. Most train routes are completely electrified as it is, and if the electricity fueling high-speed rail comes from entirely green sources, then you can get from New York to Boston quickly without any carbon emissions.

2.  Anything that expands the suburbs will do more environmental harm than good — including, if implemented improperly, high-speed trains.  This is a point that needs to be made loudly, because the passage of even a watered down version of the American Jobs Plan will result in a lot of money getting thrown around for development and infrastructure. It’s important that this money gets spent the right way. Before I talk about this particular example, I need to point out for the sake of disclosure that I live in Ronkonkoma, about fifty miles east of Manhattan on Long Island. Ronkonkoma is the terminal station of one of the lines of the Long Island Railroad, and in this proposal it is slated to be the hub connecting Manhattan to New England via the high-speed rail. If the high-speed rail can connect New York City to Boston in under two hours, then it would connect New York City to Ronkonkoma in less than half an hour. Now you may think that a half-hour train ride from where I am to New York City would be a good thing, but here’s why it isn’t.  The part of Suffolk County that stretches out to the east from where I am is full of farmland and woods, and the amount of nature out here may surprise people living in the City or the more fully suburban Nassau County. But if people could commute from the more remote regions of Suffolk to New York City in less than an hour, developers will swallow up the Island’s remaining agricultural and open spaces very quickly. Land is a precious commodity.  Housing and businesses, the agriculture necessary to feed people, the generation of energy (renewable energy especially), and nature all need their space. Of these, the addition of housing and businesses doesn’t need to spread horizontally.  That is why the most sustainable way to develop is upward, not outward. But the demand to develop outward from New York City, including further and further eastward across Long Island, has remained steady and strong since the end of the Second World War.  And the pressure to keep spreading out has just been magnified enormously by the pandemic. Wise leaders will look for ways to resist that pressure.  Also keep in mind that forestland remains our best means of removing carbon dioxide from the air, so a truly effective plan to combat global warming will keep trees where they are.  In other words, we need to start making the most of the space we have already put into use.

3.  We should always look at multiple ways to achieve the desired outcomes, and compare them in terms of costs and less-desired outcomes.  The primary desired outcome is high-speed land transit from New York to Boston, but rapid trips from Eastern Long Island to New York City and to New England are also desired.  The benefits of the first outcome are obvious, but they can be accomplished on the existing Amtrak line without magnifying the cost significantly by digging a tunnel under the Long Island Sound.  The second outcome risks the undesired eventuality of the complete suburbanization of Long Island; justifying such a massive expense should require an air-tight plan to prevent that suburbanization from happening, and the burden of proof is on the planners.  You can (and should) certainly improve the performance of the Long Island Railroad, but the suggested proposal goes past the point where the combined financial and environmental costs outweigh the benefits.  As far as cutting travel time to New England is concerned, one possibility that seems to be getting overlooked is to improve the transportation of people and cars across the Long Island Sound by boat.  Electric ferries already do exist, as do high-speed ferries.  That means that it wouldn’t require any future innovation to ferry people and their cars across the Sound in substantially less time than it takes now (and than it takes to go from eastern Long Island to New England by car), and to do it cleanly.  A fleet of green high-speed ferries might not come cheap, but you’re comparing it to the cost of a high-speed rail tunnel under the Long Island Sound.  It also wouldn’t require major disruption within the town of Port Jefferson, the site of one of the ferries between Long Island and Connecticut, whose long-term resistance to big infrastructure projects is mentioned in the Newsday article.

With some sort of large infrastructure package likely to get through Congress and reach President Biden’s desk, now is as good time as any to speculate and think big.  I like the ambition of the high-speed rail proposal.  But while I believe we can afford massive infrastructure investments, we can’t afford to have them come with significant negative consequences.  So we need to be careful and creative.  I think we can come up with some big ideas and big improvements, and make them happen in ways that will satisfy most people while helping us make our mark on the planet smaller instead of bigger.

(For updates on new posts, please click the "Follow" button.)

The Cost of Energy Transition, Part 3: In with the New

 The Alta Wind Energy Center in California, currently the country's largest wind farm.  (Photo from Wikipedia)

In a previous post, I talked about how transitioning to clean power generation over the next decade and a half will pose challenges that are more political than logistical.  I focused on the closing of existing plants in that post, but now I would like to delve into the cost of building clean energy, and how this cost compares to the cost of the existing fossil fuel infrastructure.  One company that compares relative costs is the financial advisement firm Lazard. Lazard issues a report on the levelized cost of energy every November.  The November 2020 publication includes updates on the price of coal, gas, solar, wind, and nuclear, and also has a section on the cost of battery storage.

Let's begin by looking at the very first graph, which lists the price of different forms of energy generation in units of dollars per megawatt-hour (MWh).  The price of rooftop residential solar ranges from $150-$227/MWh, while the price of rooftop commercial and industrial solar ranges from $74-$179/MWh.  These costs are actually pretty high, but the cost of utility scale solar range is only from $31-$42 per megawatt hour. The big difference comes simply from the economy of scale; the larger the assemblage of panels, the cheaper the cost per unit energy.  Wind power ranges from $26-$54/MWh. The orange diamond that says $86/MWh corresponds to offshore wind.  So wind is cheaper than solar in some places but more expensive in others. Offshore wind is noticeably more expensive than land-based wind, but it came down by $3 MWh relative to 2019 and could still be a very important contributor to the energy sector in coming years if the price continues to drop, or if the available land for generating energy is insufficient.  

How do these costs compare with more conventional forms of energy? Coal ranges from $65-$159/MWh.  This is generally more expensive than utility-scale solar or wind. But this is the cost of constructing new coal plants, compared to the cost of constructing new solar farms or new windmills.  Notice, however, the orange diamond that says $41/MWh. That's the cost of generating energy from a coal plant once the cost of the plant’s construction has been accounted for.  So on one hand, you do still need to consider the cost of stranding an operational coal plant. But I discussed this in the previous post post, and the cost is actually fairly manageable.  On the other hand, there are plenty of places where it would save money – right now – to replace the existing coal plant with a solar or wind farm.  That is an important factor to keep in consideration when deciding which coal plants to retire first, and how quickly.  Natural gas, looking specifically at the combined cycle, ranges from $44-$73/MWh. This is cheaper than coal, in continuation of a trend that's been going on for a decade.  New gas plants are mostly more expensive than new solar and wind farms.  But again, a rapid transition to clean energy will require replacing existing operational plants.

That brings us to nuclear power.  The cost of new nuclear power ranges from $129-$198/MWh.  If you scroll down four graphs to the unsubsidized levelized cost of storage, you'll see that wholesale photovoltaics plus storage costs $81-$140/MWh.  In other words, building a solar farm with battery storage today will generally cost quite a bit less per energy generated than building a new nuclear plant will. This does not bode well for nuclear power as a means of providing clean energy in the future.  But if you go back to the first graph and look at the diamond next to nuclear power, you'll see that nuclear power costs $29/MWh when you subtract the cost to build the plant. So nuclear plants are the most expensive power plants to build, but they’re actually cheap to maintain.  This suggests that existing nuclear power plants have a role to play in providing clean energy today.  Many of these plants are struggling, however, because it is very difficult for them to provide energy at a competitive price right now while the cost of construction is still being paid off. And a small number of plants, most notably Indian Point in upstate New York, have reached a point where it would take a major, costly structural overhaul to keep them running. But for the time being at least, existing nuclear plants are the cheapest source of zero-emission, non-intermittent energy.  The current administration has expressed a willingness to support taxpayer subsidies for existing nuclear plants to keep them from closing.  I think this is sensible, even if the burden of proof is now squarely on the nuclear industry where future energy generation is concerned.

To be fair, it’s important to acknowledge that intermittency (the inability of solar and wind farms to generate power at a constant rate) will require the introduction of a significant amount of battery storage as renewables gain a greater share of power generation.  The timing of this matters, as the cost of battery storage remains high but is heading downward.  Lazard estimated the cost of wholesale photovoltaics plus storage to be $102-$139/MWh in 2019 and $108-$140/MWh in 2018.  So the trend is in the right direction, but work needs to be done and time is short.  It’s important to get a real sense of how much battery storage will be needed and when as the energy market transitions.  A little bit of smart planning could make a huge difference in the overall cost of the clean energy transition.

So, from the perspective of somebody who believes that the climate crisis necessitates cleaning up all our energy use as quickly as possible, what should we do with this information?  I think the first step should be to declare a moratorium on the construction of any new power plants that emit any carbon dioxide.  This may sound controversial, but it's easily defensible given current energy economics.  Second, I think you can tip the markets in favor of cleaner energy by removing the subsidies on fossil fuels and replacing them with a carbon tax.  To avoid some serious economic and political risks, the tax would have to be balanced by a dividend so that it is revenue neutral.  That means, however, that the revenue necessary to clean up power generation would have to come from other sources.  I’ve already said in a few places that the Biden Administration will need to walk a tightrope to make this happen the right way.  But they can do this if they are smart.

(For updates on new posts, please click the "Follow" button.)

The Cost of Clean Energy, Part 2: Closing Yallourn

 

In my last post I wrote about the cost of a just transition, noting some of the logistical difficulties that may arise as fossil fuel plants are closed and replaced with cleaner sources of energy. I mentioned an article from 2017 about Australian coal plants closing on short notice (for economic reasons, not environmental ones) and leaving their employees with no time to adjust. This is obviously an example of what to avoid, but it appears that Australia is starting to learn from its mistakes. Last week, EnergyAustralia announced that it would shut down its Yallourn W coal plant in 2028, four years earlier than expected. It will be replaced with renewable sources of power, coupled with a large grid-scale battery to be completed in 2026.

The Yallourn site has a long history of generating power from coal, going back exactly one century. In 1921, a temporary power plant was built on the grounds. A permanent one replaced it in 1924, and a major station called Yallourn A was built on the grounds in 1928. Stations B, C, D, and E followed over the next few decades. Eventually the stations reached the end of their utility. Stations A and B were demolished starting in 1968, and Yallourn W was built during the 1970s. The remaining stations other than Yallourn W were demolished in the 1990s, but Yallourn W remains in use for now.

According to an article in The Guardian, the approximately 500 employees at the coal plant were notified of the advanced date of the impending closure at the beginning of March. They have seven years to prepare, and EnergyAustralia has promised a workforce support package worth ten million Australian dollars (about eight million American dollars). This is what happens when closures are planned out. There is no reason why every single one of those employees cannot land on their feet when the time comes. But that is much, much harder to do when employees are reassured that they have nothing to worry about until the plant closes on short notice. There is a right way and a wrong way to go about closing carbon-emitting power plants, and I think that we can agree that the needs of the affected workers need to be carefully considered and addressed.

But that brings us to the question of whether keeping an old coal plant open for another seven years is good enough. The Guardian article reports that “Climate campaigners said the closure was inevitable, but not soon enough given the scientific evidence about what was needed.” I’d have liked to have seen a specific quote from a specific person or organization, but I do think it’s fair to acknowledge that keeping the global temperature increase under 1.5ºC requires closing fossil fuel plants (coal plants especially) with a sense of urgency. And it can’t just be one aging plant that closes, either. But the comment does underscore the need to strike a balance between doing right by affected workers and doing right by a rapidly destabilizing climate that has the potential to affect a great many more people.

The plant closure also provides an interesting example of how different media outlets can spin the same story in two very different ways, despite presenting the same set of facts to the readers. The Guardian has a reputation for being left-leaning, for example. Reuters, by contrast is more centrist. Both news outlets mention in their articles on the closure that Australia’s energy and emissions reduction minister, Angus Taylor, is worried that “reliability and affordability concerns” will ensue. His concerns stem at least partially from price spikes that happened in the aftermath of sudden plant closures in 2016 and 2017. But Reuters made that a part of the headline for their article, and The Guardian didn’t. And yet, the articles themselves are not dramatically different in tone or content from each other; more than anything, it’s the headline. I think an important conclusion to draw from this, regardless of your taste in reading material, is to go beyond the headlines – which say a lot less than people give them credit for, regardless of what they think about media bias and who is or isn’t engaging in it – and look at the details. As far as the details go, I think projecting the fallout from a closure planned seven years in advance based on what happened with abrupt closures that weren’t entirely expected is unreasonable and unfair.

So there are a number of conclusions to draw from the announced closure of the Yallourn plant. First, a good plan will leave ample time for affected employees and their communities to adapt. Second, the urgency to close coal plants is real. It will take good, smart leadership to face that urgency without adversely affecting workers, and the balance will be delicate, but it can be done. Finally, I think we all need to agree to go beyond the headlines and the “clickbait” and understand the details. This applies to issues well beyond energy and climate, but looking at news in a shallow way or simply absorbing somebody’s spin isn’t helping the public discourse any.

The Cost of Energy Transition, Part 1: Out with the Old

 

An aerial view (from Apple Maps) of a solar farm in Wading River, NY.

When I started The Measure four years ago, I described it as a blog about energy and global warming. You can’t talk about climate change and global warming without also discussing energy and how to generate it more cleanly. A big part of the resistance to taking action against global warming comes from discomfort with changing how we’ve turned on the lights and transported ourselves for many decades. Usually, the discomfort is directed in particular at the cost involved in switching to greener energy. Will we pay dearly to change all of our energy over to clean sources, to the point that the cost of dealing with the warming will seem trivial in comparison? Given the inevitable flooding, the increases in frequency and intensity of major weather-related events, and above all the subsequent human displacement and the political consequences, I personally think it’s more than clear enough that the cost of accepting climate change is unacceptably high. And the cost will just keep rising the longer we continue to do basically nothing to rein global warming in. Plenty of reasonable people are not convinced, however, so it’s still important to consider the costs of a massive transition of our energy production.

One part of this cost comes from the closing of coal- and gas-fired power plants before the end of their operational lifetime. Power companies invest in new construction at a considerable expense, under the assumption that the cost will pay for itself over the long term. And these companies have continued to invest in fossil fuel infrastructure, despite being fully aware of the consequences. Entirely moving away from electricity generation from fossil fuels by 2035, as President Biden has set as a goal, will require some early closures and the stranding of some assets. The good news is that the closures would affect a minority of the existing power infrastructure. Based on an article written for Science in December by Dr. Emily Grubert of the School of Civil and Environmental Engineering at Georgia Tech, “a 2035 deadline for completely retiring fossil-based electricity generators would strand only about 15% (1700 GW-years) of fossil fuel–fired capacity life, alongside about 20% (380,000 job-years) of direct power plant and fuel extraction jobs remaining as of 2018.” The main reason for that is that 73% of existing fossil fuel generators will reach the end of their expected lifetime before 2035. In terms of dollars, Grubert (through personal communication) suggested a very rough estimate of between $200 billion and $400 billion in terms of stranded assets. That’s not a small hit, but it is smaller than the cost of the COVID-19 relief packages. Plus, the cost would be spread out over more than a decade. I have heard arguments against the federal government bailing out utilities for stranded assets, most notably in Leah Cardamore Stokes’ excellent book Short Circuiting Policy, which chronicles the efforts of utilities and special interest groups to thwart policy changes designed to promote clean energy. But I also think that Stokes’ analysis makes it clear that power providers need to be on board with a clean energy transition for it to have any chance of happening. So unless you can replace the existing power providers, you need to find a way to work with them.

Implementing major changes in our energy infrastructure will also cause short-term hardship for a lot of people, and that makes it a very tough sell. Dr. Grubert’s article talks about a just transition, where the needs of people whose lives will be disrupted are met. (The term “just transition” was first popularized by the labor movement over twenty years ago, and is part of the various manifestations of the Green New Deal.) Mitigating the disruption will first require establishing a detailed timeline, so that affected people and communities will know when the change is coming. Having time to respond will make it easier for communities to make not only their needs known, but get those needs met. This is something that has not been done with past closures of plants, especially when the reasons for closing the plant have been economic rather than environmental. For example, a 2017 article in The Guardian about the closing of a coal plant in Australia talks about how workers and communities have had an average of four months to prepare for the loss of their jobs when Australian plants closed. This amount of time is unacceptably short, but a properly considered phaseout would not impose such abrupt transitions on people. Biden’s predecessor in the White House made a habit of telling coal miners what they wanted to hear. That got him significant votes in battleground states, and those votes mattered in 2016. But hopefully people whose jobs and towns have depended to this point the fossil fuel industry will appreciate that honesty will benefit them a lot more in the long run than empty promises.

One thing the current administration could do to assist affected communities and workers would be to ensure that they reap benefits from the clean energy transition. These benefits could include preferential treatment of affected communities in the location of new clean-energy plants, and of affected workers in the availability of and training for new jobs in clean energy. The 2020 U.S. Energy and Employment Report, put together by The National Association of State Energy Officials (NASEO) and the Energy Futures Initiative (EFI), states that solar employed 248,000 Americans last year and wind employed 114,800. By contrast, the coal industry employs 185,689 Americans, which is already less than solar and down 5.9% from 2019. Natural gas employs 636,042 total, less than twice the amount of labor employed by solar and wind while accounting for roughly four times the present power production. In other words, solar and wind are more labor intensive than gas for the amount of energy produced. So there’s plenty of reason to think that an increase in solar and wind generation at the expense of coal and gas will result in a net increase in available jobs, not a decrease.

Transitioning to clean power generation over the next decade and a half will be difficult, but the difficulties are ultimately a function of politics much more than they are a function of logistics. As I’ve already said in a previous post, a large amount of salesmanship will be required to make it happen. I can only hope the Biden Administration is up to it. The alternative is a choice in 2024 between ineffectual lip service on one hand, or a return to a boldly blind embrace of the harmful status quo on the other.