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.