What will climate policy mean for coal?

Mar 31, 2014

Limiting climate change to 2 degrees C means shutting down coal power plants - an unpopular proposition for coal power companies. But a new study shows that delaying climate policies could prove even worse for power plant owners.

Coal power plants are a major source of , and new plants are planned around the world, particularly in India and China. These new power plants are built to run for 30-50 years, paying off only after years of operation. But stringent climate policies could make the cost of emission so high that coal power generation is no longer competitive, leaving new power plants sitting idle and their owners and investors with huge losses—a problem known as stranded capacity.

"If we are serious about meeting climate targets, then the reality is that eventually we will have to start shutting down coal-fired power plants. But the longer we delay climate action, the more stranded capacity we'll have," says IIASA researcher Nils Johnson, who led the new study, published today in the journal Technological Forecasting and Social Change. "Delaying action encourages utilities to build more coal-fired power plants in the near-term. Then, when policies are finally introduced, we have to phase out coal even more quickly and more investments go to waste," he says.

The new study finds that as much as 37% of global investment in coal power plants over the next 40 years could be stranded if action is delayed, with China and India bearing most of these costs. The study explored strategies to reduce stranded capacity in coal power plants, while limiting future to the internationally agreed 2°C target.

It shows that one key is to avoid new coal power plant construction. Potential options include shifting to other kinds of power plants, keeping old coal plants running, and improving energy efficiency. By reducing the amount of energy used, efficiency improvements also reduce the amount of energy that must be generated and, therefore, the need for new power plants.

"The best strategy would be to stop building new coal power plants starting today," says Johnson. However, the researchers also explored what would happen in a perhaps more realistic case, if governments are not yet willing to limit new plant construction. Johnson and colleagues in IIASA's Energy Program also examined two additional strategies with this limitation: grandfathering existing plants so that they are exempt from future climate policies, or retrofitting plants with Carbon Capture and Storage (CCS), a yet unproven technology that would capture greenhouse gas emissions and store them underground.

However, both of these strategies create a major risk that average temperatures will rise above the 2°C goal—a target set by international agreement in order to avoid the most dire consequences of climate change. While the grandfathering strategy would allow power plant operators to keep the old ones running, it would lead to greater emissions and reduced chances of limiting climate change to the 2°C target.

And while CCS could theoretically be used to retrofit plants, the study shows that hundreds of would need retrofitting in a short period of time—a lot of pressure on a technology that as yet remains both technically and politically uncertain. "CCS could buy us time, but what if it doesn't work? It's a risky strategy," says Volker Krey, a co-author on the paper.

Explore further: A glance at coal and its role in climate change

More information: Johnson N, Krey V, McCollum DL, Rao S, Riahi K, Rogelj J. 2014. Stranded on a low-carbon planet: Implications of climate policy for the phase-out of coal-based power plants. Technological Forecasting and Social Change. www.sciencedirect.com/science/… ii/S0040162514000924

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ScooterG
1.8 / 5 (10) Mar 31, 2014
*What will climate policy mean for coal?*

As a followup, maybe the author could tell us how much money climate policy will cost the average consumer?
rockwolf1000
4 / 5 (8) Mar 31, 2014
These days, anyone who invests money in coal fired power generation;

A) Deserves to lose every penny of their investment.

B) Should be held accountable, both financially and criminally for the damage they are causing to the environment and people's health.

C) Have no morals and thus deserve no compensation, consideration or empathy.
Eikka
3.5 / 5 (4) Mar 31, 2014
These days, anyone who invests money in coal fired power generation;

A) Deserves to lose every penny of their investment.


The irony is that without any other practical means to buffer the output of renewable energy to smooth the variations, governments around the world are facing the prospect of subsidizing coal and other fossil fuel power to keep an adequate power buffer in the grid.

Reason being that when you give the renewable energy the right of way on the grid and subsidize it to make it economically feasible, you cut the market price of energy and lower the utilization factor of every other means of production which consequently become more expensive to produce due to higher capital costs per unit energy.

So the question is really, what exactly do you propose to replace coal with? Shale gas?
thermodynamics
4.2 / 5 (5) Mar 31, 2014
The question was asked: "So the question is really, what exactly do you propose to replace coal with? Shale gas?"

At the same time the concept of CCS (carbon capture and sequestration) remains unproven and untested because none of the coal producers (except in Germany) are willing to invest R&D dollars in testing it). So, it remains an open question (not proven or disproven). If CCS works it could be a way to continue to use coal and other fossil fuels. If it does not work it can be taken off the table. Either way it should be tested.
rockwolf1000
5 / 5 (5) Mar 31, 2014

So the question is really, what exactly do you propose to replace coal with? Shale gas?


I acknowledge the problem. Coal is easy and available. Nuclear seems to be a bad option until newer reactors are proven and the issue with waste is resolved. Nat gas is a possibility in certain areas. IMO the bigger question is how to control population growth especially in areas that lack the required natural resources. I don't have all the answers but I know that rushing in to build coal fired generation as a default is the wrong move given all the deleterious side effects. CCS is not proven and a failure could be catastrophic.
colingd10
5 / 5 (6) Mar 31, 2014
Technologies to convert coal to synthetic natural gas or hydrogen and capture CO2 already exist and are in use. The coal industry dislikes these innovations because less coal is needed for energy generation and power station owners can substitute whatever fuel is cheapest from time to time.
Building a new coal power station is a bad investment decision. The technology is obsolete.
Caliban
4.8 / 5 (4) Mar 31, 2014


Reason being that when you give the renewable energy the right of way on the grid and subsidize it to make it economically feasible, you cut the market price of energy and lower the utilization factor of every other means of production which consequently become more expensive to produce due to higher capital costs per unit energy.

So the question is really, what exactly do you propose to replace coal with? Shale gas?


That obvious conclusion is that fossil has to go.

The supply is finite, and the cost to produce energy by means of burning fossil fuels will NEVER decrease from this point forward --in fact it will continue to be a more and more costly means of power production, and this without considering any of those famous "external" costs of fossil energy production.

Given our current technology, massive investment in renewables with continual refinement, upgrade, and R&D is the only workable solution.

Sitting back and collecting Carbon$$$ isn't going to cut the ice.

Caliban
5 / 5 (5) Mar 31, 2014
*What will climate policy mean for coal?*

As a followup, maybe the author could tell us how much money climate policy will cost the average consumer?


Wrong question. Let me re-word it for you so that it actually addresses reality:

"...As a followup, maybe the author could tell us how much money failure to deal with antropogenic carbon emissions will cost the average consumer?..."

Answer: All the money in the world, and more besides.
Eikka
2.8 / 5 (6) Apr 01, 2014
That obvious conclusion is that fossil has to go.


Yes, but HOW?

Asserting the same does not solve the problem.

Given our current technology, massive investment in renewables with continual refinement, upgrade, and R&D is the only workable solution.


Any plausible roadmap there?

Massive investment in renewables just makes the problem worse. Massive investment in R&D would solve it, but because of the massive subsidies and lobbies for renewable power producers we are spending most of the money on making the problem worse and the least of money to solve it.

You have to learn to walk before you can run, and we haven't yet even learned to crawl.
ScooterG
1 / 5 (7) Apr 01, 2014


Wrong question. Let me re-word it for you so that it actually addresses reality:

"...As a followup, maybe the author could tell us how much money failure to deal with antropogenic carbon emissions will cost the average consumer?..."

Answer: All the money in the world, and more besides.


Right...and the "reality" you speak of is based on computer models designed and interpreted by entrepreneurs who profit handsomely from the (AGW) scam.

Look around...smell the rat.
Maggnus
5 / 5 (6) Apr 01, 2014
Right...and the "reality" you speak of is based on computer models designed and interpreted by entrepreneurs who profit handsomely from the (AGW) scam.

Look around...smell the rat.
Don't you mean owl? Isn't it the spotted owl what you cry about all the time? How are rats connected to the spotted owl?
Caliban
5 / 5 (4) Apr 01, 2014


Any plausible roadmap there?

Massive investment in renewables just makes the problem worse. Massive investment in R&D would solve it, but because of the massive subsidies and lobbies for renewable power producers we are spending most of the money on making the problem worse and the least of money to solve it.

You have to learn to walk before you can run, and we haven't yet even learned to crawl.


Eikka,

Would you rather pay for the even more massive and ever increasing cost of continued fossil fuel use?

Let me repeat: the simple costs of carbon fuels as finite supplies dwindle will increase asymptotically --and this without even considering costs to the environment and human Society.

A huge portion of that cost will be siphoned off as profit for BigCarbon without improving the outlook.

The costs to develop, deploy, and implement alternatives --all of which are producing continual, improved results-- will ultimately be less than continuing along the Carbon Road.



namarrgon
5 / 5 (5) Apr 01, 2014
That obvious conclusion is that fossil has to go.


Yes, but HOW?


You want a roadmap? How about this recent study from Stanford:

http://news.stanf...009.html

100% renewable energy by 2050, for *less* cost than business-as-usual.