Donald Trump's Paris climate pull-out puts him on a collision course with market forces (?)
At last! Something more than abuse from the Left about Trump's Paris pullout. Given his assumptions, the author below is in fact being reasonable in what he predicts. His assumptions are however very questionable.
He assumes that CO2 reduction will remain a worldwide goal and that a CO2 price will therefore be inevitable. He is an Australian writer so that is particularly blind on his part. A Leftist Australian Federal government did enact such a price a few years ago but the next government -- a conservative government -- campaigned on a policy of abolishing the tax and promptly did so when elected. Where is the inevitability there? Given the extensive similarities between Australia and the USA, I think we have in the Australian case a pretty good guide to the likelihood of a carbon tax in the USA.
What I think is inevitable is that Mr Trump's move will make others downgrade their concerns about CO2. He has made a carbon tax less likely worldwide. Inevitable it is not. The fanatical Greenies of Germany may wear a carbon tax but they are also busily building new power plants burning brown coal, the most polluting fuel of all. Germany is best seen as an example of insanity only. Adolf has modern-day descendants.
The author below is right in saying that coal mining is most unlikely to return to its halcyon days but his talk about natural gas overlooks the fact that gas installation has taken off not only because of cost but also because of the touted benefits of gas in putting out less CO2. Now that Mr Trump has dismissed such concerns, it remains to be seen whether gas can compete on price alone. I expect that power plants located near coalfields -- which most of them are -- could still be competitive on costs. Work to convert or replace them is costly and may simply not be worth the capital expenditure. As it is, coal orders in the USA have shown a recent upturn. Some miners are working again, partly in response to orders from China. And how about this little recent snippet?
Coal consumption in the U.S. is expected to continue growing going into the summer, the government's Energy Information Administration said Tuesday in its latest monthly short-term outlook.
"U.S. coal production is expected to rise this year due in part to expected higher coal-fired electricity generation," said acting EIA Administrator Howard Gruenspecht. At the same time, "the amount of electricity generated from natural gas this summer is forecast to be lower than last summer, reflecting higher natural gas prices," he said. The summer is also expected to be cooler than last summer, the EIA said.
Natural gas has displaced coal as the top fuel for power generation in much of the U.S., but in recent weeks coal is beating out gas in some regions such as the East Coast.
Pesky! And another:
The key is the price of U.S. natural gas. Last April front-month futures were below $2.00 a million British thermal units and Friday morning they fetched $3.33 a million British thermal units.
Arch Coal reckons that at prices above $3.00, coal from the Powder River Basin in Montana and Wyoming, where they and Peabody have enormous reserves, is competitive with natural gas almost anywhere in the contiguous 48 states. The EIA predicts output in the region will rise by nearly 9% next year.
The universal prophecy was that Trump's reforms would not revive the coal industry but some revival is in fact now evident. Another failure of Greenie prophecy.
Our author's final point that solar power is cheap is also too sanguine. The example of heavy reliance on renewable power in South Australia showed how disastrous that can be. It even killed unborn babies and inflicted huge costs on industry. The South Australian government is as a result now building a big new fossil-fuel power plant to make up for the unreliable output of "renewables". You can use renewables some of the time but you have to have conventional backup for when the winds don't blow and the sun doesn't shine. And, given that, there's not much point in renewables at all. They just double your capital costs of power provision.
And the talk about health costs of coal depends on figures which have subsequently been debunked. The whole article is "Good try but no cigar"
He may be the leader of the free world, but Donald Trump is about to learn the hard way that he cannot control the free market.
The US President's declaration that America would withdraw from the Paris Accord on climate change largely was met with derision by big business, even fossil fuel giants Exxon Mobil and Conoco Phillips.
The reason? The business world has moved on. The argument about climate change has passed and most now accept the inevitability of a carbon price.
Regardless of who sits in the White House, America has always been in the business of creating opportunities through innovation and by reinventing itself. It didn't become the world's economic powerhouse by looking backwards.
This is the nation that for generations has led the world on automation and information technology, spawned the likes of Silicon Valley and delivered the personal computer and the internet.
Unlike Australia, it has never relied solely on selling minerals and energy to the rest of the world.
And therein lies Donald Trump's dilemma.
American business has been at the forefront of renewable energy development. According to the US Department of Energy, renewable energy generation employs around 880,000 Americans while a further 2.2 million are employed in its design, installation and manufacture.
Trump's real choice: Coal or gas?
Despite the presidential posturing, this is not simply a battle between renewable energy and the old guard, Republicans and Democrats or America and the rest of the world.
The President's push to rejuvenate America's flagging coal industry is likely to set him on a collision course with the rising star of the US fossil fuel sector, liquefied natural gas.
Since taking office, the President has cosied up to both sides, pledging his allegiance. Unfortunately, gas competes with coal and is a major cause for the woes that have afflicted the US coal industry. At some stage, he's going to have to choose.
New extraction technologies such as fracking have transformed global energy dynamics. Where the United States once was a hostage to the OPEC cartel and the oil-producing countries of the Middle East, it now has become not just energy self-sufficient, but in a position to be a major energy exporter.
Natural gas is a cheaper and cleaner alternative for Americans and no amount of posturing on the global stage will alter that. Coal is in decline because the economics have moved against it.
Before the Obama administration, coal-fired plants provided a little over half of America's electricity plants. That's now fallen to around 30 per cent following the closure of around 400 coal-fired generators, replaced by cheaper gas-fired plants.
Carbon price? When, not if
It's not just the immediate cost advantages of gas. Business leaders globally long ago abandoned the debate as to whether carbon emissions should be penalised, by way of a price.
That's now a given. The only question is when. That's the reason no bank is willing to finance the construction of new coal-fired generators in Australia and why the owners of our ageing coal-fired generators are shutting them down rather than spending extra money updating them.
Power stations are long-term investments. No-one is willing to risk billions of dollars on a 50-year plan to build a facility that could become a white elephant once a carbon price is introduced.
Coal jobs lost forever
Then there is coal mining itself. Pulling out of the Paris Accord won't boost coal prices or employ more American miners.
Even Robert Murray, noted climate science critic and the founder and boss of America's largest privately owned coal miner, has cast doubt on Mr Trump's ability to boost coal industry employment.
"I suggested that he temper his expectations," he told The Guardian. "Those are my exact words. He can't bring them back."
In the 1970s, coal mining employed a quarter of a million Americans. By 2015, fewer than 100,000 people were employed in US mines.
Political opportunists have whipped up outrage among the army of unemployed, citing the Obama administration's clean energy policies and climate agreements such as the Paris Accord.
In fact, most of the lost jobs were a result of improved coal mining technology. The decline has been hastened in recent years by the rising competitiveness of gas and renewable energy which has seen a collapse in coal prices that sent many miners to the wall.
The renewable energy revolution
The great attraction of renewable energy, apart from the zero emissions, is that the feedstock, the main input, is free. Sunshine comes without cost. So too does wind. It was the capital cost of harnessing that energy that previously was prohibitive.
That's why governments devoted subsidies and grants to kick-start the industry in the same way they once built coal-fired electricity generators.
In recent years, as economies of scale have gained momentum, the cost of solar voltaic panels has plummeted, which has increased the competitiveness of renewables.
Mass production, particularly in China, has seen the average cost of solar cells decline from $US76.67 per watt in 1977 to just 74c in 2013.
Those cost declines have since accelerated with installed prices — the cost of everything including panels, electronics, hardware and the installation itself — falling to $US2 per watt for large scale solar farms.
According to Scientific American, much of the price declines since 2012 have been in ancillary electronics such as inverters, which convert DC power to AC, and in lower installation costs as panel prices have stabilised.
The hidden costs of coal
But there are other costs that the President has ignored with his decision to withdraw from the Paris Accord. Most of those relate to the health of Americans.
According to the US Environmental Protection Authority — which has been neutered under the Trump administration — the Clean Power Plan would prevent around 3,600 premature deaths, 1,700 heart attacks, 90,000 asthma attacks among children and 300,000 missed work and school days each year.
Trump's economic own goal
The health benefits of cleaner energy have not been lost on China. In Beijing, Shanghai and a swathe of cities through the Pearl River delta, the air is so thick with smog and pollutants, visibility is reduced to just a few metres.
As the world's second most powerful economy, the Middle Kingdom is facing pressure from its citizens not just for a more affluent lifestyle but for a healthier environment; calls the leadership has recognised it would ignore at its peril.
Over the weekend, Beijing reiterated its commitment to the Paris agreement and the European Union pledged to side-step the White House and deal directly with American business leaders.
After last week alienating European leaders on defence issues, Donald Trump may just have unwittingly ceded global economic leadership to China, and placed himself, not only on the wrong side of history, but in the unrelenting and unyielding path of American capitalism.