U.S. Energy Secretary Stephen Chu is all about saving the coal industry. In the latest issue of Science, which includes a feature series on carbon capture and sequestration, he writes optimistically about the challenges and opportunities such technologies pose and why it could save us all from catastrophic climate change.
At least, that’s what I take away from his short essay. I don’t doubt Chu’s sincerity, or his ability to synthesize data. He is, after all, a holder of Nobel Prize for physics. But I’m afraid he hasn’t got a good grip on the economics of the matter.
In his essay, Chu writes about the reality that we won’t be slapping a moratorium on new coal-fired power plants any time soon, let alone start shutting down the existing ones, contrary advice from some of the country’s leading climatologists notwithstanding.
We should pursue a range of options for new coal-fired power plants (such as coal gasification, burning coal in an oxygen atmosphere, or postcombustion capture) to determine the most cost-effective approach to burn fuel and reduce the total amount of CO2 emitted. No matter which technology ultimately proves best for new plants, we will still need to retrofit existing plants and new plants that will be built before CCS is routinely deployed. Each new 1-gigawatt coal plant is a billion-dollar investment and, once built, will be used for decades.
Actually, coal plants cost a lot more than a dollar-a-watt. An hour’s drive east of me one of the few new coal-fired plants to buck a national trend against them is rising courtesy of Duke Energy. Cliffside 6 will cost, according to Duke itself, $2.4 billion and produce 800 MW of electricity when completed. That’s $3 for every watt, not counting the coast of the coal. Chu is off by a factor of three.
But there are even more interesting numbers associated with what’s happening at Cliffside. As Duke CEO Jim Rogers put in a letter to shareholders recently:
As part of that plan, we will retire the plant’s four older coal units by 2012 and shut down 800 megawatts of other older coal units by 2018.
Those four older units currently generate 400 MW. So a decade from now, after all the changes planned have been implemented, Duke will be generating 400 MW less than it is now after spending at least $2.4 billion, and including cost of decommissioning, probably closer to $3 billion. That’s a big investment for a net loss of generating capacity. This from a utility that, at the moment, charges some of the lowest electricity rates in the nation. Of course, if Duke gets its way, we’re going to see our rates jump significantly in order to pay for the new Cliffside plan, but that’s beside the point.
Or is it? Given that CCS is widely expected to decrease the efficiency of a typical coal-fired plant by some 30% and increase the cost by an unknown amount, it’s beginning to look like coal could quickly become the most expensive ways to generate electricity. Do we really want to head down this road?
Chu accepts that it won’t be cheap, but again puts an optimistic spin on the situation:
Estimates of CCS costs vary considerably, but experience with other pollution control technologies such as the scrubbing of SO2 and NOx show that costs can be considerably lower than initial estimates.
Like anyone else who cares about climate change and the future of their electricity bill, I hope Chu is right. I just don’t share his optimism about industry’s ability to solve the problem without some serious changes in fundamental economics. A report on Duke Energy’s plans from Duke University economist John Blackburn found that focusing on saving the coal industry is among the least efficient and most expensive ways to tackle the problem.
This report shows that, based on the utilities’ numbers and the modest changes noted above [modest increases in energy efficiency, cogeneration and renewable power sources, and if necessary, by using a large oversupply of electricity in the Southeast], electricity demand can be reduced by up to 3,700 Megawatts (MW) within 15 years, avoiding the need for any new plants and allowing retirement of 7 to 9 existing coal-fired units.
In other words, existing products and changes to the way electricity is sold and distributed among the utilities would make more economic sense and reduce emissions.
I’d like to see Science and Stephen Chu devote their respective resourcesto the opportunities offered by off-the-shelf technologies to reduce energy demand rather ways to save what is fundamentally one of the dirtiest, and rapidly becoming the most expensive, ways to power society.
And I got all the way to the end of the post before bringing up mountaintop removal.