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Bloomberg: Coal Is Dead In The Ground While Renewables Will Rise. But That Could Change

Bloomberg New Energy Finance is now out with its yearly outlook — one that puts green energy in the driver seat and coal deep in the ground. But cutting edge technologies could easily alter those predictions.

The research firm is forecasting that coal use, globally, will fall from 38% today to 11% by 2050. Meanwhile, wind and solar electricity will make up 50% of the world’s energy mix — a function of the falling price of the underlying technologies as well as $548 billion being invested in storage capacity by 2050. On top of that, the report says that CO2 emissions will fall by 38% during that time.

“Coal emerges as the biggest loser in the long run,” said Elena Giannakopoulou, head of energy economics at Bloomberg New Energy Finance, in a news release. “The future electricity system will reorganize around cheap renewables — (and) coal gets squeezed out.”

 

 

The study goes on to say that natural gas will get used mostly to firm up intermittent wind and solar energies. As a result, natural gas’ share of the global electricity supply falls from 21% today to 15% by 2050.

Does this mean that coal or natural gas interests should rally political support to stop the trend or invest in new technologies that could improve their efficiencies and hence their emissions profiles?

Coal-fired power plants contribute a third of all man-made CO2 emissions in the United States. Natural gas produces about half the emissions as coal does. If the coal could be gasified and the CO2 separated — typically with flue gas scrubbers — then both fuels would have brighter futures. Luckily, for them, there’s hope:

Net Power is burning natural gas in oxygen to create pure CO2 — much of which is captured, heated and used to create electricity. The remaining CO2 is captured and either sequestered underground or used to enhance oil recovery. It says that it can produce power at $0.06 per kilowatt-hour — on par with today’s combined-cycle natural gas plants. 

A view of the cooling towers of the Drax coal-fired power station near Selby, northern England on September 25, 2015. Energy company Drax has abandoned a 1 billion GBP installation of carbon capture technology to cut emissions, citing the UK government's reduction of subsidies for renewable energy. AFP PHOTO / OLI SCARFF (Photo credit should read OLI SCARFF,OLI SCARFF/AFP/Getty Images)

Imperfect Solutions

While imperfect solutions, coal will still be used and the United States is well positioned to capture the possibilities. And if there is a market for advanced coal production, Southern Company wants eventually to sell its coal gasification technologies, which it says will become as clean as a combined cycle natural gas plant. The utility says that it would license the tools to capture and bury carbon, or use them to enhance oil recovery.

Already, both China and India are investing in advanced coal technologies that are more efficient -- and by extension, cleaner -- than the older pulverized coal plants that are prevalent there.

For its part, China has the world’s richest shale gas reserves. It just doesn’t have the wherewithal to get the stuff out of the ground. So, it must import it in the form of liquefied natural gas, or LNG. China, in fact, is expected to become the leading importer of LNG, consuming about 40% of it, says the International Energy Agency in Paris. And the U.S. Commerce Department agreed with China to let it contract for U.S.-supplied LNG; U.S.-based Chenier Energy Inc. is setting up an office there.

To meet that demand, the U.S. Department of Energy notes that five liquefaction facilities are under construction here: Cove Point, Cameron, Elba Island, Freeport, and Corpus Christi, all of which will come online in the next three years and increase total U.S. liquefaction capacity from 1.4 billion cubic feet per day now to 9.5 billion cubic feet by the end of 2019.

“We will end up being able to export all those items,” says Tim Profeta, director of the Nicholas Institute for Environmental Policy Solutions at Duke University, in an earlier interview. “This is not an either/or choice in terms of the private market, which will ship goods and services to where they get the best price.”

Market Powers

It is about reducing pollution levels and advancing technology. But both political and economic obstacles remain — issues that could cloud Bloomberg’s rosy forecast for wind and solar. There’s now the lack of infrastructure needed to eventually carry those electrons: The Wind Energy Foundation says as much as 51,000 megawatts of renewable energy could fail to reach market if the transmission network is not eventually expanded.

And there’s also the  the just-enacted tariffs on solar panels coming from China. The 30% tariff on all solar panel imports will unquestionably hit the $29 billion industry.

The good news is that 48% of the Fortune 500 and 63% of the Fortune 100 have promised to cut their greenhouse gases, increase their use of renewable energy or improve their energy efficiencies, according to David Gardiner and Associates. In all, corporations have contracted to buy 7,000 megawatts of renewable energy over four years — a number that is expected to grow to 60,000 megawatts by 2025, says the Edison Foundation Institute for Electric Innovation.

That is the type of market power that can force political change, helping to remove tariffs and to build new wires. 

While the movement started with Silicon Valley’s tech giants like Amazon and Apple, it has now gained a lot of traction among major retailers like CostCo., Wal-Mart and Target as well as older industrials like General Motors and General Mills. One reason is because wind costs have fallen by 67% since 2009 while utility-scale solar has dropped by 86% since that time, according to the financial advisor Lazard.

Wind and solar were once consider nascent technologies that could never make a difference in electricity markets. If Bloomberg’s forecast is accurate, however, they will eventually reign supreme. But if coal and natural gas want to compete, they too must continually look to improve their processes. And if history is any judge, the free market will prompt them to do so. 

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