Eddie O’Connor on Decarbonisation and the failure of economics and economists.
In this blog post, Eddie discusses how the SuperGrid discussed in previous blogs will require changes in economics to operate.
Indirect Costs (somebody count the carbon!)
Despite the excellence of Martin Wolff’s article in the FT this week, and the facts about the cost of renewable energy it contains, there is an ocean of thinking still to be done on how to decarbonise.
Every economist that has published anything about electricity in the past 10 years insists on comparing apples with oranges. Why are wind and solar methods of electricity generation compared to gas and coal fired generation. Generation from gas and coal pollute the environment, whereas wind and solar don’t.
From the economic point of view, this would not matter if gas and coal fired generation didn’t cost money. In a report published this week by Greenpeace the costs of pollution for each state are estimated. Their total comes to $2.9 trillion per year.
To this non-economist there is real sense here. Someone is paying for the 4.5 million lives lost due to working in mines and due to the dirt pouring out from coal fired smokestacks. When a forested area one quarter bigger than the island of Ireland is burned in Australia, along with 25 thousand homes, someone is paying in the here and now for this.
Similarly, in California.
When Chennai (population 8 million) in India runs out of water due to the comparative failure of the monsoon, someone is paying. We are all paying for more expensive insurance. When 10.7 million people are displaced and lose their livelihoods due to Lake Chad reducing by 90% in size they and surrounding countries pay. When the denizens of southern Florida are having to move to a new house because of rising sea waters they are having to pay.
There was a net 36.8 billion tonnes of CO2 released last year (2019).
If in any year the cost is $2.9 trillion and the quantity is 0.0367 trillion tonnes, then each tonne released costs someone somewhere $79.
The point of this reasoning is that gas and coal fired generation have indirect costs associated with them.
Sunk Costs (the industry of vested interests)
The CIA figured that the all-in cost of coal fired generation over the coming 30 years is $9.2 cents per unit. This figure contains none of the pollution costs. If pollution costs were to be included the cost of a coal fired unit would be 8.17 cents more. So, the total real cost to global society is $17.37 cents
This is the figure that economists and politicians ought to be using when comparing with the cost of wind and solar generation.
Gas fired generation is being touted by the oil and gas companies as the fossil answer to dirty coal fired generation. They completely mislead when this is suggested. One tonne of coal when burned releases 2.8 tonnes of CO2. When one tonne of gas is burned it releases 2.75 tonnes of CO2. Of course, it can be argued that natural gas can be burned more efficiently than coal in combined cycle gas turbines. But there are 2 things that mitigate against using this more efficient figure
First: a sizeable proportion of the world’s gas fleet is open cycle, so it has a similar efficiency to coal.
Second: new research published this week shows how the mining of natural gas releases huge quantities of methane, which is either 20 or 80 times worse than CO2 as a greenhouse gas depending on the time scale used for comparison purposes.
Tweedledum and Tweedle-dee, coal and gas: both fossil fuels, both creating an unliveable environment for our grandchildren.
Greta is right, God bless her.
Opportunity Costs (what else to wind and solar have to prove?)
So, wind costs, all in, between $0.03 and $0.08, and solar about the same, or a little less, depending on the wind speed and the intensity of sunlight. No pollution, no heat,
Martin Wolff is also right when he points out how we have enough natural energy in wind and sun to supply any power needs into the future. We don’t need carbon capture and storage in freshly emptied oil and gas deposits. We need to leave it in the ground, not the clouds.
We don’t need the thorium reactor nor cold fusion. We don’t even need nuclear fusion, except where it accelerates the transition from carbon generation to renewables.
We particularly don’t need to start making plans to leave this planet because we are running out of energy. We need that land, labour, capital and enterprise for the renewable transition.
What we need is a completely renewable electric economy, and for this we need the SuperGrid.