Dangerous Prophecies

 I fully admit to being an energy wonk and this week I have been engaged in an intensely wonkish activity, reading government energy reports from the Energy Information Administration, which is about as wonky a bureaucracy as you could ever hope to find.  The EIA is the division of the federal Department of Energy that is responsible for tracking, reporting and forecasting energy use within the U.S.  I have been perusing the latest EIA forecasts for energy through the year 2040, in other words a 27 year forecast.  The experience has actually gotten me a bit riled up, which is probably surpising, given how truly dull the data is.

What's bothering me is that the EIA forecasts appear so completely out of touch with what is going on in the energy world today, especially renewable energy.  The EIA Annual Energy Outlook for 2013 forecasts a world in which they basic energy mix of the United States remains relatively unchanged for nearly 30 years, a rather depressing future that only oil companies could love!

 

For example, according to the EIA forecast by the year 2040 the United States will be using less coal to generate electricity than it does today(42%) which is a good thing.  However, it projects that way out in 2040 we will still be getting 35% of  our electricity from burning coal.  My initial reaction to this was, "What, you think we are all suicidal?"  I mean think about it, 27 more years of spewing coal into the atmosphere! 27 more years of poisoning the land with strip mining and coal ash.  By that point global warming would be so bad we could go sunbathing in the arctic!  Seriously, how could the EIA presume that in 27 years, with renewables getting cheaper every year, that we would continue to use coal to generate the bulk of our electricity? I wonder what the EPA thinks of this type of forecast!  The EPA has recently cracked down on the types of emissions new coal plants can produce and appears ready to put out equally strict emissions standards for existing coal plants.  Wouldn't it be far more logical to presume that these EPA regulations will significantly reduce the use of coal for generating electricity?

The problem with this recent IEA forecast is not only that it flies in the face of environmental reality, it flies in the face of economic reality.  The cost of using coal to generate electricity is already more than using either natural gas or renewable energy, even more so if you count the cost of the damage that coal does to our environment and health.  Moreover, all the data suggests that coal reserves are progressively getting more expensive to mine, not less. The EPA emissions regulations will probably also drive up costs for those plants that might try to reduce their emissions, rather than shutting down.  Given these increased costs why would we presume that the U.S. will continue to use a more expensive energy source for the next 27!

A Poor Track Record

The EIA doesn't have a particularly good track record when it comes to forecasting.  It completely missed the change in oil demand brought on by the growth of countries like India and China.  It also missed just how expensive oil would become given increasing global demand.  So in that sense I shouldn't be surprised that they seem to be missing the forecasts once again.  What bothers me the most about these reports is the ways in which they seem to dismiss renewable energy without any real justification.

For example, the report uses as a premise that federal tax credits for renewables will expire in 2016 and will never be renewed.  Huh?  On what basis does the EIA make this assumption?  Support for energy tax credits has been growing and attempts to kill them, such as when some members of Congress recently tried to make Wind tax credits part of the sequester, got completely rejected because the Republican congressmen from the plains states know just how fantastic renewables have been for their economy.  Why therefore should we presume that tax credits will expire and never be seen for the next 25 years?

Similarly, the report seems to totally discount the effect that state level Renewable Portfolio Standards (RPS) could have on renewable energy expansion.  The report says "...they have been relatively quiet in terms of state program expansions."  Again, I gotta say "Huh?"   State level RPS programs have been going gangbusters for the last decade and several states such as California and Colorado have even increased their renewable energy targets given how successful they have proven to be so far. And people are starting to notice that the states with RPS programs are having the greatest overall economic success.  Therefore why would we make energy forecasts assuming that all of the states will suddenly abandon their RPS programs?

Self Fulfilling Prophecies

OK, I realize many of you are probably thinking, so what if EIA got the forecasts wrong.  Prognosticators always get things wrong.  True!  However, it is also true that forecasts and predictions can quickly become self-fulfilling prophecies.  That is true not only in the negative sense but in the positive sense as well.  Predict good things will happen and more often than not they do.  Heck, this is part of the reason why Renewable Portfolio Standards work so well.  We presume a specific target for reducing our fossil fuel dependence, and sure enough the regulations and other efforts needed to make it happen, do happen. 

This is why we need to keep on the EIA about getting these forecasts right.  If they are going to project a dim, never ending fossil-fuel future they should be pushed to justify it, less we all become caught up in a future that we don't want to live in!



 

. 

Throwing Good Money After Bad

The above expression has always struck me as a bit esoteric.  Its an expression I have seen and heard a lot and yet the meaning of it never quite seems to fit the words themselves. The best definition I have seen of this expression is as follows:  "To spend more and more money on something that will never be successful."  The best example I have seen lately of this expression comes, not surprisingly, from our friends in the coal industry. 

It seems that Kentucky Power Company, a privately held power company serving the eastern counties of Kentucky has proposed spending $980 million of the public's dollars in order to update its 800 MW Big Sandy Power Plant near Louis, Kentucky in order to meet the recent regulations on air pollution which are finally being enforced by the Environmental Protection Agency (EPA). 

We have to admit that this is a good news/bad news type of story. The fact that coal-based utility companies are finally being held accountable for the tons of pollutants they have been putting into the atmosphere is a very good thing.  We are thrilled that the EPA is, at last, being allowed to do their job by the Obama administration given that they were completely hog tied during the administration of George W. Bush, the oilman. Still, nearly a billion dollars spent on a single power plant that will only be marginally less polluting after this is all done?  Isn't this a perfect example of throwing good money after bad, and in this case, a whole lot of good money?

I realize that a billion bucks probably is not what it used to be, but that's one thousand million dollars and that's still a pretty good chunk of change. Why isn't Kentucky spending that money on a renewable energy plant, either wind power or solar power, instead of trying to retrofit an old coal plant that has already seen too much use.  Kentucky has plenty of sun and given the incredible price drop in the cost of solar panels in the last couple of years Kentucky Power could build one heck of good solar power plant or wind farm for what its planning to spend to put lipstick on one very ugly pig! 

Solar has gone through an unprecedented decline in costs in recent years and solar plants are going up all over our country.  One big solar project currently under construction is the Topaz solar project in San Luis Obispo County, California.  This plant will be a 550 megawatt plant and will cost $1.2 billion to construct, only a little less than what Kentucky is proposing to spend just to clean up an already well aged coal plant.  The solar PV plant will put out no pollution, zero, have no significant environmental impact, will not contribute to global warming and will last at least 50 years.  When you look at all energy costs (see Dr. Paul Epstein's recent Harvard study on coal costs) the energy from a solar or wind plant will cost less than the energy from the coal plant. Moreover, solar photovoltaic plants are incredibly straightforward in design and require very few people to maintain them.  The maintenance costs alone would be a fraction of what they would be for a coal plant.   Wouldn't that be a better deal for the people of Kentucky!

The numbers are about the same if Kentucky were to look at building a modern Wind Farm instead of fixing an old coal plant.  Eastern Kentucky has plenty of wind resource.  A large wind farm could easily provide the same amount of electricity at less cost than coal. Costs for modern wind turbines have also gone under significant decline and the current cost of a megawatt of wind energy appears to be just a little over $1 million per megawatt.  That means that for a couple of hundred million less than they are now planning to spend to clean up the old coal plant Kentucky could have a totally non-polluting wind farm that would last much longer than a coal plant and produce the same amount of energy.  Once again, it would put out zero pollution, no contribution to global warming and could move Kentucky into the modern energy era. Once again, a better deal for the people of Kentucky!

There is a saying that there is nothing so powerful as an idea who's time has come.  I would like to believe that is true since renewable energy is definitely an idea who's time has come.  However, it may be the case that it has run up against an even more powerful force, the power of human inertia, the tendency of senseless humans to keep on doing what they have always done even when it no longer makes any sense.  The plans of Kentucky Power strike me as a perfect example of inertia.  They are going forward with spending massive amounts of public money on coal, even when coal no longer makes any sense, either for the people of Kentucky or the people on our planet. 

The time has come to realize that if we are really going to stop global warming we are going to have to do something about coal.  Coal is without a doubt the single biggest contributor to global warming.  It is not enough to build new solar farms and wind farms. If we are going to escape the ravages of a too warm planet, we must eliminate coal from our energy vocabulary.  To do that we have to stop throwing good money after bad and start replacing, not repairing, the thousands of coal-fired energy plants that are killing us and our planet.