UK Newspaper Updates Major Issues for Fossil Fuels

by S. Tom Bond on May 31, 2015

IEA Future Coal Scenarios

“Fossil industry faces a perfect political and technological storm”

Reported by S. Tom Bond, Resident Farmer, Lewis County, WV

This is the title of an article in The Telegraph, the greatly esteemed United Kingdom newspaper. The first four paragraphs follow:

“The political noose is tightening on the global fossil fuel industry. It is a fair bet that world leaders will agree this year to impose a draconian “tax” on carbon emissions that entirely changes the financial calculus for coal, oil, and gas, and may ultimately devalue much of their asset base to zero.

“The International Monetary Fund has let off the first thunder-clap. An astonishing report – blandly titled “How Large Are Global Energy Subsidies” – alleges that the fossil nexus enjoys hidden support worth 6.5% of world GDP.

“This will amount to $5.7 trillion in 2015, mostly due to environmental costs and damage to health, and mostly stemming from coal. The World Health Organisation – also on cue – has sharply revised up its estimates of early deaths from fine particulates and sulphur dioxide from coal plants.

“The killer point is that this architecture of subsidy is a “drag on economic growth” as well as being a transfer from poor to rich. It pushes up tax rates and crowds out more productive investment. The world would be richer – and more dynamic – if the burning of fossils was priced properly.”

The annual subsidy for renewables, which the fossil fuel industry likes to cry about, is only $77 billion – so fossil fuels get 66 times as much. Coal is by far the most subsidized, then oil, and natural gas is least. Coal plants are closing all over the world, even China. The IMF follows the analysis of Arthur Pigou, who advocated taxes to stop investors from keeping all the profits while dumping costs on the rest of society.

The climate deal between the U. S. and China marks a turning point, the beginning of the end for fossil fuel dominance. The chief U. S. climate negotiator, Todd Stern, claims that States representing 60% of the carbon dioxide are already on board for a deal which will limit the carbon dioxide in the atmosphere to 450 parts per million.

In China, the Communist Party expects protests if it does not slow the increasing smog, so the hope is that the maximum fossil fuel use will be next year, followed by decline.

The International Energy Agency says that two-thirds of all fossil fuel reserves booked by global companies can never be burned if the world reaches a 2 degree Centigrade (3.6 degrees F) accord in Paris. Two thirds of the assets of fossil fuel companies must be left in the ground and will be worthless. Deep sea drilling projects would be particularly hard hit. The Arctic cannot be developed. And, 95% of the coal reserves of the U. S. and Russia must stay in the ground without carbon capture and storage, which are technologies that are still very far way from being economically feasible.

“The Bank of England has launched an enquiry to determine how much of the $5.5 trillion invested in fossil fuel exploration and development over the last six years is really viable, and whether it could become the new ‘subprime’ for the global financial system. This probe has now spread to the whole G20.

“Carbon Tracker estimates that $1.1 trillion of investment has gone on ventures that will require oil prices above $95 a barrel over the next decade to break even.” Big producers are in a state of denial, of course.

“The advances in the cost and efficiency solar power are by now well-known. The US Solar Energy Industries Association (SEIA) says the average prices of photovoltaic modules dropped from $8 a watt in 2007 to $2.70 last year. The new generation of cells cost around $0.80 a watt. First Solar is already producing modules for $0.40. Its commercial technology can capture 21.5% of the sun’s energy.

“In China, Wuxi Suntech Power claims the ‘levelized’ cost of electricity from solar modules will match the country’s coal-powered stations as soon as next year.”

Utility-scale solar is being built all over the world. Companies in the United Arab Emirates have contracts to deliver solar power for as little as $59 per megawatt hour, as cheap as hydroelectricity. Battery storage cost is falling fast. The IEA estimates that the cost of a lithium-ion battery for grid-scale storage has fallen by more than three-quarters since 2008. The batteries last over three times as long. Research continues. At Harvard a project promised to cut costs two-thirds in three years and avoid use of rare earth minerals, a huge operational improvement.

To read the whole article go here, an article by Ambrose Evans-Pritchard of May 27, 2015.

>>>>>>>>>>>>>

From Climate Wire, May 22, 2015 — Meet the man who has ignited a ‘carbon war’ in corporate board rooms, namely Jeremy Leggett of the Carbon Tracker Initiative.

Leave a Comment

Previous post:

Next post: