To have any chance of preventing dangerous climate change, the world needs to reduce greenhouse gas emissions to net zero or even negative by mid-century. Many experts suggest this means we need to completely phase out fossil fuels and replace them with renewable energy sources such as solar and wind. But according to Anthony James, lecturer with the National Centre for Sustainability, Swinburne University of Technology in Australia, new modelling shows that things are not that simple: complementary approaches, including greatly reducing energy demand, will be needed.
Several studies have concluded that 100% renewable energy supply systems are technically and economically feasible. This informs the widespread view that fossil fuels can be more or less “swapped out” for renewables, without significant economic consequences.
We are strongly sympathetic to the need for a rapid global shift away from fossil fuels. But new modelling conducted independently and made publicly available by my colleague at the Understandascope, Josh Floyd, suggests that such a transition may face significant challenges.
Analyses of how to get to 100% renewable energy typically look at how future energy sources can supply enough energy to meet a given future demand.
This is what’s known as an “energy balance”. The high-quality work of Mark Diesendorf and his colleagues on the transition of Australia’s electricity supply to 100% renewables typifies such modelling.
But this approach doesn’t tell us what will happen to overall energy supply during the transition.
A rapid, large-scale energy transition creates extra demands for energy services. This demand will compete with other economic activity
This new modelling suggests a significant decline in availability of overall energy services during the transition phase. This reflects the increased energy demand associated with the transition task itself.
Such an energy “trough” would significantly impact the economy during the transition. This has flow-on consequences for how to maintain the massive renewables roll-out.
What are net energy services?
To investigate what might happen to energy availability during transition, the model looks at “net energy services” at a global scale.
Net energy services are the total work and heat that energy sources – for instance solar photovoltaic (PV) systems or petroleum – make available to end users, minus the energy services required to provide that supply.
Petroleum requires energy services to find, produce, transport and refine it. Solar PV systems require energy services for mining raw materials, manufacturing, installation, replacement and so on. The net services are what remains available for all other purposes, such as heating buildings and moving goods and people.
A rapid, large-scale energy transition creates extra demands for energy services. This demand will compete with other economic activity.
The speed of transition matters
To start with, the model assumes that fossil fuels are phased out over about 50 years. Biomass, hydro and nuclear contributions are assumed roughly to double.
The model then attempts to maintain the net energy services to the global economy at the maximum level before the fossil fuel phase-out. To do this it uses electricity from onshore wind turbines and large-scale solar PV plants, buffered with lithium ion batteries.
The findings show that the faster the transition rate, the greater the energy services required by the transition task, and the lower the services available for other uses
If less energy services are available, then energy transition will come at the expense of other economic activity. That may impact the collective will to continue
This is because of the time lag between energy investments and returns. It is exacerbated for sources where up-front energy investment is a relatively high proportion of the total life cycle, particularly so for solar PV.
A 50-year fossil-fuel phase-out represents a relatively modest transition rate. Even so, in the model’s baseline scenario, net energy services decline during that transition period by more than 15% before recovering.
And that recovery is not certain. The model doesn’t consider how this decline in energy services might affect the transition effort. If less energy services are available, then energy transition will come at the expense of other economic activity. That may impact the collective will to continue.
The cost of transition
In the model’s baseline scenario – phasing out fossil fuels over 50 years – wind and solar plants need to be installed at eight to ten times current rates by 2035.
Financially, this corresponds with capital investment in wind and solar PV plants plus batteries of around US$3 trillion per year (in 2015 dollars) and average lifetime capital cost in the order of US$5 trillion to US$6 trillion per year.
For comparison, in 2014 the International Energy Agency forecast global investment for all energy supply in 2035 at US$2 trillion per year.
This implies that total expenditure on energy supply will increase its share of world spending, reducing scope for other expenditure. Compounding the decline in energy services during transition, this has potential to apply contractionary pressure to the global economy. This has implications in turn for financing and maintaining the political will for the renewables rollout.
What if it were possible to roll out renewables even faster? This could reduce the depth and duration of the decline, but not eliminate it. Again, due to the time lags involved, accelerating deployment in the short term takes energy services away, rather than adding them.
What does this mean?
Of course, this is “just” modelling. But good models can tell us a lot about the real world. If this modelling is right, and energy services fall and costs rise, we’ll have to complement building cleaner energy supply with other approaches.
The other key aspect of transition that we have control over is how much energy we expect to use. Usually discussions of transition focus on maintaining energy supply sufficient for a growing economy much like we see today – just with “clean” energy. But this is changing.
This is about more than efficiency. It is about a shift in our collective priorities and how we define progress, wellbeing and quality of living
Growing numbers of analysts, business leaders and other prominent figures are calling for broader cultural change, as it becomes clearer that technological change alone is not enough to avoid climate catastrophe and myriad other consequences of energy-intensive consumer societies.
This is about more than efficiency. It is about a shift in our collective priorities and how we define progress, wellbeing and quality of living. Reducing energy demand within these redefined aspirations will markedly improve our prospects for successful transition.
This article was co-authored by Josh Floyd, advisor on energy, systems and societal futures at independent research and education organisation the Understandascope, and founding partner of the Centre for Australian Foresight. It was first published on The Conversation and is republished here with permission.
Schalk Cloete says
Good to finally see some work on this very important topic. Many analysts and academics do steady state analyses with optimistic assumptions and arrive at (dangerously) rosy conclusions. However, I would generalize the conclusions of this article, not only to the general global clean energy transition, but to developing world economic growth as well.
Energy sources with high up-front and low running costs (solar/wind/nuclear) are not good for rapid industrialization simply because the large up-front investment is only paid back gradually over many years. Fossil fuels, on the other hand, only require a moderate up-front investment, after which instant payback is achieved which can immediately be reinvested to drive further exponential growth.
The critical point missed by many developed world analysts (who seem to take our industrialized civilization created decades of fossil-fuelled exponential growth totally for granted) can be summarized in three parts: 1) Rapid/instant energy payback (only available from fossil fuels) is required for industrialization, 2) The majority of the world must still be industrialized, 3) Rapid industrialization is by far the best method for poor nations to mitigate the coming effects of climate change (and limit population growth).
This understanding of the 21st century sustainability crisis leads to a very different type of thinking from the conventional “if we just invest enough in solar/wind/nuclear all will be well”. Solar/wind/nuclear are perfect for when the world eventually approaches a steady state economy, but the fact is that the vast majority of the world still needs to be built. And, unless a true technological miracle appears, it is not going to get built without fossil fuels.
You are incorrect in assuming that wind and solar requires higher up front cost than for instance coal power so your whole argumentation falls apart.
Solar especially and to a degree wind also enjoys the big advantage that you can get it fast, which means it is far better suited for fast industrialization.
The fast energy pay back you also claim unique for fossil plants is also absolutely wrong. If you start with the investment decision then long before you have completed a coal power plant a wind turbine will be spinning and is also done with producing far more energy than is used for producing and erecting the wind turbine. The return on investment is also much faster with solar and wind.
Your last conclusion that fossils are needed is based upon your former declared miscomprehension’s and therefore even further from the real world.
The true technological miracle you talk about is actually in existence.
Schalk Cloete says
The most recent IEA electricity generating cost report (http://www.oecd-ilibrary.org/energy/projected-costs-of-generating-electricity_20798393) gives the following overnight capital costs for large scale coal, wind and solar in China (a good example of a rapidly industrializing nation): $813/kW (coal), $1300/kW (wind) and $937/kW (solar). Given the ~3x capacity factor advantage of coal over wind and ~5x over solar, coal plants are about 5x cheaper to build than wind or solar. These numbers are quite accurate and in reasonable agreement with other sources I reviewed earlier: coal (http://www.theenergycollective.com/schalk-cloete/365721/seeking-consensus-internalized-costs-coal), wind (http://www.theenergycollective.com/schalk-cloete/2145701/seeking-consensus-internalized-costs-onshore-wind) and solar (http://www.theenergycollective.com/schalk-cloete/2148511/seeking-consensus-internalized-costs-utility-scale-solar).
In addition, coal has two very important advantages for rapid industrialization: 1) coal power is dispatchable and 2) coal has many industrial uses as heat source and reactant. As long as solar/wind penetrations are small, option 2 is the most important. For example, almost half of Chinese coal consumption is for uses other than power. The most important use is the manufacturing of steel and cement, the materials required to literally build a nation.
The result is obvious: coal can be scaled an order of magnitude faster than anything else. For example, take a look at the last graph in this article: http://www.theenergycollective.com/schalk-cloete/448701/can-nuclear-make-substantial-near-term-contribution. It shows how China scaled coal one order of magnitude faster than it is currently scaling nuclear (which again scales faster than wind).
My estimation is therefore that the “technological miracle” is still about one order of magnitude away. Further technological improvements in wind/solar will be cancelled out by intermittency reducing their value as penetration increases. See this article for example: http://www.theenergycollective.com/schalk-cloete/333521/optimal-share-intermittent-renewables.
Bas Gresnigt says
“China … scaling nuclear (which again scales faster than wind). ”
Wind was nowhere compared to nuclear in China ~5years ago. Last years electricity production of wind surpassed that of nuclear greatly.
So it seems to me that opposite is true.
Considering the expanding Chinese solar targets and reducing nuclear targets, solar may also surpass nuclear at around 2020 in China (my estimation)!
The estimations of a 20yrs life span for wind and 50yrs for nuclear suggest that the post in your link is biased…
“Further … improvements in wind/solar will be cancelled out by intermittency reducing their value as penetration increases.”
This doesn’t fit with a.o. the Agora integration study(advised by Lionel Hirth!), illustrated in this Webinar. They conclude that the total integration costs of a wind+solar share of 50% are between zero and <3cnt/KWh compared to classic power plants.
Your statement also doesn't fit with the study of the French governmental institute ADEME, which concludes that 80% renewable is the cheapest situation in 2050.
Schalk Cloete says
The wind vs nuclear issue was discussed extensively below the linked post. Please refer to those discussions. Anyway, the point remains that China could scale coal more than ten times faster back when its economy was less than half its current size than it can scale any alternative technology now.
The Agora study was interesting, but the total calculated integration costs are 5-13 €/MWh plus -6-13 €/MWh of utilization costs. The lower range utilization costs assume high CO2 prices and low gas prices (European shale gas revolution). In the case of very high CO2 prices, nuclear becomes more attractive as illustrated in my review article of Lion Hirth’s work.
In addition, a critical assumption in these calculations is that the transition occurs gradually so that the thermal power fleet has time to adapt. If everyone decarbonizes as slowly as Germany and climate scientists are even close to correct, we are in deep trouble.
The report also shows how curtailment becomes a significant problem at 50% penetration and rapidly increases thereafter. This illustrates the important wind/solar problem that deep decarbonization becomes very difficult.
The French study calculates optimal costs of €113/MWh. If developing nations have to pay this amount while industrializing, progress will be very slow leading to major socio-economic problems. In addition, this is exactly the kind of steady state study that is being put under question here.
Diarmuid Foley says
Hi Schalk ,
Excellent analysis , are you on LinkedIn or Twitter ?
Bas Gresnigt says
“If everyone decarbonizes as slowly as Germany … we are in deep trouble.”
Yes. Despite the doubling of the Energiewende speed in the past 5years (renewable; from 17% towards 33% of consumption).
Yes. Almost all countries (incl. we in NL) do far less than Germany. I don’t know a major country which goes faster?
(Scotland, Denmark are not major)
“… curtailment becomes a significant problem at 50% penetration …”
It’s one of the reasons for the fast P2G developments. They can then convert the cheap superfluous electricity into cheap gas & car fuel.
Jeffrey Michel says
“If everyone decarbonizes as slowly as Germany and climate scientists are even close to correct, we are in deep trouble.(…) This illustrates the important wind/solar problem that deep decarbonization becomes very difficult.”
In my CCS article for Energy Post in 2013 (https://energypost.eu/ccs-a-pipedream-of-policymakers/), I quoted calculations showing that the two degree warming budget could already be exhausted by 2030. In consequence, no one would subsequently be allowed to emit any greenhouse gases whatsoever. The World Energy Council and most countries nonetheless persist in referring to 2050 as the cutoff year, implying that one more generation of fossil fuel power plants might still be reconciled with ongoing climate policy. A reassessment of coal’s benefits has been the inevitable result. Poland now plans to open a new lignite mine in 2030 that will be in operation for half a century, while other countries harbor similar intentions.
Decarbonization treatments often group all forms of renewable energies indiscriminately together. However, the CO2 emitted by burning biomass, biogas, and biofuels requires decades to be re-assimilated fully by vegetation, so that it contributes to global warming in the interim period. Nearly 30 percent of the carbon dioxide is absorbed during that time by the oceans, where it is lost irretrievably to terrestrial carbon cycles while inducing ocean acidification. Germany derives 8.1 percent of its energy from the combustion of biogenic fuels but only 4.4 percent from CO2-free wind, solar, hydropower, and geothermal sources. Germany will thus only be marginally decarbonized once nuclear power (currently 7.5 percent) has been eliminated.
Chinese wind capacity is cheaper to buy than free world quality wind turbines mainly because the quality, capacity factor, lifetime and maintenance cost is not on par with western products.
As of first quarter the average MW windturbine capacity sold by Vestas was €830.000. I have no clue about how your sources go about extracting the strange numbers you report. If you want to control my numbers go to any source that analyze the quarterly statements from Vestas.
You will then learn that the numbers have been dropping consistently by 9% annually, which the CFO has commented with a remark where she stated that the price development is remarkable stable.
Jeffrey Michel says
The energy policies of Greece and Turkey confirm Mr. Cloete’s observations. Both countries are availed of abundant solar resources, yet they are building more coal power plants (Turkey apparently over 70) due to considerably lower upfront costs for utilizing available domestic lignite resources to the benefit of the trade balance. There are three million people of Turkish extraction living in Germany, but they haven’t been writing home to recommend adoption of the Energiewende. Many of their relatives couldn’t afford to pay what are effectively the world’s highest rates per kWh charged to German households. The Danes are invoiced slightly more, but they don’t have to worry about future nuclear waste disposal or mining landscape reclamation. The prospects for a global deployment of renewable energies are even less encouraging. The current installed cumulative solar capacity of scarcely 200 GW would not even be adequate to power the 100 million air conditioners manufactured each year, assuming an average capacity of 4 kW per unit. While building air conditioners do operate primarily when the sun is shining, those employed in data centers run around the clock.
“In the model’s baseline scenario – phasing out fossil fuels over 50 years – wind and solar plants need to be installed at eight to ten times current rates by 2035.”
In stead of looking at the current rates of wind and solar installments the authors should look at the long term trends.
Wind has seven doubled installed capacity in every decade for the last four decades and shows no sign of relenting.
If you assume that wind keeps on track then wind alone will produce as much electricity as the world did in 2014 by 2031 and enough energy to out phase fossils completely before 2040.
Solar is moving faster but it is questionable if it will become cheap enough and to substitute fossils we need Synfuels and that requires better capacity factors than solar can muster.
Wind has a very high probability to become cheap enough. In 2014 the average unsubsidized 20 year wind PPA was $0.035/kWh. In 2021 the PTC is phased out. Vestas has dropped the cost per MW wind turbine by 9% annually since 2014. If 9% cost drop continues then by 2021 20 year US wind PPA’s will be signed at an average price point around $0.018/kWh.
To put things into perspective then not even Saudi Arabian oil can be produced cheap enough to match the cost of Synfuels once electricity drops below $0.005/kWh.
You may argue that this will never happen.
In the first place it actually might because both wind and solar has proven dramatic price drops over short periods of time.
In the second place a renewable world requires significant over provision, which means you either have to curtail renewable sources most of the time or create a market for discount electricity to entities that accept they only get electricity when the grid decides to.
Ps. The costing of the transition is also wildly out of reason mainly because they dream of batteries and keep absurdly high cost for wind and solar and probably the wrong mix between the two.
Bas Gresnigt says
“This new modelling suggests a significant decline in availability of overall energy services during the transition phase.”
This is opposite compared to the German experience, as shown by a.o. the decreasing whole sale electricity prices in Germany!
While Germany is the only major economy with an ongoing clearly planned transition towards renewable (in past 5years a transition speed of 2.4%/a).
So it seems to me that the authors should talk with the authors of the many studies about the German Energiewende (those are known at Agora).
Karel Beckman says
What have wholesale prices in Germany got to do with it? The Energiewende is financed through taxes on the electricity prices, which are the highest in the world.
Bas Gresnigt says
Yes. Consumer & industry electricity prices include various taxes and little can be concluded about scarcity of electricity when one looks at those prices.
Whole sale power Exchanges (a.o. EPEX, Leipzig) are the only places I know where electricity / power is publicly traded against the real market value.
As with any market, when too much is offered prices go down and vice versa.
Since Merkel’s decision in 2011 (Fukushima) to resume with the full Energiewende scenario, prices at EPEX went gradually down from ~6cnt/KWh towards ~3cnt/KWh now.
Those price decreases are caused by over-supply. The lower prices cause that power plants which make losses are closed = taken off the market.
As the low prices for Futures (power to supply in e.g. 2018) show, the market expects further price decreases. So more power plants will make losses and close, as those cannot compete against new generators such as 100% renewable virtual power plants, etc.
So the long term price decrease indicates not a “decline in availability of overall energy” but the opposite!
There is too much energy offered during the German transition towards renewable.
Similar will occur in other countries with free energy markets when they add significant new generator capacity such as wind & solar.
*) Experts estimate that the price decrease will reach the bottom at an av. price of ~2.5cnt/KWh (=cost price of power produced by new lignite plants).
Karel Beckman says
You are not getting it at all. This is not about availability it’s about cost. Renewables are so widely available because they are supported through feed-in tariffs which consumers have to pay for. Please read the article before you comment.
Energy bills in Germany are cheaper than in the US…
And, please, we can discuss about the merit of support schemes but don’t even pretend energy is a free market…
Bas Gresnigt says
Of course total system costs increase temporally when new generators are added.
Germany’s “high” costs, though insignificant as shown by a..o. the massive support of the population, are mostly a legacy of it’s pioneer role. Then LCOE of solar was >50cnt/KWh, etc.
Thanks to a.o. the mass markets they created, those costs are decreasing fast as shown in a.o. these Lazard graphs about past 6 years:
Wind: – 14%/a
Solar: – 24%/a
It implies that countries which start now end with lower costs in 2050 as also shown by French governmental study of ADEME.
Great references you found there but unfortunately at least wind is slipping into reduced cost reduction pace in the last three years. From 2013 to 2014 the average 20 year wind PPA was only lowered 6%. Since 2014 Vestas has only been willing to lower average wind turbine cost per MW capacity by 9% annually so the earlier 14% revolutionary pace has slowed.
There is a huge stockpile of technologies underway in every stage from concept to full scale testing that can reduce wind power cost dramatically.
Assuming the cost trend keeps up wind power combined with excess CO2 will soon be cheaper as source inputs for the petrochemical industry than crude oil.
This article by a nuclear proponent includes a spreadsheet where he calculates the cost of synfuels. https://bravenewclimate.com/2013/01/16/zero-emission-synfuel-from-seawater/
Since then the Synfuel conversion efficiency has improved about 30% and the cost of the plant construction has also been lowered due to key innovation in the Ruthenium catalyst, so the equilibrium point is moving very close to the current market prices for wind power and crude oil.
Bas Gresnigt says
Yes. Cost decrease for wind became less in the last few years. Not clear whether it’s a fluctuation (as we had with PV-solar).
The potential for further price decrease is still substantial (though KIC InnoEnergy thinks different).
We are still not at mass production, nor at 20MW seizes which the EU study found to be feasible.
Thanks for the link to the interesting article at the site of Brook.
Siemens Windpower and Vestas are both targeting plus 20 MW windturbines and recently Vestas has installed a test wind turbine with four turbines on two arms connected to the same tower.
The logic behind the strange looking wind turbine is that the weight of the generator scales with the cube of the capacity, so dividing the same capacity into four small generators saves weight and minimize lift capacity requirements.
At the same time Vestas is working with the Artemis technology that uses an hydraulic gear and multiple generators – a bit like the old Clipper Wind design but with hydraulics.
If you combine the two designs you could get much lighter per MW giant wind turbines ideally suited for the North Sea and still feasible to mount with the current generation of specialized ships.
I have a friend that is involved with this company http://www.floatingpowerplant.com that has built and tested an elegant solution, that combines windpower and wavepower. It is obvious that the economy in especially floating windturbines require windturbines with low center of gravity and low weight, which is exactly what Vestas is developing.
FPP is moving to full scale now.
Calculations show that with the current wind technology the shallow parts of the Northies can deliver all electricity for all Europeans including moving all transportation to electricity. FPP gives access to deeper waters and expands the accessible areas to include all the North Sea.
Who are those experts ?
You already posted the Lazard link yourself. If you use my 9% cost decrease rather than the more optimistic 14% Lazard figure then the average unsubsidized 20 year PPA contract for new wind power in USA will be signed at $0.018/kWh in 2021 when the PTC runs out.
The design life for wind turbines is typically 25 years but ever improving quality could pave the way for longer PPA contracts, which could lower the average US PPA contracts below $0.018/kWh point and possible bring into the realm of the $0.015/kWh.
Ps. Nordpool is lower than the “expert” guesstimate you quote and mostly so because of the German policy to protect their lignite mining by preventing cheaper electricity market access.
“Wind has seven (sic) doubled installed capacity in every decade for the last four decades and shows no sign of relenting.
If you assume that wind keeps on track then wind alone will produce as much electricity as the world did in 2014 by 2031 and enough energy to out phase fossils completely before 2040.”
This is the the kind of fuzzy math that this article refutes, and that the “we can end hydrocarbon usage soon!” community continues to employ to support unrealistic targets. People need think in terms of a rational transition that avoids catastrophic economic consequences while moving toward hydrocarbon independence. Hint hint, maybe natural gas?
Barry are you attributing any credibility to an article by researchers that have missed out the a major producer of wind power for the last eights years straight newer has reduce wind LCOE by less than the article claims will happen in all the years combined until 2030.
In the worst of the 8 preceding years leading up to today, which was from 2013 to 2014 wind power only lowered LCOE by 6% on average in the last 8 years the annual LCOE drop has been above double digit.
And absolutely nothing points to the direction that this will not continue.
Coal in USA has slipped from 39% marketshare three years ago to below 30% and the worlds largest coal company is now bankrupt and the whole value chain is simply doomed despite massive subsidies.
Natural gas and wind go together well but there is no way natural gas can stay economically viable provided wind continue business as usual. In USA the majority of the gas operators are now Zombie organisations that do no explorations and this is also the truth for oil globally. Since 1954 the world has not had a year were less new oil resources has been discovered.
I have had my lab and office at Risø, the center hub for wind power research, until this year where I relocated the company. I am very familiar with the research going on in wind power and know of several technologies approaching maturity that will result in double digit cost costs and many more that will result in single digit cost cuts.
I know less about solar power even though I have three friends that are prominent solar researchers but enough to know that solar is a serious contender to wind and have dropped even faster in price.
It’s not just about technology, it’s implementing it on a massive commercial scale. For all of wind’s accomplishments, it’s still a very small (really, TINY!) part of the equation. You talk of the technology, that’s the easy part!
And oh by the way
” In USA the majority of the gas operators are now Zombie organisations that do no explorations and this is also the truth for oil globally.”
Um, no, this is not truth, it is opinion, and not a very accurate one.
Barry I struggle to understand your comment. The hard part of wind is the technology development.
Seriously the fuel is free wind, so the economics are determined by how efficient you harvest that wind and that is all about technology.
Wind is a very immature technology with an extremely big potential for lowering cost. A lot of minor nudges are needed to improve wind. For instance constant scaling is required to maximise the capacity factor and quality improvement is needed to lower O&M cost and to increase lifetime.
The research and development of technologies for wind power has a profound impact outside wind power in many diverse industries.
I do not understand that you want to deny the crisis for coal, oil and gas. Last year the new oil resources found was the least since 1954 and hundreds of oil fields was abandoned and many more are under scrutiny to see if they ever can become economically viable again and there is no money to handle the decommission in many cases because the banks has continued to cover depths with loans that are not likely to be recoverable.
You seem to believe that the above statement about the huge crisis in coal, oil and gas is an inaccurate opinion, so I dare you to prove me wrong.
Jeffrey Michel says
It is certainly true that the Energiewende has very little to do with market variables. Not only is the government funneling off a generous share of taxes, but the producers are availed of 20-year price guarantees imposed as up-front costs. The current feed-in tariff revenues of nearly 29 billion euros deliver electrical power valued at only around 5 billion euros on the grid. It is remarkable how adeptly these expenses have been obscured in the debate over the future of the German power industry, implying that the total cost of providing electricity may never significantly decline. The global energy system might then ultimately become sustainable beyond the means of many intended beneficiaries to pay for it. A good deal of work lies ahead in resolving this contradiction. No less fascinating are the customary linear projections made for all generation technologies under the tacit assumption that legislated nuclear withdrawal has been a singular historic event occasioned by the Fukushima meltdown. However, an enduring spike in CO2 trading prices following rapid disintegration of multiple Antarctic ice shelves might evoke comparably dramatic commitments on fossil fuel reduction. Furthermore, a literal interpretation of German mining law implies that the licenses of many lignite mines could soon be revoked, since they are no longer being operated profitably. A single successful lawsuit from any environmental organization on this issue might make a stringent lignite phase-out schedule unavoidable.
Bas Gresnigt says
“…literal interpretation of German mining law implies that the licenses of many lignite mines could soon be revoked, since they are no longer being operated profitably.”
German Greens will start a lawsuit if there is any chance to win.
But realize that the new lignite plants make a profit at price levels of only ~€25/MWh. So they are the last (non-renew.) plants which start to make losses, also because they are more flexible than other power plants (except gas, but gas is anyway expensive).
Those plants are also difficult to attack otherwise, as they emit far less CO2 (44% vs 33% efficient) and far less NOx’s (low burning temperatures of their fluidized bed process) and other toxins (excessive oxygen in the burning process).
Jeffrey Michel says
Operating a lignite power plant at a loss is not illegal. However, the German Mining Act requires economically viable extraction from an entire mining area to be made credible by the applicant in order for a mining property license to be granted. Subsequently, the license can be revoked if any situation arises that would have originally caused the license to be refused. Since Vattenfall’s mining division has recently been losing money contrary to original licensing assumptions, the mining property rights might now be legally challenged on the basis of that provision. Revoking the license, however, would necessitate alternative financing to be arranged for mining reclamation. If the Lusatian mines discontinued operation altogether, furthermore, inoperable power plants could not supply the revenues necessary to restore the landscape. According to information received by the Left Party from the economic ministry of Saxony, the ownership of Vattenfall’s lignite operations is now being transferred to EPH without the need for relicensing. It is not clear, however, whether the usual notarized liability affidavit will nevertheless be required of the new owner by the state mining authorities. Future liabilities could increase due to previously unforeseen water contamination, as is already occurring in the River Spree watershed.
Bas Gresnigt says
Small chance that the lawyers of both companies didn’t do their job well.
If so, the Greens (incl. Greenpeace) will use the opportunity.
Asset stripping will be difficult for the new owner. Also because of the German mining unions.
Though in the long run, with 80% renewable in ~2045, lignite production (now 26%) will decrease substantially…
Futures show that av. prices of ~2cnt/KWh may become reality, which will turn mines with less rich lignite layers and less up-to-date power plants, into a loss-giving operation without a positive prospect…
“Not only is the government funneling off a generous share of taxes, but the producers areof 20-year price guarantees imposed as up-front costs.”
You are doing a bit of double accounting here. The feed in tariffs have nothing to do with taxes but are paid solely via the electricity bill. In reality the government gets extra tax income, because VAT is charged on the renewable energy surcharge.
Jeffrey Michel says
Double accounting has become widespread as the Energewende penertrates into all sectors of the economy. I did not refer specifically to renewable feed-in tariffs, which are actually of little concern in that regard, because the data are relatively transparent. If you examine the relevant job statistics, on the other hand, you will discover that some of the same workers are apparently being employed by both the renewable energy and lignite industries. The same duplicity appears applicable to parts of the automotive sector. Please read the words of other commentators carefully. I was replicating the remarks of Karel Beckman, who said that the Energiewende was being financed through taxes on the electricity prices, which are the highest in the world. The German government is fundamentally concerned with accruing tax revenues. The operators of decentralized wind and solar installations are more dependable in that regard, because they don’t generally channel profits into foreign investments in the way that E.on and RWE have done over the years, or transfer all net gains to the Czech Republic or Sweden, which are the specialties of MIBRAG and Vattenfall. You might incidentally take issue with those authors and commentators who routinely refer to German feed-in tariffs as subsidies, since that terminology is not generally employed within the country due to a variety of counterarguments. I personally compare them with the system of fixed prices used to keep other small businesses in operation. For that reason, books and magazines, cigarettes and taxi fares comply with rigid pricing regulations regardless of the individual cost of maintaining them.
These kind of EROEI studies always ignore the external energy cost of fossil fuels . Adapting to climate change will cost quite a lot of energy. Simple example: the excavators used to build higher dikes consume quite a lot of diesel.
It would be interesting to see a study looking at the whole picture: comparing the energy cost of switching to renewable energy, with that of business as usual including the energy cost of adapting to climate change.
Given the high unemployment rates pretty much everywhere in the world, slower switch away from burning natural capital assets (fossil fuels) is continued high unemployment and lower gdp and gdp growth.
The reason switching is “costly” is the labor costs of building the non-carbon burning energy capital assets. And paying millions of workers globally to build energy capital assets will provide millions of higher income consumers buying consumer goods and services, paying taxes, and buying durable goods like electric vehicles and zero energy housing.
Look, higher gdp means higher costs, and especially higher labor costs because a few capitalists are not going to pay for most of the goods produced by a high growth economy. Only by paying workers a lot more can gdp increase a lot.