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Clean Coal And The Transformation Of Society

Commodities / Coal Nov 18, 2012 - 12:12 PM GMT

By: Andrew_McKillop

Commodities

Best Financial Markets Analysis ArticleThe OECD's so-called "oil and energy watchdog agency", the International Energy Agency (IEA) continues to claim, firstly, that CO2 sequestration and deep underground storage or other disposal - called CCS - is a vital and obligatory energy revolution for all countries, due to the anthropogenic global warming crisis. Secondly it claims that CCS can be made a technological and industrial reality but will not "significantly harm the economy" or create the need for an unprecedented transformation of both the economy and society.


This policy quest almost exclusively concerns coal energy, especially for power generation, iron and steel, and cement production. The "shock statistic" is that currently known, economically exploitable coal reserves imply that 11 000 billion tons of CO2 equivalent greenhouse gases (11 000 GtCO2) could be emitted, if these coal resources were fully consumed. This is about 370 years of current annual human-source CO2 emissions. Currently uneconomic coal resources can at least double those which can be presently exploited. Metahne hydrate exploitation wolud likely add at least as much again.

Through a long, complex series of in-house reviews and changed goals, depending on highly varied academic opinions, new results from climate science research, and flexible political or media attitudes to global warming, the IEA has since about 2009 hit on its present published goal for limiting the concentration of CO2 in the atmosphere. This is a limit of 450 ppm (450 parts per million or 0.045%) to be achieved by about 2040-2045.

The current CO2 concentration is about 385 ppm. Recent growth of CO2 concentrations has run at about 1 ppm to 1.5 ppm per year. Growth rates of CO2 in the atmosphere are a highly controversial issue: IEA reports and publications take the alarmist, high end of estimated growth rates.

Staying with IEA claims, it says that CCS could contribute "over 15% of the global greenhouse gas emission reductions needed for the mid-century target of 450 ppm", that is CCS could reduce the growth of these GHG emissions (well over 90% are CO2), and prevent overshoot of CO2 concentrations, to some higher and supposedly even more dangerous level. This could be as high as 500 ppm by about 2045 according to global warming alarmists, and many published reports and news communiques from the IEA.

We have to underline that the best, most optimistic estimates - from the IEA itself - of what CCS projects can do to stop CO2 concentrations rising, are that global-scale CCS projects could only achieve about 15% of what the IEA says are needed reductions in the growth rate of CO2 to about 2045. Staying with the IEA's very optimistic ideas on what CCS could do, if applied and achieved worldwide, this would not affect the 80%-odd of present and forecast human CO2 emissions growth that CCS cannot reduce.

MODEST GOALS - FANTASTIC COSTS
IEA claims are that some 3200 CCS projects are needed by 2045, able to sequester a total of 150 GtCO2  through the period 2012-2045. Current global total human GHG emissions are estimated, for 2008, at around 29.88 GtCO2 per year. In other words, "Global CCS" as promoted by the IEA would sequester about 5 years of current total human GHG emissions through a period of about 33 years.

Meanwhile, on the ground and in the real world CCS is dragging along, with virtually no progress in the past 5 years: not a single full-size coal-fired power plant or large iron and steel plant, or major cement works, anywhere in the world, has CCS in operation. The most basic and simplest reason for this is cost, a subject the IEA and other CCS promoters steer away from. This is because, related to present-promoted IEA targets for global CCS at sufficient numbers of installations able to capture and sequested for example 5 GtCO2 per year, the total cost of these CCS installations could easily exceed $3.5 trillion. This could be a major underestimate; costs for this level of CCS (able to handle 5 GtCO2 per year) may cost $5 trillion depending on the extent and scale of what the Australia-based Global CCS Institute and other major promoters call LSIPs-Large Scale Integrated Projects, which include all stages of capture, transport and sequestration or final use of the GHG.

 CO2 pipeline transport to "final repositories" for CO2, and-or gas or oil wells at a feasible distance and needing CO2-assist for enhanced recovery, or other industrial chemical utilisation of CO2 (or other GHG) present the largest problems for making LSIPs feasible. Other industrial uses of the CO2 potentially include synthetic fuels production (from oil type to alcohol type), fertilizers, and other organic chemicals.

The IEA talks around or "relativizes" the cost of global CCS with estimates that additional costs of new power plants fitted with CCS from the design stage, worldwide, which the Global CCS Institute estimates as adding a minimum of around 40% to power plant costs, and 60% for coal-fired plants, would be about $3 trillion for the period to around 2045. This we can note excludes CCS for all non-power sector emitters, especially iron and steel plants and cement production plants, the other two major fixed or large (non transport and non habitat) emitters of CO2, where the Global CCS Institute estimates additional costs for full CCS as around 10%-15% for iron and steel plants, and 40%-52% for cement plants.

 Despite this "wall of costs" the IEA goes on claiming that "clean coal" remains a reality, and not a policy dream. Interestingly, the IEA is far from alone in its dreams, with a powerful and growing group of supporters ranging from current and past previous political elites, major power corporations, large energy companies, the finance sector, and the "global warming industry" of academics and environmentalists.

SOCIAL AND ECONOMIC REVOLUTION: KEEPING COAL ALIVE
In fact, coal energy on a global basis has no problem being kept alive, while it is very certainly threatened with near-extinction in several OECD countries, especially the US, several EU27 countries, and Japan, often for different reasons in different countries. Since 2005, coal energy demand and consumption has grown, on average, at least 3 times faster than all other competing fossil fuels, oil and gas. In "raw energy" terms, today in 2012, coal and oil supply about 31% (coal) and 34% (oil) of world commercial energy, far ahead of natural gas at about 24%. More significantly, until very recently (2011-2012) coal energy supply has been growing much faster than any other fossil energy, on a worldwide basis.

‘Clean coal’ provides a window into the political, socioeconomic and culture change trends that already underpin, and will underpin "low-carbon transition" policies, investment and spending, as well as technology and research efforts in the coming decades, especially the period 2012-2030 during which, under almost any scenario, coal's energy role will stay high or may even grow. To be sure this will be "dirty coal" also underlining that the form and type of the "low-carbon" societies and economic systems that arise or emerge can only be very different to anything we presently know.

In this context there is no need to be surprised by fantastic ironies. Europe's much-vaunted clean energy transition policy and national member state renewable energy action plans are overtly targeted at cutting dependence on coal energy and reducing CO2 emissions, or put another way, the major high-level goal of cutting CO2 emissions means that coal-fired power plants should be "the first to go".  In fact, European coal consumption is growing, in 2012, for a host of technical, economic and even financial and fiscal reasons. Again for special reasons - the Fukushima disaster - Japan's coal consumption is growing, after more than a decade of annual decline. As we know, China is the world's biggest single coal consumer, now using nearly 3 times more coal than the USA, and 4 times India's coal consumption, the world's second- and third-biggest coal energy consumers.

China is the world's biggest single exporter of industrial products, with the world's biggest trade surplus due to this. According to BP data, China alone consumed about 48% of the world's total 6 billion tons of coal energy in 2011, and this may rise to about 55% by 2030, even with stagnation of China's annual total coal burn. In China, coal represented about 70% of electricity generation and over 60% of total primary energy supply in 2011. Pu another way, more closely related to the IEA's founding objective of ensuring "adequate and affordable oil supplies" to the OECD group of countries, if for any reason China completely substituted its present coal burn with oil this would increase its total oil demand by around 42 million barrels a day. This is close to one-and-a-half times the total oil export supply of all OPEC states combined.

King Coal has a real meaning for the IEA, although this is never admitted in any report, study or conference organized by the IEA.

Coal is therefore central and basic to the continued economic development of many large developing countries, such as Turkey, Pakistan or Indonesia, and several African countries which, at present, do not have access to economically exploitable national subsoil resources of coal, oil, or natural gas. To be anti-coal, therefore, can be portrayed as anti-development, pro-poverty or even racist, frequent accusations levied against Western environmentalists happy to kick away the energy ladder to economic prosperity of the type they themselves enjoy. Much more import and much less theoretical, global prosperity as presently constituted and organized (if "organized" can be used the chaotic or anarchic play of the Neoliberal New Economy), depends on China being "the workshop of the world". As we know, supermarkets in any "postindustrial" consumer economy and society of the (neo)liberal West would be almost empty, in their hi-fi, electronic goods, hardware, clothes and shoes sections without Chinese industrial products at a price (neo)liberal Westerners can afford to pay. Low carbon energy transition therefore immediately concerns China, India and other coal-oriented and cal-dependent emerging economies.

 Moreover, adding to the many ironies and carefully avoided but uncomfortable realities of achieving clean coal and low carbon, economic development as presently constituted and conceived will almost certainly result in much higher global emissions of CO2 and other GHG, at least until 2030.

Rarely if ever given major emphasis in IEA publications, China is the single most important issue regarding the future of coal and its global environmental impact. By 2020, on present trends, China’s GHG emissions are set to overtake those of the entire OECD excluding the US, and will be double those of the EU27. Acting to "clean up Chinese coal" is now, arguably, the single most important issue for any advocate of CCS and Low Carbon. CCS is therefore seemingly crucial or critical for China, and-or China must embark on a roll-out of renewable energies at an historically, technologically and economically incredible rate.

NEW AND DIFFERENT SECURITY THREATS
The world since 2008 has already transformed the perception of global economic and energy security risks. The globalised economy, driven by a distorted, overblown and dysfunctional bank and finance sector has already gone into "self limiting mode", with long-term near stagnation or outright decline of the economy being the most likely way forward for a large number of OECD countries, and much slower-than-recent economic growth for the Emerging country economies. Convergent decline of regional and global growth is now a far more realistic outlook than convergent economic expansion.

Nowhere, in any IEA or OECD member state government energy-related publications will we find admission that CCS is blatantly uneconomic. The way out is to say that CCS is "an emerging technology for the period beyond 2025", while schizophrenically also claiming CCS is utterly urgent, to prevent terminal climate crisis, and must be applied systematically and worldwide "by or before 2030". The only way out of this dilemma is to change the economic perception, analysis and financing of CCS. On a very approximate outline basis, we could argue that doubling electricity prices, worldwide, could make CCS feasible at present estimated costs,  for the 2030 timeline of applying LSIPs worldwide. Other forms of taxation or mobilization of massive investments funds for global CCS could be imagined - one of these being the presently almost abandoned concept of worldwide mandatory emissions trading.

Rarely perceived as at present, the concept of "clean coal" is fundamentally built on an emerging set of new security threats, which importantly include market failure, or failure of the "global market-based growth economy". To be sure neoliberalism, which is essentially a late 18th century Western doctrine accepts no such existential challenges or limits. Secondly, the emerging challenge of "clean coal", especially its costs and timelines, legitimizes the expansion of state and supranational power. In turn, this very surely and certainly launches a revision and modification of ‘classical liberalism’, which was perfectly compatible with, and dependent upon, the growth of the state as the vehicle for defending the "middle cass values" of an emerging, global, urban consumer society.

Underlining the linkage, China's coal industry remains under almost total State control, like India's. In the USA, the world's second-biggest but declining coal consumer, state aid and support will soon be needed for its deeply troubled coal industry - showing that when "borgeois capitalism" collapses, it always runs for State support and control, renewing the cycle of state-then-private control in economic development. More profoundly, the whole concept of Industrial Revolution and bourgeois urban consumer society was enabled by coal consumption in the 18th, 19th and 20th centuries, in Europe, the US, then Japan.

Accepting that before- and after-Industrial Revolution means pre- and post-coal energy dependence, and that "getting rid of coal" would mean eliminating about 31% of present world total energy supplies - or would mean full scale CCS application, worldwide,whatever the cost - we come closer to the real implications of the presently artificial and limited "debate" on clean coal. To be sure, the likelihood (or even potential) of coal energy being rapidly downgraded and then fully eliminated is at present very low, but the unswerving support to CCS given by the IEA, and many other international energy and economic agencies, shows these implications are known if at present never revealed.

By Andrew McKillop

Contact: xtran9@gmail.com

Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2012 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


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