Monday, June 22, 2015

Monday Forum - end of fossil fuels?

I must say at the outset that I rather like coal mines. Without coal, there would have been no industrial revolution. Without coal, the area I come from would have been a lot poorer.

All that said, for this Monday Forum I pose four questions:
  • are fossil fuels finished?
  • if so, in what time horizon?
  • if so, what will take their place?
  • and which parts of Australia might win or lose?
I have made my own biases clear with my opening comment. I now hand it over to you.


Interesting discussion on this post that I would like to come back too later. In the meantime, the Australian Energy Market Operator has release a discussion paper: 2015 Emerging Technologies Information Paper.


2 tanners said...

I think fossil fuels, particularly coal, are finished. Coal sooner rather than later as wind and solar become cheaper, more efficient and more reliable and cheaper battery technology is shown to be commercially viable. Maybe tidal power and geothermal will have a breakthrough, but I see them as niche for the moment. Nuclear is a dead end - the rollout times mean that it will be overtaken by solar just on a current development curve, whereas I would assume a learning (i.e. compounding curve)

Absent significant Government subsidies the coal industry is already becoming uneconomic. Petrol and LPG will take longer particularly in transport industries where power cells will need to be highly effective to replace petrol/diesel/LPG solutions.

Gut feeling only is that 2015-2025 will have seen a seismic shift. The Government will be subsidising the coal/coal fired power industry for more than the value of its product in a last ditch attempt to keep alive an industry selling a product that people no longer want.

And where will benefit? That requires an analysis of existing line-and-pole infrastructure, weather patterns, domestic power substitution to partly or fully off-grid and climate change. I'd say, though, that householders stand to benefit as current power producers' models include ramping up prices whereas the solar industry's model includes lowering prices and waiting until cost pressures drive traditional power above solar. In exceptional cases that has already happened in Australia, but for most it is not a current reality.

I don't have an axe to grind here. I looked at solar last year but it was too expensive. I just believe in the inexorable march of technological progress at rates that we always find surprising.

2 tanners said...

Sorry, that time frame should have been 2020-2025.

Anonymous said...

Jim posed four questions, and sort of begged an agreeable answer with his "if so" - but "if not" is also an option, I think. Tanners, you once said 'I like how you write, even though I seldom agree'. The feeling is mutual :)

Q1: no, until an equally reliable, and equally economical, source of energy is available. There is only one at present which qualifies, and that is nuclear. I often wonder why the same people who espouse 'imminent advances' in the various green energies won't also allow the same possibility for nuclear? I think their bias is showing. Are fossil fuels finished? Not with centuries of potential fuel sources presently available; not everyone in the world has a flat screen, and ready access to food, heating and light - or maybe you don't care about that basic fact of life for probably 90% of the world's population?

Q2: longer than tanners thinks; shorter than 100 years. Who knows? What is the point of the question?

Q3: it is laughable to think that solar or wind (or tidal, and I've read a lot about that because it fascinates me) will replace (in tanners' horizon) the need for always on, reliable, base load power. You can imagine a battery advance which might become efficient (read cost) enough to make do for the average household - but that ignorse the enormous requirements of industry as it now exists. I suspect I'm a little like tanners in that I go to bed when the sun does, and get up just before dawn, so solar almost (but not quite yet) suits me. I maintain a petrol generator which runs my whole electrical needs (except the aircon) - but the various solar/battery options available right now are not quite up to that sort of convenience. That said, I have do doubt for the residence such as mine, that 'cost-horizon' is well in advance of tanners' 2020-2025. So then all we have to power is all of our industrial efforts; but I guess that can be abandoned.

Q4: non sequitur


ps, read the other day that at certain times in the UK, over 20% of the generated power is consumed by the internet. That can't be right. Maybe sign off b4 tanners is blacked out :)

Anonymous said...

pls forgive all triptychs. except "ignorse". I rather like that one, and may use it again :)


Jim Belshaw said...

I am breaking my responses up to make responses a little easier. 2t, you wrote: Absent significant Government subsidies (in bold) the coal industry is already becoming uneconomic. Now I have seen this argument before. So a very genuine question. Just what subsidies does the coal industry get?

Anonymous said...

The problem with all these potential solutions, and it applies to all the 'old' industries as well, is that there is no reliable (given in complete honesty, and with full integrity) valuation of whole of life 'cost'.

It is all very well to say that advances in battery storeage will soon provide for economic "useful" useage of solar or wind, but what about adding in the end of life, reprocessing, whatever, cost of same? Nuclear has this big death adder sort of hangover - what about the waste? Well, maybe allow for equally efficacious reprocessing, or even shooting the stuff into the sun. What are you going to do with all the dead batteries every five years?

Coal and iron ore are similarly under-costed. Nobody asks those industries (as yet) to fill in the holes, and ensure aquifers are not polluted 'forever'. Their cost base is just as laughable as tanners' clean green energy. Wind turbines? Half life of a little more than 5 years, after which you just have a bloody great big useless eyesore. Cheaper to replace than maintain, particularly those around the UK in the sea as far as I've read.

Lightbulbs: Incandescent replaced with 'green' flouros, or whatever they are. Crappy light, and now recycling bins at the council tip because they are full of mercury or cadmium or something not quite ok to stuff in a dump. Where's the advance in that from a whole of life perspective?

I think some of this green tech is actually dirtier than good old coal fired life. And I don't live in a third world country where it is the only option.


2 tanners said...

I was making the point that in the absence of significant government subsidies the coal industry is becoming uneconomic and that is what it would take. And, indeed, what I expect.

However, the coal industry pays approximately 12% in company tax compared to the 17-18% paid by the average enterprise. Mining taxes have just been reduced, despite the fact that their original justification is that they are for non-renewable resources, and of course they are the major beneficiary of the ending of the carbon tax.

They have also received, on a case by case basis, expedited approvals, suspension of environmental requirements and the ability to bring in cheap labour on s.459 visas. The value of these concessions are incalculable in the literal sense, but certainly one mine was on public record as stating that the environmental restrictions in current practice would have made investment a no-go.

2 tanners said...


I published a rather long response to your points, however Jim's site burped on the second anti-robot proof and I lost it all.

I do live in a developing country and I live with the 90% you mentioned. Solar light is the only solution here, even in the capital, because the grid is so crappy. You can't reliably cook from it - the rich use gas and the poor use wood or dung. Industry? You can't set one up unless you can afford the backup generators.

I agree about life costing but that's not going to happen while Big Coal and Big Oil (to use convenient labels) are around to prevent it. Guessing that 'green technologies' are dirtier is just that.

I also agree that none of the green technologies, or nuclear, or geothermal are there yet. None of them, and particularly in cost effectiveness. But their CE factor is rapidly rising. Maybe my gut feeling is wrong, but 5 years ago it was going to take 20 years to pay off a domestic solar installation. Last year it was three to five years AFTER the generous solar subsidies had been cancelled.

Jim Belshaw said...

I am rather glad that modern environmental concerns were not around during earlier periods in Australian history. The country would be a lot poorer now!

I'm sorry, 2T, that your longer comment got eaten by the anti-robot system.

Dealing with coal first, I'm not quite about the exact break-up between thermal and coking coal. I would have thought that coking coal would be around for quite a while yet because of steel demand. I agree that the demand for thermal coal is far more uncertain.

Oil/LNG prices dropped very sharply with rising production including from US fracking, although they have recently bounced. Low gas prices encourage the substitution of gas for electric heating and cooking and for the generation of power. Recent history suggests that the substitution effect from relative prices may be greater than I had expected, with the use of coal expanding during the high oil price phase.

In Australia, we have a number of coal fired power stations such as Vales Point coming to the end of their life. However, what happens here depends in part on relative future price movements. Will NSW face a gas shortage? The issue is hotly debated.

Renewables have their own problems. I think that kvd is right on life cycle costs, but beyond that it seems (I stand to be corrected)that roof top solar is presently the only socially/environmentally accepted alternative in this country. Every other renewable is under challenge on environmental or NIMBY grounds.

2 tanners said...

Several points

Most fossil fuel prices have returned to their long term trend. Again, long term costing tempts a return to carbon costing, and I can't think of any fossil fuel producer asking for that.

BTW, I haven't included state subsidies for mines because although I know they exist and are large, I can't find a reliable (i.e. not highly politically biased) source. Usually either Green or the Mining Council of Australia.

AS a matter of illustration, not proof, a new lithium ion battery was announced today reducing production cost by 50% and increasing storage by 100% for the same materials. Not yet commercial production, but the development of this technology took less than 5 years.

Even if my call was too soon, I reckon that fossil fuels are going soon. Why? Because so do the superannuation fund trustees who claim that their policy holders want it, but didn't have the same opinion a couple of years back when they rightly pointed out that they are legally obliged to get the best returns possible.

Finally, and completely off topic, your antirobot program is truly shite. But I already knew that and should have copied my information to the clipboard. As a matter of curiosity, does much robot spam come your way, except for ads from Newcastle gyms?

Jim Belshaw said...

Hi 2T. I don't get so many spam comments, but what I do get is massive spikes in page views I mean massive, suggesting that robots are around and active. I know that it is robot traffic, why should visitors from Russia or the Ukraine suddenly wish to visit a single post that has nothing to do with either country? So it may be frustrating, but I'm not sure that Google is wrong.

On the subsidisation issue, I need to visit that properly.

I agree that technology is shifting and faster than expected a few years' back. However, I'm not convinced by the super issue or they play to customers as well. Customers may shift, not economics.