Energy Crunch: The writing’s on the wall

June 13, 2014

NOTE: Images in this archived article have been removed.

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Coal power via eutrophication&hypoxia/flickr. Creative Commons.

Three things you shouldn’t miss this week

  1. Chart: Mapping the US carbon cap. Necessary emission reductions for existing power plants broken down by state:
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    Source: Source: SNL
  2. Article: Solar to match coal in China by 2016, threatening fossil dominance – Wuxi Suntech Power expects the cost of electricity from solar modules match to coal-powered stations in China as soon as 2016.
  3. Commentary: The Global Energy Market’s Moment of Truth – this is not a temporary market blip but a fundamental shift.

Is the writing finally on the wall for fossil fuels? In the last fortnight we’ve seen new rules on coal emissions in the US, the prospect of a cap on coal consumption in China, and a report from the International Energy Agency (IEA) highlighting the risks to fossil fuel investment.

Though the focus of the IEA report was energy investment, what came across was the spectre of peak oil. The agency sees the brief US shale boom “running out of steam” in the 2020s, forcing the world back into the arms of the Middle East where there is a risk that “investment fails to pick up in time to avert a shortfall in supply”. The numbers show the oil and gas industry sprinting to stand still: “More than 80% of the cumulative $17.5 trillion in upstream oil and gas spending is required to compensate for decline at existing oil and gas fields.” Other analysts have shown that without the recent rise in US output, global oil production would have stagnated already. Any interruption of exports from Iraq – where al-Qaida-linked insurgents are advancing on Baghdad – would drive the oil price higher.

Coal is in greater abundance and remains cheaper to extract than oil and gas, yet the cost in terms of emissions and pollution is extraordinarily high. The US EPA ruling that coal and gas plants must cut CO2 emissions to 30 percent below 2005 levels by 2030 may prove a tipping point. The US target is a long way short of what’s needed to keep global emissions below 2oC, but it is a landmark decision. China quickly followed suit by announcing a potential future cap on its coal use.

There was good news too from the International Renewable Energy Agency (IRENA), which claimed that renewables could top 30% of the global energy mix by 2030. And the falling cost of renewables is starting to disrupt markets, as demonstrated by Barclays’ recent downgrade of the entire US utilities sector in the face of the solar ‘threat’. In China, the cost of power from solar could match coal within two years, according to one manufacturer.

Slowly but surely, it would seem the tables are turning.

Related Reports and commentary

World Energy Investment Outlook – International Energy Agency

IEA Says the Party’s Over – Richard Heinberg, Post Carbon Institute

The Great Coal Cap: China’s energy policies and the financial implications for thermal coal – Carbon Tracker

REmap 2030 – A Renewable Energy Roadmap – IRENA

The EU energy security strategy in 5 graphs – Carbon Brief

The German Coal Conundrum: The status of coal power in Germany’s energy transition – Heinrich Böll Stiftung

The Truth Behind The Dash for Gas 2014  – Marco Jackson fracking documentary. YouTube

The rare earth crisis: Is it a sign of things to come? – Ugo Bardi, 2degrees network


Energy Crunch staff

The Energy Crunch team is Simone Osborn, David Strahan, Griffin Carpenter, Stephen Devlin, Aniol Esteban, Tim Jenkins.

nef is a UK's leading think tank promoting social, economic and environmental justice. nef's purpose is to bring about a Great Transition – to transform the economy so that it works for people and the planet.

Tags: Coal, IEA, peak oil, Renewable Energy