EC HH Complacency Over Coal's Collapse: Factors To Consider

The second is climate change fatalism. If it becomes accepted that we already well past the point of being able to reverse global warming, then the priority could shift away from reducing carbon emissions and instead become achieving rapid economic advances in order to pay for the huge, global effort that adapting to climate change will entail. Ironically, coal could be employed as the cheap, plentiful resource used to spur such rapid economic growth. If this sounds a bit crazy, bear in mind that it is the approach that India and China are already implicitly (and at times explicitly) embracing at the moment. India in particular is still planning on building many new coal plants in an attempt to achieve economic growth.

Bangladesh, perhaps the most climate endangered among the world's hugely populous nations, has resisted climate change fatalism. However if it runs out of hope that the world's major economies will take the necessary measures to mitigate climate change, then it could end up getting on board with this philosophy too, since it desperately needs economic growth to lift its population out of the immediate poverty it faces.

Countries like Bangladesh have, in addition, been publicly toying with the unorthodox idea of purposely releasing gasses like sulphur dioxide into the atmosphere in order to deflect sunlight and thus reduce global temperatures. Indeed, certain industries already produce this effect over a limited timespan, due to the sulphur dioxide they emit. Such industries include coal-fired power plants and container shipping.

According to this article from the Guardian, the container shipping industry alone, over a five-year lifespan, may contribute a cooling effect significant enough to offset the warming caused by every car, bus, and airplane in the world combined. Still, this cooling effect diminishes over longer timespans as sulphur dioxide leaves the atmosphere, and, in any event, sulphur dioxide emissions also cause significant local pollution, such as acid rain.

2. Local Pollution

A lot of the most concerted pushback against coal has seemed like it is driven by fears of climate change, when really it is driven to a substantial extent by frustration with more local forms of pollution that the coal industry creates. In order for local anti-pollution activists to gain public support, they often, quite understandably, use climate change as a cover.

The threat of climate change alone, without local anti-pollution activism, has a more difficult time of creating meaningful pushback, because climate change is far less of an immediate and concentrated danger than localized pollution is. Pushback against local pollution, for example, historically played a significant role in causing American industry to outsource to places like China that were more willing to tolerate it. This is also, by the way, one reason why methane emissions have gotten off the hook compared to carbon dioxide: they cause far less local pollution, even though their contribution to global climate change is severe.

If coal can overcome its local pollution problem, then, it may be able to revive itself to some extent even in spite of the role it plays in global climate change.

There is a way that the coal industry may reduce its local pollution problem: disassemble and reassemble coal-fired power plants and relocate them to more sparsely populated areas, and largely mechanize the operation of coal-fired power plants and coal mining sites.

CoalRetirementsMap

The West is wide open

pop dens

US population density/major city map

The mechanization of the coal industry is already well on its way (see graph below) and will probably continue in the coming years as a result of the "robot revolution". Moving coal-fired plants to less populated areas would of course be enormously expensive; it would require not just moving the plants themselves, but also the building of new electricity lines.

WV_Employment_vs_Production

Finding cheap routes to build electricity networks through is no easy task, nor is maintaining such electricity networks once they are already built. Plus, the longer the route, the more electricity is lost in transmission - and the routes would have to be quite long in order to locate the power plants in sparsely populated areas. Still, it could happen, if coal can remain cost competitive with other energy sources. More on this in the next section.

Local pollution is also a major reason why urban and suburban areas may start to use a lot of hybrid, electric, or Uberpool-esque vehicles, since conventional gasoline-powered vehicles create a lot of air pollution (and noise pollution) in areas in which lots of people live. Hybrids, if they can become cost-competitive with conventional cars, are ideal in this regard, as they typically cause air pollution only on rural or ex-urban roads where fewer people live.

If electric vehicles become common, it could boost demand for electricity (helping coal, potentially) and decrease demand for oil (helping coal by causing less natural gas production, potentially).

Finally, local pollution is most harmful in places where there are lots of physically vulnerable people; i.e. in densely populated countries where there are many young kids or senior citizens. The United States does not fit this description, as it is sparsely populated and most of its population is in the prime of their lives. The developing world, on the other hand, is often very young and densely populated, while Western Europe, Japan, and increasingly even China are old and densely populated. Pushback against local pollution in China in particular could cause some industrial activity - and its attendant demand for electricity - to relocate to North America.

land per capita

The countries that are by far the most densely populated on this list, namely India and Japan, have by far the youngest and oldest populations, respectively, among the world's major economies.

3. Robots 

Robots could benefit the coal industry in multiple ways. First and most obviously, they are likely to cause American electricity demand to soar, because robots are often extremely energy-intensive to use and because they could lead manufacturing that in previous decades has been outsourced to countries like China and Mexico to be brought back to the United States.

The same is true in other developed economies, like  Japan, South Korea, Taiwan, and Hong Kong, which are already totally reliant upon coal and other fossil fuel imports to power their economies. In 2014, Japan and especially South Korea were the biggest purchasers of US coal, with the exception of the Netherlands (a European trade hub), Britain, and Brazil. East Asia is also the primary destination for more than three-quarters of Canadian exports of coal, which are split about equally between China, Japan, and South Korea.

coal imports

World's largest coal importers. Source: Index Mundi

Indeed it seems like ancient history now, but prior to United States sanctions on Japan in the 1930s, Japan was getting around 60-80 percent of its oil imports from the United States. It is not totally out of the question that a somewhat similar pattern could re-emerge, with the US exporting fossil fuels to East Asia once again, as the US may want each of these countries to remain strong enough to "contain" China.

relative trade northeast asia

These values adjusted for GDP size; they are not given in absolute terms. In absolute terms, China and Japan would be higher than South Korea and Taiwan in every case. Source: Future Economics

South Korea and Taiwan are particularly dependent upon energy imports (see graph above). And the United States is very approving of its alliances with these two countries because they help to "counterbalance" (to use another geopolitical euphemism) both China and Japan, which by most accounts remain by far the world's second and third largest economies.

fossil fuel importers

For Japan, robots could particularly cause electricity demand to surge, given that Japan may need to use a lot of them to replace its rapidly aging, high income labour force. Japan's other alternative thus far has been to outsource labour to countries like China and Thailand, however it is not clear how much Japan is willing to continue becoming dependent on these countries, and meanwhile millions of Japan's domestic workers are approaching retirement age.

population-pyramid-of-japan-in-2015

A second way robots could help the coal industry is by causing electricity demand to rise overnight. One of the drawbacks of coal power has been that coal-fired power plants, unlike hydroelectric dams or, to a lesser extent, compared to natural gas plants, cannot easily ramp up and down their electricity production. This has meant that, like nuclear plants, they tend to over-produce electricity overnight, when the cost of producing the power is often higher than the price it sells for. However, since robots don't sleep, they may drive up the demand for electricity at night. In addition to coal and nuclear, this may also help wind power, since it is often windier overnight than during the day. But it could hurt solar power.

Robots could perhaps also help allow coal-fired power plants to be moved to or built in sparsely populated areas where their local pollution will not be as bothersome, since robot-run factories may not need to employ many humans. This could also prevent new, long electricity lines from having to be built and maintained in some cases, as the power plant could be located right next to the robot-run industrial areas.

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Oil Baron 2 years ago Member's comment

Great read.

Dhaval Shanischara 2 years ago Member's comment

Does it actually surprise anyone that coal is crashing? With the advent of renewable resources, and climate change, coal inevitably was going to crash

Plunger 2 years ago Contributor's comment

Tons of data here, enjoyed the article, I wish there was a more conclusive strategy presented going forward.

As for myself, if we increase the tax on coal we must certainly penalize the more damaging methane by installing the "Fart Tax"

Dhaval Shanischara 2 years ago Member's comment

The "conclusive strategy" you discuss is the hardest thing to implement and formulate when considering climate change. The data and observable effects are there but since so much money is tied to converting to renewable resources, it may be very difficult, no matter how much coal crashes