Burning Fossil Fuels Equals Big Losses

Recent research by Greenpeace Southeast Asia and the Centre for Research on Energy and Clean Air (CREA) found that the global cost of air pollution from fossil fuels is roughly $8 billion per day or 3.3% of the world’s global domestic product (GDP). Burning fossil fuels also causes 12,000 premature deaths daily.

The study entitled, Toxic Air: The Price of Fossil Fuels is the first global assessment of the economic burden of health impacts from fossil fuel air pollution. The research showed that burning fossil fuels also resulted in an estimated 4.5 million premature deaths every year globally as toxic pollutants are causing an increase in chronic and acute diseases. This costs the world some $2.9 trillion annually as a result of non-communicable diseases and respiratory made more likely by elevated pollution levels.

Particulate Matter (the small liquid droplets and particles in the atmosphere that comes from fossil fuels) air pollution increases work absences with an estimated cost of 1.8 billion days of work absences yearly worldwide.

Plus, the research also showed that air pollution from fossil fuels is affecting children from low-income families severely. There are at a minimum of 40,000 kids who die before reaching the age of five due to exposure to particulate matter air pollution.

In the Philippines, the study noted that air pollution due to burning fossil fuels, particularly, coal, gas, and oil is causing an estimated 27,000 premature deaths yearly, which is equivalent to roughly $6 billion in economic losses annually or as high as 1.9 percent of our country’s GDP.

The study concludes that decarbonizing globally can provide rapid gains for everyone. The authors stressed that many of the solutions to address climate change are the same ones needed to eliminate air pollution. This means that replacing fossil fuels with renewable energy is crucial in limiting global warming to 1.5 c above pre-industrial level while at the same time help in the reduction of the emission of air pollutants. “A phase-out of existing coal, oil and gas infrastructure brings major health benefits due to the associated reduction in air pollution,” the study read.

The numbers presented by this recent research is alarming. Yet it isn’t the first warning the world has received about the dangers of using fossil fuels heavily for our needs.

deadly coal

Research shows that burning fossil fuels also resulted in an estimated 4.5 million premature deaths every year globally. Photo c/o theecologist.org

The recent Greenpeace study also somewhat echoes the findings of energy expert and geochemist James Conca who measured death prints or the “number of people killed by one kind of energy or another per kilowatt-hour (kWh) produced”.

Conca’s research showed that globally, the mortality rate of coal is 100,000 for every 50 percent of electricity demand sourced from coal. Oil also has a large death print with its mortality rate of 36,000 for every 8% energy sourced from oil.

In contrast, solar rooftop and wind power, and mortality rates of 440 and 150, respectively. Each power source only contributes one percent respectively to the global energy at the time of the study.

Plus, the environmental benefits of shifting to renewable energy has long been well documented. For example, a study in the United Kingdom in 2017 showed that the carbon emission of the UK decreased by 5.8 percent in 2016 as the use of coal dropped by 52 percent.

Unfortunately, our government and energy planners don’t see the risks of using traditional sources of power continuously. Coal remains the dominant power source in the Philippines, accounting for 52 percent of the total energy supply in 2018. And unlike other countries that are closing down coal power plants, the Philippines will see a massive expansion of coal plants up until the next decade. Fitch Solution’s forecast released August last year showed that coal will continue to dominate our power mix and contribute to 59 percent of the energy mix by 2028.

There was a time when I have built coal plants myself to address the growing needs for more energy but we can no longer ignore the undesired effects of relying heavily on fossil fuels. And over the last few years, I have been advocating for the shift to renewables for a long time for a variety of reasons. It is possible to plan for a renewables only future for the country.  Of course, we know that even if we go completely renewable it will not contribute much in terms of “volume” to the global need to bring down CO2 . However, as we say, a small candle lighted in the dark will go a long way in contributing to this global effort.

More importantly, as I have been saying renewable power is our best bet in getting ourselves affordable and stable power. Of course, the benefits to health and our environment are also more reasons to push for a major transition to cleaner energy as many countries are now doing. We also need to look at what climate change has been doing to our father patterns -we are one of the more disaster-prone countries in the world.

Maybe providing affordable and stable energy are not sufficient reasons for our planners and government to work double-time to fast track renewable energy development in our country. Perhaps the thought of premature deaths among Filipinos and especially among our young children less than five years of age can help convince that the time to make that big shift to cleaner power is now.

References:

https://news.abs-cbn.com/spotlight/10/14/19/ph-climate-measures-lack-urgency-despite-vulnerable-status-experts-say

 https://newsinfo.inquirer.net/1228083/dirty-air-kills-27k-in-ph-yearly-says-study#ixzz6FFbqt1dz 

PH could attract $20-B renewable energy investment

(Again) It All Boils Down to Appreciating Portfolio Theory in Energy Planning

A new study by the Institute for Energy Economics and Financial Analysis (IEEFA) foresees a record decline in coal-fired power in 2019.

The study entitled “Global Coal Power Set for Record Fall in 2019,” says that the decline of thermal power coal is likely in major markets such as the United States, China, European Union, and Japan. The slowdown in the US is a record one as coal-fire use in electricity generation is likely to fall by 13 percent. Coal power decline in the EU posted a staggering 23 percent year-on-year in the calendar year to September 2019. 

It also notes that Southeast Asia is unable to absorb the dramatic decline of coal in these markets. “At just 4.6% of the world’s total coal-fired power generation in 2019, the Southeast Asian region is not big enough to compensate for the dramatic cuts in thermal coal use in the U.S, the European Union and South Korea, and the ongoing slow decline in Japan,” explained Tim Buckley, co-author of the report and director of energy finance studies at IEEFA.

The report also stresses that around the world, investments are moving away from coal due to fear of rising stranded asset risks. It also doesn’t help the coal sector that renewables are seeing double-digit deflation annually says the report. Buckley says it is clear that we will see a steady decline in thermal coal in the coming year. “The transition away from coal is happening faster than forecasters can keep up with.”

In the Philippines, it seems like there is no slowdown in coal power use. On the contrary, coal dominates and continues to dominate the country’s energy mix. A Greenpeace recent report says that coal remains our primary energy source with a 52.05 percent contribution. On the other hand, renewable energy sources share was less than half of coal at 22.27 percent as of December 2018.

The Greenpeace study also says that in terms of proposed committed projects, coal remains the king with 80 percent shareholding in total installed capacity. The environmental group says that coal power’s share in the power mix will increase to three-fourth if all these proposed projects were to be approved. 

“We are already in a state or era of dirty energy because the majority of our power plants come from coal and there are a lot of proposed coal power plants,” Khevin Yu, Greenpeace Philippine campaigner noted.

Greenpeace also analyzed the commitments and energy portfolio of five power companies. These five firms’ portfolio when combined accounts for more than 50 percent of the present existing and proposed power projects in the country. The report pointed out that the proposed power projects of four out of five firms still have coal as their preferred energy source.

In terms of their priority, companies are focused on coal energy development. “This shows that these companies will lead us to a path that our energy system will become coal-dependent,” Yu said.

Greenpeace has recommended placing a moratorium on coal plants the soonest possible time so clean energy can flourish. The suggestion isn’t new as the Energy Secretary had already been asked in congress if he favors such move. To which the secretary replied that a moratorium would be a disservice to the Filipino people.

coal jan

Coal power is likely to contribute 75% in PH energy mix says Greenpeace. Photo c/o Optimusenergy.com.au

Stepping the brakes on the construction of coal-fired plants, and ultimately, the dominance of coal in our power mix is not a disservice to the Filipino people. On the contrary, building more coal-plants places Filipinos at a disadvantage as I have discussed before. We have to remember that coal plants are locked into long-term Power Sales Agreements or PSAs, which can run up to 25 years. This means that consumers’ choices are taken away from them in the long run, when in fact, what we should be working on allowing consumers to choose their preferred sources of power.

We can trace coal’s dominance in our energy mix to our energy planners’ skewed concept of the least cost. Again, our energy planners are using the ‘least cost method’ in terms of building costs without looking at the risks, namely fluctuation in foreign exchange rates and world prices of coal.

Perhaps our energy planners should be given a crash course on portfolio theory, developed by Harry Markowitz, a Nobel Prize winner. His theory posits that risks can be minimized at any level of expected return if the investor mixes assets in a portfolio, combining high and low or zero- risk assets. Putting this theory into energy planning, this means that we should diversify our energy sources portfolio.

Greenpeace says at the rate we are going, we are likely to end up with a 75 percent coal share in our power mix. This runs counter to what financial experts advise investors of diversifying one’s portfolio. Having three-fourths of our power come from coal means we are making our consumers more vulnerable to unpredictable global coal prices and fluctuation in foreign exchanges.

Yes, we can push for a moratorium on building coal plants. But unless our energy planners understand portfolio theory for energy planning, then we can expect them to always push for coal as they look at the least cost. We all should be very scared now if Greenpeace’s prediction that coal will contribute 75 percent and brace ourselves for possibly higher power rates in the future if this forecast comes true.

Of course, we need to reduce coal in power use significantly as we aim to meet our commitment of 70 percent emission reductions below business-as-usual-levels. We, along with other nations need to help save the environment. But another compelling reason to move away from coal is to provide consumers with more choices and reduce the risk of having them pay for more expensive electricity in the future. May our energy planners realize that their misplaced appreciation of the least cost method is costing Filipino consumers more.

References:

IEEFA update: Global coal power set for record fall in 2019

https://www.philstar.com/headlines/2019/11/22/1970979/greenpeace-companies-coal-expansion-will-block-philippines-transition-low-carbon-future

Should We Have a Moratorium on New Coal Plants?

 

According to news reports, Germany intends to shut down its first power plants that use black coal in 2020 as part of the country’s efforts to phase out all coal plants by 2038.

Earlier this year, Germany, one of the largest consumers of coal in the world, announced that it would shut down all 84 coal-fired power plants in the next two decades in the hope of meeting its international commitments in the fight against climate change. 

Coal plants account for roughly 40 percent of Germany’s electricity as the country is the last bastion of coal burners inNorth-Western Europe.

The decision to close all of Germany’s coal-fired plants was no walk in the park. The German coal exit commission consisting of industry representatives, politicians, and non-government organizations (NGOs) spent seven months of discussions and a 21-hour negotiating session deciding whether to junk coal-fired plants altogether. 

The decision to end coal plant operations was described as “a historic accomplishment,” by Ronald Pofalla, chairman of the 28-member government commission. Likewise, Hans Joachim Schellnhuber, a member of the commission and an adviser to the German chancellor, Angela Merkel stressed that “This is an important step on the road to the post-fossil age – a step that also opens up new perspectives for the affected regions through innovation-driven structural change.” 

German Chancellor Angela Merkel’s administration is reported to have allotted some 1 billion euros or $1.1 billion to fund the closing of several coal plants with a total of five gigawatts capacity by 2023. Merkel’s government intends to replace coal power with renewables by increasing the share of renewable energy from 38 percent to 65 percent in 2030.

Germany, one of the largest consumers of coal in the world is shutting down all 84 coal-fired power plants in the next two decades. Photo c/o carbon brief. org

Germany is not the only country that’s retiring coal-fired plants. The United Kingdom government has earlier committed to phasing out its coal plants by 2025.

Similarly, in the United States, coal plants are being closed as well. According to data from the U.S. Energy Information Administration and Thomas Reuters, around 10,6000 megawatts of coal-fired plants are either to be retired or converted to gas by the end of 2019. Last year, several coal plants with a total of 13,000 MW ceased operations.

The Philippines, however, is going against the global trend. Data shows that coal accounts for 52.1 percent of the country’s power generation mix in 2018, up from 49.6 in 2017. On the other hand, the contribution of renewable energy has declined from 24.7 percent in 2017 to 23.5 percent in 2018.

And the Philippines will continue to rely on coal for at least two more decades, according to BNEF’s New Energy Outlook 2019. 

Caroline Chua, BloombergNEF’s energy analyst for Southeast Asia noted that coal-fired power generation in the Philippines will steadily increase and will remain as the biggest single source of electricity until 2041. “By 2050, the Philippines will still have almost as much coal-fired generation as today,” Chua stressed.

Our country’s reliance on coal does not sit well with various sectors. There have been calls to place a moratorium or suspension on the building of new coal-fired power plants. Cagayan de Oro City 2nd district Rep. Rufus Rodriguez floated the idea during a budget deliberation so the Philippines can cut its carbon emissions. 

Congressman Rodriguez asked Energy Secretary Alfonso Cusi if he agrees to a moratorium on coal to help the Philippines meet its commitment to the United Nations by 2030. “May we know whether the Secretary agrees that we should, therefore, to comply with our Intended National[ly Determined] Contribution to the UN, we should therefore already have a moratorium on coal plants?” he asked.

The secretary, however, was quoted to have said a “moratorium on any technology is a disservice to our country.” If we can find alternative ways to provide electricity service, then it will not be a disservice.

The suggestion of Congressman Rodriguez has its merits. If we want to meet our international obligations of cutting down carbon emissions, then preventing the construction of more coal-fired plants is a great start. I am from Cagayan de Oro, and I am proud of Congressman Rodriguez’s stand. He will get my support.

But setting aside environmental concerns, there are other reasons why the Energy Department should consider placing a moratorium on coal power, particularly large central thermal coal plants.

We have to keep in mind that coal-fired power plants with large generating capacities are signed up for long-term power supply agreements (PSAs). These contracts often run up to 25 years.

The problem with these long-term PSAs is that they take away the power of consumers to choose their preferred sources of energy or technologies. Essentially, big coal-fired plants that are signed-up by distribution utilities will end up burdening consumers who are stuck with the same power supply contract for as long as 25 years. This is a disservice to consumers since what we should be aiming for and working for is for the consumers to be given a choice on their preferred technology and pricing. So distribution utilities should balance their portfolio by matching type and tenor of their contracts to the needs of their consumers.

This is just the problem with our energy planning. We often fail at being consumer-centric when in fact, placing the welfare of the consumers should always be the priority. Looking after consumers mean giving them as many options as possible. Unfortunately, locking them into long-term supply contracts is akin to taking away their power to choose. We could change all that now by considering a moratorium on the construction of big central thermal coal power plants.

But the discussion should be beyond just discussing “moratorium” as we should really be thinking about alternative ways to tap the environment for energy. It is this mentality of looking for an easy way out of our energy needs that leads us to the usual suspect: coal. So yes, we should have this moratorium on new coal plants while developing other sources of energy.

References:

Murang Kuryente slams DOE refusal to impose coal moratorium

Green energy use to rise but coal to remain necessary

http://ieefa.org/u-s-coal-plant-retirements-to-top-10gw-in-2019-eia/

Cusi not cool with coal-fired power plant moratorium

https://cleantechnica.com/2019/10/04/a-uk-coal-power-station-closes-signaling-the-end-of-an-era/

https://www.theguardian.com/world/2019/jan/26/germany-agrees-to-end-reliance-on-coal-stations-by-2038