The Quest - By Daniel Yergin Page 0,183

site and build, and its lifetime may ultimately extend into the next century.

Yet the rules, the politics, and the expectations keep changing, creating what economist Lawrence Makovich calls “the quandary.” The business itself is still subject to alternating currents of public policy—and dramatic swings in markets and popular opinion—that lead to major and abrupt changes in direction. The focus on climate change grows more intense. So does antipathy to building new plants. And it is not just the prospect of new coal or nuclear plants that engenders environmental opposition. Wind turbines and new transmission lines can also raise the ire of local publics.

How, in such circumstances, to meet the needs and close the gap between public expectations and what can actually be built? Both wind and solar still have to prove themselves on a systemic scale. (To each of these we will return later.) Efficiency and the smart grid could reduce or flatten out the growth curves.

The place to start is with the current mix. In the United States, coal’s share, once almost 55 percent, has declined somewhat to about 45 percent of all electric-power generation. Natural gas is next, at 23 percent and rising; and nuclear, at 20 percent. Hydropower is 7 percent; wind is almost 2 percent; and solar does not register. Over the decades, oil has been squeezed down from over 15 percent to just 1 percent. That is why, despite what is often said, increased renewable or nuclear power would have very little impact on oil use unless accompanied by very widespread adoption of electric cars that plug into the electric grid.

The other major developed regions are somewhat less reliant on coal. In Europe, nuclear, coal, and natural gas are all tied at 25 percent each. Hydro is 15 percent. Wind and oil are virtually neck and neck, at 4 and 3 percent respectively. Japan is 28 percent coal and 28 percent nuclear, followed by natural gas at 26 percent. Oil is 8 percent; hydro, 8 percent. Wind is negligible. In all three regions, solar has yet at this point to appear in any statistically significant way.

THE FUEL MIX

Electricity generation in 2009 by fuel type, in millions of gigawatt-hours

Source: IHS CERA

China and India, the world’s most populous countries, rank first and third, respectively, in coal consumption, with the United States placing second. In China about 80 percent of electricity is produced from coal, while this figure is 69 percent for India. Hydropower accounts for 16 percent of electricity production in China and 13 percent in India.3

The choices on fuel mix are determined by the constraints and endowments of region and geography. Thus, over 80 percent of Brazil’s electricity is hydropower. The choices are also shaped by technology, economics, availability, and the three Ps—policy, politics, and public opinion.

When it is all added up, however, on a global basis, a triumvirate of sources—coal, nuclear, and natural gas—will remain dominant at least for another two decades. As one looks further out in the years ahead, however, renewables grow, and the mix becomes less clear—and much more subject to contention.

COAL AND CARBON

Today 40 percent of the world’s electricity is generated from coal. Coal is abundant. The United States holds over 25 percent of known world reserves, putting it in the same position in terms of coal reserves as Saudi Arabia with respect to oil reserves. A new generation of ultra-supercritical power plants—operating under higher temperatures and pressures—are coming into the fleet. They are much more environmentally benign than the plants that would have been built a generation ago, and because of their greater efficiency they can emit 40 percent less CO2 for the same amount of power as a plant built a couple of decades previously. Today most scenarios have coal use growing on a global basis.

Between 1975 and 1990 the output of coal-generated electricity literally doubled in the United States. In those years, government policies restricted alternatives, and coal became the reliable, buildable generation source. Policies also promoted coal as a secure energy source and one not subject to political disruption. For many countries, that is still the case. But not in the United States and Europe, where carbon emissions are a major issue. Based on the chemical composition of coal and natural gas, and the greater efficiency of a combined-cycle gas turbine, coal produces more than twice as much CO2 per unit of electricity as does natural gas.

In 2011 about 25 coal-fired plants were under construction in the United States. But political and regulatory opposition to coal on