Simon Wild

19 February 2013 — It gets depressing when you hear and read about adaptation over mitigation, coal over renewables and no hope over hope. So three recent good news stories from around the world are worth noting, two from market driven forces and one from legislative driven forces.

The first is from the US, the stalwart of inaction – well certainly the stalwart of being noncommittal. This one is from a website called 2degrees, great site worth a visit. They have reported that according to the Sustainable Energy in America Factbook 2013 that the US doubled its renewable energy capacity (excluding hydro) from 44 gigaWatts in 2008 to 86gW in 2012. Couple that with their gas generated electricity and their grid emissions fell by 13 per cent over the same period. In the words of an American friend – awesome (prolong the emphasis on the awe).

Onto the legislative driven change – Germany. Luckily it looks like they didn’t listen to their former adviser who said let us focus now on adaptation. They have continued to take their stance of “look what we are doing, surely you can do the same, it ain’t that hard”. True leadership. They are well and truly on their way to achieving their target of 80 per cent renewables by 2050, they are close to achieving 40 per cent from renewables by 2022! Between 2011 and 2012 they achieved a 15 per cent increase in renewable energy (just in the year!) to reach 23 per cent from renewable energy in 2012.

Now onto my home turf – Australia. A laggard in the realms of decarbonising our electricity grid. The government has its hands tied by the bank balance – high tax earner from coal exports – so legislating a renewable energy target close to Germany’s is virtually impossible. But here is the light at the end of the tunnel, Australia is very good at responding to market driven reform – if the market can’t get finance or if it’s cheaper to do something else then the market will respond. And here is the change that the market will respond to “Rising risk prices out new coal-fired plants: report” from the Sydney Morning Herald – thanks Dave Collins of Cundall Sydney for finding this one.

The report draws on various sources for information but the long and the short is renewable energy is now cheaper than coal fired electricity generation, and cheaper than gas fired power generation. “Wind farms can now generate electricity at $80 per megawatt-hour, compared with $143 for a new coal power station and $116 for a new baseload gas power station.” Even if Abbot gets in and abolishes the carbon tax wind will still be cheaper!

As a quick comparison, using the triharder calculations trigen units in buildings is about $140-150 per megawatt-hour.

PV (solar farms) are still a bit more expense at $157 per megawatt-hour but not for long, “By 2020, wind power’s cost per megawatt-hour will drop to $70 and then to $66 by 2030. The cost of large-scale solar PVs will drop to $97 for an equivalent amount of electricity and then to $87 10 years later”.

So the response we usually get when we talk about the grid being decarbonised in Australia is “it will never happen the Government doesn’t have enough power”, maybe not. But the market does have the power. If you can buy electricity cheaper from a renewable energy provider rather than a coal fired electricity provider then you will, regardless of your views about climate change and treehugging.

Now that one deserves a very prolonged awe on awesome.

Chart 1

Meanwhile, there has been a lot of coverage over the last week about China now consuming more coal than the rest of the world combined, also about how China wants to cap its coal use at 4bn tonnes but that could hamper growth and how bad it is that China is now the highest carbon emitter in the world. But how does China’s growth compare to Australia or the US in coal, energy and emissions?

Using the absolutely awesome website Gapminder(go there – you can lose hours of time) I wanted to understand how China sits in relation to the rest of the world and if they continue along the path of economic growth to match Australia or the US where do we all end up?

Well, the first thing to look at is total coal use. Chart 1 shows total coal consumption per country since 1850, it very quickly demonstrates the role coal has played in the rapid economic expansion of China since 2002. Now, we can argue about how much of China’s coal is used in making stuff for the rest of the world but let’s ignore that because the future will be more local consumption in China than export. China is the red line, United States is hello, India is blue and Australia is the smaller dotted red line – the size of the circles relates to population. If you go to gapminder.orgyou can animate over time – awesome.

So, China has been consuming more coal than the US since about 1987 and India is now approaching the point of consuming more coal than the US. Not a good picture. But if we look at coal use per capita

Chart 2

over time, it paints a very different picture. (Chart 2)

Australia has been consuming more coal per capita than the US since about 1982, with a slight improvement in 2010 (maybe financial related) but an appearance of a downward trend since 2006. India is still way down in per capita terms, but China is definitely catching up fast to the US and likely to surpass it in the next few years. But the per capita coal use of China is definitely not as high as the rest of the world combined. So is it all being consumed in the manufacturing of stuff for the rest of the world? Coal consumption per capita against GDP per capita is a good way of assessing this. (Chart 3)

If the GDP per person was as high in China as it is in Australia today then China per capita coal use would probably be twice as much as it is now! In GDP per capita terms China is where Australia was in the 1950s and where the US was in the 1940s and strangely enough its coal use per capita is roughly where Australia was in the 1950s. So coal use per capita in China is in line with their current GDP per capita. Does that mean their coal use is typical of a 1940/50s developed country? It seems to me like it is, so with a population of 1.4 billion people (20 per cent of global population) and a coal use per capita of a developed country why is the fact that China is consuming more coal than the rest of the world surprise us?

So, the last one is future impact. Let’s move beyond the coal debate for a moment, since burning oil, or natural gas, or shale gas, or hydroelectric or nuclear to produce electricity, manufacture stuff and live

Chart 3

our lives can be as environmentally damaging (it’s not just about emissions). We all know that the developing countries are called that because they are developing. They are moving more people out of poverty, moving more people into the middle class and generally raising the GDP per capita. So let’s look at energy use per capita against GDP per capita. (Chart 4)

When we look at total energy use per capita rather coal use per capita China is nowhere near Australia or the US. Yes they are using a cheap form of energy to cheapen their growth (not sure what Australia’s excuse is) but China’s energy use per capita is almost 3 times less than Australia. What appears to be happening is the developing countries, the US and Australia, seem to be improving efficiency and heading towards 5kg of oil equivalent per person and the developing countries are heading to a similar point.

What about the future? Well if you use the impact equation it brings up some terrifying results. In 2012 the global population was 6.9billion, energy per capita was 1.8kg of oil equivalent per capita giving a total of 12 billion kg of oil equivalent energy use. In 2050 the world population will be 9.5 billion according to the UN medium projections, if the developing countries achieve a GDP per capita similar to Australia and therefore an energy per capita equivalent to Australia the energy per capita is likely to go up to 5kg of oil equivalent. This would result in 47 billion kg of oil equivalent.

By 2050 our population is predicted to increase by a factor of 1.4, whereas if everyone lived as consumptively as the average Australian does at the moment the global world energy use would go up by a factor of 4! In other words if the end goal is to live like the average Australian we would need to find enough energy to support the equivalent of 28 billion people today.

Chart 4

Yes coal use in China is now more than the rest of the world combined, but the energy use per capita in China is 5 times less than the US and if everyone lives like the average Australian by 2050 we will need to find 4 times the amount of energy every year than we currently consume. I wonder if the world actually has four times the amount of energy? I wonder if we can afford to create that amount of energy?

Simon Wild is the chief operating officer of Cundall.