China’s National Energy Administration recently announced the cancellation of more than 100 planned coal-fired plants. Why? Because China’s air quality is abysmal and the country has limited domestic coal supplies at current consumption rates. There are also less costly options.
This serves as a cautionary tale for us. America’s government has little influence on the global decline in coal use, so it will likely take more than the government to improve the economic future of those who work in the coal industry.
To fuel its economic growth, during the past few decades China has invested in all of the “shovel-ready” technologies to expand its electric energy supply. This included a heavy emphasis on coal. Like Europe and the United States, China also invested in research and development that has succeeded in driving down the cost of natural gas as well as wind and solar power. That global investment in innovation is paying off.
Coal demand will likely continue to decline globally, driven by fundamental economic reasons, energy security concerns and the desire for cleaner air and reduced environmental impact. The decrease in coal use is part of a megatrend that promises to hurt almost everyone in the coal industry while benefiting the rest of us.
Given the factors leading to a decrease in coal demand, it is time to put the phrase “war on coal” on the shelf and deal with reality.
Unless some unanticipated tipping point is reached, the reduction in coal use will be slower than what environmentalists would like and faster than what is comfortable for those whose livelihood depends on coal. Although coal use is declining, the U.S. still generates more than 30 percent of its electricity from coal. Globally, about 40 percent of electricity is generated from coal, and China generates near 70 percent of its electricity from coal.
The cost of replacing that much infrastructure limits the rate that coal will be replaced by alternative sources. Take, for example, cars. We can buy a new car that is cheaper to operate and cleaner than our current vehicle, but the savings are not large enough that we rush to replace our car. The same dynamic is true with coal plants. They will be replaced with new technology, but not immediately.
In the 1980s and 1990s, when it appeared the semiconductor industry might disappear, the industry collaborated to make the technological breakthroughs needed to save itself. The government cooperated with the chipmakers, and the U.S. is still an important player in a global industry. The semiconductor industry prepared itself for the global situation that was coming. It did not try to recapture the past.
The coal industry needs to take the same approach, but it does not appear to have the industrywide leadership needed to try cooperative innovation to make coal a less costly and more desirable form of energy.
A way forward is needed for the industry to develop a credible cooperative plan for the beneficial use of coal itself or for the resources of the coal industry. That would provide governments an effective way to help.
We must not forget that there is real pain in the lives of those working in the coal industry as they see their livelihood disappearing. The labor market is also changing. While the number of jobs is growing and domestic manufacturing output is at or near record highs, new types of jobs are being created as automation makes some manufacturing jobs of the past less relevant.
Overall, in the U.S., the number of wind and solar energy related jobs may well be greater than employment in coal producing regions, but the reality is that well-paying jobs are not being created in coal country to replace the ones lost.
It is unlikely that many traditional coal jobs will return, but we need to use this time of decline in the use of coal to build jobs that improve the quality of life for those in the coal industry.
If we fail, it will be because we fought a nonexistent war on coal rather than focusing our creativity on how we all can benefit from a well-recognized global energy shift.
David Tuttle is a research fellow in the Energy Institute at The University of Texas at Austin. Robert Hebner is the director of the Center for Electromechanics at The University of Texas at Austin.
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