Can Your Company Consume Clean Energy and Still Compete Globally?

by | Mar 17, 2016

Is there is a correlation between economic growth and the rate of growth in greenhouse gas emissions? If the current presidential campaign is the benchmark, one would suspect a close link. But, at least for the last two years, those heat-trapping releases are stable while global economic growth is on the rise.

For those who live in or around coal country, most of the talk is about President Obama’s “War on Coal” and how the series of regulations ranging from carbon to mercury to sulfur dioxide and nitrogen dioxide are killing coal. And, by extension, they are suffocating businesses whose processes depend on cheap energy.

But coal’s problems are multidimensional. Cheap natural gas has eaten into its marketshare while the coal seams in Central Appalachia are thinning. Developers have also over-produced. That has caused global prices to fall while foreign exports have declined as well, given the emphasis on keeping worldwide temperatures to no more than 2 degrees Celsius in the 21st Century.

“Plain ole economics is the main thing,” says Charles Bayless, former chief executive Tucson Electric Co. and Illinois Power. “A gas plant is much cheaper to build than a coal plant and it is much simpler to run. But if natural gas were still high-priced, we might not have that option.”

While Bayless says that climate change is certifiably man-made, he has explained to this reporter that the burden of decreasing pollution must be spread around the world. But has the push to go green red-lighted a global economic expansion?

The good news is that the latest data coming out of the International Energy Agency in Paris says that the global rate of carbon emissions has remained flat for two years in a row, at 32.1 billion tonnes in 2015. It adds that reduced coal use and the increased consumption of green energy is the reason why.

Consider: renewables have accounted for 90 percent of all new generation added around the world, with wind making up half of that during that time span, says the agency. Meantime, global economic output has increased by 3 percent. In other words, unlike previous time period when emission rates have fallen or remained constant, the reason now is because of changing fuel mixes — not because of hard economic times.

To this end, China is a major reason why. It’s carbon emissions have fallen by 1.5 percent because of its declining coal use. China’s coal consumption dropped by 10 percent to 70 percent of its electric generation in 5 years, the agency says.

It might slip even further in the coming years, although it still consumes 47 percent of the world’s coal — far more than other nations. Under the COP21 agreement, China’s major push to cut carbon won’t come until 2030. The United States, by comparison, has reduced its coal use as percentage of the electric generation portfolio from about 50 percent in 2007 to 34 percent today.

To be clear, China is still the world’s biggest culprit when it comes to releasing carbon dioxide emissions, at around 26 percent of them. It is followed by the United States, which produces 14 percent of them, and then the European Union that is responsible for 13 percent of them.

One major issue between the China and the United States —  not to mention, the rest of the developing world — is that the less-developed countries want to join the modern ranks. They are trying to industrialize their economies and they do not want to restrain production. However, if the western world offers up both financial and technological assistance, then China could embark in earnest on a quest to cut its carbon emissions.

To this end, China is willingly moving toward a greener energy sector and is enacting policies and procedures to build more wind, solar, hydropower and nuclear energies. But it will still need carbon-intensive fossil fuels, like coal and natural gas.

One of the sticking points to advancing the global climate pact signed in December in Paris is how richer nations would assist poorer ones in cutting their emission levels. Global leaders have already established a $100 billion climate fund that will get additional funding over a decade.

That money will also come from vendors that sell clean technologies. For example, Tesla Motors and Daimler are trying to get a foothold in the electric vehicle market there while GE Energy and Siemens are selling natural gas turbines, and Toshiba Corp. is one of China’s key nuclear energy providers.

“U.S. LNG exports are already being positioned to support Europe and Asia,” says Brian Gutknecht, product marketing general manager, GE Power & Water, referring to the super-cooled gas, in an earlier talk with this writer.

“In many cases,” he notes, “that will put gas pricing below coal. In other places like China, it will require tapping into their own unconventional gas together with more stringent emissions requirements to displace coal.”

Diversifying the global energy mix is therefore not just a method by which to burn cleaner energy but it is also fast becoming an economic development tool — a lesson to perhaps impart to the coal-based states in this country. Witness the findings by the International Energy Agency as well as the those in the United States, which shows economic productivity up and carbon rates down.

Clean energy is increasing competitiveness, not smothering it — a point worth remembering as the political rhetoric heats up this election season.

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