Coal Really IS On Its Way Out

Here’s an excellent piece on the rise and fall of coal around the world.  Even in places like China, the relative costs of coal versus competitive energy resources has begun to take coal out of the picture.   Two key metrics are in play.  From the article:

The first metric is the long-run marginal cost (LRMC) of energy from a power plant, which is the value of the energy it produces minus the ongoing costs of running the plant, i.e., fuel costs, variable operating and management (O&M) costs, fixed O&M costs, and any carbon costs that might be imposed by policy.

The second metric is the levelized cost of energy (LCOE) from a power plant, which is the value of the energy it produces minus the costs of running it (LRMC) and the capital cost of building it.

If you’re thinking about whether to continue running a power plant you already own, you’re thinking about LRMC. If you’re thinking about whether to build a new power plant, you’re thinking about LCOE.

What this has created is arguably the most dramatic story in the history of the energy industry.  It’s illustrative of the fact that, as they say, “sometimes it’s better to be lucky than good.”

Suppose, for some reason, there had been a hard limit associated with scaling solar PV and wind, and prices hadn’t plummeted over the last 10 years.  None of this would have happened, and we’d have a planet far hotter and more toxic than what we have today.

That’s because our civilization is almost completely powerless to stave off the imminent environmental collapse, due to the enormous power of the fossil fuels industry.  If it weren’t for hard economics, we’d be burning coal until Earth was a desert.