Guess Whose Burning Coal?
July 3, 2008
Why the Gulf Is Switching to Coal
The Persian Gulf may be sitting atop massive oil reserves. But with prices for crude skyrocketing, it makes more sense to sell it than to burn it. Instead, the Gulf is turning to coal for its energy needs — to the detriment of the climate.
For Alfred Tacke, CEO of the Essen energy giant Evonik Steag, it’s the yellowish-brown pall below that tells him the plane he’s on is approaching the Persian Gulf. Beneath the haze, he knows, is Kuwait, which has five large-scale gas- and oil-fired power plants in operation. The power they generate provide around-the-clock electricity for Kuwait’s gigantic seawater desalination plants and the country’s enormous air-conditioning needs.
“Here, you only need to stick your finger in the sand and you’re likely to strike oil or gas,” says Tacke, whose energy group ranks fifth among Germany’s electricity producers. But Tacke has his own ideas about how to make money in the region. And they center on a different kind of black gold: coal-fired power plants. “We’re currently in the process of discussing the conditions for projects of this kind,” he says.
As odd as the idea may seem, coal power in the gulf is just one more outcome of skyrocketing oil prices. In a world with dramatically disparate ideas on how or even whether to address the risks of global warming, demand for coal plants across the globe is growing rapidly to the detriment of efforts to increase the production of renewable energies such as solar, hydro and wind.
Nowhere is that demand more paradoxical than in the oil-rich Middle East. At the end of April, for example, the state-owned Oman Oil Company signed a memorandum of understanding with two Korean companies on the construction and operation of several coal-fired power plants. Dubai, for its part, is initially planning to build at least four large facilities with a cumulative output of 4,000 megawatts. Abu Dhabi also wants to get into the act. Even Egypt is thinking of constructing its first coal-fired plant on the shores of the Red Sea.
Two-Hundred More Years of Coal
Other regions in the world are fuelling the trend as well. Oil-rich Russia is planning the construction of more than thirty new coal-fired power plants by 2011. In China a new facility is connected to the grid about once every 10 days. Greenpeace estimates that around five thousand coal-fired power plants will be in operation worldwide by 2030.
The economics behind the coal fad are clear. To produce a megawatt hour of electricity using Australian coal, it costs just €11. Using natural gas, on the other hand, ups that price to €26 while oil-fired power plants swallow up €50.50 per megawatt hour of electricity.
Plus, coal is likely to be available for quite some time to come. Global coal reserves will last an estimated 100 more years and possibly even twice that long. As a result, coal is relatively cheap and in some cases can even be gleaned from open pit mines as in Australia, but also in the US, South Africa, China and Russia. The difference between the prices of natural gas and oil on the one hand, and coal on the other is growing increasingly large.
For the Gulf, the development is turning into a highly lucrative business model. They are currently able to sell their oil at record prices on the global market (currently over $140 a barrel). At the same time, they are able to satisfy their own energy needs at a much lower cost with coal shipped in from overseas.
From an environmental standpoint, of course, this trend is devastating. The Gulf states, first and foremost the United Arab Emirates, are among the world’s boom regions. It is predicted that by 2015 the population of Dubai will double to a total of 2.6 million. Per capita energy consumption in the Emirates is six times higher than the global average and a third more than even the US average.
Deserts Devoid of Solar Power
Should coal play a major role in satisfying such a growing energy demand in Dubai and elsewhere, prospects for the global climate are dim. Even a modern anthracite-fired power plant emits 750 grams of CO2 per kilowatt hour of electricity produced, twice as much as a gas-fired power plant and around 50 percent more than an oil-fired power plant. The amount of CO2 emitted by lignite-fired power plants is much greater, further aggravating the greenhouse effect.
The situation is one which shows the limitation of climate protection policies developed and implemented on the national rather than the international level. Germany has committed to reduce its CO2 emissions by 20 percent by 2020 relative to 1990 levels and is striving to achieve double that reduction figure. Many Gulf States, on the other hand, including the United Arab Emirates, are classified as developing countries — meaning that even though they’ve ratified the Kyoto Protocol, they have no obligation to reduce their CO2 emissions.
A quick look at the potential of solar power in the region shows the absurdity of this situation. In the sun-baked Gulf, one square meter of solar cells produces at least 2,200 kilowatt hours of electricity per year. In Germany annual output for a square meter is less than half that amount. In the Gulf States, though, solar energy is much too expensive when compared with coal. In contrast to Germany, there are no subsidies for those who invest in solar collectors.
In Germany last year, solar power facilities with an output of 1,300 megawatts were installed. In Saudi Arabia the other Gulf States, it was just 36 megawatts. Even if only a fraction of the solar electricity subsidies available in Germany were available in the Gulf, the positive effect for the global climate would be many times greater.
For the moment, though, there is currently not enough political support for solutions of this kind, neither in the oil-producing countries nor in the industrialized nations. Which means that Alfred Tacke of Evonik Steag is hoping for tidy profits in the future. “The Gulf,” he says hopefully, “is a growth region for us.”
July 3, 2008 at 7:05 am
The basic problem with solar power (and wind power) is its intermittancy. Solar is available less than 50% of the time (wind less than 30%), so it requires conventional or nuclear backup. One megawatt of solar = one megawatt of coal/nuclear backup. So the economic question is, Why am I building expensive solar? The answer is, It’ stupid.
Now tidal power makes some sense because it’s continuously available, and orbital solar collectors also could provide continuous power at spectacular expense. On the other hand, orbital solar collectors make jim-dandy weapons.
July 3, 2008 at 7:55 am
This development shows what happens when a politically correct issue is pushed via demonstrations and feel-good activism to a gullible, uninformed public. The Greens here in in Germany are still insisting on closing functional nuclear power plants, and just last week our Green/Social Democrat city government legislated that solar thermal panels must be installed whenever significant roof repairs are made. Of course this ignores the fact that the situation of the roof may not be ideal or that the homeowner’s money could be spent more efficiently for other energy-saving measures. I wonder where these jerks hang their halos at night. I wish they would keep them on and use the light they produce to read a little about subjects like economics.
July 3, 2008 at 11:31 pm
The problem with most of the Greenies is that very few of them are familiar with the laws of thermodynamics. Energy does not exist in a vacuum, it must be produced from something in which it is bound up. Fossil fuels are still the most cost effective sources of energy. Nuclear power is next and it has the advantage of being clean.
If electric cars are ever to be practical some major breakthroughs in battery technology and battery disposal must be made. And we’ll need a lot more electric generating plants.
Bob S. has already mentioned the problems with solar and wind. They are supplements not core sources.
Bio-fuels have some promise, but it still costs energy to raise the plants that provide the fuels.(Check the price of corn.) I read about an oil producing algae that sounds too good to be true because it seems to be a cheap source of conmtinuous production.
Conservation and alternative fuels can help, but they are not the immediate solution as posited by the nattering nabobs of the left.
July 8, 2008 at 3:34 am
This goes to the core of the whole problem. While Western Nations are being ‘coerced’ into going down the direction of the so called renewable sources for electricity generation, there are Countries just thumbing their noses at that, and constructing coal fired power plants like there’s no tomorrow. While Countries like the US and other western countries are actively pursuing those renewable sources, Countries that can afford the immense cost of constructing those plants using renewables are ‘counting the beans’ and then going for coal fired plants.
Why?
The renewable plants are subject to the variability of the wind and the Sun (and night time) while coal fired plants provide a constant reliable power. This is called baseload power, and the renewable’s just cannot provide that constant set level of power.
Dollar for dollar the original construction of coal fired plants is cheaper although if the cost of the coal is added into the overall cost, THEN those renewable look attractive. The time factor also comes into the equation because a coal fired plant can be constructed in half the time.
For a huge 2000MW coal fired plant, you would need to construct ten large solar plants covering an immense area for only variable power of less nameplate capacity than from either Solar or wind.
Those western countries are just caving in to the ‘green’ environmentalists, whereas to countries like those in the Middle East, the only thing they think of when the word green is mentioned is that it is the colour of money.
TonyfromOz