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Market Forces and Coal

Posted on 19 August 2019 by Riduna

Following defeat of the Australian Labor Party in the Federal election a leading Member has suggested that the Party should not rely on the use of Market Forces as the basis for curbing emissions.  This would be a mistake since it is these forces, particularly those of supply and demand, which governments can not resist - no matter how ill-disposed to rapid reduction of greenhouse gas emissions they may be.

Supply and demand are influenced by price, reliability, cost to use, appearance and many other comparative factors.  Simply put, a manufacturer will not produce goods or services unless cost of production enables him to compete profitably with other producers. Consumers are unlikely to purchase a product unless it is deemed to have advantages over other products. 

Into this mix has been inserted new, highly disruptive, though still evolving technology in the form of renewable energy generation.  It is disruptive because it enables radical departure from existing, often long-standing technology to which we have all become accustomed.  It offers cheaper, more efficient production of goods and services which can be supplied to consumers at lower prices, though more profitably.  Nowhere is this more evident than in the generation, storage and use of electricity.

Coal

Demand for coal is primarily created by demand for electricity, steel, bitumen and other products.  The fact that the Adani coal mine will be built and will export coal to India is a natural response to this demand – and the demand for more jobs in Regional Queensland.  It will not help reduce greenhouse gas emissions but it is a natural response to market forces.

Demand for the end-products of coal is likely to increase in coming years because of a growing population and expanding economic growth, giving the impression that the future of the coal industry is secure.  Not so, because electricity generated from renewable sources, primarily wind and solar, is now cheaper than electricity generated from new coal-fired power stations while old power stations are closing because essential maintenance is becoming more pervasive and expensive.

Australia is unquestionably the worlds’ leading exporter of coal.  In 2017 it exported 202 million tonnes of thermal coal which was used to generate electricity and 177 million tonnes of coking coal used for smelting and other purposes.  In addition, Australian coal mines produced and sold some 44 million tonnes for domestic consumption, mostly for power generation.  However coal production is prone to contraction due to falling internal and external demand and other factors such as price or availability of substitutes such as Liquified Natural Gas.

Domestic Demand

In 2018 Australia had 19 coal fired power stations in operation, generating about 62% of its electricity with the balance coming from oil and gas-fired power stations (23%) and renewables (15%).  

Fig 1.  Rapid expansion of large-scale solar Photovoltaic (PV) generation is expected by the end of 2019 with new capacity of 1,570 MW commissioned in 2018 and 4 - 5,000 MW likely to complete in 2019.  Source of graphic:  Wikipedia.

Australia's coal-fired power stations have a nominal capacity to generate 24,970 MW.  With closure of 4 stations likely by 2030 (5,654 MW) and a further 11 (16,151 MW) closing by 2040, leaving 4 stations (3,165 MW) which may operate beyond 2040.  It is possible, indeed likely, that all 19 power stations could close by 2030 without causing any failure to meet national demand for electricity. The reason for this is, as shown in Fig 2. below, the investment pipeline in renewable energy has a generating capacity of 29,307 MW, exceeding the nominal capacity of coal fired power stations now in operation.

Fig. 2.  The Pipeline comprises approved projects which have commenced/not commenced but are likely to be commissioned by 2025.  It excludes mega-projects:  Snowy 2.0 (2 GW), Pilbara Power Hub (9-12 GW) and the NSW Power Hub (4 GW) since funding, start and stage completion dates are uncertain.  Source:  Authors research and Clean Energy Council data.

Proponents of coal fired power generation correctly point out that renewables only generate electricity when the sun shines or the wind blows, while demand is for reliable dispatchable energy supplied 24/7.  This problem is being overcome in three ways:  

1. The Pipeline includes pumped hydro and battery storage of 2.115 GW to help ensure continuity of supply.  

2.  Snowy 2.0 is likely to be commissioned well before 2030 and provide an additional 2 GW back-up for solar and wind.

3.  Solid State battery technology promises cheaper, more stable batteries with up to 3 times storage density of lithium-ion batteries now in use and is likely to be commercialised by 2025, possibly sooner.

It is currently estimated that 35% of Pipeline projects, with around 5-8 GW generating capacity will be completed and connect to the Grid in 2019, further eroding the use of coal which, as shown in Fig 3, has contracted by about 24% over the last decade.

Fig 3.  Decline in Australian domestic coal consumption 2007 - 18, shown in millions of metric tonnes.  Source:  CEICDATA.

Advances in solid state battery technology will result in cheaper electricity storage, expansion of small-scale solar with generating capacity of >8 GW, and fall in its dependence on the Grid for back-up.  The present cost of Grid-scale battery storage is likely to fall by as much as 50% and will be supported by larger pumped-hydro projects such as Snowy 2.0. Most of these developments are likely by 2025 and would see further, more rapid decline in the use of fossil fuels, to generate electricity.  

By 2030 domestic demand for coal to generate electricity could be reduced to zero, implying that coal mining production would be forced to contract possibly by 40 million tonnes over the next decade.

Export Demand

Australia is the largest coal exporter in the world.  In 2016/17 it exported  379 million tonnes comprising 45.7% coking coal largely used for smelting iron ore and 54.3 % thermal coal used for generating electricity.  As shown in Fig 4, the bulk of these exports were to Asian countries, with 5 countries accounting for 86.9% of all export destinations.

Coking or ‘metallurgical ‘ coal is described as a non-substitutable material used in production of steel from iron ore.  In fact hydrogen can perform the same reductive task and the Swedish Government is involved in a prototype steel works using hydrogen rather than coking coal to smelt iron ore.  However, wide-scale adoption of hydrogen for this purpose seems unlikely for at least a decade.

Other factors more likely to affect future demand and use of coking coal are a decline in demand for steel due to regional or global economic downturn or, more significantly, greater use of scrap metal as the source of steel products.  The latter is likely to grow significantly as electric vehicles begin to rapidly replace those driven by internal combustion engines after 2025, resulting in rapid increase in availability of scrap metal which is often recovered using electric furnaces.

Major importing counties, notably Japan, China, Korea and India, seek to become more self-sufficient in coking coal through increased domestic production, thereby conserving foreign exchange needed for purchase of other imports and improving self-reliance. All of these factors are likely to result in declining demand for coking coal by 2030, with more rapid decline possible thereafter as hydrogen becomes more widely used for smelting. 

Fig 4.  Coal exports to Japan, China, Korea, Taiwan and India account for 87% of all Australian coal exports so future intentions of these countries merit special attention.  Source of data:  Australian Dept. of Industry:   Thermal Tonnage.  Coking Tonnage.

Decline in demand for thermal coal may be more rapid and sustained, as evidenced by the future intentions of major importers expressed by their policies, actions and commitments under the Paris Accord.

Japan:  In 2018 climate events cost it US$27.5 billion. Severity of such events will increase in coming years unless it - and other countries – decarbonise their economies.  An added imperative is the need to generate electricity at a cost which is no more than the cost of its competitors if its trading activities are to remain competitive.  Realising this, Japan intends to reduce its emissions to 26% below 2005 levels.

The Government has determined that it should decarbonise the economy by about 2050 and to this end generate energy from renewable sources by using hydrogen for transport and steel production, increase use of renewables and possibly reopen its nuclear generators.  The net result is reduction in use of fossil fuels, particularly coal, though a timetable and targets are not specified in the Government Policy Paper.

China has indicated policies aimed at increasing size and efficiency of domestic coal production by limiting 2019 imports to 2018 level.  These policies have resulted in lower thermal and coking coal imports from Australia in 2019 and likely to further reduce in future years as China increases coal imports from Russia and Mongolia – already a matter of concern to the Minerals Council – a strong advocate of coal production.

The USA trade war with China could see reduced steel exports and possibly reduced demand for Australian coking coal and iron ore.  Demand for thermal coal may also contract due to proposed new Chinese investment ($360 billion) in renewable electricity generation and a change in policy away from an export focussed economy to one more reliant on production for the domestic market.

India was the worlds’ largest importer of Australian coking coal in 2017, accounting for over 90% of its imports. It has now reduced dependence on Australia by diversifying the source of coking coal by importing from Canada, USA, Mozambique and South Africa.  As a result future Australian exports are expected to reduce by around 36 million tonnes.

The Carmichael (Adani) coal mine in Queensland proposes exporting 10-15 million tonnes of thermal coal to India annually for use in Adani power plants for as long as permitted by the Indian government. However, the latter is pursuing a policy of self-sufficiency in thermal coal and rapidly increasing the contribution of renewable energy capacity to 175 GW by 2022 which, if achieved, would significantly reduce the need for thermal coal imports.

South Korea:  President Moon Jae-in, a reformist, has committed his government to rapid transition to renewable energy and away from fossil fuels, particularly coal.  Central to these reforms is closure of 14 coal-fired power stations, limitations on output of 42 other coal-fired power stations and increasing renewable energy generation from 8 to 48% - all by 2026, so as to exceed 2030 targets shown below. 

Fig 5. 2030 Targets for Korera’s 8thBasic Plan for Electricity Supply and Demand (8thBPE) compared with 2017 outcomes.  Source:  Blomberg NEF.

In support of these measures South Korea has increased the tax on coal imports by 28% while lowering tax on LNG imports by 75%, showing strong support for conversion of existing and building of new power stations to burn gas rather than coal and indicating continuing decline in dependence on and import of coal.  

Taiwan’s demand for electricity in 2017 was about 42 GW, generated from Gas (43.4%), Coal (39.2%), Nuclear (9.2%), Hydro (8.1%) and Renewables (<0.1%).  It has no coal deposits and relies on imports to meet its energy needs. Taiwan has a detailed plan for transition from fossil fuels to renewables which calls for replacement of nuclear and coal by solar PV and wind farms and by roof-top PV.  

The plan calls for Solar PV to contribute 20 GW in new renewable capacity by 2025, replacing firstly nuclear capacity (4GW), then coal.  Although doubts exist about capacity to achieve 2025 targets, there is far less doubt that those targets will be exceeded by 2030, resulting in significant reduction of coal imports.

Conclusions

Given the above analysis and as the effects of global warming increase in frequency and severity, popular pressure on governments will develop, forcing them to strengthen and implement policies aimed at reducing greenhouse gas emissions more rapidly, particularly from burning coal, the single largest source greenhouse gas emissions produced by human activity.

Contraction in demand for coal may initially be evidenced by falling prices rather than falling volumes of production but, when declining demand is sustained it will result in reduced production and mine closures.  In terms of volume and value, Australian coal exports may have already begun to decline and, as indicated above, are unlikely to exceed the revenue peaks estimated to be achieved for 2018-19 in the future. 

Over the next decade it is possible that the volume of coal mined in Australia could decline by 25% - 35% for both export (by up to 120 million tonnes) and domestic use (by up to 15 million tonnes) with consequent closure of the least efficient mines with loss of jobs in both coal production and its use.

It is in the interests of all parties to plan for orderly contraction of the industry both in terms of public revenues derived from the coal mining industry, employees directly and indirectly employed in it and rehabilitation of mine sites and coal fired power stations.  Alternative sources of revenue will need to be identified and legislated for, employees will require retraining and redeployment, while mine site rehabilitation will require agreed funding, legislation and supervision.

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Comments 1 to 16:

  1. Labour are now advised not to use market force mechanisms to combat climate change, which is very strange given their policies during their election loss didn't appear to use market force mechanisms. There was no carbon tax, and the climate policies were mild, and focused more on things like vehicle emissions standards, so this is a regulatory approach.

    www.newstatesman.com/world/2019/05/morrison-s-miracle-why-australian-labor-party-suffered-crushing-defeat

    www.jacobinmag.com/2019/05/australia-labor-party-bill-shorten-third-way

    In fact it appears Australia's Labor Party lost the election through a scaremongering campaign against their general economic policies, and clumsy, vague climate policies to do with the fate of a coal mine, and not focusing o the concerns of blue collar workers in language that they could understand.

    However a carbon tax is probably a hopeless proposition in Australia because of the history of previous proposals, so that mainly leaves a cap and trade option. It all seems silly to me because its possible to combine market and non market mechanisms anyway.

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  2. This piece is clearly well-intended but seems strikingly out of touch with what is actually happening with energy consumption and investment under the currently dominant climate policy paradigm, which insists that governments rely on "market forces" to drive forward the energy transition, and which has demonstrably failed. Far from being some kind of inevitable "force of nature" as the author seems to suppose, the very existence of "market forces" depends entirely on the maintenance and effective enforcement of a variety of legal institutions of and by the state (property rights, financial institutions, trade mechanisms, etc.).

    At the same time, it seems to be increasingly evident even to advocates of mainstream climate policy that it is failing to deliver the energy transition. Colleagues and I have written about this extensively, including in a series of major Working Papers and occasional shorter pieces. Here's an excerpt from one of the latter:

    We are told repeatedly that the falling costs of renewable generation capacity makes renewables “more competitive” with fossil fuels, and that each new record low auction result for solar or wind is a reason to celebrate. From the standpoint of private investment and profit making, however, falling auction prices are hardly a good thing. As governments have turned away from “come one, come all” feed-in-tariffs towards more competitive bidding regimes where the “winner takes all”, there are pressures to win the bid in order to secure a 20-year subsidy in the form of a “power purchase agreement” or PPA. The bidding process has driven down contract prices even faster than the real costs of building the projects have fallen (due to “learning by doing,” economies of scale, technological improvements, etc.). Investors then see diminishing profit margins and lose interest. (“Too bad about the planet but, hey, there are many other things to invest in.”) As one analyst writing for Risk Magazine puts it:

    At the end of the day investors aren’t just going to put their money on a good story, their main objective is to make money from these investments. A look at the renewable energy sector fundamentals analysis shows that the total rating of all listed renewable energy companies fundamentals is just 3.9 out of 10, a rating that signals the renewable energy sector has very poor fundamentals.

    Under the current policy approach, private project developers have avoided risk and expanded their market share through PPAs with government entities, or with utilities that are mandated to reach renewable energy targets. But the “guaranteed returns” that such PPAs ensure for investors often translate into higher electricity costs for users, which can quickly translate into “political risk” when electricity users start complaining about rising bills. Governments then phase out—often abruptly—the policies that made investment in renewables attractive in the first place. This is what happened in Europe where, once subsidies for renewables were scaled back, investment collapsed:

    Because of falling auction prices, many people still assume that the market share of renewables will reach a “tipping point” once they become the “least cost option.” But because there is simply not enough profit in “low carbon solutions” like renewable power generation—at least, not without subsidies—renewables are unlikely to attract the levels of capital needed to achieve the Paris targets.

    Source

    On coal in particular, here is an excerpt from another recent piece I authored, looking at the latest data on coal consumption and emissions in the context of the need for dramatically greater electricity generation in order to have any hope of wider decarbonization:

    While demand for all forms of energy is growing, what is happening with the power sector (electricity) is especially important. Moving away from fossil fuels will involve widespread electrification, dramatically increasing the need to generate electricity. Global demand for electricity grew even faster in 2018 than demand for energy overall, at 4%. And 42% of energy-related emissions last year came from the power sector.

    Despite the closure of many coal plants around the world, coal remains the dominant fuel for generating electricity globally. On current trends, coal consumption is projected to remain at roughly current levels for many years. Although coal consumption declined for a few years, it actually rose in 2017, and again last year.

    Coal consumption is growing dramatically in several large countries, mainly in Southeast Asia. China recently announced plans for at least 300 new coal-fired power plants – most of them outside China. Coal demand for power rose 2.6% last year, and CO2 emissions rose 2.5%, with coal accounting for 80% of the increase.

    Source

    Government commitments under Paris have to be understood in the context of the fact that those commitments were widely recognized at the time as completely inadequate to achieve their stated purpose—but also, perhaps even more alarmingly, the fact that almost no governments are on track to meet even those very inadequate targets. To extrapolate on the basis of those commitments while ignoring those two facts seems careless at best. And calling emergent technologies "disruptive," although fashionable, does little to strengthen the argument. Lots of things are "disruptive": wildfires, epidemics, wars. We need a credible plan with real democratic accountability, not more market-driven chaos and "disruption."

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  3. johntreat

    claims that market forces have “demonstrably failed” to drive forward the energy transition. This is not the case in Australia where market forces have attracted S39 billion in a renewable energy pipeline and possibly a further $15 billion in proposed major projects.

    Market forces Are not the constraint on transitioning to a decarbonised economy. Rather development and commercialisation of technology, particularly fort energy storage, are.

    The point made in this essay is that Australian coal production is dependent on and vulnerable to change in demand for coal and those changes are likely because of contracting demand from its largest customers.

    It is true that Chinese government policy is to proliferate use of coal-fired electricity generation – a fact noted in my essay China’s Greenhouse Gas Emissions. If successful, which is debatable, China would be committing many countries to increased coal consumption for the next 40-50 years.

    Surely a question to be asked is will those countries proceed with China's gift of new coal fired electricity generation which:
    (a) produces energy which is far more expensive than that generated from renewables
    (b) puts them at a competitive disadvantage with countries actively transitioning to a decarbonised economy, and
    (c) increased their carbon emissions and contribution to carbon emissions which increased global warming and cost of damage it causes.

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  4. Johntreat

    "As governments have turned away from “come one, come all” feed-in-tariffs towards more competitive bidding regimes where the “winner takes all”, there are pressures to win the bid in order to secure a 20-year subsidy in the form of a “power purchase agreement” or PPA. The bidding process has driven down contract prices even faster than the real costs of building the projects have fallen (due to “learning by doing,” economies of scale, technological improvements, etc.). Investors then see diminishing profit margins and lose interest."

    This is not so much market forces failing, as a badly designed market bidding mechanism combined with subsidies ( a non market mechanism). Carbon tax would have been a better market mechanism, and would not require subsidies.

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  5. Riduna:

    Climate change is not an "Australian" issue; it is a global issue. Given the phenomenon of "off-shored" emissions, it should be clear that the performance of market-focused climate policy has to be assessed on the basis of global trends. This is a basic flaw in the original piece, IMHO.

    But even if we grant the national frame of reference, I think you've missed the significance of the BNEF graph of clean energy investment in Europe: When government incentives for RE are scaled back, investment collapses. It isn't clear from the original article how much of the $39b is underwritten by such incentives, but my understanding is that it must be considerable. So that investment isn't due to "market forces," but to government attempts at minimizing the impact of market forces on a fledgling industry.

    On the issue of cost, I think you've missed the point of the analysis we've done, which is simply that low-cost doesn't mean profitability. Profit-seeking investors — and there is no other kind of private-sector investor — invest on the basis of profitability, not on the basis of cheapness. Investment in renewable generation has proven to be stubbornly poor at delivering returns to investors, especially as governments have turned toward more competitive subsidy mechanisms. That's why the BNEF graph of clean energe investment in Europe collapses. To be clear: RE generation at the right end of the graph was still *cheaper* than at the left end, but it wasn't *profitable*, because the government subsidies that were masking the failure of market forces had been removed.

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  6. nigelj:

    The point is that when government subsidies — which were supposed to shepherd nascent industries to market viability — were removed, the failure of the market forces there were supposed to mimic became obvious. And although it is a favored policy shibboleth, there is no evidence whatsoever that a carbon tax would be effective in disincentivizing wasteful production; on the contrary, companies simply absorb the tax as a business cost and pass it on to consumers (as they do with the costs of advertising, or the costs of hiring lawyers to fight consumer-protection groups). That's why a carbon tax is a deeply regressive kind of tax. The "yellow vests" in France made sure we all know that.

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  7. ^"... *they* were supposed to mimic..." Apologies.

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  8. Johntreat @5 &6

    Anyone can be a critic. Nothing is perfect in this life. Please state your better alternative on how to transition to renewable electricity generation if you want to have credibility.

    And who is "we"? 

    You say "there is no evidence whatsoever that a carbon tax would be effective in disincentivizing wasteful production; on the contrary, companies simply absorb the tax as a business cost and pass it on to consumers (as they do with the costs of advertising, or the costs of hiring lawyers to fight consumer-protection groups).'

    What a huge strawman. Carbon taxes are not primarily intended to reduce wasteful production; there are other ways of doing that. Carbon taxes are intended to put a price on fossil fuel use and encourage alternatives. In fact the strongest transition to renewable energy in Australia happened in the short period it had a carbon tax. 

    There is no problem companies pushing costs onto consumers provided there is a carbon tax and dividend structure. However its very unlikely that producers would push all costs onto consumers, because that risks losing market share.

    A quick look on wikipedia at carbon taxes show they are used in plenty of countries and have delivered some positive results even with quite weak settings, and the research on this is listed.

    You are making baseless assertions. But maybe you have another alternative and can convince me. What is it?

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  9. en.wikipedia.org/wiki/Carbon_pricing_in_Australia#Effect_of_the_carbon_price

     

    A carbon pricing scheme in Australia, commonly dubbed by its critics as a "carbon tax", was introduced by the Gillard Labor Government in 2011 as the Clean Energy Act 2011 which came into effect on 1 July 2012. As a result of being in place for such a short time, and because the then Opposition leader Tony Abbott indicated he intended to repeal "the carbon tax", regulated organisations responded in a rather tepid and informal manner..."

    Despite this it did have some effect as I noted: "Because the Australian carbon tax does not apply to all fossil fuels usage, it only had an effect on some of the emitters of greenhouse gases. Among those emitters to which it applied, emissions were significantly lower after introduction of the tax. According to the Investor Group on Climate Change, emissions from companies subject to the tax went down 7% with the introduction of the tax, and the tax was "the major contributor" to this reduction."

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  10. The "carbon tax" regime most favoured envisages redistribution of the tax gathered to public on per capita basis. So you would pay more petrol yes, but get money back from government to cover that. It sounds like money merry-go-round but if you use less carbon than average then you make money at expense of those who use more carbon. A strong incentive to look for ways to use less. Macron's levy on petrol gave nothing back so the yellow vests had some justification.

    At the industry level, even a carbon tax with no feedback to consumers can be effective. If two products are equivalent in everything except price, then you buy the cheapest? If you have limited budget you buy the cheapest? Well surely then if you can avoid paying a carbon tax, then you can ship your product for less than your competitor who is just absorbing the tax. Solar panels on the factory roof for starters.

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  11. johntreat

    Are we talking at cross purposes here? The focus of your comment is on what attracts RE investment while the focus of my essay is on Australian coal production, arguing that its level is affected by market forces, particularly demand from consumers, asserting that it is vulnerable to reduced demand brought about by climate change imperatives and adoption of clean energy technology.

    The essay does not attempt to look at the global warming effects of lower or higher coal use or what induces investment in RE projects. You are right to assume that the Australian RE Pipeline ($39 billion) is largely attracted by availability of one-off public financial assistance for approved investments.
    Australian coal production also receives subsidies of $1-2 billion per annum.

    The Australian government has announced its intention of terminating financial assistance to RE investors, arguing that this sector is now well established and no longer requires assistance. It will be interesting to see if this results in a predicted investment collapse – or ongoing investment in fewer but larger, multi GW projects.

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  12. nigelj @ 8

    Could "we" be Trade Unions for Energy Democracy?

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  13. Riduna @8

    Yes 'we' sure looks like that trade union organisation. I didn't click on the word source in Johns article because it wasnt highlighted in a different colour, but I gave it a go now it goes to that website. If only people would just be clearer on who they represent.

    I'm not adverse in principle to trade unions or his basic concerns about needing more democratic input into decision making etc.

    The major concern in his article appears to be that falling costs of renewables generate low profits once subsidies are removed. He goes on to say "By now, the message should be clear: The insistence on private-sector-led investment in renewables, which we are told needs to be “unlocked” through various incentives—subsidies, feed-in-tariffs, guaranteed returns through PPAs, etc.—has proven to be a disastrous failure. This is the reason why renewables are “underperforming.” This is what must change if deployment is to reach the levels needed to meet the Paris targets."

    I think its a fair analysis, but unfortunately he doesn't appear to say what this should change to in any detail. The website talks about trade unions and democratic control of things but doesnt spell out how that would work and why it might lead to increases in adoption of renewable energy. A workers cooperative might prefer to stay with fossil fuels! The only thing he does is hint at direct government investment in electricity generation.

    Subsidies have been good in that they have kick started renewable energy, however clearly there is now a problem with profitability when subsidies are removed. Perhaps its as simple as keeping a subsidy mechanism in place, but there are obviously other options. For example a carbon tax would punish continued use of fossil fuels, so reducing their profitability and thus countering the falling costs of renewables so increasing their profitability. But Im not an economist and dont have the knowledge to work that out in detail.

    Another option is the government just take over the financing of renewable energy, (as the article suggests) but that is a "big call" with obvious political ramnifications and implications for governments ability to fund such a thing, although some mechanisms do exist. This appears to be what the GND proposes.

    And I repeat subsidies are not a market mechanism, so although generators are free to decide what to invest in  we are left with a semi market approach. Carbon taxes are also a semi market approach. The only purist market approach is to just keep fingers crossed and hope markets solve the problem left to themselves (they wont).

    But investment in renewables does seem to be stalling so something has to change and the only options appear to be 1) keep subsidies 2) a carbon tax or cap and trade approach and 3) direct government investment in renewable energy.

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  14. I meant the word source wasn't highlighted in red. 

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  15. Nigelj

    I also missed the ‘source’ because it isn’t red.

    I tend to be wary of comparing annual investment in RE in dollar terms when their cost is falling. A better measurement is to compare commissioned capacity of RE installed each year.

    While accepting that public utilities are best administered by the public sector I don’t agree that this is a sine qua non for continuing RE investment.

    We need to remember that the alternative to RE is on-going use of fossil fuels producing GHG emissions, an increasingly severe climate, and rising cost of damage caused by it. That cost can not be ignored and, at least for the public sector, must make RE the only option.

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  16. Riduna @15, good points. In fact it appears that while investment in RE has decreased since 2010 consumption and installed capacity has continued to grow presumably because prices have fallen which compensates for the lower investment:

    ourworldindata.org/renewable-energy

    www.bmwi.de/Redaktion/EN/Dossier/renewable-energy.html

    However there may be a limiting factor as prices will just not keep on falling forever, not steeply anyway, and the pace of conversion to renewables is too slow, all suggesting its appropriate to consider what is the best mechanism to ensure investment continues and indeed that more capacity is built. A carbon tax avoids governments having to find money but please all countries have to do something, anything. The pace of change is too slow. 

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