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Coal and Poverty

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I am as anti-coal as anyone else. It’s a terrible energy source if you care about the future of the planet. However, there’s no question that there’s a good reason why people burn coal, especially if you are poor–it is cheap and relatively abundant. The use of coal was central to the Industrial Revolution and continues to be for newly industrialized nations. That doesn’t mean it has to be that way–certainly we could be investing huge amounts into clean energy in newly industrializing companies to forestall this.

But that said, it’s really a cherry picked argument to say that coal actually doesn’t help the poor in the short term.

More coal doesn’t help people living close to the grid

The report notes that approximately 15% of people in energy poverty live close to existing electric grids, but there are a variety of barriers blocking their connection. For example, the poor consume relatively little electricity, so the costs of connecting them may exceed the resulting profits. The power lines used to connect them also result in high energy losses and power system instability. The poor also have little political influence in many developing countries. As the report concludes:

This means that for energy-poor families living close to the grid, building new power generation capacity – coalfired or otherwise – will not help them get connected. Instead, access will require financing the upfront costs of new connections, and rationalising tariffs to reflect the true costs of supplying power.

More coal also doesn’t help people in rural areas

Approximately 84% of energy-poor households live in rural areas further away from the grid. For this group, decentralized stand-alone and mini-grid solutions are much quicker than waiting to build a new centralized power plant and distribution lines. A single power plant can take a decade between planning and ultimate completion, while distributed wind turbines or solar panels can be deployed much more rapidly, as Elon Musk explained in ‘Before the Flood’:

So more coal only helps the capitalists? I mean, you might argue that coal is not the most efficient way to provide this electricity in terms of getting up the fastest. But that doesn’t mean that coal isn’t useful, especially on a smaller scale.

It then goes on to an unfortunate use of Bjorn Lomborg of all people to “show” that China’s poverty reduction in recent decades wasn’t really because of coal use. Um, OK. To be fair, China’s rise was due to a lot of factors. But very cheap energy built by a government that couldn’t care less about pollution was a big part of it.

At the end, the author notes that coal causes lots of pollution and the poor bear the burden of that. True enough but then that’s not really the argument here, right? In the short term, coal helps the poor. In the long term, it probably doesn’t. Finally, the real point:

Wind and solar are already becoming cheaper than coal

Not only are wind and solar better for the poor in terms of ease of deployment, clean air, and slowing climate change, they’ve also become cost-competitive.

South Africa, for example, is the cheapest place in Africa to generate coal-fired power, yet electricity from its new 4.7 gigawatt Medupi advanced coal plant will cost … 17% more than the electricity generated from South Africa’s 2 gigawatt of new onshore wind power. In India, the minister responsible for power development recently stated: ‘I think a new coal plant would give you costlier power than a solar plant’ (Climate Home, 2016). The statement is supported by the extremely low bid prices for recent solar procurements in India (Kenning, 2015). Renewable energy investment in the emerging world now outpaces that in developed countries (McGrath, 2016).

Renewable energy also has low operating cost and zero fuel cost, while fossil fuel costs are variable and susceptible to price spikes. And renewable energy creates more (and safer) jobs than coal.

Coal companies and their allies often argue that we need to burn their products to lift the poor out of poverty. For example, Matt Ridley has claimed:

those who advocate no support for coal are effectively saying that the adoption of renewable energy is more important than alleviating African poverty

In reality, there are better, faster, cleaner alternatives to help deliver electricity to the energy-poor. Those who argue to the contrary often do so to advance their own agendas.

That is starting to happen, but there’s no good reason to prevaricate about the role coal has played and continues to play in poverty reduction and rapid industrialization. Once again, these things would happen with far less damage to people and nature if wind and solar were built instead of coal. But the article as a whole is far from compelling in refuting the arguments for coal. The argument needs to be that “Yes, coal is an effective way to move people out of poverty but that the long-term damage makes it a terrible idea. Instead, let’s engage in the rapid buildup poor nations’ industrial capacity through renewable energy.” Fudging the facts about coal doesn’t help.

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  • Rob in CT

    At the end, the author notes that coal causes lots of pollution and the poor bear the burden of that. True enough but then that’s not really the argument here, right? In the short term, coal helps the poor. In the long term, it probably doesn’t.

    Isn’t this really a question of how we evaluate benefit? Or do you mean that the damage to human health has some lag time built in so it’s not really short term (more like medium term)?

    Because if we account for the negative health impact, coal doesn’t look nearly as good. It may still be better than nothing, but evaluated against other options (solar, wind, nuclear, hydro…) this has to ding coal.

    • Yes, in the long run (or medium run) coal is a bad thing. On the other hand, it’s perfectly obvious why those short-term benefits lead nations to invest in coal.

      • Rob in CT

        Right, I get that. My thought (poorly expressed) is that thinking about the damage to human health as medium or long term as opposed to short term may be a mistake. I mean… the damage is done at exposure, even if it doesn’t manifest for 20 years or something…

        • Could well be. And of course there are many reasons to push for renewable production instead of coal at the out set. Unfortunately, the linked article combines those with some very shaky reasoning.

        • SamChevre

          On the other hand–the direct impact of coal-fueled electricity on human health depends on the comparison basis. Running water from wells and refrigeration — versus water carried by hand from surface sources and no refrigeration–have hugely positive effects on general health. I would be unsurprised if “have a coal-burning power plant with no filtration and electricity” (mid-century Cleveland or Pittsburgh) was healthier overall than “have no electricity”.

          • Rob in CT

            I would be unsurprised if “have a coal-burning power plant with no filtration and electricity” (mid-century Cleveland or Pittsburgh) was healthier overall than “have no electricity”.

            Me too.

            I’m saying that as against present-day alternatives, it’s not clear. If the choice is coal or nothing, well, yeah…

        • delazeur

          I mean… the damage is done at exposure, even if it doesn’t manifest for 20 years or something…

          Well, yeah. That’s why it’s reasonable to say that it’s good in the short term and bad in the long term. Similarly, spending all your money now instead of saving any of it is short-term thinking, even though the trouble you will run into in however many years will be the result of the thing you are doing today.

        • Nang Mai

          Even beyond the complete environmental devastation … I think the idea of what is ‘good’ isn’t really defined here. Is the industrialization of China a good thing for most people living there? I don’t know the answer to that but I have to wonder. I know I wouldn’t want to work in an Apple factory even if it meant that my dorm had an ice box. My impression is that most people working in those factories would rather return to the country as peasants than to live as slaves. I mean given a choice. If somehow farms could be paid true value for their products. Anyway, an economy based on industrialization wasn’t sustainable even in wealthy nations — see the Rust Belt in the US. So when the bust comes all those people will be left in even worse shape.

  • foolishmortal

    Grid? What grid? In China, the poor and some of the middle class take a lump of coal and throw it in the stove.

    • Warren Terra

      This gets to something of a disconnect here: the author is pointing out that coal can provide cheap power near the plant but isn’t a panacea for rural immiseration, and Erik points out that cheap dirty coal power fueled China’s rapid economic growth – and they’re both correct.

      As I understand from what I’ve read. China has experienced explosive growth in the cities, without substantive change or betterment in the rural areas except for remittances from people who moved to the cities, which isn’t a trivial exception.

      • Brett

        The rural areas are much better off (mostly) after land reform policies, but they’re still much poorer than the coastal cities.

        • Jean-Michel

          China’s economic boom actually began with land reform and small-scale entrepreneurship in rural areas–urban areas were more resistant to change because they were relatively privileged under the old central planning system and local elites didn’t want to upset the apple cart. The gap between urban and rural incomes rapidly shrank in the early ’80s but started to grow again as the cities boarded the “reform and opening up” train.

    • Jackov

      Does this mean Pennsylvania is the Hubei of the US?

  • tribble

    Is there a problem with the argument that poor people who lack a connection to a reliable electricity grid don’t benefit from additional coal generation?

  • Snarki, child of Loki

    IF ONLY there were some sort of organization, perhaps Federal, for promoting Rural Electrification!

    But that would be so last-century & stuff, wouldn’t it?

  • Eli Rabett

    Renewables have an upfront capital cost that folks in the developed world can help with. Coal and oil suck the poor dry because of the cost of buying fuel and transporting it which is not a minor thing. As far as networks, the cost of pushing a net 3 km easily wipes out any advantage of centralized power over renewables. A number to keep in mind is that in India about 25% of electricity transported on the net is stolen, which makes it pretty hard to maintain the net No telephone poles needed in Africa

  • NeonTrotsky

    If you cost out the health and environmental effects of coal I’m pretty sure its a net drain on the economy, and you can be damned sure its not the capitalists who are bearing those costs

    • Area Man

      The externalized costs of coal range between 10-25 cents/kWh (source). If that number is even close to being correct, there is no possible way that coal is economically beneficial for anyone but the people selling it.

      • Yellow Bellied Marmot

        Area Man hit the nail on the head here – Epstein et al 2011 found the public health and other externalized costs of coal (guess what, disproportionately borne by the poor) to be somewhere between $0.09-$0.27/kWh, with a best estimate of $0.178/kWh. It’s worth quoting Epstein’s conclusions at some length:

        Our comprehensive review finds that the best es-
        timate for the total economically quantifiable costs,
        based on a conservative weighting of many of the
        study findings, amount to some $345.3 billion,
        adding close to 17.8¢/kWh of electricity generated
        from coal. The low estimate is $175 billion, or over
        9¢ /kWh, while the true monetizable costs could be
        as much as the upper bounds of $523.3 billion,
        adding close to 26.89¢/kWh. These and the more
        difficult to quantify externalities are borne by the
        general public.

        Still these figures do not represent the full societal
        and environmental burden of coal. In quantifying
        the damages, we have omitted the impacts of toxic
        chemicals and heavy metals on ecological systems
        and diverse plants and animals; some ill-health end-
        points (morbidity) aside from mortality related to
        air pollutants released through coal combustion that
        are still not captured; the direct risks and hazards
        posed by sludge, slurry, and CCW impoundments;
        the full contributions of nitrogen deposition to eu-
        trophication of fresh and coastal sea water; the pro-
        longed impacts of acid rain and acid mine drainage;
        many of the long-term impacts on the physical and
        mental health of those living in coal-field regions
        and nearby MTR sites; some of the health impacts
        and climate forcing due to increased tropospheric
        ozone formation; and the full assessment of impacts
        due to an increasingly unstable climate.

        The true ecological and health costs of coal are
        thus far greater than the numbers suggest. Account-
        ing for the many external costs over the life cycle
        for coal-derived electricity conservatively doubles
        to triples the price of coal per kWh of electricity
        generated.

  • Dilan Esper

    Good post.

    We get on conservatives’ asses (and rightly so) for denying facts when they conflict with ideology. One area where liberals do this is where there are conflicts between major constituent groups. This comes up in some trade and immigration disputes as well as with respect to coal and the environment.

  • Erik seems to have missed the central point that new coal is dearer today than wind and solar in most places, without allowing (as you should) for health costs. This is reflected in the 158 GW fall in the global pipeline of new coal projects – 14% of the total – in the first six months of 2016, with plenty more to come. Existing coal plants are becoming vulnerable too: one in Texas, Monticello, is operating at below 30% capacity factor, as it can’t compete with wind and gas, and is headed for early closure. BTW, if you want to write about energy policy, it’s usual to show some familiarity with the basic vocabulary, including “capacity factor” and “LCOE”.

    Coal is dying. About time. Sure, help the miners find something else. The “coal helps the poor” line is desperate b/s by the coal lobby.

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