Economist's Nightmare, Environmentalist's Delight?

Globalize Power Generation to Abate Global Warming

Ganga Prasad G. Rao
http://myprofile.cos.com/gangar

Just yesterday, at www.livemint.com, I opined against India's voluntary involvement in any carbon reduction proposal. Clearly, as a country, India cannot afford to hold back the millions of its citizens in abject poverty to assuage the feelings of the developed world who conveniently forgot for decades that CO2 emissions turn the earth warmer. But, climate change will not stop for India, or for that matter, any other country. It has been gathering steam all these years and decades and now, alarmingly, it seems to be accelerating. We must reduce CO2 concentrations, and that too within a short period of time. 15 years post Kyoto, we have achieved little. Some, me included, would contend that the wave of privatization and competition in various economies and especially the power sector, has set us back and moved the world closer to an environmental catastrophe. Perhaps Kyoto has served its purpose of enriching dirty capitalists while we waited for it to deliver an environmental miracle!

Now that the group of nations is gathered to consider a new emissions reduction plan, I cannot but muse about its prospects. Surely, we do not want to learn five decades from now that we used the wrong criterion or permitted an unwise loophole or two, did not anticipate emissions from new service industries or did not include a certain sub-clause in exchange for a week's vacation in the Virgin Islands! We want a solution that obtains real physical reduction in CO2 emissions and concentrations within a decade. Can the new protocol deliver this? I fear not. Is there an alternate plan short of nuclear winter? Well, let's explore one. A solution very different from the one would unfold with the adoption of a new global treaty. No, it is most definitely not an economist's solution (I’d almost distance myself from it!). In fact, far from it, it is an 'apocalypse tomorrow' kind of solution; one that takes a dark view of what has already occurred and prescribes a draconian solution by a benevolent environmental dictator.

We know coal capacity constitutes over 70% of total power generation globally and is responsible for about a third of global GHG emissions. We know coal is very polluting, regardless of the type of technology used to convert it to power. We also know China and India are building thermal plants faster than rabbits multiply (and the US, not to be outdone, is adding some of its own!). No one builds a thermal plant to operate for an year, two or a decade. A super-size mine-mouth thermal plant built on the coal reserves of an entire mine, emits CO2 for three decades or more. By the time, the negotiations conclude and the countries endorse the new protocol in their elected body of representatives, it would be another decade and glaciology would be discipline of the past world! The good news though, is we have plenty of gas and plenty of thorium across the world to sustain power generation for a couple of decades or more (though, the thorium-power technology developed by India is being 'postponed' thirty years. No, there is no link to the '123' nuclear agreement with the US or the ongoing global warming negotiations). If climate change is already upon us (behold the shrinking glaciers and extreme weather events), should we not act today (when we should have acted yesterday)?

Much of the electrified world is connected through grids across regions, even continents. We could go a step beyond nationalization and 'globalize' power generation and put it under common ownership. Then, as an emergency measure, we could completely do away with coal-based power generation for a few decades; power would be exclusively generated from hydro, gas, wind and nuclear stations. It'd be necessary to open up gas fields and ramp up gas production (Have a look at global gas reserves and you will get my point) and require gas production to be diverted to power generation almost by a decree. Gas would be preferentially supplied to power stations around the world at rates determined by the amount of existing regional gas generation capacity (granted there would be monopsony pricing power, but gas is assured a market). Power consuming 'blocs' could then put in their bids for supply of 'green power' from this 'globalized' electricity network. Prices may be twice as high regionally, but demand would be satisfied. As for coal suppliers, they could be compensated at the rate of half a cent per KWH that they were excluded from generating as of a certain baseline date.

What good would it do? True, a large part of the generating capacity is coal-based. But the fuel-flexible fraction of that capacity could be converted to gas immediately. The rest would need to be retrofitted to accommodate gas – something that can be achieved within a few years, if there is political will (The mine-mouth power plants could be converted to mine-mouth iron and steel plants!). This achieved, we could exclude coal from thermal stations, reducing emissions by a quarter almost 'overnight'. CO2 concentration, now on an inexorable upward trend, would pause within a decade. Longer-term technological advances and capital retirement, obsolescence and turnover would reinforce the environmental gains and, hopefully, reverse the emissions trend beyond 2020. Fifty years down the road, when CO2 concentrations have been halved, environmental lessons truly learned and the world environmentally and technologically advanced, one could reconsider coal as a fuel in all its end-uses.

An economist's nightmare, but an environmentalist's delight?