There are two types of climate-change-ologists who get into discussions about electricity: those that recognize that economics, jobs, taxes, subsidies and re-elect-ability all play a factor in decision making and look for incremental solutions to problems; and those who believe that mankind has gone too far and needs to rejoin our original state with nature, forgetting that the changes in our life span and quality of life are directly related to our access to energy (also known as de-growthers). Today, we talk about the first kind.

Every year, Lazard issues a report on the levelized cost of energy (LCOE) which calculates the lifetime (full cycle) cost of energy production. As of 2019, they estimate that the cost of crystalline solar and wind generation was $40/MWh and $41/MWh, which compares favorably against their estimates for natural gas and coal at $56/MWh and $109/MWh, respectively. Being cynical, and having work in Oil and Gas my whole life, I know that “full cycle” uses a lot of assumptions and those assumptions usually are biased to the benefit of the author (and those that pay the bills). But basic inspection tells us that coal stands out as the high cost option. The good news is: it should be easy to see if this is true using pretty simple measurements: production, consumption, sector financial performance, jobs and new construction.

In 2010, U.S. coal producers produced 1.1 billion tons of coal. Less than a decade later in 2019, they produced ~700 million tons (down 30%). Strike 1.

In 2010, when consumption was 3.9 trillion kWh, 45% of the electricity was generated by coal. In 2018, it was 27% and next year, the EIA expects it to be 22% while still consuming the same kWh. Strike 2.

Peabody Energy, Arch Coal, Alpha Natural Resources and Westmoreland have all filed for bankruptcy since 2015 and as a snapshot of how equity performance has been, Peabody had a market capitalization of $17.3 billion in 2010 and today is <$1 billion. Not surprisingly, jobs have followed suit. Strikes 3 and 4.

It goes without saying then that in 2019, only one new coal plant was commissioned in the United States at the University of Alaska-Fairbanks, replacing the existing 55 year old one, and let’s be honest, it doesn’t take a lot of creativity to visualize Alaska in the winter…not a lot of sun. Strike 5.

The point, even ignoring the fact that there are significant assumptions to get to a full cycle cost in the LCOE math, what is unquestionable is that no plant lasts forever and that over time, the force of economics will take hold. Coal is in decline and, as those power plants continue to be retired, the 27% of electricity they do produce in the U.S. will need to come from somewhere- or there will be a lot of unhappy citizens driving electric vehicles that don’t charge when they plug them in.

If we want incremental solutions: protest flaring and pass strong laws allowing the use of eminent domain in building transmission lines. Both are more practical than degrowth and may ultimately lead to incremental solutions.