How Coal is Losing to Renewable Energy
As humans, we are biologically and socially wired to pursue progress. Progress in the sense of acquiring a more in-depth appreciation to our surrounding and making it more habitable for our species. As long as we continue to pass air through our lungs, all we can do is look towards a better future that continues to sustain life in all of its glory. Energy plays a big part in any evolutionary endeavor humans wish to undertake. It is the “battery of life” powering our very existence day and night. The question remains; as we look to develop better ways to exist as a species is it not necessary to also develop better ways to produce and manage energy?
Changes in energy generation have already begun to take shape as major energy markets enter a full transition mode, both in the U.S. and across the globe. Despite Trump’s best efforts in trying to maintain a status quo all that we can do is join the bandwagon before it’s too late.
Columbia University’s Center on Global Energy Policy conducted a study and found that “President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities.”
Even though almost half of the coal consumption has declined due to competition from another fossil fuel, natural gas, nearly 20% of the decline is as a result of solar and wind. This in itself shows that even though the current government in the U.S. is trying its best to save the coal industry, more corporates and people of good will are keen on adopting a more green direction in terms of energy sourcing. The story is the same throughout the world as carbon footprint payout has become a major concern.
The study was an eye opener, further away from the States; nations have also recorded similar declines in coal production. BP, a British oil and gas company reported that coal production took a deep of 6.2 % an equivalent of 231 million tons of oil in 2016 in its annual review of global energy trends. China recorded an even higher decline.
These are the facts and in light of this, it would be both careless and foolish for investors in natural resources and energy not to adjust their holdings to reflect this global transition. In the past months, the U.S. government has overweighed renewable energy stocks in our Global Resources Fund (PSPFX), and the provision is now a key ingredient to the fund’s performance.
U.S. Global Investors
Bob Dudley, BP’s chief executive gave no indication that the coal industry would and should be revived, indicating the coal marked the completion of its “entire life cycle” in 2016. U.K marked its very first coal-free day in April of 2017. Mr. Dudley also explained that coal production and consumption recorded falling levels that had not been witnessed since the time of the Industrial Revolution almost 200 years ago.
Solar and wind have been enjoying a significant growth simply because they make good economic sense.
Solar costs have already rivaled coal in the U.S. and Germany as recently reported by Bloomberg New Energy Finance (BNEF). The same trend will soon follow in China which is also the world’s biggest investor in renewable energy.
U.S. Global Investors
The age of fossil fuels is slowly but surely coming to an end. Renewable energy generation was in the past regarded as a costly and inefficient venture. Not anymore, owing to innovations in the last two decades renewable energy through solar and wind are now cheaper to produce and have begun to push coal plants out of business.
Another aspect that we need to reconsider is the manpower required in energy production.
Most people who are against the elimination of coal as a source of energy claim to be fighting for the miners and other people who depend on coal to feed their families.
How true are their concerns? Here are the statistics behind their claim.
By the Numbers
The Department of Energy 2017 U.S. Energy and Employment Report shows about a million people were employed in America by the renewable energy and alternative fuel industries in 2016, equated to 200,000 workers in the collective fossil fuel industries of coal, gas, and oil. If we also include part-time employees the total number of Americans working in renewables goes up by another 2 million.
The report highlighted that solar energy employed close to 360,000 both full-time and part-time employees which is the largest number of renewable workers. Wind power took up 100,000 employees. By comparison, the coal industry could only manage a little over 86,000 workers, tailed by the oil and petroleum industry, which could only manage to employ 12,000 workers in 2016.
Over 74,000 new positions were added through solar energy in 2016 and an additional 25,000 through wind energy bringing a total of nearly 100,000 new jobs in the renewable energy sector.
Keeping in mind that the numbers did not consider workers employed in the storage, distribution, and transmission of renewable energy. This would increase the number with an additional 2.3 million workers.
The report showed that in both solar and wind energy, employment grew substantially in 2016. Wind sector recorded a rise of 32% with solar increasing by 25%.
On the flip side, the coal industry has continually recorded a steady decline in the number of job opportunities offered since 2012. This is majorly because of numerous plants shutting down in the last decade. The closure of the plants can be attributed to various factors such as stringent federal regulations and more interest in renewable energy.
Future of Coal
As America and the world move towards a carbon-free energy production, employment opportunities will in turn also shift. The government should put measures in place that consider workers who are directly affected by this shifts. Workers still working in the fossil fuel industry and wish to remain in the energy sector should learn new skills required for the renewable energy sector.
What We Should Take Home
The two energy sources have always been pitted against each other by pundits in the private and public sector. The issue has been heavily politicized in America and other world nations.
Let us not think of the two sources of power as rivals but rather. Electricity production has been a long historical issue in the world of innovation. Coal is not the enemy, we have enjoyed its fruits for decades and owe much of the technological advancements to the power coal has been able to provide.
The transition from coal to renewable energy should be seen as an issue in innovation. Think of it as switching from iPhone7 to iPhone 8. Renewable energy will soon if not already provide us with efficient cheap and clean energy. It is an issue of offering the consumer a better deal.
The question remains, Can renewable energy sources take over the whole energy sector?
It is tough to say; nevertheless, renewable energy is definitely not the malevolent monster it is often portrayed to be in public debates.
Renewable energy is a fast developing technology, offering energy companies and consumer an opportunity to get cheaper electricity.