The future of fossil fuels
Predictions include coal reaching a plateau and a nuclear comeback
The predictions by energy executives include a plateau for coal.
For all the buzz around wind, solar and electric cars, energy company executives had plenty to say about the continuing role of fossil fuels and nuclear power at the recent Bloomberg New Energy Finance Future of Energy Summit.
Oil, post-Paris
BP Chief Financial Officer Brian Gilvary sees oil and gas playing key roles.
“A lot of people think that what was agreed to in Paris was all about a race to renewables,” he said. “Actually it was a race to reduce emissions.”
Therefore, a lot will fit into the mix, Gilvary said.
Oil demand will stay strong to 2040 and plateau rather than peak, he said.
“We will continue to pursue world projects. But we will do that in a way to make sure we start to reduce emissions in our own business.”
Playing chicken
Ethan Zindler, a Bloomberg New Energy Finance analyst, said about half of all U.S. coal plants lose money on any given day as cheap gas, along with wind and solar farms, push electricity prices lower. Meanwhile, demand for power is flat. The result, Zindler said, is coal plants wrestle to outlast one another, fighting for a bigger piece of the pie.
“Every day across multiple regional transmission operating systems, we see power plants staring across at each other and saying ‘Who is going to go first?’ ” Zindler said. “It’s only a matter of time as these plants try to outlast each other.”
Coal is here to stay
Bob Murray, chief excecutive of the Ohio coal mining company Murray Energy Corp., expects U.S. thermal coal production to keep falling in coming years. But he’s optimistic it will stabilize around 650 million tons a year, down from more than 1 billion tons a decade ago. But that depends on America’s utilities supporting coal, Murray said.
“You must have a reliable, resilient power grid, and there’s only two types of base-load generation — nuclear and coal,” he said.
Even without support from utilities, Murray has another plan. He wants to buy and operate coal-fired power plants.
“If you can dig coal out of the ground, you sure as heck can run a power plant,” he said.
Natural gas in China
The boom in natural gas over the last decade has transformed the power sector, and Meg Gentle, CEO of the Houston LNG exporter Tellurian, sees demand rising even higher. To understand why, look no further than China. Gentle estimates the country will add 12 gigawatts of gas-fired power plants this year.
In Beijing, more than 5 million homes switched from burning coal to gas last year. And every month, Chinese automakers churn out about 8,000 vehicles fueled by natural gas instead of gasoline.
“Across all of the sectors in China,” Gentle said, “the demand for gas is very robust as the country starts to be committed to blue skies and clean air.”
A nuclear resurrection
Nuclear power may be on the ropes, as reactors struggle to compete with gas plants.
But the technology will rise again with smaller, cheaper and more agile reactors, said Edward McGinnis, principal deputy assistant secretary for the U.S. Energy Department’s Office of Nuclear Energy.
The U.S. is at the forefront of designing and developing small, modular reactors. In eight to 10 years, McGinnis said, “we will be witnessing a very disruptive, exciting time in the nuclear sector.”
“If you can dig coal out of the ground, you sure as heck can run a power plant.” Bob Murray, Murray Energy Corp.