Another Possible Consequence of Japan's Nuclear Power Problems: The Rise of Coal?

The world has had only one week to digest the disturbing news about Japan's nuclear power problems. And a week hardly makes a lifetime.

But one thing is for sure -- coal may be on the way back as a power generating fuel source.

The well-regarded "Heard on the Street" business column in a recent issue of The Wall Street Journal (March 18, 2011) put it this way: "Rumors of coal's demise increasingly look premature. The commodity has plenty of critics, concerned about its environmental impact. But even more-pressing safety concerns about nuclear power, after Japan's earthquake, could lead countries to raise coal usage to make up for energy shortfalls."

The column went on to say, "There are clouds to this rapid reassessment of coal's prospects. Natural gas could prove a cleaner, more popular replacement for nuclear power. Nuclear capacity shutdowns might prove shorter than expected. And governments may also seek to promote other sources like wind and solar more strongly, although these remain higher in cost and less reliable than coal."

In the U.S. coal currently provides about half of total generating capacity.

This "reevaluation" of coal's role in U.S. electricity generation follows a piece several days ago in the Financial Times suggesting that renewable energy may also be in a better overall position as a result of the Japanese nuclear disaster.

Another footnote to the usage of U.S. coal -- something which may become much larger than just a footnote as time goes on -- is the rapidly increasing interest in China in importing U.S. coal from Montana and Wyoming (and Canada for that matter). This, too, is not bereft of critics. But China cannot simply rely on its own reserves to fuel, both figuratively and literally, its enormous market growth. Could there possibly be room for China and the U.S., both of which claim to be concerned to some degree about carbon emissions, to work together towards a way to burn coal more cleanly (which benefits both) while providing the U.S. an export market in China? It's probably too early to say with any certainty at this moment.

However, former British Prime Minister Harold Wilson used to say that a week is a long time in politics. One wonders whether this now applies as well to the energy generation sector.

Don Smith
Director
Environmental and Natural Resources Law & Policy Program

Former Colorado Governor Bill Ritter Jr. Interviewed as Part of "Environmental Leaders Series:" Discusses His Administration's Energy Initiatives

Former Colorado Governor Bill Ritter Jr. discusses his administration's energy initiatives, with particular focus on renewable energy initiatives, in a new video interview now available on the University of Denver Sturm College of Law website. The 45 minute interview can be accessed by clicking here.

Governor Ritter, who served from 2007 to 2011 and who is credited with coining the phrase "the new energy economy," was interviewed by Don Smith, Director of the Environmental and Natural Resources Law & Policy program.

The interview provides an inside look at Governor Ritter's energy philosophy as well as the challenges he faced in implementing it. Among the key observations made by Governor Ritter are:

• The competitive advantages of establishing a renewable energy portfolio standard (i.e., a minimum level of generation from renewable sources) "are undeniable."
• Colorado is the best place in the world for research and technological development related to renewable energy.

Governor Ritter, who now directs the Policy Center for the New Energy Economy at Colorado State University, also discusses how he came to believe that renewable energy, and "the new energy economy," should be a key foundation of his administration's work, why he supported increasing the state's renewable portfolio standard from 10 percent to 30 percent during his term in office, and how the barriers to additional renewable energy development might be addressed.

Professor Smith said, "As Governor of Colorado, Bill Ritter Jr. was one of the nation's leading advocates of renewable energy. But even more importantly in many respects was the Governor's ability to translate his policy vision into legislative reality. The interview with Governor Ritter, which is now available to anyone by way of our website, is one more step in the Sturm College of Law's goal of being 'the' renewable energy law school in the U.S. Next school year (August 2011-June 2012) the Sturm College of Law will offer four renewable energy-related courses, along with numerous other undertakings by faculty and students that also will build our institutional renewable energy expertise."

"It was an honor to host Governor Ritter at the Sturm College of Law. Anyone interested in renewable energy law in any part of the U.S. -- or internationally for that matter -- should watch this video and take account of the Governor's observations. His is one of the most credible voices in the nation talking about renewable energy," Professor Smith said.

Financial Times' Lex Column Asks do Recent Events in the Middle East and Japan Portend a New Lease on Life for Renewable Energy?

Yesterday's Lex Column (March 16, 2011) in the Financial Times raised a thought provoking point about the impact of unrest in the Middle East as well as the nuclear power plant crisis in Japan: Will this perhaps herald a new "lease on life" for the renewables sector?

Lex, one of the oldest and most highly-respected business columns in the world, suggested that there is great value in "public sentiment and political goodwill," both of which seem clearly on the decline in the case of Middle Eastern oil and nuclear power in general.

"With nuclear, the largest carbon-free source of electricity, suffering a mortal blow to its reputation, it will now be harder to say 'no' to pricier alternatives," the Lex Column argued.

It seems a pretty broad statement to say that the nuclear industry has suffered a "mortal blow to its reputation" and, of course, it's worth remembering that many countries generate a huge amount of electricity from nuclear power -- for example, France generates about 80 percent of its electricity from nuclear power. But on the other hand, as governments begin to pull back on generous "aid" packages for renewables it may well be that politicians and societies in general will look more favorably on the higher costs traditionally associated with renewable energy.

This is probably not the best time to make any final declarations one way or another, but at least at this moment what Lex is suggesting is worth keeping in mind.

Don C. Smith
Director
Environmental and Natural Resources Law & Policy Program

What we are Reading

"Spread the wealth: The impressive growth figure of resource-rich African countries are not all good news," The Economist, February 10, 2011

"Heated but hollow: Congress embarks on a rhetorical debate about greenhouse gases," The Economist, February 10, 2011

"Monster or victim: A court in Ecuador controversially finds Chevron a whopping $9 billion," The Economist, February 17, 2011

"A Special Report on Feeding the World," The Economist, February 26, 2011

"Innovations in Energy," The Journal Report, The Wall Street Journal, February 28, 2011

"Eco:nomics: Creating Environmental Capital," The Journal Report, The Wall Street Journal, March 7, 2011

"Being ambitious: The European Commission maps a path to a low-carbon future; now to walk it," The Economist, March 10, 2011 (See also the European Commission press release of March 8, 2011, about the Commission's roadmap "for building a low-carbon Europe by 2050" by clicking here; to see a list of Questions and Answers about the roadmap, click here.)

Hani Yaafouri, MRLS Graduate 2010, Writes About Political Tension in Libya: Lots of Oil, Little Economic Growth

In the last few months, we have witnessed unprecedented revolutions in several oil-rich Middle Eastern countries. People in Egypt, Tunisia, and most recently Libya, have taken to the streets to demand change from their governments. Demonstrators in these countries are protesting for better governments, economic reform and the end to corruption.

Libya has the largest proven oil reserves in Africa with 42 billion barrels of oil and over 1.3 trillion cubic meters of natural gas. Libya was listed ninth in the world in oil reserves in the last few years. In 2010, Libya was Europe’s largest oil supplier. Libya has massive reserves and the country has a lot of unexplored areas. Western oil companies are desperate to get the rights to oil explorations in Libya. Libya’s oil is in high demand because it is light sweet crude oil. This type of oil is very desirable because it is clean, low in sulfur and easy to refine and burn.

With all of this valuable oil, why is Libya behind most countries in economic growth?

There are several reasons for Libya’s lack of growth. First, Libya has a ruling family that has been in power for over 40 years. They have tightened the grip on the country’s natural resources. Second, the ruling family has confiscated the oil wealth, closed off education and oppressed its people.

Third, the money from the Libyan Sovereignty Fund (the country’s oil fund), which has more than $100 billion USD in investments, is used by the ruling family for personal interest. Fourth, the United States imposed economic sanctions on Libya between 1982 and 2004 which hampered economic growth.

Fifth, the country’s natural resources are mismanaged and there is no accountability or transparency of the government. Lastly, the money that comes from oil production goes towards buying ammunition and weapons to support the regime.

The recent political unrest is due to corruption, a lack of transparency and more importantly, a lack of accountability in the use of Libya’s natural resources. The country has enormous wealth and huge potential. In order for the country to grow and prosper, Libya’s natural resources have to be well managed and wisely used. Unless the current practices stop, corruption will continue to breed political unrest.

Hani Yaafouri, a Lebanon native, is a 2010 graduate of the Master of Resources Law Studies Program at the University of Denver Sturm College of Law