TIME energy

America’s Big Bet On Natural Gas And Big Short On Coal

Shale gas
A shale gas well in Pennsylvania Ty Wright/Bloomberg via Getty Images

The U.S. is becoming increasingly dependent on natural gas

This post originally appeared on OilPrice.com

America is betting the kitchen sink on natural gas. No matter which estimate you look at — the U.S. Energy Information Administration, the International Energy Agency, or Wall Street banks — two things are clear: the United States is slated to consume enormous amounts of natural gas and the dominant fuel of electricity generation for the last 50 years, coal, is diminishing.

First, America’s energy darling: natural gas. It is difficult to overstate the effect shale gas production has had on the United States. In 2006, shale gas production accounted for about 5 percent of natural gas production. In 2013, it accounted for roughly 40 percent. As industry leaders clamored to take advantage of the vast supply of newly accessible domestic natural gas, analysts began to forecast longer and longer projections of low natural gas prices. The result is big expectations for natural gas.

The EIA expects natural gas production to grow at a 1.6 percent annual rate from 2012 through 2040, resulting in a dry natural gas production of 23.04 quadrillion BTU in 2013 and a production forecast of 38.37 quadrillion BTU in 2040. Demand will come from residential, commercial, and transportation use, but the largest demand increase will be from the electric power sector, particularly combined cycle power plants. Today, the U.S. has a combined cycle generating capacity of roughly 190 gigawatts. By 2040, capacity is forecasted to increase to approximately 316 gigawatts.

Meanwhile, the outlook for coal continues to appear bleak. This week, the Government Accountability Office released a newreport with increased projections for the number of coal plants expected to retire in the coming years. The report estimates that 42,192 megawatts, or 13 percent of coal-fueled summer generating capacity, will retire between 2012 and 2025 as a result of environmental regulations, lower natural gas prices, and decreasing electricity demand. These retirements are on top of the 150 coal-fueled units with a summer generating capacity of 13,786 megawatts that have been retired since 2000.

America’s gamble will not affect everyone in the country equally. Almost 40 percent of the retired coal capacity will take place in in Ohio, Pennsylvania, Kentucky, and West Virginia. Fortunately, Pennsylvania, Ohio, and to a lesser degree West Virginia, have economies that will be better prepared for this transition as a result of surging production from the Marcellus and Utica shale plays.

The story is the same for exports. Last week, the U.S. Energy Department gave the final approval to build two more LNG export terminals.

Related: This Natural Gas Giant Is Worth The Risk At These levels

The outlook for coal exports is much different. Last month, Oregon’s Department of State Lands denied a key permit to Australia-based Ambre Energy to build a coal export terminal on the Columbia River. On Sept. 15, Ambre Energy was dealt another blow when the U.S. Army Corps of Engineers denied its appeal. Corps spokesman Scott Clemans said, “We could do [the review] and make a yes or no determination, but given the lack of clarity right now as to whether the required state authorization is going to happen, and given the amount of time and energy we still need to devote to this project, it doesn’t make sense to devote resources to a project that may not happen.”

For everyone’s sake, let’s hope the gamble pays off. Because if natural gas fails to live up to the high expectations, there will be less coal to back it up.

More Top Reads From Oilprice.com:

TIME energy

Why King Coal Will Keep Its Crown

A coal plant looms behind a traditional house in Tianjin, China
A coal plant looms behind a traditional house in Tianjin, China Frederic J. Brown—AFP/Getty Images

The challenge of unseating the most polluting power source on the planet

This post originally appeared on OilPrice.com

For climate change activists and those hoping for an energy future dominated by renewables or even less-polluting natural gas, the death of coal cannot come quickly enough. But with coal still the dominant form of cheap electricity throughout the world, it is unlikely the bogeyman of climate change will disappear anytime soon.

That’s because the price of coal, compared to other fuels, is just too good to refuse. Just look at China, where the country’s double-digit economic growth has largely been fueled by coal, which fulfills 60 percent of its energy mix.

According to a chart showing the levelized cost of energy — the price at which electricity must be generated from a source to break even — coal is the second-cheapest form of energy behind hydropower, at $40 per megawatt hour.

Compare that to the cost of nuclear at $60, natural gas at $70, and solar — which at $280 per MWH, is seven times the cost of coal. Coal is also plentiful, relatively easy to extract — though admittedly dangerous if mined underground — and requires minimal processing. And it can be used for power generation (thermal coal) or steelmaking (metallurgical coal).

Of course, coal-fired plants have exacted an enormous price on air quality, and the Chinese government – which has declared war on pollution — recently banned the use of coal in smog-cloaked Beijing. Last week, it was announced that for the first time in over a decade, Chinese coal imports and coal consumption both dropped.

While that may seem like a dart in coal’s balloon, coal’s continued use elsewhere is more than making up for China’s restraint.

Germany doesn’t like to talk about it, but the world leader in the use of renewable energy, particularly solar, is also a big consumer of coal. As The Economist recently pointed out, Germany’s production of power from lignite coal is now at 162 billion kilowatts, the highest level since the smokestack-belching days of East Germany.

The same article notes that Japan, which has no natural energy resources of its own and is scrambling to meet electricity demand — most of its nuclear reactors have been offline since the 2011 Fukushima disaster — approved a new energy plan in April that includes coal as a long-term electricity source. The Japanese have also invested almost $20 billion in overseas coal projects in the past seven years, according to the Natural Resources Defense Council.

In the United States, even though a shale-gas supply boom has seen many utilities shift to cheaper natural gas, the country will still be generating a third of its energy from coal by 2040 (only 10 percent less than now), according to the U.S. Energy Information Administration (EIA). That’s despite a concerted effort by the Obama administration to force the nation’s coal-burning power plants to reduce their carbon emissions by a third over the next 15 years.

U.S. coal producers have responded to the trend of falling domestic consumption by exporting more coal overseas. A Wall Street Journal chart shows exports of U.S. coal grew from around 50 million metric tons in 2000 to 106.7 million MT in 2013. Most U.S. coal is destined for Europe, with Brazil, South Korea and China close behind.

All of this is not to suggest that coal producers haven’t had their problems. The price of benchmark thermal coal over the past three years has dropped from more than $130 a ton to around $80. Metallurgical coal is also at a six-year low.

Despite a huge cutback in production, the coal market continues to be oversupplied. As Oilprice.com pointed out recently, waning steel demand in China has forced mines in Australia to close. Australian producers are also threatened by Chinese plans to build more rail capacity for its domestic coal, which would undermine its coal imports.

In the United States, coal producers are finding it increasingly difficult to lock utilities into long-term contracts that provide stability and protection from price fluctuations. That’s because the utilities want the flexibility to have short-term contracts, or even buy coal on the spot market, since natural gas continues to be a competitive option.

Looking ahead, though, there doesn’t appear to be a declining demand curve for coal. Consider this: in Africa, some 60 percent of the continent’s population, or more than 600 million people, do not have access to electricity. The EIA predicts African coal consumption will rise by 70 percent by 2040. In India, another big consumer of coal, 300 million people remain disconnected to the electricity grid. The country plans to increase its use of renewable energy by 15 percent by 2020, but still faces the challenge of energy demand exceeding supply by 10 percent.

Coal is a likely contender to fill that gap. A recent article in Australian Mining states that by 2025, India’s electricity generation from coal will be reduced from 60 percent to “only 50 percent of installed generation – but that doesn’t necessarily mean less coal generation.”

In the end, it all comes down to price and government policies. If the economics of coal can be beaten by other electricity sources, the old-school fuel will face pressure, as it already has in the U.S. But as market forces continue to drive the various options available for utilities, coal use — particularly in developing nations — is almost certain to go up. Unless governments enact American-style laws to sharply curtail coal power plant emissions, expect King Coal to retain its crown.

Read more at OilPrice.com

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New Commercial Nuclear Battery Being Developed

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TIME energy

Oil: A Blessing And A Curse For The Middle East

Erbil refinery in Iraq, seen in June 2014.
Erbil refinery in Iraq, seen in June 2014. Onur Coban—Anadolu Agency/Getty Images

The region's supplies of crude have their downside

Originally appeared at OilPrice.com

What exactly is at stake in the battle for control of the Middle East, other than the obvious — the region’s abundant oil and natural gas? And why is it coming to a head now?

There are two aspects to what is currently transpiring in the Middle East: the battle for the region’s natural resources and the battle for the region’s human resources.

The region’s natural resource wealth has long been both a blessing and a curse. It has helped countries like the United Arab Emirates and Oman achieve amazing progress in a relatively short time and make the leap from societies that not long ago were comparable to medieval times into the 21st century.

But as one learns in the study of conflict resolution, change – any change – brings with it a certain amount of conflict. And the changes that oil and gas money brought to the Middle East were phenomenal. In turn, they upset more conservative elements of society who were unhappy to see the “natural order” of things – i.e., the old ways – disrupted and replaced with modern ways.

At the same time, the region’s resources have been a curse because it gave dictators like Iraq’s Saddam Hussein and Syria’s Bashar al-Assad the ability to squander billions of dollars on arms and weapons systems, to wage wars on its neighbors, and to threaten regional security. Syria, for example, with far less revenue from oil than Iraq, invested its modest revenues on increasing internal oppression rather than investing in the country’s future — its people.

Just how rewarding is it for Assad to look at his country today, utterly destroyed, more than 190,000 killed according to the United Nations, many more maimed both physically and psychologically, the infrastructure totally devastated? Yet he remains at the reins. He is now president of parcels of territory eroded by war.

Oil wealth has also allowed tiny counties, like Qatar, to assume an outsized role in the region and meddle in its neighbor’s politics, certain that its money can buy it anything, including influence. But what money cannot buy is critical thinking, which is what appears to be lacking most in the region.

Related: Oil Companies Turning Away From The Middle East

The second aspect of why the Middle East is going bonkers today is that the existing borders are based on Western colonial thinking. In many places, one country ends and another begins at a line in the sand drawn by a Frenchman and a Brit who divided up the spoils of the Ottoman Empire at the close of World War I.

This is why, for example, the Islamic State (IS) became so powerful in Syria and in Iraq — for them and the fighters who join them, there are no borders, no demarcation lines and no frontiers.

Why is IS so powerful, yet so little is known about who they are? From the little we know about them is that that the core of the officers corps comes from the remnants of Saddam Hussein’s army that went underground when the U.S. invaded in 2003.

Professor Amazia Baram, chair of Arab studies at Haifa University and an expert on Iraq under Hussein, explains that when the late dictator was still a lower echelon thug working for his cousin — who took power in a military coup – the family was overthrown but managed a comeback.

Once back in power, Saddam was given the task of setting up an underground system of operations from which the regime could recover in the event of a future coup. Saddam, according to Baram, excelled in securing back-up plans and in the process got rid of the top man and placed himself at the head of the state and party. Saddam never forgot the importance of maintaining the emergency fallback protocol and although he is now gone, his former generals have, by all appearances, taken over the network and placed it at the disposal of IS.

As the United States and its Western allies again get drawn into a Middle East war, this time it might be more constructive if they went in with something more than shock and awe.

Related: Does UAE Conscription Law Signal the End of the Dream?

Eliminating the IS threat militarily alone will not suffice. What is needed here is a viable “Marshall Plan” adapted for the Middle East where reforms are made in the education sector, where democratic principles are gradually introduced, and where the people are given voice in participating in the affairs of state and invited to join in governance, rather than being locked out of any decision making process.

As the map of the Middle East is being redrawn, so too must change be introduced into the very core of the region’s socio-political system.

Read more at OilPrice.com

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TIME 2014 Election

Midterm Elections See a Surge in Ads About Energy and Environment

Projected to hit highest level ever

Political ads about energy and the environment will likely reach their highest number ever this election cycle, according to the Cook Political Report.

While these issues usually don’t rule the national polls of top midterm election priorities, there are several competitive races this cycle with energy at the forefront, especially in the Senate. There is also new outside money being spent on environmental issues, particularly from billionaire Tom Steyer, who has spent a reported $26.6 million of his own money this cycle to raise the profile of climate change through his super-PAC NextGen Climate Action.

“We’ve already seen more spots in U.S. Senate general elections alone (87,000 as of September 12) than we saw by this point in both Senate and House races in 2008 (56,000),” writes Elizabeth Wilner, a Senior Vice President of Kantar Media Ad Intelligence and contributing editor of the Cook Political Report. “If you add in 2014 House spots, we’ve nearly doubled the 2008 number (102,000). And with overall trends in advertising being what they are, with spot counts increasing over time, logic points to 2014 being the biggest cycle for energy/environment-related advertising, ever.”

Many of the “toss-up” Senate races this year have candidates bashing each other over energy industries that are economically or culturally important to the state. The prospect of the Keystone XL pipeline has ignited races from Michigan down to Louisiana, where Sen. Mary Landrieu (D-La.) is trying to prove how her chairmanship on the Energy and Natural Resources Committee will help the state increase its offshore oil and gas drilling in the Gulf of Mexico.

In Kentucky, Senate Minority Leader Mitch McConnell has campaigned on his commitment to fight the “War on Coal” while his Democratic rival, Kentucky Secretary of State Allison Lundergan Grimes, hit the airwaves to put distance between herself and President Barack Obama on the issue. In Colorado, the support for the green energy industry has thrust Republican Rep. Cory Gardner’s and Democratic Sen. Mark Udall’s campaigns to cut ads with their candidates in front of wind turbines. And in Alaska, Democratic Sen. Mark Beigch has aired an ad of him driving a snowmobile over the ice of the Arctic Ocean to tout his efforts to expand drilling there. In a response ad for Republican opponent Dan Sullivan—a former commissioner of the Alaska’s Department of Natural Resourcesan X Games medalist criticized Begich’s “lame tricks,” driving skills and voting record.

Some energy industries appear to have a have a greater hold than others on donors’ wallets. While Democrats and Republicans are spending hundreds of thousands of dollars to figure out who is more pro-coal in Rep. Nick Rahall’s southern West Virginia district, NextGen Climate Action has yet to receive much support, receiving four donations of $250, $500, $300 and $2,500 in August, according to Bloomberg.

TIME energy

How College Kids Helped Divest $50 Billion From Fossil Fuels

Stephen Heintz, President of the Rockefeller Brothers Fund, Valerie Rockefeller Wayne, the chair of the fund, and Steven Rockefeller.
From left: Stephen Heintz, President of the Rockefeller Brothers Fund, Valerie Rockefeller Wayne, the chair of the fund, and Steven Rockefeller, a son of Nelson Rockefeller and a trustee of the fund, in New York, Sept. 16, 2014. Hiroko Masuike—The New York Times/Redux

The groundwork for an announcement by heirs to the Rockefeller fortune was years in the making

Environmentalists hope Monday will come to be viewed as an “economic tipping point” in the battle against climate change.

More than 700 investors pledged to divest their holdings from fossil fuel companies, just a day after an estimated 400,000 demonstrators marched through the streets of New York to demand that world leaders take action to stop climate change at a United Nations summit this week.

The divesting organization garnering all the headlines is the Rockefeller Brothers Fund, a respected charity that is run by the heirs of John D. Rockefeller, who built his fortune refining oil at Standard Oil Company. The Rockefeller Brothers Fund and about 50 other foundations have a combined $4.2 billion in assets total, which will no longer be invested in fossil fuel companies. Combined with individual investors and other institutions, such as colleges and faith groups, a total of $50 billion assets has been pledged to not be invested in fossil fuel companies. “It’s not huge, but its a very important signal to the market,” says Stephen Heintz, President of Rockefeller Brothers Fund.

For recent University of California, Berkeley graduate Katie Hoffman, the idea that the heirs of an oil tycoon would reroute billions of dollars away from fossil fuel companies was laughable when she began advocating that her school divest from those businesses in 2011. But it was she and other college activists who actually gave the divestment movement legs in its nascent days. “We’ve been integral in the process, and that’s been seen by folks who are actually driving and funding the movement,” Hoffman said at the event in New York where the Rockefellers announced their intentions Monday. “We have a stake in this. This is our future.”

The divestment movement began at Swarthmore College, a small Pennsylvania liberal arts school, in 2011. Students there, who could visibly see the impact that coal mining was having on the nearby Appalachian Mountains, began advocating that their school divest its billion-dollar endowment out of the largest companies that profit from drilling for and distributing fossil fuels. “In asking for divestment, we are implicitly stating that investment is a choice,” Mountain Justice, Swarthmore’s student-led divestment advocacy group, says on its website. “ It is a political choice with global consequences. Choosing to invest in an industry means financially endorsing that industry’s practices.”

Students at other schools, like Hoffman at UC Berkeley, quickly picked up the fight. Overall, 400 college campuses now have active divestment movements. The campaigns mirror previous efforts to deal with moral and political issues via economic means. In the 1980s, it was college students that first pushed their administrators to divest holdings from companies doing business in South Africa, where the racist regime of apartheid still reigned. More recently, prominent schools such as Harvard and Brown divested from companies operating in Sudan because of atrocities occurring in Darfur.

The calls for fossil fuel divestment had, until this point, been met with a more muted response. Despite birthing the movement, Swarthmore has continually maintained that divesting would hurt the school’s endowment, which it says it not meant to be used to advocate for social purposes. The UC system shot down a student-led divestment proposal last week. Other schools with large endowments, like Harvard and Brown, argue that divestment is a symbolic move that won’t affect energy companies’ bottom lines, or that more positive change can be made through shareholder activism.

Still, there has been some progress for advocates. A total of 15 colleges have divested from fossil fuels, according to Arabella Advisors, a consultancy firm for philanthropies. The most notable is Stanford University, which agreed in May to divert its $18.7 billion endowment away from coal companies. Activists hope that the big names associated with Monday’s divestment announcement, including the actor Mark Ruffalo, will encourage more schools and other organizations to divest. “This movement has gone beyond higher education,” says Jess Grady-Benson, a recent graduate of Pitzer College, which agreed to divest from fossil fuels in April.

Despite the movement’s growth, young people continue to play a central role. Divestment activism is likely to spread to many more campuses as the school year gets underway. “Youth have always gone to the conferences or the parties, but we’re always outside,” Hoffman says. “Divestment gets us in the board room, which is really exciting.”

TIME energy

The Rockefellers Are Pulling Their Charity Fund Out of Fossil Fuels

Rockefeller Family Discusses Concerns About Direction Of ExxonMobil
Stephen Heintz, center, president of the Rockefeller Brothers Fund; Neva Rockefeller Goodwin, left, economist and great-granddaughter of John D. Rockefeller; and Connecticut state treasurer Denise Nappier attend a news conference in which the Rockefeller family's members voiced concern about the direction of the oil company ExxonMobil on April 30, 2008, in New York City Spencer Platt—Getty Images

A sign of the times from a family that made its fortune in oil

The Rockefeller oil dynasty is set to divest its charity foundation from fossil fuels.

The family, whose patriarch John D. Rockefeller founded Standard Oil in 1870, will put its Rockefeller Brothers Fund—an $860 million philanthropic organization—into the same category as around 180 other institutions, including religious organizations and pension funds, which have pledged to divest any assets tied to fossil fuels in lieu of cleaner and more-sustainable alternatives, the New York Times reports.

Hundreds of wealthy individuals have made similar moves. The Times cites a statement from Arabella Advisors that says a total of $50 billion from various groups, and $1 billion from individuals, has been divested from fossil fuels in recent years.

The Rockefeller fund has already replaced its investments in coal and tar sands entirely while investing in more alternative energy sources, but its president Stephen Heintz said that progress toward complete divestment from fossil fuels is being made slowly but surely. “We’re moving soberly, but with real commitment,” he said.

The announcement comes on the eve of a U.N. climate-change summit, with hundreds of thousands of people taking to the streets of New York City on Sunday demanding more concrete action on global warming.

[NYT]

MONEY The Economy

Alaska Gives Every Resident $1,900 Cash… Just for Being an Alaskan

One big, literal payoff of living in Alaska is the annual Permanent Fund Dividend given to each qualifying Alaskan. This year's check will be one of the largest ever.

TIME energy

ISIS’s Ultimate Goal: Saudi Arabia’s Oil Wells

Saudi Arabia oil
Saudi Arabia has the richest reserves of oil on the planet Marwan Naamani—AFP/Getty Images

The terror group has its sights set on the world's biggest oil reserves

Originally appeared on OilPrice.com

For the terrorist group known as the Islamic State, Syria and Iraq were a good place to start their campaign, but in order to survive and prosper it knew from the outset that it had no choice but to set its sights on the ultimate prize: the oil fields of Saudi Arabia.

It is in that direction that the battle for control of the world’s largest oil fields is currently heading.

Islamic State — which has its origins in al-Qaeda – knows fully well that in order to sustain itself as a viable and lasting religious, political, economic and military entity in the region, it has to follow the same objectives established by al-Qaeda when Osama bin Laden broke off his relations with the Saudi monarchy and vowed to bring down the House of Saud.

Bin Laden’s ire at the Saudi monarchy stemmed from the fact that Saudi King Fahd bin Abdulaziz Al Saud invited the American military to use Saudi Arabia as a staging area to build up forces to take on the then Iraqi leader Saddam Hussein after Iraqi troops occupied Kuwait in August of 1990. Bin Laden objected to the presence of “infidels” in the land of the two holy mosques, and asked the king to allow his outfit to tackle Saddam Hussein’s troops.

Similarly, IS knows that it will only feel secure once Saudi Arabia is part of the Caliphate, and its oil fields are under IS control — which is why the group has two logical next steps.

First, to capture and secure the most important country in the Muslim world: Saudi Arabia.

If the battle for Syria and Iraq attracted tens of hundreds, (some say tens of thousands) of young Muslims, the battle for control of Islam’s two holiest sites, Mecca and Medina, are very likely to attract many more fighters into the ranks of the Islamic State.

And second, to take on the United States — the one remaining superpower that could stop its march on the oilfields of Saudi Arabia, and ultimately the rest of the Gulf.

After much hesitation, it now appears that the Obama administration has come around to realizing the true danger posed by IS. Washington, along with some of its NATO allies, is now formulating a plan to defeat IS.

However, it may be wise to point out that Washington’s track record in dealing with Middle East problems has not been something to crow about. As a point of reference, one need only mention Iraq and Afghanistan — both prime examples of how not to do things.

Even if the U.S. can defeat IS militarily, any victory would only be temporary since eventually, U.S. troops will pull out and the remnants of IS would emerge from their respective hiding places, as they did after Saddam Hussein’s capture and death. Indeed, a U.S. intervention — through its massive air campaign — will foment even greater animosity toward the West in general, and the United States, in particular. It’s all déjà vu.

The one power that can effectively move against IS in a manner that would appear legitimate to other Muslims is Saudi Arabia, as Nawaf Obaid, a fellow at Harvard University’s Belfer Center for Science and International Affairs, and Saud al-Sarhan, research director at the King Faisal Center for Research and Islamic Studies pointed out in a joint opinion piece published Sept. 9 in the New York Times.

The authors dispute the widely believed notion that Saudi Arabia created IS and is funding it. “Saudi Arabia is not the source of ISIS — it’s the group’s primary target,” they write.

As Obaid and al-Sarhan put it, “The Saudi leadership has a unique form of religious credibility and legitimacy, which will make it far more effective than other governments at delegitimizing ISIS’s monstrous terrorist ideology.”

What makes IS powerful today is the fact that they laid out their military strategy based on where oil fields are located. The fact that they went after northeast Syria and northern Iraq is not coincidental by any means. Islamic State may be ruthless and brutal, but it is first and foremost a terrorist organization with an astute business plan.

The capture of oil wells in Syria and Iraq has made the group financially self-sufficient. Now it’s all or nothing.

Read more on OilPrice.com

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TIME energy

The Case for Staying Connected

We don't need to ditch the grid. We need to fix the power business

The solar-rooftop revolution has inspired a lot of talk about grid defection, about electricity independence, about firing your utility and freeing yourself from its wires. And this power-to-the-people rhetoric isn’t just coming from hippie-dippy environmentalists. The banking giant UBS recently predicted that as more homeowners produce and store their own electricity, big utilities and their centralized power plants will gradually become irrelevant. The energy company NRG is already shifting its focus from massive fossil-fuel plants to home-energy solutions. “The future of energy isn’t 120 million butt-ugly wooden poles,” says NRG Energy CEO David Crane. Even the Edison Electric Institute, which is run by utilities, has warned that the rise of rooftop solar could disrupt the utility business model.

It’s an exciting concept, with the potential to empower homeowners and save them money while slashing carbon emissions. As solar costs have plummeted and the number of installations has exploded–over half a million Americans became at-home solar-electricity producers over the past five years–I’ve talked big too. I’ve compared the rise of do-it-yourself power generation to the shift from landlines to mobile phones.

Well, as the politicians say, I’d like to revise and extend my remarks. I still think rooftop solar is an incredibly disruptive technology and a serious threat to antiquated utilities. But the solar revolution is not the telecommunications revolution, and I doubt it will usher in a new era of grid defection and electricity independence. Nor should it. Why disconnect from the grid when you can get paid for providing it with stuff it needs? It might feel good to fire our utilities and escape their wires. But it’s in everyone’s interest for us to figure out a way to get along–and for the politicians to write rules making that possible.

After all, most of us will still need the grid in the solar age. Just about everyone has a cell phone, but some rooftops aren’t right for solar. And most homes and businesses that do go solar will still need extra power; energy analyst Hugh Wynne says factories, malls and apartment buildings generally produce less than 15% of their electricity on their rooftops, while single-family homes usually produce less than 75%. You can go off the grid without losing reliability if you get a backup form of home-electricity production, like the gas-fired generators NRG is pushing, or some form of storage for when the sun isn’t shining. But while batteries are getting cheaper–as are electric vehicles, which can function as car-shaped batteries when not in use–they’re still not as cheap as the grid.

The grid, after all, is an awesome form of power storage, constantly moving electrons to where they’re needed from where they’re not so that our refrigerators keep running. It provides an amazing service to all of us by balancing power supply and demand every second of every day; it ought to, given the trillions of dollars we’ve invested in it. Sure, you might be able to declare independence from the grid, just as you might be able to grow all your food in your backyard, but it’s hard to see how that would make economic sense. On the other hand, staying connected should improve the economics of going solar; in peak afternoon hours, when the grid needs more supply to power air conditioners, you should be able to sell excess electricity to your utility at an attractive price, so it doesn’t have to build and operate additional plants to keep the lights on. It should be good for you, the grid and other ratepayers.

The key word is should. Some utilities have declared war on rooftop solar, shrieking that it threatens their business model–and in many states, it does.

Utilities usually get paid for selling more power and building more power plants. When you produce your own power, you cut into their profit margins. That’s why so many utilities are fighting to limit net metering, which lets solar customers sell power back to the grid, while pushing to charge customers additional fees for using the grid. They argue that otherwise, nonsolar customers will have to pay more to make up for their shortfalls.

That’s not entirely wrong–anyone who uses the grid ought to pay for the privilege–but it also encourages solar customers to go off-grid. It would be better for everyone if they stay connected, so they can generate energy for the grid when it’s needed and, if they get electric vehicles, store energy for the grid when it’s not. But that’s going to require an entirely new way of regulating utilities so they get paid for the services they provide rather than the power they sell us.

We don’t need to fire our utilities. We need to fix the utility business.

FOR MORE ON NEW ENERGY, GO TO time.com/newenergy

TIME energy

Why China’s Insatiable Appetite For Coal Has Likely Peaked

China coal pollution
Coal powers China today, but that may be changing STR/AFP/Getty Images

The biggest coal consumer in the world is rethinking its energy policy

This article originally appeared on OilPrice.com

China’s run as the world’s most voracious consumer of coal may be coming to an end.

A recent report from Greenpeace found that China’s coal consumption declined in the first half of this year and new Chinese government data suggests that the country’s coal imports have dropped. Estimates indicate that by the end of the year, China’s coal imports could be 8 percent below 2013 levels.

China imported 18.86 million tonnes of coal in August, thelowest level since September 2012.

Part of the reduced demand is due to a slowing Chinese economy. After years of double-digit growth rates, China’s GDP expanded by just 7.7 percent in 2013, and it could struggle to hit its 7.5 percent target this year. Some analysts are predicting an average growth rate of only 6 percent in the next few years.

But a lower GDP growth rate is only part of the reason. As the Sierra Club’s Justin Guay points out, China may be beginning to “decouple” its growth from coal consumption. In other words, China’s economy could continue to expand even while its coal consumption drops – something unthinkable not long ago.

That’s due in large part to China’s declared “war on pollution,”announced earlier this year.

Years of increasingly choking smog have sparked public anger and even led to protests. In 2013, a government survey of 74 Chinese cities found that all had pollution levels that exceeded levels the World Health Organization deems safe.

“We will resolutely declare war against pollution as we declared war against poverty,” Premier Li Keqiang said in March. The plan calls for the closure of old and dirty steel, cement, and coal plants: An estimated 1,725 small-scale dirty coal plants are expected to be shuttered. The government also declared it would spend $275 billion in the next three years to reduce pollution.

China has also set up environmental courts, instituted fines for offenders of environmental standards, granted non-governmental organizations the right to sue polluters, and now requires the nation’s largest factories to disclose pollution data to the public.

The efforts are starting to pay dividends, as evidenced by declining coal import levels. This is a major reason that international coal prices have reached their lowest levels in six years. And the low prices are not succeeding in stoking a resurgence in demand.

And more declines could be coming, thanks to a series of proposed new laws. The central government released a draft version of a law on Sept. 10 that amounts to an outright ban on coal with a high sulfur and ash content. This could significantly hurt coal exporters, like Australia and South Africa.

The government is also seeking to cut coal production by 10 percent because low demand is causing economic losses for 70 percent of China’s coal companies.

Moreover, China is considering a permanent limit on the overall consumption of coal. The current five-year plan aims for consumption of 4.1 billion tonnes of coal in 2015, up from 3.7 billion tonnes in 2013. But in the next five-year plan, which will run from 2015-2020, China could cap its coal consumption at the same 4.1 billion tonnes-per-year level, and even ratchet it downwards.

And in 2016, efforts to slash coal demand will likely only accelerate, considering China’s announcement that it will introduce a nationwide cap-and-trade program. Details are murky, but if successfully implemented, major producers will be incentivized to improve efficiency and switch to cleaner sources of energy.

As the world’s largest consumer of coal, as well as the world’s largest emitter of greenhouse gases, the significance of China’s policies on coal use cannot be overstated. Thanks to a concerted effort by the government to improve air quality, the era of insatiable Chinese demand for coal could be over.

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