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Even though they really, really shouldn't. As you undoubtedly know, it's a terribly dirty fuel source that is destroying the planet. When I saw this headline, m

Even though they really, really shouldn't. As you undoubtedly know, it's a terribly dirty fuel source that is destroying the planet. When I saw this headline, my gut reaction was actually "good -- I hope that makes other fuel sources more competitive". I then realised that I am not an economist, and that it would have the opposite effect -- increasing production. One thing I'd love to see come out of COP26 is an internationally agreed minimum tariff per ton of CO2e, including electricity weighted by its means of production. We want coal to be very expensive to buy (and very cheap to sell).

rustnote 5y ago
Coal isn't just for electricity, it usually rises and falls with the price of steel because it's needed for the process. Also has use in a bunch of other things like water filters.
- aceazzameen 5y ago
  I thought water filters use charcoal, not coal.
dustintrex 5y ago
It's going to have both effects simultaneously. Production is not going to increase very much overnight, because coal mines are not particularly elastic. However, most coal consumers are actually in the market for electricity, so high coal prices will encourage substitution with alternatives like solar.
- tialaramex 5y ago
  High electricity prices also eliminate the cost of (some) subsidy schemes for sustainable energy. Which almost can't help but encourage more such schemes. The UK's CfDs (Contracts for Difference) pay schemes like wind farms a fixed price for their output, allowing projects to go out to market saying look based on our plans we're going to make so-and-so-many MWh of electricity, the UK promises to pay so-and-so-much £££ for that electricity, therefore lend us (much less) £££ to build it and we'll pay you a nice return. This means investors only need to care about whether your wind farm proposal actually makes electricity, not guess what the price of that electricity will be when it's sold. Normally these schemes cost the government money. Say electricity is selling for £50 per MWh, and your wind farm's CfD specifies £80 per MWh, the government hands over £30 per MWh extra to make up the difference. But, when prices sky rocket the government actually gets paid the difference. When electricity sells for £200 per MWh and your wind farm's CfD said £80 per MWh, you only get £80 per MWh as promised, the other £120 per MWh goes into the general fund to buy missiles or feed orphans or whatever.
  - makomk 5y ago
    Part of the problem in the UK is that the amount of wind was at something like a 40-year low earlier this year, meaning that wind farms weren't producing that much at all. As the amount of renewable power increases and fossil fuels get phased out and become more expensive, we can expect high electricity prices to coincide more and more with times when renewables are producing very little power and low prices with times when they're producing lots of it. So even if CfD prices look good on paper compared to average electricity wholesale prices the government is still likely to lose a lot of money on the deal due to when that electricity is produced, which ultimately comes out of all our electricity bills.
    - solotronics 5y ago
      How do you even heat a house with wind? Aren't most homes in the US and EU are heated with gas?
      - mjmahone17 5y ago
        If a home has a heat pump (most AC systems), heating primarily with electricity isn’t that hard, at least in milder cold temperatures. Most homes in the colder areas of the US heat with gas because the cost per joule of gas is a lot less than for the equivalent electricity. But a lot of homes can supply most their heat with electricity, and would if the economics made sense. And even more would build that capability if gas was 2x the cost per joule as electricity.
        tialaramex 5y ago
        Also even ignoring the direct price of the fuel, unlike for most things for heating it makes practical sense to burn gas in your house to make it hotter, not burn gas in a power station, then ship the power to your house and use that to make it hotter. A modern home boiler is very efficient, because what you wanted was heat, which is exactly what you get by burning gas. The gas turbine at a power station has to do the same conversion (burn gas to make heat) but then also convert the heat into electricity, and that's before transport loss. In the ideal world, the choice is between "Burn gas in your home" (bad, accelerates climate change) and "Use renewable electricity" (good, although maybe expensive depending on policy decisions). But for many people today there is no choice, resistive electrical heating would still burn gas in a power station and just cost them a lot more. Heat pumps tilt the scales, if they're practical for you, it really is possible that a heat pump running on electricity that's actually produced by burning gas works out cheaper and more environmentally friendly than just burning the gas yourself. And of course a heat pump powered by wind is entirely practical and potentially quite cheap.
tuyiown 5y ago
> my gut reaction was actually "good -- I hope that makes other fuel sources more competitive". I then realised that I am not an economist, and that it would have the opposite effect -- increasing production. Not a economist either, but those are not exclusive. Also, this is not the case here, but ever lowering demands triggers structural prices increase at some point, due do scale cost reduction not working anymore, but you won't see investments in production either.
- deleted 5y ago
  [deleted]
piokoch 5y ago
Welcome to the reality. People don't want to freeze in their houses. People will gladly listen to the talks how renewable energy sources are good for our planet, they will even go on "climate strike" marches... until temperature drops at home below 21 degrees.
- Lutger 5y ago
  A lot of people are also willing to invest in better isolation and sustainable ways of heating their homes. Meaningful action does not require us freezing in our houses, not yet. But you have a point, which is exactly why survival of our societies should not be a choice on the consumerist menu. The government, the justice system, the corporate world and finally the citizen should lead in the struggle to decarbonize the world, not the consumer.
  - tonyedgecombe 5y ago
    > The government, the justice system, the corporate world and finally the citizen should lead in the struggle to decarbonize the world, not the consumer. That always sounds like an excuse for doing nothing to me.
    - Lutger 5y ago
      What one must do as a citizen is put pressure on the government. And, as a consumer, one should also make climate friendly choices, but it's not the most important thing and it should not distract us from where the real difference is made.
    - bombcar 5y ago
      It's better than that, it's an excuse for doing nothing and blaming the other for nothing getting done.
      - Lutger 5y ago
        No. It's the other way around: shifting responsibility from government and corporation to the individual is an excuse for doing nothing and blaming you for nothing getting done. This is how recycling and the carbon footprint is invented - by the softdrink and fossil fuel industry. You have just fallen perfectly into their traps. Just listen to the rhetoric that Shell uses: this is literally what they say.

rustnote 5y ago

Coal isn't just for electricity, it usually rises and falls with the price of steel because it's needed for the process. Also has use in a bunch of other things like water filters.

aceazzameen 5y ago
I thought water filters use charcoal, not coal.

dustintrex 5y ago

It's going to have both effects simultaneously. Production is not going to increase very much overnight, because coal mines are not particularly elastic. However, most coal consumers are actually in the market for electricity, so high coal prices will encourage substitution with alternatives like solar.

tialaramex 5y ago
High electricity prices also eliminate the cost of (some) subsidy schemes for sustainable energy. Which almost can't help but encourage more such schemes. The UK's CfDs (Contracts for Difference) pay schemes like wind farms a fixed price for their output, allowing projects to go out to market saying look based on our plans we're going to make so-and-so-many MWh of electricity, the UK promises to pay so-and-so-much £££ for that electricity, therefore lend us (much less) £££ to build it and we'll pay you a nice return. This means investors only need to care about whether your wind farm proposal actually makes electricity, not guess what the price of that electricity will be when it's sold. Normally these schemes cost the government money. Say electricity is selling for £50 per MWh, and your wind farm's CfD specifies £80 per MWh, the government hands over £30 per MWh extra to make up the difference. But, when prices sky rocket the government actually gets paid the difference. When electricity sells for £200 per MWh and your wind farm's CfD said £80 per MWh, you only get £80 per MWh as promised, the other £120 per MWh goes into the general fund to buy missiles or feed orphans or whatever.
- makomk 5y ago
  Part of the problem in the UK is that the amount of wind was at something like a 40-year low earlier this year, meaning that wind farms weren't producing that much at all. As the amount of renewable power increases and fossil fuels get phased out and become more expensive, we can expect high electricity prices to coincide more and more with times when renewables are producing very little power and low prices with times when they're producing lots of it. So even if CfD prices look good on paper compared to average electricity wholesale prices the government is still likely to lose a lot of money on the deal due to when that electricity is produced, which ultimately comes out of all our electricity bills.
  - solotronics 5y ago
    How do you even heat a house with wind? Aren't most homes in the US and EU are heated with gas?
    - mjmahone17 5y ago
      If a home has a heat pump (most AC systems), heating primarily with electricity isn’t that hard, at least in milder cold temperatures. Most homes in the colder areas of the US heat with gas because the cost per joule of gas is a lot less than for the equivalent electricity. But a lot of homes can supply most their heat with electricity, and would if the economics made sense. And even more would build that capability if gas was 2x the cost per joule as electricity.
      - tialaramex 5y ago
        Also even ignoring the direct price of the fuel, unlike for most things for heating it makes practical sense to burn gas in your house to make it hotter, not burn gas in a power station, then ship the power to your house and use that to make it hotter. A modern home boiler is very efficient, because what you wanted was heat, which is exactly what you get by burning gas. The gas turbine at a power station has to do the same conversion (burn gas to make heat) but then also convert the heat into electricity, and that's before transport loss. In the ideal world, the choice is between "Burn gas in your home" (bad, accelerates climate change) and "Use renewable electricity" (good, although maybe expensive depending on policy decisions). But for many people today there is no choice, resistive electrical heating would still burn gas in a power station and just cost them a lot more. Heat pumps tilt the scales, if they're practical for you, it really is possible that a heat pump running on electricity that's actually produced by burning gas works out cheaper and more environmentally friendly than just burning the gas yourself. And of course a heat pump powered by wind is entirely practical and potentially quite cheap.

tuyiown 5y ago

> my gut reaction was actually "good -- I hope that makes other fuel sources more competitive". I then realised that I am not an economist, and that it would have the opposite effect -- increasing production. Not a economist either, but those are not exclusive. Also, this is not the case here, but ever lowering demands triggers structural prices increase at some point, due do scale cost reduction not working anymore, but you won't see investments in production either.

deleted 5y ago
[deleted]

piokoch 5y ago

Welcome to the reality. People don't want to freeze in their houses. People will gladly listen to the talks how renewable energy sources are good for our planet, they will even go on "climate strike" marches... until temperature drops at home below 21 degrees.

Lutger 5y ago
A lot of people are also willing to invest in better isolation and sustainable ways of heating their homes. Meaningful action does not require us freezing in our houses, not yet. But you have a point, which is exactly why survival of our societies should not be a choice on the consumerist menu. The government, the justice system, the corporate world and finally the citizen should lead in the struggle to decarbonize the world, not the consumer.
- tonyedgecombe 5y ago
  > The government, the justice system, the corporate world and finally the citizen should lead in the struggle to decarbonize the world, not the consumer. That always sounds like an excuse for doing nothing to me.
  - Lutger 5y ago
    What one must do as a citizen is put pressure on the government. And, as a consumer, one should also make climate friendly choices, but it's not the most important thing and it should not distract us from where the real difference is made.
  - bombcar 5y ago
    It's better than that, it's an excuse for doing nothing and blaming the other for nothing getting done.
    - Lutger 5y ago
      No. It's the other way around: shifting responsibility from government and corporation to the individual is an excuse for doing nothing and blaming you for nothing getting done. This is how recycling and the carbon footprint is invented - by the softdrink and fossil fuel industry. You have just fallen perfectly into their traps. Just listen to the rhetoric that Shell uses: this is literally what they say.