* This is my article in BusinessWorld last October 31, 2017.
See also:
BWorld 160, A high carbon tax is irrational, October 25, 2017
Energy means development. It is not possible to have fast
growth in all sectors — agriculture, manufacturing and services — and sustain
it without ample supply of affordable and stable energy and electricity.
The US remains the world’s biggest economy in terms of
nominal or current values of gross domestic product (GDP). But in purchasing
power parity (PPP) valuation of GDP, China has tied the US economic size in
2013, both with $16.7 trillion, and in 2014, China ($18.2T) overtook the US
($17.4T).
US ENERGY POLICIES UNDER EX-PRESIDENT OBAMA
The energy policies of the previous administration can be
summarized as follows: (1) drastic reduction of coal use, (2) steady use and
consumption of nuclear and hydroelectricity, (3) relative encouragement of
natural gas and oil, and (4) massive support and subsidies for variable
renewable energies (VREs) especially wind-solar.
In contrast, other giant economies in the world have the
following energy policies:
Germany: (1) mild reduction in coal, oil and nuclear, (2)
relative encouragement of natural gas, and (3) massive support and subsidies
for VREs.
Japan: (1) increased use of coal and natural gas, (2)
decreased use of oil and nuclear, and (3) big support for solar.
China and India: uniform increase in coal, oil, natural
gas and VRE. Which is the right thing to do, to improve energy capacity as big
and as stable as possible to hasten their economic development (see table).
The US energy transition from coal to VREs like
wind-solar has affected its long-term energy stability and competitiveness and
punch some holes on the budget and ordinary consumers’ pockets.
US ENERGY POLICIES UNDER PRESIDENT TRUMP
Recognizing the long-term threat of this trend, President
Donald Trump issued a series of policies reversing the Obama policy. Among them
are the following:
(1) Appointed an Anthropogenic global warming (AGW)
skeptic, Scott Pruitt as head of the Environmental Protection Agency (EPA). EPA
in the previous administration has issued lots of regulations that explicitly
or implicitly restrict new coal power plants while putting existing coal
plants.
(2) Issued America Energy Independence policy in March
2017, targeting to reverse among others, the Clean Power Plan (CPP) projected
to cost the US economy up to $39 billion a year and increase electricity prices
in 41 States by at least 10%. A follow up Executive Order (EO) “Implementing an
America-First Offshore Energy Strategy” was issued in April 2017.
(3) Exit from the Paris Agreement and the multi-trillion
dollars possible liabilities in legal and environmental challenges.
These policies will reverberate to Asia and the rest of
the world in terms of higher US production of coal, oil and gas. Higher supply
means lower or stable prices for these energy sources.
On a related note, an America First Energy Conference
(http://americafirstenergy.org/) will be held in Houston, Texas this coming
Nov. 9, to be sponsored by the Heartland Institute. Being organized by an NGO,
speakers and moderators (41 so far) are all from nongovernment entities except
one, from the US Department of Interior.
HUGE COAL POWER IN SOUTHEAST ASIA (SEA)
Last week, the International Energy Agency (IEA) reported
that about 100 GW of new coal-fired power generation capacity is expected to
come online in SEA alone by 2040, increasing the region’s installed capacity to
about 160 GW and more than doubling the region’s current coal power capacity.
Global coal-fired generation capacity to grow by nearly 50% over today’s
levels.
Coal as fuel is preferred because it is cheaper than
natural gas and coal plants are in many cases less costly than the capex needs
of gas plants, the IEA admits.
The Philippines will be among the big SEA nations that is
investing big amount of resources in expanding its coal capacity. And rightly
so. In 2016, coal constituted 34% of PH total installed power capacity but
contributed 48% of actual electricity production.
Cheap, stable, and dispatchable electricity upon demand,
that is the kind of power sources that people the developing world need.
Governments must step back from climate and renewables alarmism and cronyism
and go for least-cost, reliable energy.
----------------
See also:
BWorld 160, A high carbon tax is irrational, October 25, 2017
BWorld 161, The sin of smuggling and corruption in the Sin tax law, November 02, 2017
BWorld 162, Open pit mines and open economy, November 05, 2017
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