* This is my article in BusinessWorld last November 16, 2017.
See also:
BWorld 160, A high carbon tax is irrational, October 25, 2017
Among the global leaders who attended the ASEAN Summit
2017 this week in Manila were the leaders of the US, China, Russia, Australia,
and India. These five countries are also the top five in having the world’s
biggest coal reserves and top five biggest coal producers.
US President Trump in particular emphasized his desire
for “reciprocal trade” with Asian countries. Energy trading is a growing sector
in the US as it is now the world’s biggest oil and natural gas producer
(overtaking Saudi Arabia and Russia in oil and gas output, respectively, since
2014) but not yet the world’s biggest exporter of these two commodities.
The subject of Trump’s energy policies was well-discussed
by many scholars, researchers, and some players during the “America First
Energy Conference” in JW Marriott Houston, Texas last Nov. 9, organized by the
Heartland Institute and co-sponsored by many other US-based independent think
tanks and research institutes.
I attended that meeting and it seems I was the only Asian
in the big conference hall. I went there from a different perspective compared
to American participants — to further understand how the evolving US climate
and energy policies would impact Asia in the short to long-term, the
Philippines in particular.
In his breakfast plenary lecture, Joe Leimkuhler, VP for
drilling of LLOG, a deepwater exploration company, discussed whether the US can
dominate energy as articulated by President Trump.
“Energy dominance” is defined as being able to meet all
US domestic demand and export to markets around the world at a level where they
can “influence the market.”
He showed lots of very interesting tables and charts
including the usual Strengths-Weaknesses-Opportunities-Threats (SWOT) analysis
of current US energy environment. Among his conclusions are the following:
a. Oil, natural gas — The US can have energy dominance in
the short-term but to make it long-term, the shale revolution should be
sustained and supported, and if more gas reserves are discovered.
b. Coal — Supplies can meet domestic demand but may be
unable to provide for short-term exports. There are no coal exporting
facilities on the West Coast to cater to the biggest coal customers in the
world, Asia. The states of Washington, Oregon, and California have passed laws
preventing the construction of such facilities or delaying the permits. US coal
is cheaper to produce and its quality is higher than other suppliers can give.
Many sessions in the conference provided extra
information about the current weaknesses of the US coal industry despite its
huge reserves.
In the session on “Peace Dividend: Benefits of Ending the
War on Fossil Fuels,” Dr. Paul Driessen, Senior Fellow at the Committee For A
Constructive Tomorrow (CFACT), showed these data on electricity prices, 2017,
in US cents/kWh: (a) Germany: residential 35, business and industry 18; (b)
California: residential 19, business/commercial 18, industry 14.5; (c)
Indiana-Kentucky-Virginia average: residential 11.7, commercial 9.5, industry
6.5. Germany, Denmark, South Australia and California have the highest
concentration of wind-solar farms and they have the most expensive electricity
prices in the planet.
The US has the largest coal reserves in the world
estimated at 381-year supply, shown in the Reserves/Production (R/P) ratio.
Russia has the highest R/P ratio because its production and consumption is
smaller compared to the US. China has the second biggest reserves but its R/P
ratio is small because of its huge production and consumption in million tons
oil equivalent (MTOE). In 2016, half of global coal consumption was made in
China alone (see table).
Once the US can build those coal export facilities in the
West Coast and various anti-coal policies in the Clean Power Plan (CPP) and CO2
Endangerment Findings are finally reversed, Asia will have more options of
cheaper and higher-quality coal, aside from what they currently get from
Australia, Russia, Indonesia, South Africa, and others.
The Philippines is a small player in the global coal
market — very small reserves, negligible production (mostly from Semirara), and
meager consumption. Yet many environmentalists seek to further restrict, if not
actually prohibit Philippine coal power plants and force us to depend on
undependable, unstable, unreliable, erratic, intermittent, and expensive
wind-solar energy.
Governments should not pick winners and losers via
legislation and multiple regulations, taxation, and selected subsidies. They
should allow consumers to realize higher consumer surplus via competition and
more choices in energy sources that are cheaper, stable, predictable, and
dispatchable.
-------------------
See also:
BWorld 160, A high carbon tax is irrational, October 25, 2017
BWorld 163, US energy policies and implications in Asia and Philippines, November 19, 2017
BWorld 164, PES conference amidst reduced risk and uncertainty, November 21, 2017
BWorld 165, Airport transfers and tourism, November 25, 2017
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