I want to say thank you Arjun - I spent 2.5 years in the climate sector (zero experience in climate before that but fell in love with energy thanks to the work) and become very worried by its disconnect from the real economy/reality, e.g., climate is not the only agenda. I have been using your content to prepare for interviews for jobs in the energy sector. I got an offer! I am deeply convinced that if I don't understand the traditional energy sources, I won't have any credibility talking about energy transition. Thank you for that! And I am so excited for my new role :)
Thank you Tong for your comments and kind words. Congratulations on getting a job offer! And I 100% agree that there without an understanding of energy, once cannot really understand climate solutions.
You touched on it for a bit but would you care to expand on the implications for Canadian E&P’s? It sounds like you think a re-rating of large US producers is inevitable. Do you share the same view for Canada?
Yes, if US oil & gas re-rates, I would expect Canadian Oils to re-rate as well. Long-lived FCF is the key positive attribute. The CCUS hub that eliminates Scope 1 takes away the key perceived negative.
Interesting article in today's (February 19) online Washington Post about small modular nuclear reactors in coal country by Evan Halper. Admittedly a U.S. centric take. I've never understood why most environmentalists won't consider nuclear as an alternative that will reduce CO2 emissions.
Great video as always. King Coal, for better or worse, is going to be King for a long time.
Coal is an excellent power generation fuel and necessary for steel production, so you get two critical pillars of modern civilization for one. For the energy part, we know from history that people prioritize energy basically like this:
1. Reliability of output.
2. Simplicity of sourcing, supply chain and operation.
3. Cost.
4. Cleanliness/local and or global environment.
Acquiring coal can be very low tech. Recently I read 'Coal Dust in My Blood' by Bill Johnstone, who grew up working in coal mines around Newcastle UK in the 1920's and 1930's, during his time he saw the first mechanized mining machines, before then it was just ponies and pick axes, the saying was the coal was "taken from the point of a pickaxe". So you don't need exotic metals, kilometres-long drilling verticals with AI-guided drill bits, high tech manufacturing facilities or even electricity, if it really comes down to it.
As for energy density, coal is as simple and low-tech to source as firewood, but has higher BTU's (ratio varies depending on the quality of the wood v. grade of coal).
Coal can be transported on the back of a truck or a train (which was often fueled directly by the coal itself, further simplifying the supply chain), no ultra-expensive pipelines or LNG ships to freeze it to -260 degrees, no need to refine it in expensive refineries or have anything like the level of technology required for nuclear power. Flammable fumes and vapors are not much of an issue.
Coal can be stored easily as well, you just dump it on the ground and try to keep it as dry as possible, that's it. Even if it gets wet it still burns. A dry pile of coal just sits there until you need it one day, either today or 50 years from now. No need for salt caverns for the strategic coal reserve, just a giant pile with a tarp over it. No need to worry about refining it in a high tech, expensive, refinery, or having it absorb moisture from the air and becoming useless after a year. No need for expensive storage facilities.
If you have coal, or big stores of the stuff piled up in reserve, you don't need to rely on other countries and their unstable politics, you have cheap, simple, reliable, dispatchable energy always available completely independent of anyone else (that goes for countries, but also for individual households depending on an unreliable electrical grid, like billions of people do today).
But wait, that's not all! LOL. Coal is easy to burn for domestic use too, cooking and heating can be done with it with very low tech, you don't need anything more complicated than an iron stove with a chimney, no need for complicated pipeline networks or electric grids that require maintenance and a stable government to build, operate and maintain them. If you have a pile of coal in your backyard you don't need to worry about your developing country's unreliable electrical grid cutting out.
Yes, everyone knows about the pollution for burning and mining it, but people in every culture have made that tradeoff for a better life and decided to live with it. Furthermore, it's a lot easier to address the tailings and smokestack pollution because they are concentrated in two locations than to try to convert the entire power generation system in many countries to a different technology, so CCS technologies are going to be hugely important in the future (I'm Canadian, see the CCS technology in operation at the Boundary Dam power station Boundary Dam Power Station (saskpower.com)). Although nuclear power is an incredible technology, it still requires extremely complicated technology and maintenance compared to coal. If we think of the grid itself as part of the whole 'machine' then a nuclear plant + power grid is a huge, complicated, resource-intensive, machine which requires an advanced society to operate.
And we haven't even mentioned metallurgical coal, which is an essential fuel and reactant to make steel (but that will have to be for another time).
Just trying to keep the conversation going! I dont want to go on too long though, dont want to bore people. Clean coal technologies by either pre-treating the coal to remove the water and some impurities, and various kinds of sequestration technologies are a big research topics now, it's such simpler to bolt those on to the thousands of existing thermal coal plants all over the world than it is to try to rebuild the whole system with renewables or nuclear. These technologies will ensure demand for thermal isn't going away soon, some.are already in use (like Boundary Dam).
I'm somewhat older than you and I remember reading Amory Lovin's book "Soft Energy Paths" back in the late 70s before awareness of climate change. He was a proponent of burning coal in fluidized bed combustion devices for district heating. He was anti-nuclear as most environmentalists at that time. So his proposed coal burning solution was considered "green" back in the day. Seems somewhat ironic today.
Great video Arjun! Reminds me of an online exchange I had with a person who was claiming China was going off coal and to solar electric generation. When I tried to explain that coal is still the primary fuel for electric power in China, the person accused me of getting my information from right wing news outlets. I gave them a link to a CNN website story where I got my stats from.
Thank you James. I keep hearing the same (renewables + nuclear). But if population has peaked and is in decline and the period of turbo-charged GDP growth is behind it, you can include me in the camp of being highly skeptical China will rapidly shift off coal any time soon.
To your point on coal in India..
https://www.woodmac.com/news/the-edge/how-india-is-redefining-its-energy-future/
I want to say thank you Arjun - I spent 2.5 years in the climate sector (zero experience in climate before that but fell in love with energy thanks to the work) and become very worried by its disconnect from the real economy/reality, e.g., climate is not the only agenda. I have been using your content to prepare for interviews for jobs in the energy sector. I got an offer! I am deeply convinced that if I don't understand the traditional energy sources, I won't have any credibility talking about energy transition. Thank you for that! And I am so excited for my new role :)
Thank you Tong for your comments and kind words. Congratulations on getting a job offer! And I 100% agree that there without an understanding of energy, once cannot really understand climate solutions.
You touched on it for a bit but would you care to expand on the implications for Canadian E&P’s? It sounds like you think a re-rating of large US producers is inevitable. Do you share the same view for Canada?
Yes, if US oil & gas re-rates, I would expect Canadian Oils to re-rate as well. Long-lived FCF is the key positive attribute. The CCUS hub that eliminates Scope 1 takes away the key perceived negative.
Interesting article in today's (February 19) online Washington Post about small modular nuclear reactors in coal country by Evan Halper. Admittedly a U.S. centric take. I've never understood why most environmentalists won't consider nuclear as an alternative that will reduce CO2 emissions.
Great video as always. King Coal, for better or worse, is going to be King for a long time.
Coal is an excellent power generation fuel and necessary for steel production, so you get two critical pillars of modern civilization for one. For the energy part, we know from history that people prioritize energy basically like this:
1. Reliability of output.
2. Simplicity of sourcing, supply chain and operation.
3. Cost.
4. Cleanliness/local and or global environment.
Acquiring coal can be very low tech. Recently I read 'Coal Dust in My Blood' by Bill Johnstone, who grew up working in coal mines around Newcastle UK in the 1920's and 1930's, during his time he saw the first mechanized mining machines, before then it was just ponies and pick axes, the saying was the coal was "taken from the point of a pickaxe". So you don't need exotic metals, kilometres-long drilling verticals with AI-guided drill bits, high tech manufacturing facilities or even electricity, if it really comes down to it.
As for energy density, coal is as simple and low-tech to source as firewood, but has higher BTU's (ratio varies depending on the quality of the wood v. grade of coal).
Coal can be transported on the back of a truck or a train (which was often fueled directly by the coal itself, further simplifying the supply chain), no ultra-expensive pipelines or LNG ships to freeze it to -260 degrees, no need to refine it in expensive refineries or have anything like the level of technology required for nuclear power. Flammable fumes and vapors are not much of an issue.
Coal can be stored easily as well, you just dump it on the ground and try to keep it as dry as possible, that's it. Even if it gets wet it still burns. A dry pile of coal just sits there until you need it one day, either today or 50 years from now. No need for salt caverns for the strategic coal reserve, just a giant pile with a tarp over it. No need to worry about refining it in a high tech, expensive, refinery, or having it absorb moisture from the air and becoming useless after a year. No need for expensive storage facilities.
If you have coal, or big stores of the stuff piled up in reserve, you don't need to rely on other countries and their unstable politics, you have cheap, simple, reliable, dispatchable energy always available completely independent of anyone else (that goes for countries, but also for individual households depending on an unreliable electrical grid, like billions of people do today).
But wait, that's not all! LOL. Coal is easy to burn for domestic use too, cooking and heating can be done with it with very low tech, you don't need anything more complicated than an iron stove with a chimney, no need for complicated pipeline networks or electric grids that require maintenance and a stable government to build, operate and maintain them. If you have a pile of coal in your backyard you don't need to worry about your developing country's unreliable electrical grid cutting out.
Yes, everyone knows about the pollution for burning and mining it, but people in every culture have made that tradeoff for a better life and decided to live with it. Furthermore, it's a lot easier to address the tailings and smokestack pollution because they are concentrated in two locations than to try to convert the entire power generation system in many countries to a different technology, so CCS technologies are going to be hugely important in the future (I'm Canadian, see the CCS technology in operation at the Boundary Dam power station Boundary Dam Power Station (saskpower.com)). Although nuclear power is an incredible technology, it still requires extremely complicated technology and maintenance compared to coal. If we think of the grid itself as part of the whole 'machine' then a nuclear plant + power grid is a huge, complicated, resource-intensive, machine which requires an advanced society to operate.
And we haven't even mentioned metallurgical coal, which is an essential fuel and reactant to make steel (but that will have to be for another time).
Excellent write-up!
Very detailed argument. Thanks for sharing all that information!
Just trying to keep the conversation going! I dont want to go on too long though, dont want to bore people. Clean coal technologies by either pre-treating the coal to remove the water and some impurities, and various kinds of sequestration technologies are a big research topics now, it's such simpler to bolt those on to the thousands of existing thermal coal plants all over the world than it is to try to rebuild the whole system with renewables or nuclear. These technologies will ensure demand for thermal isn't going away soon, some.are already in use (like Boundary Dam).
I'm somewhat older than you and I remember reading Amory Lovin's book "Soft Energy Paths" back in the late 70s before awareness of climate change. He was a proponent of burning coal in fluidized bed combustion devices for district heating. He was anti-nuclear as most environmentalists at that time. So his proposed coal burning solution was considered "green" back in the day. Seems somewhat ironic today.
Great video Arjun! Reminds me of an online exchange I had with a person who was claiming China was going off coal and to solar electric generation. When I tried to explain that coal is still the primary fuel for electric power in China, the person accused me of getting my information from right wing news outlets. I gave them a link to a CNN website story where I got my stats from.
Thank you James. I keep hearing the same (renewables + nuclear). But if population has peaked and is in decline and the period of turbo-charged GDP growth is behind it, you can include me in the camp of being highly skeptical China will rapidly shift off coal any time soon.