Your work is my work

Hi there,

Happy Thursday. I’m off to the Guggenheim to look at some art. Before hopping on the subway I put the finishing touches on this newsletter, which essentially argues that what North America and Europe ‘do’ decarbonization wise matters less and less compared to what they can help Asia achieve. Said differently, as certain energy transition challenges, like coal use, concentrate on different continents, global cooperation matters more than silo’d approaches.

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OPINION

A few recent data compilations and charts have crystallized a trend in global energy transition dynamics that’s becoming more pronounced. Especially as it pertains to specific sources of energy generation, such as coal, their dominance is becoming increasingly centralized by geography.

I gestured at this in the most recent newsletter, where I shared a chart from Nat Bullard that illustrated how India now consumes more coal than Europe and North America combined. If we look at Asia on the whole, the picture becomes even more striking.

Coal, one of the three primary fossil fuels, is predominantly used for electricity generation as well as in industrial applications, where burning it generates high heats needed for a variety of industrial processes and it can be used as a source of carbon for manufacturing processes like cement and steelmaking. As we’ve written about often in this newsletter, coal is an environmental scourge on many fronts. In addition to producing significant carbon dioxide emissions when combusted, coal is one of the dirtiest fuels in terms of the air pollution it contributes to the atmosphere and local environments, air pollution that drives millions of excess deaths around the world annually. Not just in Asia, but in places like the U.S., too, where coal still accounts for a sizable share of electricity generation in many states.

Taking India as an example, it’s worth noting that increased consumption of coal is happening for “good” reasons. For one, it has buoyed a massive expansion of electricity access over the past two decades. Coupled with a ballooning population—India is now the most populous country in the world, with 1.4 billion people and counting—coal is the primary fuel used for providing electricity to more and more people. Access to electricity is essential for countless other things that benefit those who have new or increased access to it.

This then is a twin challenge of decarbonization. The goal isn't just to change the pie's ingredients, i.e., the energy generation sources that provide electricity, heat, and more. It's to simultaneously change the pie's ingredients while continuing to grow the pie, especially in places, like India, that haven't traditionally enjoyed the level of energy access other places have.

What works where?

Returning to the point we opened this newsletter with, the fact that specific challenges, like phasing out coal, are becoming more spatially centralized is both a challenge and opportunity. Reducing the world's consumption of coal is definitively turning into a challenge that's focused on the Asian continent. The world's two most populous countries, China and India, account for close to two-thirds of all global coal consumption. Again, this isn't purely to produce electricity; a lot of coal is also used for steelmaking, for example. More than half the world's steelmaking happens in China. As much as China is making massive strides in investing in and deploying cleaner energy, its coal consumption isn't falling.

Taking steel as an example, there are approaches that exist at scale to cut coal use out of steelmaking almost entirely: as we have covered in depth this month, Nucor, the largest steelmaker in the U.S., produces steel with 50%+ fewer emissions than Chinese or other global counterparts by omitting coal and blast furnaces from its production process entirely. Still, the extent to which steel manufacturers in China can be encouraged (or coerced) to adopt these approaches, accelerate the retirement of fully deprecated blast furnaces, and invest in new infrastructure like electric arc furnaces depends on countless variables.

Similarly, thinking through India's coal consumption, there are no quick fixes. Part of why North America and Europe use much less coal than they used to is that countries in those parts of the world have built a lot more renewable energy. The U.K. for instance has halved its emissions from a 1990 baseline by building a boatload of wind energy (and by importing clean electrons from France's nuclear fleet). The U.S. has built a lot of solar and wind. That said, North America and Europe have weaned off coal in large part by building tremendous amounts of natural gas-fired generation. So much so that in reverse of the coal dominance exhibited by Asia, gas generation in the U.S. is higher than in all of Asia (h/t to Dave Jones from Ember). Whereas India outpaces North America and Europe in coal use, North America and Europe far outpace all of Asia in natural gas use. 

This doesn’t mean that the answer to Asia’s coal dependence is necessarily to expand gas use. The U.S. 's gas boom is in no small part predicated on how much more gas the U.S. produces today than it did twenty or thirty years ago. Coal-to-gas switching in Asia will certainly help: many Asian countries like China, Japan, South Korea, and also India, increasingly import liquefied natural gas from the U.S. and elsewhere as LNG exports expand.

The go-forward opportunity to reduce Asian coal consumption will be to skip the ‘gas as a bridge fuel’ transition phase the U.S. is navigating to build out more solar, batteries, nuclear, and other sources of cleaner electrons, in a fashion not dissimilar to how telecommunication proliferation in parts of the world entirely skipped the ‘pole and wire’ phase. As Nat Bullard wrote in an email exchange with me, “Asia looks to be (in power terms) coal and renewables; Europe and U.S., gas and renewables.” Arguably, the best-case scenario for both is increasing the renewable (and nuclear) share. China seems to understand this, as Chinese policymakers have been extremely busy rolling out policies that support building more renewables and nuclear to reduce emissions. Whether China is more focused on energy security, as it lacks the gas reserves of the U.S., or decarbonization is somewhat beside the point—the outcome is largely the same.

To what extent India and other populous, coal-dependent countries like Indonesia can follow in China’s footsteps will depend on the generous ‘exporting’ of best practices and lessons. For instance, the combination of solar plus grid-connected batteries is beginning to reduce gas usage in California. The same could work in India or Indonesia, endowed with ample sun, especially as batteries get cheaper and cheaper chemistries like sodium-ion commercialize. Solar panels are already quite cheap amidst Chinese oversupply, down to cents per watt. Grid-connected battery deployment is starting in other geographies, including Chile, as well.

The net-net

Robert Jenrick, a former UK minister who has aspirations of becoming the leader of the Conservative Party, caught flak for saying “there’s no prizes for being the first country in the world to decarbonize” recently. In a sense he’s right, though. The Earth’s atmosphere and climate system are agnostic as to which latitudes and longitudes carbon dioxide and other greenhouse gas emissions stem from. By 2050 or earlier, some countries, especially those that industrialized first, might be close to ‘done’ with decarbonization. But what North America and Europe achieve in terms of decarbonization matters progressively less if it doesn’t help Asia—increasingly an epicenter of population and emissions—achieve the same.

Fortunately, the fact that many countries the world over are engaged in different forms of experimentation with what mix of resources can reduce emissions and mitigate other environmental challenges while expanding energy access, reducing the cost of it, maintaining grid reliability, and more means there’s universally applicable learning happening in distributed fashion. What works where will invariably vary spatially. But as specific countries learn what works for them, distributing understanding of the practices and policies that drive the most meaningful and enduring outcomes is the real decarbonization imperative.

PODCAST

We took a summer siesta from podcasting but have a great new episode out for you this week. 

In this episode, Nick and Tim Hill, the General Manager of Sustainability Solutions for Nucor Corporation discuss how Nucor became one of the largest steel producers and recyclers in the world and their circular and electricity-powered process that produces steel with fewer emissions. Nick and Tim also discuss:

1. Misconceptions about ‘hard to abate’: It’s worth asking whether steel, which is often seen as a ‘hard to abate’ sector, should be given a reframe, considering that Nucor already offers steel that emits less than one third the GHG intensity of BF-BOF steelmaking (Worldsteel).

2. Additional decarbonization: There are several areas where Nucor can achieve additional emissions reductions, including by sourcing more renewable energy. This is an area where Nucor leads the market with numerous technological partnerships.

3. Global leadership: How can Nucor’s expertise in greener steel manufacturing spread to the rest of the world? There’s a lot of work to do to decarbonize steel and Nucor finds itself in a powerful leadership position, not just to export greener steel to markets globally, but to shape and influence how the entire world approaches decarbonization.

OTHER ~COOL~ STUFF

Electric Era, one of my favorite climate tech companies, is hosting its inaugural 'Driver Days' event this weekend (Aug 24-25). in Southern Oregon and Northern California. If you are an EV owner in those areas, stop by for free EV charging.

Free EV charging at the following two locations from 12-5 PM:

• Saturday August 24th: 7 Feathers, Canyonville, OR -> Link 

• Sunday August 25th: SkyCharger, Weed, CA -> Link 

Go meet their team and celebrate their expanding network 🚗⚡. 

Adios,

— Nick