The Australian government continues to claim that coal will play a vital role
in bringing cheap energy to developing nations. In particular, it has
claimed India’s poor will benefit from the development of coal reserves
in Queensland’s Galilee Basin. But is that really the case?
In our recent research,
my colleagues and I tested claims that coal will help India’s poor,
relative to the impact of alternative, renewable energy sources. We
found that when you add up all the costs and benefits of coal—including
positives such as jobs, and adverse impacts such as those on
health—renewable energy is cheaper.
The cost of coal
We calculated the cost of delivering coal-powered
electricity from Australia’s Galilee Basin to the Indian state of
Bihar. It’s a poor, farming-dependent state with annual gross domestic
product of about $565 (Rs37,888) per person. It has India’s highest
proportion of households without access to electricity—roughly 75
million people without power.
In our analysis, we added proportionate costs for developing the Galilee Basin; expanding the coal terminal
at Abbot Point on the Great Barrier Reef; shipping the coal to India;
developing infrastructure to transport it to Bihar; building coal-fired
power stations; and improving the electricity network.
The infrastructure required to produce a modest
amount of electricity for each household for a 20-year period amounted
to a staggering $29 billion. We assumed that every household would
initially demand a maximum of 0.3 kilowatts, rising to 0.675 kW in a
decade. This means every household would initially at least be able to
have a couple of lights and a fan on, charge mobile phones and power a
computer or a small television for four to six hours a night.
By comparison, Queensland average residential
demand every hour of the year is similar at 0.6 kW, but varies over the
year and during the day. For instance, the average maximum demand can
rise to 1.9 kW on very hot or very cold days. Demand depends on the
energy efficiency and size of appliances, but speaking in averages, if
the household is running an air conditioner, a fridge, a television, a
computer and a few halogen downlights, this adds up to about 1.9 kW.
A kettle alone can draw 1.8 kW, an iron 1 kW and an oven 2.4 kW, so you can see how quickly household power demand can ramp up.
The
investment required for coal-fired electrification in Bihar worked out
to a cost of 13.6 cents per kW-hour, about half what we pay in Australia
for the electricity we get from (largely) coal-fired generation.
The major reason for this difference is that
network costs are high in Australia. Australia’s grid is widely
dispersed and network companies have sought to add infrastructure to
cope with those few (very hot) hours a year when all air conditioners
are turned on at once.
The residents of Bihar would not be using air
conditioners, heaters or stoves because, with an average daily income of
$3 per person, they cannot afford expensive appliances or, for that
matter, large electricity bills. Using electricity for only four hours a
night would cost each household in Bihar $130 per year, a sizeable
proportion of annual household income.
Coal would replace kerosene and animal dung, which are associated with burns, poisonings and respiratory problems.
Nitrogen oxide, sulphur dioxide and particulate
matter form when coal is burned at high temperatures, and are associated
with respiratory problems. Chen Zhu, China’s health minister from
2007-13 and professor of medicine and molecular biologist, estimates
that lung cancer is now the leading cause of death in China, and that
between 350,000 and 500,000 people die prematurely each year as a result of pollution. Much of this can be attributed to burning coal.
Based on Indian and other studies on health
costs, we estimated that attempting to control pollution and health
costs would increase the total cost of electrification using coal to $40
billion, adding another 11c per kWh to the cost of electricity.
Coal-fired electricity for Bihar would not improve health outcomes, nor
provide cheap electricity for the rural poor.
There are, of course, benefits associated with a
large electrification program for Bihar. We estimated, based on current
project plans, that the building of coal-fired power stations and
network infrastructure would provide around 8,500 jobs. While 8,500 jobs
is a sizeable employment number, it is modest when considered in the
context of a population of 104 million people who live in Bihar.
Renewable alternatives
With the level of investment and the costs
associated with coal-fired electricity for the rural poor, it is easy to
feel daunted by the staggering scale of the challenge. We found,
however, that there are alternatives.
Bihar does have potential for hydro, biomass,
solar and combined solar-battery electrification options. We estimate
the investment cost of using the local renewable resources to implement
village-level micro-grid electrification at $27 billion. That is less
than the cost of the Galilee Basin coal-fired option and translates to a
cost of 13.5c per kWh.
Importantly, there are no additional health costs associated with pollution.
In addition to the benefit of electrification,
project estimates for solar electrification in Bihar point to
significant employment potential for locals. As Germany and Australia have found, the development and installation of rooftop solar have resulted in employment growth.
It is estimated that the solar home system program in Bangladesh has reduced the use of noxious fuels and provided employment for 114,000 people.
Based on current project plans in Bihar, we estimate that developing
the local resources for electrification in Bihar will provide around
79,000 jobs for locals.
That would be nearly 10 times as many jobs as
would eventuate from coal-fired electrification. Job creation on that
scale is likely to provide a significant stimulus to economic
development in the state.
Lack of industry
The elephant in the room for proponents of
coal-fired power for the rural, agrarian poor is that remote rural
locations have no or little energy-intensive industry.
Industry is necessary to underwrite the costs of
electrification for residential consumers. Coal-fired power stations
must run constantly; they cannot just run for a few hours a night when a
few lights and mobile phone charging is required for 15.8 million
households (as in Bihar). A few hours a night is all that they can
afford.
If the needs of the rural poor are to be matched
to the supply of affordable and benign electricity, then the best option
for rural electrification is local renewable micro-grids, implemented
by local workers, to develop their economy from within.
The poor will benefit from coal-fired power
generation only if you ignore the costs of pollution and if industries
can be attracted to rural areas. Without industry, though,
electrification for the world’s rural poor requires a different model to
that offered by coal-fired power.
This may be why there is speculation that the Carmichael coal project is now on hold.
By: Lynette Molyneaux, John Foster, and Liam Wagner.
Photo: Jitendra Prakash (Reuters).
Review: Emerging Market Formulations &
Research Unit, Flagship Records.
For The #FacebookTeam
