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Sunday, December 01, 2013

Could Al Gore Be Wrong About Coal's Future

Energy economists have long talked about the "energy ladder" which says that as a person or a nation gets richer that they seek higher quality, cleaner fuels.  For example, very poor people burn dung for heating and cooking services and this activity sharply raises local particulate levels causing serious breathing issues.  The NY Times reports that China wants to burn cleaner coal for its electricity and heating and it is now buying coal from Australia.  If such "clean coal" exists, this would mean that China's CO2 emissions will rise but that there will be less particulates and SO2 associated with power generation that relies on cleaner coal.   I thought Al Gore told us that coal has no future?  As I mentioned in a previous blog post, a boycott only works if no major potential purchaser steps in to purchase when the boycotted good's price falls.  It is ironic that communist China knows how to play the capitalist game.  It would have received an "A" in my class.   How will Al Gore incentivize China to not rely on "clean coal"?  He could argue that it isn't clean.  He could pay the Chinese not to use it but who will be taxed to pay for this side payment?