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Coal vs. Solar: Considering All the Costs

Lauren Zanolli
| Friday February 14th, 2014 | 16 Comments

coal trainSome coal mining companies are getting a bargain on federal land and skirting export royalties, buoying their profits at the expense of taxpayers, according to a report released by the Senate Energy and Natural Resources Committee earlier this month.

Initiated last year by committee chairman Sen. Ron Wyden (D-Ore.), who will soon step down to join the Senate Finance Committee, the report found that several state Bureau of Land Management (BLM) offices sold tracts at below-market prices to mining companies and also shared information with the companies during the leasing process, which would violate protocols for the “blind lease” process used to get taxpayers a fair deal on public land sales. The same report also found that coal companies in several Western states booked coal exports through trading desks, thereby skirting the 12.5 percent export royalty payments due to taxpayers.

A separate report from the Government Accountability Office released earlier this month found that the BLM’s federal coal leasing program lacks sufficient oversight and sometimes fails to properly value the land it sells to mining companies, costing taxpayers an estimated $200 million in lost revenue.

Besides raising serious questions about federal and state employee misbehavior, the revelations also beg the question: How much does coal, the cheapest and most used energy source, really cost U.S. taxpayers? If we look at all the ignored costs of coal–preferential land leases, direct subsidies, not to mention collateral damage to public health and the environment–is this fuel source really the cheap, patriotic option that we should continue to subsidize, and how do the costs, all considered, stack up against renewable energy sources?

Let’s focus on solar, since that industry has received significant subsidies and also the most scrutiny of all renewables, post Solyndra-gate.

In 2010, direct federal subsidies to the renewable energy industry totaled $14.6 billion, up from $5.1 billion in 2007. Solar installers received $1.1 billion of those 2010 subsidies, according to the EIA.

To give these numbers some perspective, the coal industry has been receiving subsidies since 1932, and in 2007 the industry benefited from about $4 billion in direct government assistance. In 2010 this number shrank to just $1.4 billion. However, estimates on current coal subsidies vary widely, depending on how one accounts for indirect benefits like railroad subsidies that cut transportation costs. The Environmental Law Institute puts total coal subsidies from 2002 through 2010 at $25.4 billion. The price of generating electricity using coal has steadily risen since the 1970s and the cost of coal (including taxes) per million Btu increased 90 percent in the 10 years since 2002, hitting $2.38/million Btu in 2012.

Meanwhile in the renewable energy world, the cost of solar energy has dropped 50 percent since 2008, driven in part by falling solar panel prices as demand grows and the technology gets more efficient. While solar remains an expensive option for many areas, overall the industry is nearing cost competitiveness with stalwarts like coal, even without federal subsidies.

Variations in state subsidies for both industries, plus changes in solar capacity in different geographic areas, make nationwide apples-to-apples comparisons for coal- and solar-generated electricity difficult. But, a recent analysis by Lazard, a financial advisory firm, put utility-scale solar generation within range of the cost of coal power by 2015. Without subsidies, the levelized cost of energy (the cost of producing electricity, including capital costs, fuel and other operating costs) from utility-scale solar plants in 2013 ranged from $89 to $104 per megawatt-hour. But the firm estimates that the bottom end of this range will hit $64 per MWh in 2015 due to the continuing drop in solar panel and system costs. By comparison, coal generation costs between $65 to $145 per MWh.

Coal remains by far our biggest source for electricity, fueling 37 percent of the country’s power. Solar accounts for 1 percent (overall, renewable energies make up 12 percent).

There are pros and cons for every fuel sourced and used in America, and industry advocacy groups on both sides will always spin the numbers to their benefit and make the energy portfolio debate more simplistic than it is in reality.

But there are a few undeniable facts that might start to reshape the energy debate over the next few years: climate change is a very real problem, the environmental risks of clean coal are now better understood (just ask West Virginians in the wake of the Elk River spill) and renewable energy companies aren’t going away anytime soon–subsidies or no subsidies.

Image Credit: greatlettuce, Flickr


▼▼▼      16 Comments     ▼▼▼

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  • J_Bob

    Climate change has been going on for 4+ B years, so whats new. A better answer would be how much is man contributing to it.

    So how come the global temperature has pleatued in the last 13+ years, with increased CO2, if that gas is driving climate change?

    • Dave Williams

      Support you claim that the global temperature has leveled off over the past 13+ years, please.

      Human emissions are not as large as natural emissions, but that falls under the assumption that our contribution doesn’t not affect the natural balance that existed prior to the industrial revolution.

      The BIG problem is, CO2 isn’t the ONLY gas byproduct of burning coal. Here is an easy-to-read breakdown of what is emitted http://www.ucsusa.org/clean_energy/coalvswind/c02c.html

  • archaeopteryxgr

    a small coal plant is can power an elevator, a toaster oven, a hospital or a foundry. All the solar and wind contraptions cannot. They may, randomly, but you may get stuck between floors or blow the fuses while trying. This, regardless of cost. Even if solar or wind were free, you might still get stuck

    • Oklahoma Sam

      Coal is filthy and is one of the principal causes of global warming, among other things. It is not acceptable to continue burning it.

      Also, no one suggested that solar along can replace coal. What we need is temporary natural gas, then nuclear as our base. Coal should have gone by the wayside 30 years ago.

      • cifey

        nuclear is filthier in the long run, see Chernobyl, Goiania
        Solar is promising, biofuels etc

  • Gl Remote

    One of the things that have been disclosed as a result of a FOIA request is that researchers at the University of Virginia apparently did not keep research logs, which are crucial to allowing other scientists to reproduce and confirm the original work. Without these logs, the credibility of climate change research conducted by Dr. Mann and his colleagues is seriously diminished. Of course this pundit automatically refers to AGW as a given.

  • daniel155

    Without the subsidies, wind and solar are not competitive in the marketplace and they are not as green as advertised. Windmills mar the landscape, are noisy, and kill bats, migratory birds, birds of prey, and hummingbirds. Solar is good on an individual home basis but bad when used to mass produce energy. Solar panels take up a lot of land and ruins views of desert landscapes. It also takes up land that is the habitat for endangered species such as the desert tortoise. Plus it needs lead acid batteries that need to be disposed of when spent.

    All sources of energy have their environmental costs but the environmental costs of the so-called green energy sources are not publicized.

  • Bruce Abbott

    I work in the power industry, and install instruments on power plants to test their efficiency for contractual obligations. I recently tested 8 new GE gas turbines, 100MW each; their sole reason for being to provide power during the times when the forest of wind turbines surrounding them ground to a halt. These machines emit tons of CO-2 at around a 1000 degrees, since they are simple-cycle turbines with no boilers to recover that waste heat.
    Germany is building new coal plants that burn brown coal at an efficiency that would make the average gas turbine blush. When a coal plant or natural gas turbine has an availability of +90% and the best solar and wind plants can’t break 40%, don’t expect miracles from green power.

  • CapitalistRoader

    While solar remains an expensive option for many areas, overall the industry is nearing cost competitiveness with stalwarts like coal, even without federal subsidies.

    Great! Then we should quit throwing taxpayer subsidies at all energy sources and let the most efficient and practical source dominate the market. Probably impractical, though, as each energy sector has politicians in its pocket. The energy producers finance politicians, and the politicians turn around and finance the energy producers. There’s a name for it: regulatory capture. And no amount of “good government initiatives”, no number of politicians claiming that they, finally, will lead “the most transparent administraton evah!”, will fix the problem. The only solution is to regulate at the lowest level of government possible. Get the federal government out of environmental regulation.

  • http://www.energysage.com/blog EnergySage

    We cannot hold our breath for large scale government actions to combat climate change. Solar is here and affordable so what are we waiting for? Get an Instant Estimate and see how much you could be saving with solar – http://bit.ly/1gKEjv0

  • davisddfffsdsdddsssss

    hi

  • davisddfffsdsdddsssss

    ndjdf,fjflflkf

  • davisddfffsdsdddsssss

    Coal loses solar wins

  • davisddfffsdsdddsssss

    solar FTW

  • MPL

    Solar is awesome

  • davisddfffsdsdddsssss

    Why the unicorn