Next they should do the same with natural gas. The data on the investments of nat gas fracking make it doubtful that it will pay back even the last round of capital investment.

https://www.desmogblog.com/2019/12/17/us-fracking-shale-wood...

As the cost of renewable power continues to drop, investing in extracting oil/ natural gas/ coal from the ground is going to make increasingly less sense. Coal has the fewest uses outside burning for power and the greatest environmental impact, so it's the most vulnerable, but oil and NG are going to come under increasing pressure.

It’s a great stocking stuffer.

It's coming; coal is unprofitable largely because it's been displaced by gas. But solar and wind are starting to gain critical mass, which could mean that natural gas craters faster than coal has. Fossil fuels are starting to look very risky.

The point of that article is that nat gas, even without additional climate externalities loaded onto it (which they should be), looks like it will turn out to be a poor investment. If we then add future analysis of climate costs onto that, they should already be as dead an investment avenue as coal.

Natgas can’t and won’t die in the short term. It is necessary to balance the intermittency of renewables in electrical generation, at least until there is viable utility scale battery storage. I’m not sure there is another good alternative at the moment. Even if loads were to decrease dramatically (unlikely in my opinion) it would still set the marginal price for electricity in most areas.

There is a massive oversupply globally of natgas at the moment, which is why the long term investment outlook looks bad. It has been overproduced via copious debt, increasing efficiencies have made the extraction price very low, and it’s a pesky byproduct of oil production in some areas (and pricing reflects that in those areas with prices actually going negative at some times). Perhaps if the environmental externalities of extraction were priced in, it would be more expensive but it’s a big reason why the US has been able to retire so much coal over the past decade. Arguably this is a huge net win environmentally speaking.

Sealed nuclear reactors [1] will likely play a big role here. They are much safer and far less expensive than nuclear tech currently in operation (which dates back to the 70s or earlier). The astronomical cost of building a nuclear power plant has been a huge barrier to adoption, but that should come down significantly over the next decade.

[1] https://www.world-nuclear.org/information-library/nuclear-fu...

I hope you are right. I think nuclear power is probably the best thing that can be adopted. The new build costs are astronomical compared to natgas though and I’m not entirely sure why. We’re talking almost an order of magnitude the last time I looked - 1200/kw for gas vs 8000/kw for nuke. Gas costs have come down dramatically over the years while nuclear costs have increased. I hope this trend can reverse. Don’t know anything about the sealed reactor that you’re discussing though.

Renewable + storage, for intermittent supply, is already cheaper than a natural gas peaker plant for intermittent supply.

I think this is wrong in terms of new build cost. Especially if you take away subsidies. As far as I know, local factors aside, wind gen costs around 1500/kw without storage. Solar is similar, and gas is around 1000-1200 for a combined cycle and 800 for a simple ct (which would likely be a peaker). If I am remembering correctly, Duke energy recently completed a combined cycle plant that came in significantly under cost - around 900/kw.

If you add utility scale batteries, you’re looking at much more for renewable. I’m not sure what type of storage you have in mind though. Add to that, the capacity factors are very high for gas, while notably low for renewable. This impacts payback severely and I’m not even sure if you can sell capacity against a renewable plant - I may be wrong here.

What type of renewable are you talking about and what type of storage? Also what are the new build costs you are referencing? Or are you simply saying that a utility scale battery costs less than building a peaker?

But part of the reason why coal is a poor investment is the issue of climate change. Work on solar panels and other renewables is at least partly spurred on by the threat of climate change.

fracking is a very expensive form of gas, versus say Qatar. Also seems to have large greenhouse effects via leakage.

It used to be, my understanding is that these days many fracking operations are viable at $40 a barrel.

The US didn't become the world's largest oil producer by producing the most expensive oil.

$40/barrel break even is still way more than most conventional oil fields. It's killed off say, tar sands and some of the more expensive off shore/arctic plays (say, like some pre-salt fields). The other thing about shale is that it tends to be short cycle (most of the production in a few years), rather than long cycle payoffs. That might be more attractive to majors avoiding risks.

Why do you care if the saudis can extract it cheaper especially considering they are the ones manipulating the supply just to increase their profits? As long as I'm going to pay 60 bucks a barrel, I'd rather pay my fellow americans especially since it is making us energy independent which hopefully means we can avoid any more stupid wars in the middle east (one can dream at least).

Plus, this doesn't even consider the environmental affects on the water supply. These fracking chemicals are poison and not contained well.

Remember that price paid for an asset is the primary driver of returns for the investor. Even as coal implodes, one can make money as the near term cash flow on invested dollars is high enough to offset declines.

Smoking has been in decline for decades yet cigarette companies have been phenomenal investments.

Aside from a few industrial uses, nobody buys "Coal"; people buy power. There is no differentiation. If it's cheaper to put in a new solar array with batteries than it is to continue burning coal, then power companies will shutter the coal plants.

This isn't really analogous to tobacco because there is no direct substitute for smoking. So long as people are addicted to tobacco there is a predictable and steady decline curve which allows these guys to milk it over time.

There is also a fairly predictable decline curve for coal and shutter dates. I’m not talking about building new plants. That makes no sense I agree (as do the utilities). Existing coal plants absolutely make money as they simply need to cover variable costs.

The big difference is for tobacco, the curve is decades long and may continue to decline for decades more. For coal power, it's unlikely to last until the end of the decade.

Smokers gonna smoke, but outside a few specific places, nobody is going to be generating power with coal in 20 years. Unlike smoking, the consumers of coal power are pragmatic and driven by profit.

The earnings yield is much higher to compensate.

Maybe I don't understand what you're saying but it sounds like you're implying a homeostatic mechanism prevents capital from being withdrawn from coal.

If no company or sector could decline due to declining profits, then nothing in the economy would work at all.

I take your point, but... In fact the number of smokers has been increasing globally. It's going down in the West, but up elsewhere, and global population is increasing, overwhelming the reduction in smoking prevalence.

Even domestic cigarette investments have done phenomenally. Not just PM. Look at LO for instance (no longer listed as it was bought out).

> this is one of those policies which is both environmentally friendly and makes piles of economic sense

To a broader point, this is how real change is enacted: make it matter to enough folks, usually by means of economic pressures. I.e., make bad things cost more than good things. Although obviously ham-fisted tariffs, etc. aren't very effective for a host of reasons. You gotta be more subtle than that.

Carbon needs to be taxed to create incentives to reduce use, and for society to capture the externality cost of burning fossil fuels.

> ham-fisted tariffs

Tariffs could and probably should be used to punish nations that doesn't want to play with reasonable rules though. Given reasonable politicians it could be used to make sure that everyone are applying carbon taxing and/or similar policies.

Yes, my point is just that the one-dimensional "raise prices on bad stuff" strategy invites circumnavigation efforts which make it ineffective. Tariffs for economically punishing bad actors is a useful tool in the right scenarios.

> The cost of running existing coal plants has exceeded the cost of building new solar & wind power plants. Over the next few years, demand for coal is likely to implode.

That article cites a report written by climate change activists who want coal to be banned as fast as possible. If their fantasy were a reality, market forces would achieve their goals without intervention. Naturally, they're going to argue that government intervention is necessary to speed things along.

Federal reports suggest coal will decline slightly over the next several years, but won't disappear. Some forms of renewables are competitive with coal (onshore wind, hydro, geothermal), but they cannot be used everywhere. Solar and offshore wind are still not competitive with coal, nuclear, or natural gas.

[1] https://www.eia.gov/outlooks/aeo/pdf/aeo2019.pdf

[2] https://en.wikipedia.org/wiki/Cost_of_electricity_by_source#...

That was my thought too. I wonder if they're just dressing up their findings in environmental speak for points. What other industries do they plan to drop in the name of the environment?

> Do you think people run coal power plants to generate profit? Profit doesn't matter.

Depends on where you are in the world; quite a lot of the west has privatised its generation and does dispatch through markets, so the coal plant really will be run if and only if it's profitable.

The UK has almost completely closed all its coal generation in the past decade.

Quite a lot of the East does not. Also, UK replaced it's coal for natural gas because large coal mines are not near it.