New York City The first day of the annual Energy Finance conference convened in New York University’s Law School buildings on Washington Square by the Institute for Energy Economics and Financial Analysis was – believe it or not – fascinating. Not only did I get to catch up with Daniele Pommes and his No Al Carbone campaign around coal-fired plants in Brindi, Italy, but also with a lot of other campaigns, old and new, around coal operations in the USA and elsewhere around the world.
None of that was really the subject at hand on the first day of the conference though. Tom Sanzillo, the IEEFA finance director, had brought in some financial hotshots including Dr. Tony Yuen from Citigroup and Julien Dumoulin-Smith from UBS Investment Research specializing in energy markets, as well as Tim Buckley, now with IEEFA and formerly an investment banker from Sydney, Australia to talk about what was really happening in coal markets, and it added up to an amazing immersion course over several hours in high line energy economics.
The UBS whiz kid summed it up most forcefully as he repeatedly argued that there was a “war of attrition” on coal, coal was losing, and now would clearly not prevail. Dumoulin-Smith argued essentially that the price of gas was now so low that the cost spread between gas and coal for new power plant construction allowed utilities to lock in costs, build the plant, and be profitable just on the price differential alone. Buckley focusing more on coal shipped into markets that were forced to import the supply came at it from another angle, but between the strength of the dollar and falling prices of other currencies, the cost of “dispatch” or transportation, and the pricing of coal even though the market had dropped, it was a dead letter, especially given the Indian commitment to be 50% dependent on its own coal in the next several years and Australia’s existing products.
A number of speakers argued that the impact of just the USA-China agreement that President Obama announced as a commitment that both would cut down their carbon emissions by 50% was sufficient enough already to indicate that CO2 emissions would not get worse. Listening to the mega-domes talk about the lowering cost of renewables like wind and sun, the problems of pipelines, the low cost of liquid natural gas, the refining of byproducts, there almost seemed to be hope, if you believed the experts that capitalism might save the world yet for our grandchildren regardless of what we all might have thought as we’ve fought the son of a gun utilities on these issues for the last more than 40 years.
My thoughts kept coming back to the fights in the 1970’s that ACORN waged to cut the size of the Middle South Utility, now Entergy’s, White Bluff plant on the Arkansas River between Little Rock and Pine Bluff. They mentioned an ongoing fight with the Colstrip plants in Montana. I can remember well sitting with the organizers and leaders of the Northern Plains Resource Council in Billings on winter nights in the early 70’s strategizing on how to clip the company plants for building Colstrip II.
A number of questioners tried to ask the experts how they would place a financial “market” value on the fights they had waged to stop plants in their towns. Sanzillo was clear that the campaigns were central, even if there was no easy way to put a number to it.
Having been in these fights over five decades, many of us could have assured the questioners that price is just one part of the puzzle, because it has been boots on the ground and voices raised that have potentially put is in the winning column against coal way more than the magic of capital markets and supply and demand. Breathing and living on the planet turns out to be a huge value added, no matter how the numbers shake out.
The Dubliners – Springhill Mine Disaster Performed by Luke Kelly