Tag: coal

OM in the News: The Green Energy Transition Isn’t Easy

“Despite extravagant hype, the green-energy transition from fossil fuels isn’t happening. Achieving a meaningful shift with current policies is too costly,” writes The Wall Street Journal (June 25, 2024).

Globally, we spent almost $2 trillion in 2023 to try to force an energy transition. Over the past decade, solar and wind energy use has soared to record levels. But that hasn’t reduced fossil-fuel use, which increased even more over the same period.

Research shows that when countries add more renewable energy, it does little to replace coal, gas or oil. It simply adds to energy consumption. For every 6 units of green energy, less than one unit displaces fossil-fuel energy. While renewable energy sources worldwide will dramatically increase up to 2050, that won’t be enough even to begin replacing fossil fuels—oil, gas and coal will all keep increasing, too.

During the 19th-century transition to coal from wood, overall wood use increased even as coal assumed a greater percentage of energy needs. The same thing happened during the shift to oil from coal: By 1970, oil, coal, gas and wood all delivered more energy than ever before.

With a thirst for affordable energy, oil and coal energy use has doubled, hydro power has tripled and gas has quadrupled in the last 50 years. The use of nuclear, solar and wind power has surged.  During past additions of a new energy source, researchers found it has been “entirely unprecedented for these additions to cause a sustained decline in the use of established energy sources.”

Solar and wind aren’t better, because unlike fossil fuels, which can produce electricity whenever we need it, they can produce energy only according to the vagaries of daylight and weather. They are cheaper only when the sun is shining or the wind is blowing at just the right speed.

When we factor in the cost of 4 hours of storage, wind and solar energy solutions become uncompetitive with fossil fuels. Further, solar and wind are almost entirely deployed in the electricity sector, which makes up only 1/5 of all global energy use. As we struggle to find green solutions for most transportation, we have yet to address the energy needs of heating, manufacturing or agriculture. And we are ignoring the hardest sectors like steel, cement, plastics and fertilizers.

Classroom discussion questions:

  1. What can managers do to help the need for sustainable operations given these statistics?
  2. Will solar, wind, and nuclear take over the bulk of energy production? Why or why not?

OM in the News: Coal Gets Hot

Coal makes a comeback.

Contrary to observations in Supplement 5 (Sustainability in the Supply Chain) of your text, an energy-starved world is turning to coal as natural-gas and oil shortages exacerbated by Russia’s war against Ukraine lead countries back to the dirtiest fossil fuel. From the U.S. to Europe to China, the world’s largest economies are increasing coal purchases to ensure sufficient supplies of electricity, despite prior pledges by many countries to reduce their coal consumption to combat climate change.

“The global competition for coal—also now in short supply after years of declining investment in new mines and resources—has driven benchmark prices to new records this year,” reports The Wall Street Journal (July 5, 2022). The push is being led by Europe, which is boosting coal purchases to ensure it can keep power flowing to homes and factories after Russia cut gas supplies. Germany, which has promised to eliminate coal as a power source by 2030, is among the nations now importing more.

Trucks carrying coal in India, where coal powered generation hit a high this year.

Parts of the U.S. are boosting use of coal power, as high demand for electricity amid unusually hot temperatures pushes regional power grids to the brink of blackouts this summer. China, the world’s biggest coal consumer, is expanding production of the fuel and its use in power generation, spooked by shortages last year that caused country-wide electricity cuts and outages. India is also leaning hard on coal as energy demand increases.

Coal use fell in many major Western countries over the past decade, displaced by cleaner forms of energy that became more cost-competitive. Natural gas became more plentiful thanks to the American fracking boom and Russian exports to Europe. Wind and solar power also gained, buoyed by falling prices and government subsidies and mandates. In addition to Germany, Italy, France, the U.K., the Netherlands and Austria have now said they are preparing to restart coal-fired power plants, boost their production or keep them running longer than planned.

The resurgence of coal, which emits around double the carbon dioxide as natural gas, further threatens to set back international efforts to keep global temperatures under 2 degrees Celsius.

Classroom discussion questions:

  1. Why is increasing coal consumption an issue impacting operations managers?
  2. What are ISO 14001 and 50001 and how do they relate to this article?