Home Editors' Picks Energizing growth via fossil fuels, nuclear power, and unsubsidized electricity prices
(Part 6 of a series)
There are two good things about the ongoing Conference of the Parties 28 (COP28) meeting with governments, multilaterals, corporations and other players in Dubai, United Arab Emirates (UAE): one, the host country is a big oil-gas producer and exporter and hence, will never agree to a phase-out of fossil fuels; and, two, the growing pivot to nuclear energy as the attractiveness of wind-solar as “decarbonization” alternatives is waning.
The bad thing, of course, is that the estimated 70,000 participants in the COP 28 meetings are using lots of fossil fuels while they demonize fossil fuels. There is continuing double talk and hypocrisy in the annual UN climate meetings. There are no solar planes, no commercial giant kites to bring people from around the world to Dubai. Only oil-guzzling commercial planes and private jets can bring them to Dubai.
The UAE’s reserves/production or R/P ratio for oil in 2020 is 73.1, meaning that despite its big annual production for domestic use and exports, its oil reserves will be depleted in 73 years (vs the US’ 11 years and the UK’s seven years). And the UAE’s gas R/P ratio, also in 2020, is 107.1 years vs the US’ 14 years and the UK’s five years. The UAE and Saudi Arabia, Qatar, Iran, Kuwait, etc. keep exploring and digging for more oil and gas — that is why their reserves are not falling — while the UK, US, other western industrial countries restrict oil-gas exploration in the pursuit of “decarbonization” and “net zero” aspirations.
I saw a copy of the International Energy Consultants (IEC) 2023 report on global comparison of retail electricity tariffs. The prices are for the years 2018 and 2022. The main explanation given why many countries have high electricity prices is because they have unsubsidized rates compared to countries with subsidies.
Seeking other possible explanations, I dug up the consumption data of fossil fuels, especially coal and natural gas plus nuclear power, of those countries listed in the IEC report over a one-decade gap, 2012 to 2022.
The quick conclusion is that European countries have high electricity prices — up to 31.6¢US/kwh for Denmark — because they have “decarbonized” and “denuclearized” a lot. The total consumption for coal, gas, and nuclear (CGN) for Denmark has declined by 62% in just one decade. Greece, Germany, Italy, and Ireland also have had double-digit declines in CGN consumption.
Many Asian countries did not follow the wild and irrational “decarbonization” push of the Europeans. Instead, they expanded their coal and gas consumption as many of them have no nuclear energy development yet.
The Philippines has a good record here. CGN consumption has expanded 102% over one decade. It has unsubsidized electricity and yet Meralco prices are at a similar level as the average for all 46 countries and US states at only 18¢US/kwh (see Table 1).
So good job, Meralco. Good job too, other private and corporate distribution utilities, for keeping electricity prices at competitive rates and yet avoiding occasional blackouts experienced by areas under electric cooperatives pampered by politics and the government agency National Electrification Administration (NEA).
I also checked the energy index and prices. The solar and wind energy index peaked in late 2021 then started falling until today. The EU carbon permit prices have plateaued since early 2022 and are now on a steady decline. More companies are less willing to pay high carbon permits and taxes — either they cut back on their energy use or simply close and move to countries outside of Europe.
The UK is a classic example of fast, wild, irrational decarbonization. Their monthly electricity production has been falling for the past 13-14 years now, and the UK’s economic growth has been crawling for the past decade or two. In contrast, in China (and also India, Vietnam, Indonesia, etc.) electricity production keep rising (see Table 2). Their pace of industrialization has quickened, and economic growth is high.
The priority concern for the Philippines and other developing countries is more sustained high growth so that they can create more jobs and businesses for their people, cut unemployment and poverty, and aspire to be wealthy and prosperous. Only cheap energy can provide this. Now that the anti-coal lunacy has deepened, the developing world should proceed to develop more nuclear energy.
Bienvenido S. Oplas, Jr. is the president of Bienvenido S. Oplas, Jr. Research Consultancy Services, and Minimal Government Thinkers. He is an international fellow of the Tholos Foundation.