November 02, 2006

Will anti-carbon rules start to kill coal?

Businessweek magazine and Vinod Khosla are talking down coal power Vinod Khosla is a major venture capitalist and has made several big green energy bets. Solar thermal power and biofuels.

Here's Khosla's argument: Much of the developed world has already imposed curbs on greenhouse gas emissions, and the U.S. is likely to follow suit. The European experience suggests that the cost of emitting a ton of CO2 is about $20 to $25. Since coal-fired power plants emit more than twice as much CO2 for the same amount of electricity as natural-gas-fired plants, coal gets hit hardest by the curbs. The effective price of coal could leap as much as sixfold, raising the cost of producing electricity by about 50%.

Khosla's grand vision is to repower the U.S. via solar plants in the American Southwest. The idea: Use thousands of acres of mirrors to focus solar energy, heating water to drive turbines. An analysis of new Australian solar technology suggests that it is cost-competitive even with today's coal plants.

Solar thermal will still take time to scale up even if it is cost competitive. If coal electricity is 50% more expensive that could also help shift things to nuclear power. Almost every power generation method except coal (natural gas and oil could take smaller hits) would win.

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