5 minute read

The China Syndrome

The China Syndrome” was a 1979 hit movie starring Jane Fonda, Michael Douglas, Jack Lemmon and Wilford Brimley. The storyline follows two reporters who discover safety discrepancies in a fictitious California nuclear electric generation plant. A greedy and corrupt utility ignores and covers up safety issues. The operator who attempts to publicize the cover up is murdered, and the end of the movie leaves an audience wondering what happened to the reactor.

The term, “China Syndrome,” was an idea associated with a nuclear plant meltdown where the reactor core burns not only through the reactor containment vessel, but also all the way to China. I’m not sure what would happen once, or if, it got to China (would it turn and burn its way back?) but it made a cool name for a hit movie.

The world now faces a different “China Syndrome”: in more ways than one. Everyone -- except maybe the environmentalists who throw tomato soup on Van Gogh paintings and interrupt Wimbledon by scattering orange glitter and jigsaw puzzle pieces on the courts to protest fossil fuels, or the Biden Administration that keeps throwing billions of dollars of bribes to build renewable energy projects -- knows the movement to fight climate change by eliminating fossil fuel use faces a very long, difficult, and expensive path. (Apologies to William Faulkner for the sentence length).

Regardless of the hype, in totality, renewable energy is more expensive and much less reliable than fossil fuel-fired energy. Without a major breakthrough in technology, renewables will not take fossil fuels’ place as the reliable, affordable energy for decades and decades, if ever.

Exhibit 1: China and its breakneck construction of coal-fired electric generation. In 2021, China started 40,000 megawatts (MWs) of coal generation. In 2022, it started another 86,000 MWs and currently has another 60,000 MWs permitted and expected to begin in 2023, with the real potential that even more will be permitted and started this year. That comes to approximately two new coal plants added each week for the last two years. Of course, none of the plants have environmental controls. The plants emit not only carbon dioxide (CO2), but also sulfur dioxide and nitrous oxides – the latter two are almost entirely scrubbed from U.S. coal plants.

In mid-2022, China reported operating 1,074,000 MWs of coalfired generation, with more coming each week. By comparison, the U.S. has 194,000 MWs of coal-fired generation, approximately 18% of a China fleet that continues to grow, quickly.

China is adding huge amounts of renewable generation with solar and wind, as well. That is what countries that are not fully electrified and are looking at maintaining or building an economy do. However, the fact that China is adding so much coal-fired generation demonstrates it knows what the tomato soup and confetti throwers ignore – coal provides cheaper and more reliable electricity than renewables. If it didn’t, why would China build so much coal generation?

Exhibit 2: All the helicopter money the Biden Administration is giving away to close fossil-fuel generation and build renewables under the Inflation Reduction Act. If renewable generation were truly cheaper than fossil fuel generation, renewable subsidies would not be necessary. Renewables would be cost-competitive on their own. There is always the argument that the variable dispatch costs of subsidized renewables are cheaper than fossil fuel-generation, which is true at times, but where does the electricity come from at night or when the wind stops? Real problems.

And, subsidies do not mean cheaper, they only mean that the subsidies come from someone or somewhere else. For instance, tax dollars could be deployed to solve other problems facing the U.S. like affordable housing, healthcare, or food, but instead subsidize inefficient renewables.

Exhibit 3: The rolling blackouts in areas over the past three years and the projected summer capacity deficiencies in the twothirds of the country that have largely made aggressive moves to cease fossil fuel generation and transition to renewables. Increasing volumes of reliable fossil fuel generation are being forced to close each year, thanks to subsidized renewable generation. With those closures, the electric grid becomes more and more unstable.

Exhibit 4: The entire U.S. coal fleet emits only 1.5% of global CO2 emissions. China’s CO2 emissions will grow that much in about a two-year period. U.S. emissions are not exactly the boogeyman deserving of tennis tournament interruptions and certainly not billions of dollars of subsidies to resolve.

Dozens of studies on the internet show how China can reduce its fossil fuel emissions over the next seven years and meet its pledge of peak carbon emissions by 2030. However, coal plants are built to run for 40 to 50 years. Nothing in any of China’s actions indicates a plan to do anything but continue to build and run coal plants into the future, because they are cheaper and more reliable than renewables.

That is our current “China Syndrome.” We have taken the John Kerry fall and will sacrifice our cheap, reliable energy to chase an unachievable goal. China will benefit from cheap and reliable energy and take our jobs. Unlike the 1979 movie, we know how this one ends.

I hope you have a good month.

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