GE Released a Manifesto for Climate Change. It Involves Hydrogen.

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General Electric

released a kind of manifesto for climate change Tuesday. It lays out a plan to help the world dramatically cut its carbon emissions while meeting its growing demand for power. Renewable technology plays a big role, but so does natural gas and eventually even hydrogen gas.

Manifesto is a charged word. And there are some big ideas in General Electric’s (ticker:


) white paper even though the title is somewhat benign: “Renewables and Gas Power Can Rapidly Change the Trajectory on Climate Change.”

The 20-page report points out that electricity demand is set to rise by about 60% over the coming four decades. And the company has done some provocative math. “If you double capital spending [on renewables], invest $10 trillion by 2050, and have zero fossil fuels you are short power [generating capacity],” says Scott Strazik, CEO of GE’s Gas Power division, tells Barron’s.

Even by 2050, with huge increases in spending, GE doesn’t believe renewable technology can meet all the world’s power needs. GE isn’t saying fossil fuel is here to stay, instead they are, in one respect, arguing for the more rapid conversion of coal electricity generating capacity to natural based generating capacity.

There are a few reasons for the gas conversion strategy. The world, for starters, will still need fossil fuels even in 2050, based on the math from GE. The company does have some electricity credibility. It was founded by Thomas Edison. And GE has relationships with about 90% of the world’s electricity producers.

Natural gas is less carbon intensive than coal. That is another reason to accelerate the switch. Natural gas releases about one-third the carbon dioxide when burned as the comparable amount of coal. The reasons link back to high school chemistry. Coal is almost all carbon by weight. Natural gas is about 75% carbon by weight.

That difference matters. The global power generation industry accounts for about 40% of all emissions of carbon-dioxide—the greenhouse gas primarily blamed for global warming. That is almost 14 billion metric tons of carbon dioxide emitted by power plants each year.

GE points out that, with current strategies and policies, global emissions from power generation are likely to fall from 14 billion metric tons to 10 billion metric tons a year between now and 2050. Not bad, but that could fall even further to 6 billion metric tons with more aggressive coal to gas switching.

Coal and natural power generation technologies are fundamentally different. With coal, water is boiled and the steam turns a generator. With natural gas, a jet engine-like turbine burns gas and the hot exhaust can turn a turbine. The excess heat from the exhaust can also boil water for a steam turbine.

What’s more, gas-based power plants are typically smaller than coal plants and cheaper to build. Switching from coal to gas usually means locating a gas plant on an existing coal plant foot print and adopting the electrical infrastructure on site.

Switching has worked in the U.S. Over the past decade “power sector [emissions] dropped by one third as coal went from 50% to 25% of the capacity mix and gas went from 20% to 37%,” says Strazik. “Renewables went from 1% to 9%” over the same span.

The U.S. has had the benefit of low-price natural gas. That also helped drive the switch. Natural gas commodity prices in the U.S. have averaged, roughly, $3 per thousand cubic feet, or mcf, for the past decade, down from $6 per mcf the decade prior. Some of that benefit is now being exported to the rest of the world in the form of liquefied natural gas, or LNG.

GE doesn’t appear to be arguing for fossil fuels to protect a legacy business. The company recently announced it was exiting the new coal plant building business. It’s also a large maker of renewable generating technologies.

It believes phasing out coal faster is key to meeting global emission goals. What’s more, gas turbines can also burn hydrogen gas down the road. Some GE turbines burn hydrogen today, and hydrogen gas, of course, has no carbon in it.

Wide scale adoption of hydrogen for electricity generation is a ways off though. There isn’t enough hydrogen yet. Vic Abate, GE Chief Technology Officer, tells Barron’s hydrogen-related capital costs need to come down a lot. That doesn’t happen over night. The world has “spent three decades developing wind power,” adds Abate.

The GE Power division, which includes the gas portion Strazik runs, generated about $17.6 billion in sales over the past 12 months, down from $18.6 billion in the comparable period a year ago. In the third quarter, however, gas power sales grew 7% year over year.

Better power results have helped GE stock, but lately, for shareholders, it has been all about Covid-19. Year to date, GE stock is down about 2%, trailing behind comparable returns of the

S&P 500


Dow Jones Industrial Average.

GE is a large aerospace supplier and Covid-19 has decimated demand for commercial air travel. The stock, however, has rebounded recently as the outlook for effective vaccines has become much clearer in recent weeks. GE shares are up about 76% over the past three months.

Write to Al Root at

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