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China’s Coal Crisis

David Winning, Wall Street Journal
SYDNEY—The idea of peak oil—the point at which global production reaches its maximum—has fixated the energy industry for years. Now, China is grappling with a new worry: peak coal.

State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.

“China accounts for around 14% of global coal reserves but its share of global coal consumption is already over triple that at 47%, which is unsustainable,” Hong Kong-based brokerage CLSA Asia-Pacific Markets said in a report last month.
(16 November 2010)

‘Peak coal’ to see prices soar
Fran Kelly, Breakfast Show, ABC (Australia)
This week, science journal Nature says the world is on the verge of exhausting its cheap coal supplies. With rising demand and dwindling supplies of high quality usable coal, prices could be much higher by the end of the decade. The finding could also have implications for the controversial technology, carbon capture and storage.

Interview with Richard Heinberg, Senior fellow, the US Post-Carbon Institute
(18 November 2010)

Should we be planning for the end of cheap coal?

John Timmer, Ars Technica
The recent IEA report on global energy use trends contained a bit of a surprise. If oil prices remain high and governments make progress on their emissions goals, there’s a possibility that the world has already hit peak oil, and that the next few years will see its use plateau for a while before dropping again. Using these same assumptions, the report also said that we could hit peak coal somewhere within the next 20 years. In today’s edition of Nature, a commentary suggests that, even skipping those same assumptions, we may hit peak coal before too long, simply because the best and cheapest sources are vanishing fast.

The authors of the comment unquestionably have an agenda; they come from the Post-Carbon Institute, which clearly has an interest in promoting consideration of a world that doesn’t run on fossil fuels. And that agenda is obvious in the article summary, which concludes, “Energy policies relying on cheap coal have no future.”

That appears to be in sharp contrast to various estimates that suggest the world’s coal supply is enough to keep us going for up to several hundred years. But the key word in the sentence is “cheap.” The authors don’t deny that there’s a lot of coal left out there—although they say it’s less than most people think—but they argue that actually using it will get progressively more expensive, a trend that will ultimately make relying on cheap coal a losing proposition.

The authors provide some pretty simple evidence: for the past couple of decades, the projected global supply has been dropping at a rate faster than consumption, which suggests that there’s something off with the projections. They blame advances in geology, which have led a number of nations to decide that some reserves that were once thought to be economically recoverable really aren’t.
(18 November 2010)

The Chinese Coal Monster – running out of puff

Euan Mearns, The Oil Drum: Europe

In July of this year I wrote a story called The Chinese Coal Monster drawing attention to the fact that China would soon account for 50% of global coal production and consumption. 10% per annum growth in Chinese coal is clearly unsustainable and I posed the question “How long can this go on?”

An article published in the Wall Street Journal earlier this week called China’s Coal Crisis suggests the answer to this question is not much longer.

Policy makers [in Beijing] are mulling an annual cap of between 3.6 billion tons and 3.8 billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua news agency reported earlier.

A Nature publication called The End of Cheap Coal by Heinberg and Fridley was also published this week. This refers to earlier work such as Blackout (Heinberg), Hubbert’s peak – the coal question (Rutledge) and A global coal production forecast with multi-Hubbert cycle analysis (Patzek and Croft). The most notable thing about Heinberg and Fridley’s (on The Oil Drum known as Sparaxis) comment is that it is published in Nature. More commentary and full reproduction of The Chinese Coal Monster below the fold.

Let’s begin with a few excerpts from the WSJ article:

State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy.

Imposing a cap would be significant as China’s mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the past decade.

So the cap has been set because the mining industry is finding it increasingly difficult to maintain and grow production.

In the three years to September 2010, Chinese companies spent $20.96 billion on overseas coal-sector acquisitions, according to Dealogic.

Even if no official limits are introduced, China can’t keep growing coal output much beyond another decade, analysts say. The mining sector is constrained by chronic infrastructure bottlenecks, especially road and rail, and those coal deposits that are easiest to mine have already been tapped.

Experts are starting to predict when China’s coal reserves will run out—a nightmare scenario in a country where 70% of its energy is derived from coal.

This is a key issue. China may well have vast reserves remaining, but these may be further away, deeper down, thinner seams and lower energy content, and at some point it just becomes impossible to achieve what you achieved the previous year when so many variables work against you.

Let’s put the 3.6 to 3.8 Gt cap in perspective. In 2009, China produced 3050 million tonnes (3.05 Gt) coal (2010 BP statistical review of world energy). If that increases by 10% this year that will bring production to 3355 million tonnes already suggesting that the lower limit of the proposed cap may be reached in 2011 (next year). At this point it’s worth noting that Patzec and Croft (2010) forecast peak coal production in 2011, which I and many other commentators thought was unduly pessimistic.

What I imagine we will see happening is that Chinese production growth in 2010 will be significantly less than 10% and we will see a plateau develop within the 3.6 to 3.8 Gt range in the period to 2015. Growth in Chinese coal production has underpinned their industrial revolution and an end to growth in their primary energy source poses risks to their and global economic growth. But the Chinese are enterprising people and I imagine they will manage their transition away from domestic coal by a combination of increasing dependence upon coal imports, improving energy efficiency of coal fired power stations, and rapid expansion of nuclear capacity.

[“The Chinese Coal Monster” appears below at original, originally published 12 July 2010]
(19 November 2010)

Dirty Coal, Clean Future

James Fallows, The Atlantic
To environmentalists, “clean coal” is an insulting oxymoron. But for now, the only way to meet the world’s energy needs, and to arrest climate change before it produces irreversible cataclysm, is to use coal—dirty, sooty, toxic coal—in more-sustainable ways. The good news is that new technologies are making this possible. China is now the leader in this area, the Google and Intel of the energy world. If we are serious about global warming, America needs to work with China to build a greener future on a foundation of coal. Otherwise, the clean-energy revolution will leave us behind, with grave costs for the world’s climate and our economy.

… I have been learning about an area of Chinese achievement that is objectively good for the world as a whole, including the United States. Surprising enough! And China’s achievement dramatically highlights a structural advantage of its approach and a weakness of America’s. It involves the shared global effort to reduce greenhouse-gas emissions, of which China and the United States are respectively the No. 1 and No. 2 producers, together creating more than 40 percent of the world’s total output. That shared effort is real, and important. The significant Chinese developments involve more than the “clean tech” boom that Americans have already heard so much about. Instead a different, less publicized, and much less appealing-sounding effort may matter even more in determining whether the United States and China can cooperate to reduce emissions. This involves not clean tech but the dirtiest of today’s main energy sources—coal.

… The proposition that coal could constitute any kind of “hope” or solution, or that a major environmentalist action plan could be called “Coal Without Carbon,” as one I will describe is indeed named—this goes beyond seeming interestingly contrarian to seeming simply wrong. For the coal industry, the term “clean coal” is an advertising slogan; for many in the environmental movement, it is an insulting oxymoron. But two ideas that underlie the term are taken with complete seriousness by businesses, scientists, and government officials in China and America, and are the basis of the most extensive cooperation now under way between the countries on climate issues. One is that coal can be used in less damaging, more sustainable ways than it is now. The other is that it must be used in those ways, because there is no plausible other way to meet what will be, absent an economic or social cataclysm, the world’s unavoidable energy demands.
(December 2010 issue)

Cleaning Up Coal

Kevin Drum, Mother Jones
I’m trying to make sense out of “Dirty Coal, Clean Future,” James Fallows’ latest piece in the Atlantic, but I’m not having much luck. In one sense it’s simple. Fallows makes two points:

* Like it or not, the world is going to be using a lot of coal for a very long time.
* China and America are collaborating very nicely on development of clean coal technology.

But collaborating on what? Here’s where it gets confusing. Primarily, there’s the fact that China is just building lots and lots of coal plants, which provides a lot of scope for experimentation:

… All the collaboration sounds wonderful, and even a 20% or 30% improvement in coal technology would be welcome. But that said, sequestration is the holy grail and I still don’t know if the Chinese are doing anything more on that front than the rest of us. Maybe that’ll be in the sequel.
(9 November 2010)

Fridley, Heinberg discuss ‘peak coal’ in NATURE journal

Richard Heinberg, Post Carbon Institute

Today’s edition of the highly-esteemed Nature Journal contains an analysis of global coal supplies by Post Carbon Institute Fellows David Fridley and Richard Heinberg. If you’re a subscriber to Nature, you can access the article here. If not, Nature’s podcast interview with Richard Heinberg provides an overview.

AUDIO:  “Peak Coal” Nature Journal Podcast with Richard (4 minutes)

Yesterday, Australia’s ABC Radio National interviewed Richard about his work featured in the Nature article.

AUDIO: ABC Australia Podcast Interview with Richard Heinberg 

And here’s a nuanced take on the issue from Ars Technica. And one from Business Spectator.

A synopsis of the Nature article:

The idea that coal is cheap and plentiful drives much thinking about future world energy consumption. It can explain the resistance of the United States and China to carbon-cutting policies — both countries have lots of coal, and they don’t plan to stop using it anytime soon. But is it a reasonable assumption? Richard Heinberg and David Fridley argue in this week’s Nature that coal prices are likely to start rising much sooner than everyone thinks — perhaps by the end of this decade.

This prediction is based on two observations. First, several recent studies suggest that high-quality accessible coal reserves will run out much sooner than predicted by official forecasts from the main coal-producing countries. Second, global demand is growing rapidly, mainly driven by China. China is both the world’s biggest producer of coal and its biggest consumer. “Its influence on future coal prices should not be underestimated,” say the authors.

The authors call for better data on world coal supplies. A US national coal survey was last completed in the 1970s and is long overdue. Countries should also immediately start planning for higher coal prices, and reconsider their investments in clean-coal technology. If coal becomes more expensive, then carbon capture and storage will no be longer be an economically viable route to reducing carbon emissions. The economic shocks from rising prices would be felt by every sector of society, say Heinberg and Fridley. New limits on energy consumption “will be imposed by energy prices and shortages if they are not achieved though planning and policy”. 

(18 November 2010)
Re-posting the article here for completeness. -BA