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Peak (thermal) coal ?

December 10th, 2012

Most of the news on CO2 emissions has been bad. In particular, there are plenty of stories suggesting that coal-fired electricity is booming, and that this can be expected to continue. Although the evidence is mixed, I’m coming to the opposite conclusion. It’s already clear that no new coal-fired power stations will be constructed in the US for some time to come, and that many old ones will close, thanks to cheap gas and EPA regulations. And, while there are some new stations coming on-line in the EU, closures will predominate there too, although they still need to work out what to do with Poland.

But the big news is from China. Not that long ago, the standard story was that China was turning on two new coal-fired power stations every week. Now as this AFR report (paywalled, but another version here) says, China is cutting back hard on coal expansion. I found this story from March, in which the China Electricity Council says that it expects coal consumption in 2015 to be below the 2011 level, implying that the peak is very near. India is also planning some big expansions, but if China can grow without coal, so can they.

All of this suggests that the peak in global use of thermal coal could be much closer than is generally thought. Demand for metallurgical coal, used to produce steel, seems much more robust at least as long as investment-driven growth continues apace in China and India. Looking at the other fossil fuels, we reached plateau oil at least five years ago. On the other hand, gas (less carbon-intensive than the others, but still a source of CO2) is booming. So, there’s still a lot of work to be done before we can end the growth in emissions, let alone start on the 80 per cent reductions we need.

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  1. ts
    December 10th, 2012 at 10:01 | #1

    India plans to add ~107GW of thermal power generation capacity to its 2011 level, the vast majority of which will be coal fired.

    McKinsey expects the global seaborne thermal coal market to continue to grow between now and 2020. Total global seaborne thermal coal supply was ~700mtpa in 2011 which they expect to increase to ~1050mtpa in 2020.

    I don’t think “peak” coal production will be reached any time soon, personally.

  2. Ikonoclast
    December 10th, 2012 at 11:38 | #2

    From data I checked some time ago (don’t ask me to find it again now), it appeared that peak energy from thermal coal would be reached soon, within 5 or 10 years. From what I saw this was not from voluntary cutting back of thermal coal use nor necessarily from substitution by gas acting as a cause. (Substitution by gas is a consequence in this scenario.) The actual cause is the difficulty of finding new thermal coal deposits of high quality and the rundown in quality at existing deposits. Thus higher tonnages of lower grade coal are burnt and they yield less energy although more CO2.

  3. Jenny
    December 10th, 2012 at 12:36 | #3

    I can’t find the source right now but there are indications that India is not looking good as a market for coal in the future. The major issue there is the capacity of railways to transport coal from ports to thermal power stations and the alternative abundance of solar energy to exploited using solar photovoltaics and solar thermal where the fuel supply is not dependent on transport infrastructure.

  4. Peterm
    December 10th, 2012 at 12:41 | #4

    I do not believe there is any shortage of high grade thermal coal on a world wide basis. There are large reserves of high quality easily accessible coal in East Africa. There may be some local issues with supply in places like West Virginia but that is all. And then the Powder River Basin still has heaps of coal for the USA as a whole.

    It really is just a matter of price and flexibility. Electricity from gas is almost as cheap as coal. A Gas turbine can go from cold to full power in about 5 minutes. (That takes about 24 hours for a thermal coal fired unit). Plus gas does not leaves toxic ash around that is expensive to dispose. A gas turbine unit requires less capital to build and can be built closer to the load center. (It is generally cheaper to pipe the gas to the load center then than generate the electricity remotely and transmit it.)

  5. Peterm
    December 10th, 2012 at 12:51 | #5

    Jenny, isn’t there an issue with civil unrest, large scale public corruption and lot of other not so good stuff associated with the Indian coal industry. It seem that every now and again the locals, whose livelihood is being destroyed by the coal mines, steal a cache of explosives from one of these mines then use the stuff as munitions to arbitrage coal production.

    I’d imagine this sort of stuff is enough to make alternative energy sources very attractive.

  6. Ikonoclast
    December 10th, 2012 at 14:08 | #6

    According to Wikipedia;

    “The Energy Watch Group predicts that the Chinese extraction will peak around 2015.[2] The EWG also predicts that the recent steep rise in extraction will be followed by a steep decline after 2020. Another study puts the peak at 2027.[9] The US Energy Information Administration projects that China coal extraction will continue to rise until 2030.”

    So it appears various studies and estimates ranging from the “Peaksters” to the conservative, optimism-biased US EIA put the peak at 2020 to 2030. That’s not far away in historical terms. The concern from an AGW point of view is that every ton of coal burnt from now is a ton too much.

  7. Hermit
    December 10th, 2012 at 14:39 | #7

    If Clive Palmer’s ‘China First’ coal mine fails to get going it will lend credence to a peak in China coal demand. Very big contracts will be needed to justify the infrastructure investment including port and rail. However China’s plans to cut coal use around 1% a year are too slow. If I recall in 2011 China generated 9.4 billion tonnes of manmade CO2 out of a world total of 34 Gt. World emissions should be nearer 25 Gt by now. Australia’s emissions hover around the half Gt mark as they have done for years.

    Some suggest low gas prices (for power generation) and tough EPA smokestack rules in the US has led to their greatly increased thermal coal exports to China. A collapse in building investment in China could also spell trouble for both our iron ore and coking coal. Outside the US high gas prices could lead to a thermal coal revival carbon tax or not. Note Germany’s new 2.2 GW station for their local brown coal/lignite. I think it will take a couple more years to call a world wide trend.

  8. quokka
    December 10th, 2012 at 19:26 | #8

    I wish I could say that I find all this to be convincing, but I cant. World coal consumption was up over 5% in 2011, and coal consumption up 4% in Europe. In 2011 coal was the highest percentage of world primary energy supply since 1969. Projecting the trend is not pretty.

    I don’t find the claim that if China can grow while plateauing coal consumption, then so can India to be at all convincing either. The point is that China already has huge baseload capacity from coal and total electricity production maybe 4-5 times that of India. China has much more “wriggle room” than does India. India has made it plain that it will grow capacity by whatever means available. How much coal and how much nuclear and renewables remains to be seen, but it seems unreasonably optimistic to believe there will not be a lot more coal and they will deal with the infrastructure issues for coal as needed.

    Then there is Vietnam whose current plan is 45GW of new coal by 2020 and 75GW by 2030. South Africa is almost guaranteed to build more coal capacity and also, I would think almost certainly rapidly growing Indonesia. Japan is not going to reduce coal consumption anytime soon unless rationality prevails. And this list is certainly only a piece of the story.

    Before taking much notice of “peak coal”, I would certainly like to see a definite, clearly identifiable change in trend.

  9. TerjeP
    December 11th, 2012 at 04:00 | #9

    Aren’t we at risk of confusing things with this loose use of the “peak” label. The peak oil theory is about geological constraints that lead to a peak in production. It is a hard supply limit imposed by physics coupled with technological limits. As such once reached it can’t be readily fixed by simply throughing money at the problem. In short it is a prediction that oil production will become highly inelastic.

    However what is happening with coal arguably has little to do with current geological or technological limits. If we want more coal we can just throw money at the problem. There is plenty more in the ground and we know how to get it out. The issue is on the demand side not the supply side. And even there it is a mixed story.

    Even if we are reaching a global Hubbert style oil peak we certainly aren’t anywhere near being geologically constrained in fossil fuels more generally. Especially given new technology in areas like fracking.

  10. TerjeP
    December 11th, 2012 at 04:00 | #10

    throwing

  11. Hermit
    December 11th, 2012 at 06:15 | #11

    If India and China have no plan to seriously cut coal use then other countries (the ‘good guys’) could carbon tax their manufactured exports until they fall into line. For administrative simplicity the single rate would be arbitrary and punitive, say 15%. The coalition imposing the carbon tariff could comprise the EU, Scandinavia, Australia, California and others. NZ and Canada forfeit.

    Under the latest Kyoto round China retains developing country status. They lecture the West on its ‘historic responsibility’ to cut emissions. Well maybe China and India should have kept their populations under a billion each. If we carbon tax their exports it shares the pain because Western consumers pay more they sell less. Some of that coal burning is on our behalf so it’s partially our responsibility. When China and India fall into line with declining emissions the tariff gets lifted.

    Therein lie some problems; what entitles a country to charge a carbon tariff on China, is this veiled protectionism and what to do with the revenue? Sticky as this problem is if China doesn’t feel some pain now they will cook the planet.

  12. Ikonoclast
    December 11th, 2012 at 06:57 | #12

    @TerjeP

    As used by crude “Hubbertarians” and “Limits to Growthers” (I am both at times) the term “Peak” followed by a word for a material stock (e.g. peak oil, peak coal, peak uranium) means peak extraction of the material stock with the peak being caused by depletion of the stock not by lack of demand.

    The real world is a bit more complex. The precise peak of extraction will always be affected by economic and technological factors. One can imagine that a stock like gas, for example, could be near its “Hubbertarian” peak at some point only to have a severe recession hit that reduces gas use and postpones the peak. When the economy picks up, gas use goes up again and then hits its final peak due to near geological constraints in total world supply. Another kind of peak could occur if we reduced, for example, thermal coal use permanently by bringing on a different form of power (solar). This would be a voluntary or economic peak.

    TerjeP, you say; “Even if we are reaching a global Hubbert style oil peak we certainly aren’t anywhere near being geologically constrained in fossil fuels more generally. Especially given new technology in areas like fracking.”

    This statement needs a bit of analysis;

    1. There is no “if” about the global Hubbert style oil peak. It has happened. The IEA has now admitted that Peak Conventional Oil occured in 2006.

    2. We are indeed close to geologically constrained fossil fuels in general. It depends on one’s definition of “close”. To me, 20 years is close. Historically, for homo sapiens, a species that “reached anatomical modernity about 200,000 years ago and began to exhibit full behavioral modernity around 50,000 years ago” 100 years is close.

    3. Peak fossil fuel in the geologically constrained sense is almost certainly due within 20 years to 100 years and probably much closer to 20 years. This excludes the use of seabed methane clathrates as a fuel. If we attempt the latter we turn this planet into Venus II quite literally.

    4. As well as fossil fuel use being geologically constrained, we also face the fact now that it is biospherically constrained. That is we have to stop using fossil fuels or else make the biosphere close to uninhabitable for humans.

    Those science fiction writers who have envisaged future human population remnants living in a warm temperate to sub-tropical Antarctica have probably got the prediction about right.

  13. Jim Birch
    December 11th, 2012 at 09:07 | #13

    These predictions have a high level of rubberyness (if that be a word) as they rely on combining projections about growth, technology and political factors. The big factor that will effect coal use seems clearly to be its cost relative to solar alternatives. AFAICS the trajectory for this is pointing in the right direction, and the basic physics looks accommodating, but forecasting technology beyond a few years is too fraught to come up with dollar per megawatt figures you could be confidently use in planning.

    The prospect for sufficient political will to enforce a sufficiently robust and inclusive carbon price to push the balance towards solar doesn’t look very good to me, despite its bleeding obviousness. There are still a lot of committed people – and money – in the various denialist and procrastination camps, including our very own SATP. A series of negative weather events like hurricane Sandy could change public political consciousness a bit but that would really indicate a worse underlying problem.

  14. Hermit
    December 11th, 2012 at 10:40 | #14

    I suggest it should be clear by now that solar is not going to make a serious dent in coal burning. Windpower yes to some extent but still needs major backup. In Australia the closing coal stations Playford, Brix and Collinsville were small and clapped out. We still have Eraring, Hazelwood etc etc. As to gas fuel replacing coal today AEMO warns us that we cannot be both a major LNG exporter and have cheap domestic gas.

    If the 75% capex price drop for PV could be replicated for batteries then perhaps that technology could do more of the heavy lifting. Solar thermal with storage is several times costlier than carbon taxed coal. One day the RET may cease making solar economics even worse. We need a serious coal replacement soon.

    @JB Wiki was no help on your acronym http://en.wikipedia.org/wiki/SATP

  15. kevin johnson
    December 11th, 2012 at 10:54 | #15

    Steve At The Pub?

  16. quokka
    December 11th, 2012 at 11:02 | #16

    Jim Birch :
    These predictions have a high level of rubberyness (if that be a word) as they rely on combining projections about growth, technology and political factors. The big factor that will effect coal use seems clearly to be its cost relative to solar alternatives.

    No doubt growth, or lack thereof, could have a serious effect. As for political factors, money talks and the economic is likely to dominate unless there is a dramatic improvement in public attitude to climate change. I’d be very happy to see millions of people rampaging through the streets demanding real climate action, but it’s not happening. It will change eventually, but no tipping point yet. As for solar, it remains an adjunct to, not a substitute for baseload/dispatchable generation. See Germany. Just the grid/system level costs for PV can exceed the LCOE of coal and CSP is not competitive.

  17. December 14th, 2012 at 13:21 | #17

    It appears that China may average a solar installation rate of about a gigawatt a month over the next three years. Not bad.

  18. Mihal
    December 15th, 2012 at 16:33 | #18

    Here are a couple of articles for consideration:

    New Global Assessment Reveals Nearly 1,200 Proposed Coal-Fired Power Plants

    “research shows that 1,199 new coal-fired plants with a total installed capacity of 1,401,268 megawatts (MW) are being proposed globally. If all of these projects are built, it would add new coal power capacity that is almost four times the current capacity of all coal-fired plants in the United States.”

    http://insights.wri.org/news/2012/11/new-global-assessment-reveals-nearly-1200-proposed-coal-fired-power-plants

    South, East China coal consumption to rise 300mt by 2015: consultancy

    http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Coal/8939150

  19. John Quiggin
    December 15th, 2012 at 18:15 | #19

    @Mihal

    Worth looking at, but proposals can be scrapped. Of 249 coal plants proposed in the US in 2007, at least 174 were subsequently cancelled

    http://www.sourcewatch.org/index.php?title=What_happened_to_the_151_proposed_coal_plants%3F

  20. quokka
    December 18th, 2012 at 22:07 | #20

    “Coal is likely to rival oil as the world’s biggest source of energy in the next five years, with potentially disastrous consequences for the climate, according to the world’s leading authority on energy economics.”

    According to IEA Medium-Term Coal Market Report 2012

    http://www.guardian.co.uk/environment/2012/dec/18/coal-challenge-oil-international-energy-agency?intcmp=122

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