Peak coal

Whether applied to a particular region, to a particular country, or to the whole world, peak coal is the point in time when coal production reaches is maximum level before beginning to decline. Some regions, such as Britain, have already passed their production peak; in other regions, production continues to increase. The question of when major producers such as China and the United States will reach their production peaks is of major importance to issues of climate and energy policy, and it is closely related to estimating coal reserves.

US Geological Survey
The US Geological survey is in the process of re-evaluating the total recoverable and economically recoverable reserves in the Powder River Basin, the source of coal that several of Michigan's proposed coal plants will be relying on.

In 2008 the U.S. Geological Survey released a detailed assessment of the coal resource in the Gillette field. USGS concluded that the portion of the recoverable coal that can be mined, processed, and marketed at a profit, based on conditions in 2007, including $10.47 per ton and assuming an 8 percent rate of return, is 10.1 billion short tons for the six coal beds evaluated, only 6 percent of the coal in the Gillette field. This is about half the estimate arrived at by a 2002 study of the same field, which arrived at an economically recoverable resource of 23 billion short tons.

The USGS study has been analyzed in detail by activist Leslie Glustrom of Boulder, CO. In a recent address to a renewable energy conference in Northern Michigan, Ms. Glustrom detailed her findings.

2010 Energy study finds coal will peak in 2011
In a peer-reviewed article published in the journal Energy, two researchers - Tadeusz Patzek, a University of Texas engineering professor, and Greg Croft, a St. Mary's College of California earth science professor - write that the world will hit "peak coal" production in 2011 or shortly thereafter, and then mining would begin a long, steep decline. The authors believe the 7 billion tons of coal the world is now mining and burning each year is as high as it can get, due to harder to reach coal reserves and rising demand. The study was funded through a University of California, Berkeley graduate student fellowship.

The pair's prediction is based on the "Hubbert Cycle," the resource-depletion theory that American geophysicist M. King Hubbert used in the 1950s to correctly forecast that U.S. oil production would peak two decades later. Patzek predicts coal will peak not because supplies are running out but because the remaining deposits are increasingly difficult to mine. Alaska's North Slope, for example, has coal reserves that rival those of the continental United States, but turning that coal into energy would be practically impossible, Patzek argues: "It would take 10 or 11 of the largest coal terminals on the Earth operating 24-7, 365 to load ships above the Arctic Circle during the polar night." Russia, China and other energy consumers face similar logistical difficulties with coal, and while global supplies are set to trail off, the stage is set for demand to spike, Patzek said. U.S. consumers use slightly less than 1 billion tons of coal annually, the Chinese use an estimated 3.5 billion tons, and emerging energy giants like India and Indonesia are steadily using more.

Patzek and Croft's peak-coal prediction is being contradicted by government economists and industry groups. The federal Energy Information Agency estimates the United States alone has about 260 billion tons of recoverable coal, enough to support current consumption levels for at least two centuries, said George Warholic, an EIA coal economist. And the National Mining Association said the United States is sitting on enough recoverable coal to power the country for the next 440 years.

The researchers and agencies are making forecasts using different methodologies. The Hubbert cycle analysis looks at past production trends to predict future results. EIA and the mining trade group prefer to measure current consumption rates against estimated future reserves. Jerry Taylor, a resource economist and senior fellow at the libertarian CATO Institute said much of the disparity comes because there are too many variables contributing to coal production to make precise predictions. New mining technology could boost production by making previously untouchable reserves cheap to recover, Taylor said. Alternatively, coal production would drop if an influx of cheap oil and natural gas curbed demand, he said, pointing to the boost in natural gas drilling due to hydraulic fracturing.

The researchers are also skeptical about emissions from burning fossil fuels causing catastrophic climate change: they accept the science connecting human greenhouse gas emissions to global warming, but think the remaining accessible fossil fuel stores only contain enough carbon to raise global temperatures by about 0.8 degrees Celsius, said Croft. (It should be noted that the scientific consensus is the earth has already warmed 1 degree Celsius, and many climate scientists like James Hansen believe any additional increase could set into motions feedbacks toward warming beyond human control.) Therefore, Croft said, he advocates not a cap-and-trade law for carbon emissions and investment in carbon capture and storage, but instead incentives for renewable energy and possibly a carbon tax to promote efficiency.

Barbara Freese, a senior coal policy analyst for the Union of Concerned Scientists, said she could not judge whether the peak-coal prediction was accurate without more analysis but that the study should prompt policymakers to question some of their assumptions about the fossil fuel: "We spend a lot of time talking about whether we can rely on renewables and efficiency and whether that's practical and affordable, but we've kind of given a pass to coal proponents. We need to see evidence that we have the economically recoverable reserves."

2010 Nature commentary: cheap coal ending soon
In a November 18, 2010 commentary in the journal Nature, The end of cheap coal authors Richard Heinberg & David Fridley said that the end of cheap coal is coming soon. The authors are notably part of the Post-Carbon Institute, but point to simple evidence for their assessment: for the past couple of decades, the projected global supply has been dropping at a rate faster than consumption, which suggests that the projections are inaccurate. They say this is due to advances in geology, which have led a number of nations to determine that some reserves once thought to be economically recoverable really aren't. For example, South Africa and Germany, which between them have just under 10 percent of the global reserves, have recently lowered their estimated recoverable reserves by more than a third over a five-year span. Further, the US, which has over a quarter of the estimated global reserves, hasn't updated its estimate since the 1970s. The authors say new mining techniques and a higher price on coal could place some of these reserves back on the table, but that partially echoes the authors' point: coal won't stay as cheap as it is now.

Another factor the authors believe will start boosting coal prices is a mismatch between the sites of supply and demand. Although global demand is remaining pretty steady, China's demand has skyrocketed and continues to rise. It has significant reserves, but hasn't been able to extract them fast enough to keep up with demand. As a result, China has been increasingly reliant on coal imports from places like Australia and the US, which adds significantly to the cost of coal, both in China and in the domestic markets of the exporters. Three more years at its current growth rate would encompass the entire output of the Asia-Pacific exporters.

The last issue presented by the authors is the quality of the coal. According to the commentary, although the volume of coal extracted in the US has continued to go up, the amount of energy extracted hasn't changed significantly since the 1990s (although there's no source for this figure). In short, the authors say we have to mine more to get the same energy. If this trend kicks in globally, it could have a severe impact on the market.

As a first step, the authors recommend that the US Geological Survey be tasked with providing a current estimate of the current US coal reserves, and the economic cost of extracting them with current techniques, to have a more accurate discussion about policy considerations.

Harvard Study: Global coal may peak in 2011 and US coal by 2015
A Feb. 2011 report led by associate director of the Center for Health and the Global Environment at Harvard Medical School Dr. Paul Epstein, "Mining Coal, Mounting Costs: the Life Cycle Consequences of Coal" wrote of peak coal: "With 268 billion tons of estimated recoverable reserves (ERR) reported by the U.S. Energy Information Administration (EIA), it is often estimated that the United States has “200 years of coal” supply. However, the EIA has acknowledged that what the EIA terms ERR cannot technically be called “reserves” because they have not been analyzed for profitability of extraction. As a result, the oft-repeated claim of a “200 year supply” of U.S. coal does not appear to be grounded on thorough analysis of economically recoverable coal supplies. Reviews of existing coal mine lifespan and economic recoverability reveal serious constraints on existing coal production and numerous constraints facing future coal mine expansion. Depending on the resolution of the geologic, economic, legal, and transportation constraints facing future coal mine expansion, the planning horizon for moving beyond coal may be as short as 20–30 years. Recent multi-Hubbert cycle analysis estimates global peak coal production for 2011 and U.S. peak coal production for 2015. The potential of “peak coal” thus raises questions for investments in coal fired plants and carbon capture and storage (CCS)."

2010: Studies suggest South Africa reaching peak coal
Recent research from three scientific journals suggest that usable coal reserves in South Africa are much smaller than previously thought, and that annual production could reach a peak and begin to decline within a decade -- or might have peaked already. Jeremy Wakeford, chair of the Association for the Study of Peak Oil (Aspo) in South Africa, discussed the studies in the organisation's latest newsletter, and how they challenge the "commonly believed [idea] that South Africa has abundant coal reserves which will last 200 years or more... given the country's overwhelming dependence on coal, this issue has huge ramifications for our future development path."

"Peak" refers to the theory that production in commodities such as oil grows until a peak is reached, whereafter production declines. In the case of South African coal, recent studies are suggesting production has already reached its peak, or soon will. Coal provides 70% of the country's energy supply, supports 90% of electricity generation, is used to make a quarter of the country's liquid synfuels using the Sasol process, and is a big earner of foreign exchange through exports to foreign users. Geologist Chris Hartnady, in a paper to be published in the SA Journal of Science, has forecast peak production in 2020 at about 285-million tonnes a year.

Related Sourcewatch Articles

 * Peak oil
 * Coal reserves
 * Michigan and coal

External Articles

 * Kurt Cobb, "The Coal Question Revisited," Scitizen, January 17, 2008.
 * David Strahan, "Lump Sums," ''David Strahan, March 5, 2008.
 * Richard Heinbert, "Coal in the United States," MuseLetter, June 2008.
 * David Roffey, "Peak Coal?" Webdiary, January 30, 2008. (This includes reader commentary)
 * Joseph Romm, "Are we approaching peak coal? Part I," Gristmill, January 7, 2009
 * David Strahan, Coal:Bleak Outlook for the Black Stuff New Scientist, 19 January, 2008