MuseLetter #179 / March 2007
by Richard Heinberg
Burning the Furniture
A soon-to-be-released study by the Energy Watch Group in Germany on the future of global coal supplies has implications so surprising and far-reaching that energy policymakers may take years to digest it. This essay is intended to help speed that process. The report’s central conclusions are that minable global coal reserves are much smaller than is commonly thought, and that a peak in world coal production is likely within only ten to fifteen years.
I will first offer some context for appreciating these conclusions, by way of some general information about global coal usage. Then I will describe the basis for the report’s conclusions, and finally will attempt to draw out some of the implications (not discussed by the report’s authors) for world energy supply and climate policy.
The Dirt on Coal
For millennia, biomass was humanity’s main energy source. Coal was the first fuel of the industrial revolution and was the world’s primary source of energy from the end of the 19th century until the middle of the 20th, when it was overtaken by oil. More recently, natural gas has substituted for coal to some extent in electricity generation, partly because of growing concern about greenhouse gas emissions (coal is the most carbon-intensive common fuel, natural gas the least); meanwhile oil remains the globe’s most important fuel largely because of its role in transport.
The historic pattern was thus for industrial societies to move from low-quality fuels (coal contains an average of 14 to 32.5 megajoules per kilogram) to higher-quality fuels (41.9 Mj/kg for oil and 53.6 for natural gas); and from a solid fuel present in significant quantities in only a few countries to a liquid fuel easily transported and therefore well suited to a system of global trade in energy resources.
During the past three years those trends have altered somewhat. The world’s rate of oil consumption has begun to level off largely because of high petroleum prices—which themselves may be due to the peaking of production in conventional oil (which, on the basis of current data, seems to have occurred in 2005), as well as to shortages of new exploration prospects, drilling rigs, and trained personnel. At the same time, regional natural gas supply constraints are appearing, primarily in North America (the most intensive consumer of the resource), as well as Russia and Europe. Further, the use of coal is increasing dramatically in China as that nation rapidly industrializes (in 2005, China was responsible for 36.1 percent of world coal consumption, the U.S. for 9.6 percent, and India 7.3 percent). As a result of these factors, the global consumption of coal is today growing faster than that of oil or natural gas—a reverse of the situation in earlier decades. From 2000 to 2005, world coal extraction grew at an average of 4.8 percent per year compared to 1.6 percent per year for oil; although world natural gas consumption has been growing at a healthy pace in recent years, in 2005 it actually fell slightly.
The following figure summarizes some of the most important current global data with regard to coal. The left-hand scale and the vertical bars refer to reserves, the line and righthand scale to current yearly production rates by country.
Looking to the future, many analysts who are concerned about emerging supply constraints for oil and gas foresee a compensating shift to lower-quality fuels. The conversion of coal to a gaseous or liquid fuel is feasible, and coal-gasification and coal-toliquids plants are being constructed at record rates.
This expanded use of coal is worrisome to advocates of policies to protect the global climate, some of whom place great hopes in new (mostly untested) technologies to capture and sequester carbon from coal gasification. With or without such technologies, there will almost certainly be more coal in our near future.
Today coal provides for over a quarter of the world’s primary energy needs and generates 40 percent of the world’s electricity. Approximately 13 percent (around 664 million tons) of total hard coal production is currently used by the steel industry, and over 66 percent of total global steel production depends on coal. But because of the costs of mining and transporting coal, its lower energy density, and the inefficient way it is typically burned to generate electricity, the primary energy embodied in coal yields only about one-third of the economic productivity of the primary energy in oil.
Unlike oil, which is traded globally, coal is a regional resource: 90 percent of coal production is consumed in the country of origin. Australia is the foremost coal exporter, and last year was responsible for 30 percent of the international trade in coal, double the proportion of the next-largest exporter (Indonesia).
According to the widely accepted view, at current production levels proven coal reserves will last 155 years (this according to the World Coal Institute). The U.S. Department of Energy (DOE) projects annual global coal consumption to grow 2.5 percent per year through 2030, by which time world consumption will be nearly double that of today. Meanwhile, coal remains the most environmentally damaging of the conventional fossil fuels. While it produces a quarter of the world’s energy, it is responsible for nearly 40 percent of greenhouse gas emissions, principally carbon dioxide (CO2). Efforts to sequester carbon could theoretically reduce that environmental burden, but coal is still problematic for other reasons. Sulfur, mercury, and radioactive elements are released into the air when coal is burned and are difficult to capture at source. Coal mining often destroys landscapes, and recently very fine coal dust originating in China and containing arsenic and other toxic elements has been detected drifting around the globe in increasing amounts.
The EWG Coal Report
The Energy Watch Group report, “Coal: Resources and Future Production,” notes that
About 90% of coal reserves are concentrated in 6 countries: USA, Russia, India, China, Australia and South Africa. The USA alone holds 30% and is the second largest producer. China is by far the largest producer but contains only half of the reserves of the USA. Therefore the development of these two countries is a key for future coal production.
However, the report’s authors (Werner Zittel and Jörg Schindler) are of the opinion that “the data quality is very unreliable,” especially for China, South Asia, and the Former Soviet Union countries. Some nations (such as Vietnam) have not updated their “proved reserves” for decades, in some instances not since the 1960s. China’s last update was in 1992; since then, 20 percent of its reserves have been consumed, though this is not revealed in its official figures.
Even more striking is the fact that since 1986 all nations with significant coal resources (excepting India and Australia) that have made the effort to update their reserves estimates have reported substantial downward resource revisions. Some countries—including Botswana, Germany, and the UK—have downgraded their reserves by more than 90 percent. Poland’s reserves are now 50 percent smaller than was the case 20 years ago. Each new assessment (again, except in the cases of India and Australia) has followed the general trend. These downgrades cannot be explained by volumes produced in this period. The best explanation, according to the EWG report’s authors, is that nations now have better data from more thorough surveys. If that is the case, then future downward revisions are likely from countries that continue to rely on decades-old resource estimates. The report concludes: “the present and past experience does not support the common argument that reserves are increasing over time as new areas are explored and prices rise.” This argument is supported by the fact that even the world’s in-situ resources of coal have dwindled from 10 trillion tons of hard coal equivalent (hce) to 4.2 trillion tons in 2005—a 60 percent downward revision in 25 years.
Here are figures used in the report for world coal totals, provided by the World Energy Council (WEC) in 2004 and reproduced by BP for 2004 and 2005, taking into account the three broad classifications of the resource:
Total world reserves (at end 2002):
bituminous coal + anthracite 479 billion tons
sub-bituminous coal 272 billion tons
lignite 158 billion tons
Each coal class has a different energy content:
anthracite 30 MJ/kg
bituminous coal 18.8–29.3 MJ/kg
sub-bitiminous coal 8.3–25 MJ/kg
lignite 5.5–14.3 MJ/kg
Only coal with a high heating value is suited for long-distance transport and for use in metallurgical processes. Thus, from the standpoints of size of reserves, energy content, and suitability for a range of significant uses, bituminous coal and anthracite are the most important of the categories.
As noted earlier, China and the U.S. are key nations for the future of coal. Let us look at these two countries’ situations in a little more detail.
China reports 55 years of coal reserves at current rates of consumption. Subtracting quantities consumed since 1992 (the last year in which reserves figures were updated), this declines to 40 to 45 years. However, the calculation assumes constant rates of usage, which is unrealistic since currently consumption is increasing rapidly. China plans to expand coal production to make substantial quantities of liquid fuels; this will push production rates to their limits. Already China has shifted from being a minor coal exporter to being a net coal importer.
Moreover, we must factor in the peaking phenomenon common to the extraction of all non-renewable resources (the peak of production typically occurs long before the resource is exhausted).
The EWG report’s authors, taking these factors into account, state: “it is likely that China will experience peak production within the next 5–15 years, followed by a steep decline.” Only if China’s reported coal reserves are in reality much larger than reported will Chinese coal production rates not peak “very soon” and drop rapidly. The authors conclude:
The analysis shows that the strongly rising production of China will have a substantial influence on the peak of world coal production. Once China cannot increase its production anymore world coal production will peak. But also the future production of the USA will have a substantial influence on the absolute size of peak production volumes.
The United States is the world’s second-largest producer, surpassing the two next important producer states (India and Australia) by nearly a factor of three. Its reserves are so large that America has sometimes been called “the Saudi Arabia of coal.” The U.S. has already passed its peak of production for high-quality coal (from the Appalachian mountains and the Illinois basin) and has seen production of bituminous coal decline since 1990. However, growing extraction of sub-bituminous coal in Wyoming has more than compensated for this. Taking reserves into account, the authors of the report conclude that growth in total volumes can continue for 10 to 15 years. However, in terms of energy content U.S. coal production peaked in 1998 at 598 million tons of oil equivalents (Mtoe); by 2005 this had fallen to 576 Mtoe.
This forecast for a near-term peak in U.S. coal extraction flies in the face of frequently repeated statements that the nation has 200 years’ worth of coal reserves at current levels of consumption. The report notes: “all of these reserves will probably not be converted into production volumes, as most of them are of low quality with high sulfur content or other restrictions.” It also points out that “the productivity of mines in terms of produced tons per miner steadily increased until 2000, but declines since then.”
The report’s key findings regarding future U.S. coal production are summed up in the following paragraph:
Three federal states (Montana, Illinois, Wyoming) own more than 70% of US coal reserves. Over the last 20 years two of these three states (Montana and Illinois) have been producing at remarkably low levels in relation to their reported reserves. Moreover, the production in Montana has remained constant for the last 10 years and the production in Illinois has steadily declined by 50% since 1986. This casts severe doubts on the reliability of their reported reserves. Even if these reported recoverable reserves do exist, some other reasons prevented their extraction and it is therefore very uncertain whether these reserves will ever be converted into produced volumes. Considering the insights of the regional analysis it is very likely that bituminous coal production in the US already has peaked, and that total coal production will peak between 2020 and 2030.
The report is somewhat more pessimistic than a previous independent analysis of future U.S. coal production by Gregson Vaux (“The Peak in U.S. Coal Production”), which gave America 30 to 50 years till peak.
The following figure provides an overview of world coal production, based on detailed country-by-country analysis.
The International Energy Agency’s “World Energy Outlook 2006” (WEO 2006) discusses two future scenarios for global coal production: a “reference scenario” that assumes unconstrained coal consumption, and an “alternative policy scenario” in which consumption is capped through government efforts to reduce climate impacts. Both scenarios are compatible with the supply forecast in the EWG report until about 2020. Thereafter, only a rate of demand corresponding with the “alternative policy scenario” can be met. This clearly has implications for climate policy, which I will explore in a later section of this article.
The report focuses on mined coal and does not discuss underground coal gasification. The U.S. DOE has estimated that up to 1.8 trillion tons of otherwise unminable coal might be turned into useful energy by underground gasification, roughly tripling the amount of energy that could be recovered from the mining of U.S. coal resources. However, as report author Werner Zittel noted in an email exchange on this point, underground coal gasification is still in the research stage and its future as a source of global energy is uncertain. Major problems include:
- the variable gas composition and its low heating value
- environmental issues due to sudden soil sinks, groundwater contamination and numerous bore holes
- changing coal composition and its seem thickness
- inclination of the coal layer
- water levels
- density of covering layers
- economic aspects
At the same time, it is possible that the report understates some of the problems associated with mined coal. A coal-mining engineer in South Africa once described to me in conversation how cost-driven mining techniques often take out only the best coal and leave behind poorer-quality resources, and how this is done in such a way that once an underground mine is shut down, it is likely never to be re-opened. This situation is probably not unique to South Africa: E. N. Cameron’s At the Crossroads: The Mineral Problems of the United States (1986) discusses how “workings deteriorate, and cave-ins may occur” in abandoned mines, frequently leading to a situation where “Costs of rehabilitation may become prohibitive. Mining of the poorer seams may never be resumed. The coal involved in such mines becomes a lost resource.”
Implications for Global Energy Supply
According to the Association for the Study of Peak Oil (ASPO) 2006 Base Case Scenario (published in the February 2007 ASPO Newsletter), the global production of conventional oil (crude plus condensate) peaked in 2006, while all liquids (including non-conventional oil) and natural gas combined will peak approximately in 2010.
Since oil and gas together provide the bulk of world energy, their combined peak will probably determine the peak in total world energy production and consumption. If the EWG report is right that the global coal peak will occur around a decade after the petroleum/gas peak, this probably implies a 10-year interval, starting around 2010, of relatively slow fall-off in total energy from fossil fuels, followed by a gradually accelerating decline.
Regional oil and gas supply gaps will likely first be closed using domestic alternatives, and those nations that have an available coal resource base will likely seek to produce liquid fuels from coal. This will reduce the already meager amount of coal available to the export market. Peak oil is sometimes spoken of (e.g., by the team that produced the 2005 Hirsch report, “Peaking of World Oil Production: Impacts, Mitigation and Risk Management”) as a liquid fuels crisis that will primarily impact the transport sector. Taking into account regional gas constraints and a likely near-term peak in global coal extraction, it is perhaps more appropriate to speak instead a broad-spectrum energy crisis with implications for electricity generation, space heating, and agriculture as well.
Oil, natural gas, and coal together supply over 87 percent of total world energy, which stands at about 400 quadrillion Btus, or “quads,” per year. Therefore, compensating for a realistically possible 2.5 percent annual decline in all fossil fuels averaged over the next 20 years would require developing almost 10 quads of energy production capacity from new sources each year (this assumes no growth in energy demand). Ten quads represent roughly 10 percent of total current U.S. energy production. By way of comparison, today’s total installed world wind and solar generating capacity—the result of many years of investment and work—stands at less than 1 quad.
Where could 10 quads of new energy production capacity come from? The expansion of nuclear power is problematic given future constraints in the availability of uranium (another study by EWG, “Uranium Resources and Nuclear Energy,” published in 2006, estimates that global production will peak before 2050 even with robust resource estimates), and also given the high expense and time lags associated with constructing nuclear power plants. Tar sands and oil shale face practical hurdles such as shortages of fresh water for processing. Biofuels suffer from low energy profit ratios, and their development likewise requires substantial quantities of fresh water. Other renewables—solar, wind, tidal, wave, and geothermal—have significant potential for increase; however, there is arguably no credible scenario in which these could grow fast enough to offset projected declines in any one of the three principal fossil fuels, much less all three together.
Of course, whatever response society eventually arrives at to fossil fuel shortages will consist of a cobbled-together mix of the available alternative energy sources plus a heaping helping of energy conservation (efficiency and curtailment). I use the word response rather than solution because the latter term implies an outcome in which present societal patterns of industrial production and consumption are maintained. But this may not be possible. Planned, strategic curtailment of energy use will of necessity be the primary adaptation strategy. This has enormous implications for every aspect of modern economies.
Implications for Climate Policy
For the most part, climate policy experts have relied upon robust estimates of future global coal supplies. For example, the following charts from NASA’s James Hansen, one of the world’s foremost climate scientists, show CO2 levels that will result from the burning of remaining fossil fuels given widely accepted reserves levels for oil, gas, and coal, under two scenarios: “business-as-usual,” and “coal phaseout.”
In both charts oil production is not projected to peak until 2020-2030, with a very slow decline thereafter; in the first chart, emissions from coal production do not peak until 2100. In addition, in the “business-as-usual” scenario absolute levels of production at the time of peaking are much higher than those forecast by ASPO and EWG; the ASPO/EWG peaking levels correspond to about 420–440 ppm of CO2 versus 575 ppm in Hanson’s first chart. For the sake of comparison, the current atmospheric CO2 level is 390 ppm. According to the International Panel on Climate Change (IPCC), a 420–440 ppm peak in CO2 levels may be consistent with a global average surface temperature increase of 2 degrees C above preindustrial levels, the critical threshold target for maximum allowable increase cited by many climate scientists.
If ASPO/EWG is correct, this means that oil, coal, and gas resource-and-production limitations may result in declines in CO2 emissions that are more or less in line with what is considered politically feasible for voluntary emissions reductions (the IEA “alternative policy” scenario).
However, while this is good news, there is no room for complacency. First, it should be noted that the IEA scenario has been criticized as being insufficiently stringent, since higher reductions in carbon emissions may be needed in order to confine global warming to 2 degrees C (a report by the Institute for Policy Research, “High Stakes: Designing Emissions Pathways to Reduce the Risk of Dangerous Climate Change,” concludes that in order to have a high degree of confidence of keeping average surface warming to 2 degrees above pre-industrial levels, carbon emissions must be reduced 70 to 80 percent below present levels by 2050). Even the 2 degree target is somewhat arbitrary: we do not know if drastic cuts in emissions with that as a target are enough to stop runaway reinforcing feedback loops, already initiated, from forcing a temperature increase of many degrees based only on carbon already let loose.
Moreover, the 420–440 ppm figure derived from ASPO/EWG fossil fuel supply constraints ignores contributions from other greenhouse gases, as well as potential CO2 contributions from alternative fossil fuels—heavy oil, tar sands, oil shale, and methane hydrates. Most of these (excepting methane hydrates) are carbon-intensive, and while they are costly to develop and current production is minor to nonexistent, significant efforts may be devoted to expanding their exploitation in response to shortages of existing fuels. On the face of it, the evidence that resource limits will constrain CO2 emissions to the IEA “alternative policy” scenario would seem to be, as I have already noted, good news for climate protection advocates. However, the latter may be wary that industry-led opponents of emissions-reduction policies will seize on this data to argue that governments needn’t do anything about emissions, since rates of fossil fuel extraction will decline in any case. In other words, for advocates of climate policy, this new information about coal may constitute yet another inconvenient truth.
Nevertheless I would argue that it makes more sense for climate protection advocates to embrace the news and use it to advantage, rather than to deny or marginalize it. Climate advocates can make the argument that, even if society finds steep voluntary cuts in the use of coal and other fossil fuels to be economically onerous, there is really no alternative: declines in production will happen anyway, so it is better to cut use proactively and systematically than wait and be faced with shortages and price volatility later. The findings of the 2005 DOE-funded Hirsch report (“Peak of World Oil Production: Impacts, Mitigation and Risk Management”) regarding society’s vulnerability to peak oil apply also to peak coal: time will be needed in order for society to adapt proactively to a resource-constrained environment. A failure to begin now to reduce reliance on coal will mean much greater economic hardship when the peak arrives.
The climate-change mitigation discussion focuses on emissions—a term and concept with little intuitive resonance for the average person. But, as Michael Klare has argued in his recent essay, “Global Warming: It’s About Energy,” the discussion is somewhat misleading: emissions reductions that are being discussed will almost certainly entail not just a new generation of coal-powered generating plants and more efficient cars, but a substantial reduction in consumption of fossil fuels, and this will in turn have serious implications for our entire modern way of life. If there is no credible way of replacing fossil fuels with other energy sources in order to meet the emissions reduction trajectories being proposed, this probably implies real economic pain. Unlike emissions, high energy prices are something everyone can understand. Climate activists have attempted to downplay this economic impact of the policies they advocate, while opposing forces have underscored it. The new information about coal helps: it tells us that even if the economic price for carbon reduction is high, we have no choice but to proceed. There really is no “business-as-usual” option, even ignoring environmental impacts, given the resource constraints.
Climate activism is hardly rendered irrelevant by the news about coal. Society’s response to both resource constraints and climate impacts will be crafted by policy makers whose decisions will inevitably be shaped as much by effective public relations and public perceptions as by pure science. A lack of strong advocacy for sensible energy policies could result in a victory for industry-led efforts to shift societal investments toward the development of low-grade fossil fuels—efforts that could raise emissions levels and imperil the climate, and yet still fail to solve the world’s energy problems.
Given the nature of its findings, the EWG coal report should be regarded with utmost seriousness. Those findings must be examined carefully and checked against other studies (I am aware of a similar study under way in the Netherlands; as soon as it is available I plan to write a follow-up article to compare its results with those of the EWG). If the data and analysis described here hold up, the implications must be faced. World energy will begin to decline very soon, and there probably is no supply-side fix. The most important policies will be ones that have to do with proactive energy curtailment and systemic societal adjustment to lower consumption levels. Those policies will necessarily impact agriculture, transport, trade, urban design, and national electrical grid systems—and everything dependent on them, including global telecommunications.
In other publications I have advocated a Depletion Protocol for oil as a policy tool to enable societies to better adapt to the impending peak in global petroleum production. Depletion protocols for gas and coal, while not as critical (since these fuels are not traded globally to the same extent as oil), could also help with the difficult process of adaptation. Nations that are currently dependent on coal—China and the U.S. especially—would be wise to begin reducing consumption now, not only in the interests of climate protection, but also to reduce societal vulnerability arising from dependence on a resource that will soon begin to become more scarce and expensive.
Energy Watch Group, “Coal: Resources and Future Production” (April, 2007). This article is
based on a draft of the study report. For information about the study, please contact
Werner Zittel: email@example.com
Energy Watch Group, “Uranium Resources and Nuclear Energy” (December, 2006) EWGpaper_ 1-06_Uranium-Resources-Nuclear-Energy_03DEC2006.pdf
World Coal Institute website
Gregson Vaux, “The Peak in U.S. Coal Production” (May 27, 2004)
ASPO Newsletter #74, February 2007
Robert Hirsch, et al., “The Peaking of World Oil Production: Impacts, Mitigation and Risk Management,”
Chris Vernon, “Dr. James Hansen: Can We Still Avoid Dangerous Human-Made Climate Change?” (The Oil Drum, November 22, 2006)
Paul Baer and Michael Mastrandrea, “High Stakes: Designing Emissions Pathways to Reduce the Risk of Dangerous Climate Change,” Institute for Policy Research (November, 2006)
E. N. Cameron, At the Crossroads: The Mineral Problems of the United States (John Wiley & Sons, 1986). Quotations from p. 198.
Michael Klare, “Global Warming: It’s About Energy” (February 17, 2007),
Richard Heinberg, The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism and Economic Collapse (New Society, 2006)