November 16, 2010
Chinese Government Worries On Domestic Peak Coal

The Wall Street Journal reports that the Chinese government might place a limit on coal mining in order to make Chinese domestic coal reserves last longer.

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.

Their main worry on coal consumption is not global warming. They want their reserves to last longer and would rather import more coal now in order to delay development of a later greater dependency on imported coal. Since imported coal will cost more one effect of this move could be to drive up Chinese demand for nuclear, wind, and other electric power sources.

China's industrialization places demands on resources that could grow to be multiples of current US resource consumption.

Update: Over at The Old Drum read Euan Mearns on China's unsustainable coal production growth and estimates on ultimately recoverable coal reserves. Kjell Aleklett believes China is very close to peak domestic coal production regardless of what their policy makers decide.

Share |      Randall Parker, 2010 November 16 11:26 PM  Energy Fossil Fuels


Comments
Chris T said at November 17, 2010 10:00 AM:

The biggest resource issue China is facing, by far, is water. They're dangerously close to maxing out their country's water capacity.

Engineer-Poet said at November 17, 2010 8:15 PM:

You'd think they'd be more careful about polluting it, wouldn't you?

Mike Puckett said at November 18, 2010 11:35 AM:

It would also let them help address their trade surplus with the US by importing our coal.

Mastro said at November 18, 2010 11:42 AM:

We should have done the same thing 30 years ago with oil.

Maybe the Alaska wildlife refuge is just a way of doing that now...

Indy said at November 18, 2010 12:42 PM:

1. It's very difficult and expensive and often cost-prohibitive to move large amounts of coal around, and it's only done by sea in either extraordinary circumstances of exhaustion of local supply (Japan, Singapore, Taiwan) or for the most valuable ranks used in materials-refining processes. In most countries - consumption is roughly equal to production. Occasionally it can be *barely* economical in China in instances where large coal-using manufacturing operations are located near the near, while domestic coal resources lie very far away. These are the uses of almost all of China's coal imports - which when combined still represent only the tiniest fraction of China's overall consumption. For example, in 2007, China produced 1282 MTOE of coal, but consumed 1321 for imports of about 40 - or only 3% of the total. More recently, China returned to being a net exporter, but is expected to import significantly again soon, but still - you're only talking about a few percent of total demand.

2. Coal is *very* cheap at the mine mouth, but the stuff used for producing electricity (its major use) is actually not very energy-dense - about a third that of oil. You need a lot of it to make juice - and it's heavy and bulky and difficult to move around. Most large countries, like the US and China, use a considerable amount of their freight-rail infrastructure just moving coal from mine to plant. Some might suspect that one would move the plants closer to the mine - but that would be even more expensive because I. The plants need to be by a plentiful water source, which is not often co-located with the mineral resource, and II. you lose *even more* electricity energy value through long-distance transmission loss than you have to spend on coal transport. Most of the cost of coal-fired electricity is, ironically, the cost of the Diesel used in the train-engines that move the coal to the plant.

3. This is China's real short-term problem with coal - limited freight-rail infrastructure and high diesel prices. They are moving people off the old rail-lines and onto new high-speed lines to make room for more coal, and they are also building more, and dedicated, coal-movement "commodity conveyor" rail networks to move even more coal. That's a medium-term solution.

4. In the long run, that is, by mid-century, China has a real fossil-energy-exhaustion problem - the same problem everyone else on earth except the US and Russia have with coal. China cannot both establish developed world electricity-per-capita output and simultaneously preserve their domestic coal resources for long. It will present a real challenge for them. As the "peak" folks like to remind everyone - it's not about the amount of reserves in the world, it's about the capacity to generate *economic growth* by *expanding* the rate at which these resources are delivered to market at prices (and with net energy balance) that don't discourage economic activity. Eventually, probably within the next 25 years - relative scarcity and high prices will be unavoidable unless some unforeseen breakthrough in affordable renewable energy is developed.

West said at November 18, 2010 1:04 PM:

"relative scarcity and high prices will be unavoidable unless some unforeseen breakthrough in affordable renewable energy is developed."


Don't worry about it, Indy, we are going to invest a lot of money in renewable energy, and then, naturally, a miracle will occur!

We have a plan(the miracle), so your mind can rest easy.


DonM said at November 18, 2010 1:28 PM:

The big question is nuclear fusion. If it works in 15 years, then a handful of water has all the heavy hydrogen needed to make all the energy needed for you in your lifetime, and potential for space flight to the asteroid belt (and after that to mining the gas giants). Saving oil or coal in that case will be a waste.

If it doesn't work, then we will have to run through our coal, oil, and Uranium/plutonium/thorium/cesium fissionables before we cut back our (earthbound) population enough to live off the input solar. The bumpy part is when plutonium is made, it can be chemically separated from Uranium, and used to make bombs. That has potential to be a very unstable time.

shannonlove said at November 18, 2010 1:39 PM:

You know, the very first resource depletion panic book was The Coal Question by the 19th century British economist William Jevon. It was published in 1865 and in it Jevon used very rational arguments and a lot data to show that Britain was doomed to run out of coal and collapse economically and otherwise. Jevon was no crackpot or polemist but rather a well respected economist most noted for Jevon's Paradox which demonstrated that increasing the efficiency of the use of resource always leads to increased instead of decreased use of the resource.

It's available on line and will worth read. The book is well worth the read because it represented the very best thinking of the day and it turned out to be completely wrong. Jevon got almost everything right except understanding how technological change would completely alter the economics of energy production. More relevantly, those in a panic about resource depletion today make the same arguments that Jevon did 145 years ago.

Most people, even the notionally educated, simply don't understand that we create resources with technology. As long as we keep developing technology we keep creating resources. There is no such thing as a natural resource except the ambient oxygen in the air. Human action and effort creates all the rest.

Inventive minds are the only true resource.

Robert said at November 18, 2010 1:48 PM:

I don't know where Indy gets his facts, but bituminous coal typically has about 12,000 to 14,000 Btu/lb on a dry basis, whereas oil has about 18,000 to 19,000 Btu/lb. Obviously this varies greatly depending upon the source of oil and coal. For example, lignite coal is a very low rank coal, with a lot of water content. Texas lignite is maybe 7000 Btu/lb. For conventional single-cycle power plants, the efficiency is about the same whether you use coal or oil.

Indy said at November 18, 2010 2:23 PM:

@Robert: I get this particular fact from BP (I know, Gulf Oil spill, I know...) They say that that it takes about (it's very approximate because oils and coals have a wide variety of energy-densities) 1.5 tons of hard coal, or 3 tons of lignite, to match a TOE - ton of oil equivalent. That's where I get "about a third that of oil" from. They say that oil has about 18,150 BTU/pound so that implies their lignite estimate is 6,050 BTU/pound - which sounds a little low, but is still a perfectly reasonable figure. They also say about half of China's reserves are in this low-rank form, so it seems the proper figure to quote.

Either way - the point is that even though coal is much, much cheaper than oil for the same amount of energy - it is also much bulkier than oil. That bulk makes it expensive to transport - so expensive that sometimes even pricey oil is preferably as a power source. For example - and for this exact reason - Singapore produces almost all its electricity and gets 86% of its primary energy from expensive oil and uses hardly any cheap coal at all. Compare that to China (18%) or even the US (39%). Japan remains the world's #1 Coal importer and pays a hefty price for it - and four times what they paid just a decade ago. Can China really afford multiples of Japan's imports at even higher prices?

LarryD said at November 18, 2010 2:41 PM:

DonM, at the moment, the two best bets for fusion are Polywell and Dense Plasma Focus, with Polywell being further along. Within six months we should know if Polywell will pan out or not.

Both hope to be able to use boron-11 for fuel (negligible neutron production).

As for fission, people don't realize that the return on energy is high enough that we'd still get net positive energy even if we went to the trouble of extracting uranium from the likes of granite. And the Japanese already have one system from extracting uranium from seawater that's only a little more expensive than the peak price for uranium ore hit a few years ago, before new sources came online.

Drew said at November 18, 2010 3:42 PM:

Tons upon tons of Uranium is brought into the sea every year by water/ice eroding mountains. The price of electricity from seawater uranium would not be significantly different than it is now, ~10% increase.

We (USA) have so much fissionable material, that it is not even economical to recycle the waste. (This will not be true forever.)

Thorium is much more plentiful than Uranium, and is a perfectly good substitute that has been validated by working reactors.

Fission reactors produce less radioactive waste than coal plants.

xd said at November 19, 2010 10:01 AM:

So the important point about that is it gives us back leverage over the rare-earths supply that the Chinese showed up they could withhold on a whim.

China: "Screw you guys, we got the rare earths production?"
Us: "Yeah? We got the coal you need to power your plant and equipment to refine it. Put up or shut up."

I reckon this is actually good news because it means we all have to play nice.

Massive Devices said at November 20, 2010 10:06 AM:

Substitutes for rare earths make the Chinese monopoly laughable.
Like the man said, the only shortage is a shortage of human ingenuity.
Humans in general seem to be getting more stupid with every generation. What is that novel where humans de-evolve over time into something between a seal and a sea otter? Great fun!

Randall Parker said at November 20, 2010 12:09 PM:

Shannon Love,

Jevons was correct that British coal production would decline. Oil was still to be found and that enabled economic growth to continue. But right now the high price of oil is holding back economic growth. I expect growth to resume in the long run. But we could be looking at 15-20 years of economic contraction and stagnation while we wait for the energy technology advances that will enable the resumption of economic growth.

Robert, Indy,

There are 4 types of coal. Within each type energy intensity varies. In descending energy density: Anthracite, Bituminous, SubBituminous, Lignite The production of the highest energy content type, anthracite, peaked decades ago. The average quality of extracted coal in the United States is declining as coal mining companies have to shift to lower quality deposits as higher quality deposits become depleted.

The same pattern is seen with oil. Lower quality oils are extracted today and these oils require more energy to process them into usable form.

Nick G said at November 22, 2010 11:29 AM:

Randall,

As far as I can tell, British coal production declined from lack of demand, not supply. I've been looking for a source for historical coal prices (before WWII) that would give a clue about supply vs demand. Have you seen any?

The average quality of extracted coal in the United States is declining as coal mining companies have to shift to lower quality deposits as higher quality deposits become depleted.

There are very, very large amounts of bituminous coal in the US, especially in the Illinois Basin. They're not being used because they're high sulfur, which makes them slightly more expensive than sub-bituminous Powder River coal.

Randall Parker said at November 22, 2010 9:13 PM:

Nick G,

I've read accounts claiming that the coal veins were getting smaller in Britain. Costs were rising. Maggie killed off most of the rest of the British coal industry by letting in cheaper imports. Sorry, I do not have time to pursue this at the moment. But I recall TOD posts about it.

Nick G said at November 23, 2010 10:59 AM:

I've read accounts claiming that the coal veins were getting smaller in Britain...I recall TOD posts about it..

I think I've read all of the TOD posts about coal. Unfortunately, their discussion of changes in UK coal resource quality have never gotten beyond the superficial.

Nick G said at November 26, 2010 12:55 PM:

Here's a detailed discussion of UK coal.

"At the present time folk would have you believe that the UK has very little coal left (4.5 years according to the BP report, from 2005, which suggests that the country is only staving off running out, since it is using about a quarter of that a year, by relying on imports).

So where did the coal go? Did some evil Voldemort-type character sneak into the country over night and magic it away? No! As the World Coal study shows, the coal is still there. It is just that, at the present time, the coal is not economically mineable and so it is not considered a reserve. It is, however, physically, still there, and thus, is still shown in the first column as a resource. And as the price of oil rises and the price of alternate fuels rises, so more of that resource will become a reserve. "

http://www.theoildrum.com/node/7129#more

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