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Hogsback on the re-emergence of the Peak Coal debate

PEAK Coal has been an occasional topic for Green politicians in their crusade towards a low-energy future. It has not been discussed in detail by the coal industry, though <i>Hogsback</i> thinks that might change after a recent US study.

Tim Treadgold
Hogsback on the re-emergence of the Peak Coal debate

Rather than attack the coal industry in the time-weary Green fashion, the latest analysis of Peak Coal – the point at which world coal production tops out – looks at the price impact of falling coal production.

The heading on the research report, published by mildly-green organisation the Post Carbon Institute, is what should catch the eye of everyone with an interest in coal mining: “Why coal prices will soar in the coming years”

Yippee, is what some of The Hogs’ friends might say to that forecast, with good reason, because even though the price tip is from a Green group it is well reasoned and surprisingly logical.

What the authors have done is apply the experience of the Peak Oil debate, which kicked off in the 1950s but didn’t gain traction or hit mainstream media headlines until the 1970s, when two oil shocks caused by Middle East troubles sent a shudder through the economies of the western world.

The man behind Peak Oil was King Hubbert, a geophysics boffin who worked for Shell Oil and later the US Geological Survey. He predicted that US oil production would peak between 1965 and 1970, and he was right.

Less well known is that some of Hubbert’s early work was on coal resources of the US and his stunningly obvious conclusion that finite resource could not sustain exponential expansion.

Two Post Carbon Institute researchers, Richard Heinberg and David Fridley, have picked up where Hubbert left off with coal and while much of their paper is written as a warning about the dangers of assuming an infinite supply of coal to power the world there is plenty for the coal industry to consider.

Essentially, Heinberg and Fridley have questioned – as Hubbert did with oil – the assumptions of recoverable coal reserves, arriving at the conclusion that “coal might may be less abundant than has been assumed”

How could this be so? Surely the official data from government geological surveys around the world point to a bottomless pit of coal.

That’s the first point of attack: government statistics, which the authors question as being out of date and not commercially focused. In other words, the coal reserve estimates are old and do not take into account the fact that not all coal is easily accessible, or could ever actually be mined.

On top of the work on reserve estimates comes the question of consumption and the rapid growth in demand for coal, “largely driven by China” which produces around 40% of the world’s coal and is the biggest consumer.

But, here comes the first big question. Some of China’s coal mines are already very deep, plunging down as much as 1000 metres, and only viable in a command economy because coal hauled up that distance must be expensive, and is becoming more so.

It is through the combination of questioning government data, and matching that data with coal consumption figures that Heinberg and Fridley have arrived at their conclusion that Peak Coal approaches.

Consider a few of their findings, starting with government reserve estimates.

“The first British coal survey, in the 19th century, suggested that the nation had enough coal to last 900 years. The current reserves lifetime is only 12 years.”

“The first official U.S. coal survey, in the early 20th century, suggested that the country had enough coal for 5000 years. That estimate shrank to 400 years in 1974 and stands at 240 years today.”

Heinberg and Fridley acknowledge that there are exceptions to the trend, with reserve estimates growing in countries such and Indonesia and India. “However, in aggregate, estimates of global coal reserves have dropped at a faster rate in recent years than can be accounted for by mining alone.”

Critics will undoubtedly pick holes in this latest Peak Coal argument, possibly pointing out that no allowance seems to have been made for discovery, and the power of the price mechanism to encourage new mine developments.

There is also the problem of the report coming from an organisation such as the Post Carbon Institute.

But, most of the criticism that can be levelled at the work of Heinberg and Fridley was also levelled at King Hubbert and his work on Peak Oil – and he was right.

Being a coward by nature, The Hog is happy to sit on the fence when it comes to deciding the accuracy (or not) of the logic behind the Peak Coal argument, though in the back of his mind is the undeniable fact that all geological resources are finite, with price the key to their unlocking.

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