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By Robert Rapier on Jul 30, 2014 with 31 responses

King Coal Deposed in West, but Reigns in East

Introduction

This is the 3rd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous posts – World Sets New Oil Production and Consumption Records and The US and Russia are Gas Giants – delved into world oil and natural gas production and consumption figures. Today’s post looks at the global coal picture.

Coal Consumption

In the US, coal consumption has been flat to declining for the past 20 years. Just since 2007, US coal consumption has fallen by more than 20%. This is the primary reason the US leads all countries in reducing carbon dioxide emissions over that same time period. (This will be covered in an upcoming article). Still, the US accounted for 11.9% of the global demand of coal in 2013. This was good for 2nd place globally among countries for coal consumption, but the 455.7 million metric tons of oil equivalent (Mtoe) that the US consumed in 2013 was roughly the amount we consumed in 1987.

The declining demand story is the same in the European Union (EU). Since 2007, coal consumption in the EU has fallen by 12%. While the consumption decline since 2007 is not as dramatic as that in the US, the decline in EU coal consumption since the late 1980s has been greater. In 1989, US and EU coal consumption were almost identical (480.5 Mtoe for the US versus 487.6 Mtoe for the EU), but then consumption in the EU fell sharply during the 1990s. Today the EU share of the world’s coal consumption is 7.5%.

The story of declining coal consumption in recent years holds true for most of the developed world. Canada, Australia, and New Zealand have all seen their coal consumption decline since 2008. Japan’s coal consumption was on the decline until the 2010 Fukushima nuclear power plant accident, but has been increasing since as Japan tries to make up for the loss of nuclear power. Germany is a notable exception in the EU. It has seen coal consumption rise in three of the past four years, but there too the general trend for the past 40 years has been sharply lower coal consumption.

So if you live in the West, and you tend to get your news sources from the West, you might believe that global coal consumption is on the decline. But you would be very wrong.

The Chinese Dragon is Fueled by Coal

In 1980, the US, the EU, and Asia Pacific each consumed some 400 to 500 Mtoe of coal. EU coal consumption never went much beyond that level before beginning to decline to the 2013 level of 285.4 Mtoe. US coal consumption rose a little bit, but topped out at 574.2 Mtoe in 2005.

But in the developing world, coal consumption trends have been very different. In fact, coal’s gains in the developing world are shocking:

Coal Consumption 1965 through 2013

In 1980 the combined coal consumption of the US and the EU was 866 Mtoe. Today, the combined coal consumption of the two is 741 Mtoe. But the increase in Asia Pacific’s coal consumption since 1980 is 2196 Mtoe — nearly triple today’s combined coal consumption of the US and EU.

China is the world’s top consumer of coal, and was responsible for nearly 74% of Asia Pacific’s gains since 1980. In 2013, China consumed 1925 Mtoe, 50.3% of the global total. This represents a more than six-fold increase in China’s coal consumption since 1980, which is of course partially explained by the outsourcing of manufacturing from developed countries.

No other country comes close to China’s coal consumption. The US was a distant second at 456 Mtoe (11.9% of the global total), followed by India at 324 Mtoe (8.5%), Japan at 129 Mtoe (3.4%), and Russia at 93.5 Mtoe (2.4%).

Coal Production and Exports

China also produces the most coal. The 1840 Mtoe mined there in 2013 was 47.4% of the world’s total, but not enough to satisfy China’s coal demand. As with the consumption figures, the US was also a distant second in production at 500.5 Mtoe, which was more than the US consumed and 12.9% of global production. US coal exports are on the rise as a result. Following the US in coal production were Australia at 269 Mtoe, Indonesia at 259 Mtoe, and India at 229 Mtoe.

Australia and Indonesia both produce far more coal than they consume, and as a result they are major exporters to Asia. In fact Australia is the world’s top coal exporter, with nearly 90 percent of its exports destined for Japan, China or South Korea. US coal producers would love to expand into this market but are at a geographical disadvantage. Further, there aren’t many options for US producers wishing to export coal from the west coast. As a result, most US coal exports are destined for Europe.

Coal Reserves

Nevertheless, the US has 26.6% of global proved coal reserves — the most of any country, with a reserves-to-production (R/P) ratio of 266 years. At current market prices for coal, these reserves would be valued at some $15 trillion, so there will be tremendous economic incentive to mine this coal. But there will also be tremendous environmental pressure to leave it in the ground as concerns about climate change continue to mount.

Following the US in coal reserves are Russia with 17.6% of global reserves, China with 12.8%, Australia with 8.6%, and India with 6.8% of global reserves. The BP Statistical Review indicates that each of these countries has enough proved reserves to produce coal for at least 100 years at 2013 rates except for China, which has only enough reserves for 31 years of production at its 2013 consumption rate. Russia, on the other hand, has enough proved coal reserves to produce at its 2013 rate for over 450 years.

Conclusions

The global coal markets are the story of skyrocketing consumption in the Asia Pacific region that far more than offsets the consumption declines in the West. The US has the world’s largest coal reserves, and because the US Environmental Protection Agency is attempting to phase coal out in the US, coal producers would like to grow their coal exports. However, these producers are constrained by geography and the availability of west coast coal export terminals in tapping into the growing Asia Pacific market.

Link to Original Article: King Coal Deposed in West, but Reigns in East

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Jacob David Tannenbaum on July 30, 2014 at 10:54 pm

    According to http://www.resilience.org/stories/2009-03-04/how-much-coal-out-there those 266 years are a little deceiving. 30% of the coal is in the harsh wilderness of Alaska, and the necessary infrastructure to extract and transport the coal is non-existent. Furthermore, a lot of the reserve numbers have not been scrutinized with recent technology, and a recent USGS study of fields in Wyoming reduced the previous estimate by 95%.

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    • By Robert Rapier on July 31, 2014 at 1:43 am

      That article seems to be casually conflating reserves and resources. The 266 year R/P represents proved reserves. Those are reserves that have been determined to be economically and technically extractable. The resource is much larger. So when the article states this:

      “the coal reserve estimate for the Gillette coal field is 10.1 billion short tons, which is a mere 5% of the original 200 billion ton resource total. In other words, the USGS has just revised the Gillette resource base down by 95%.”

      That doesn’t follow. A reserve is a subset of a resource, and it can be a very small percentage of the resource. If the resource is 200 billion tons and the reserve is 10.1 billion tons (I don’t know; just using these numbers) that doesn’t mean the resource base has been revised down. The 200 billion ton number doesn’t represent reserves, so there would be no downward revision here.

      Likewise, in Alaska he talks a lot about the resource, and how it may not be obtainable. Again, we are talking about reserves, not resources. A large fraction of the resource won’t be obtainable.

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      • By Jacob David Tannenbaum on July 31, 2014 at 2:47 am

        You’re entirely right Robert, I often get annoyed at the conflation of reserves and resources with oil finds, I can’t believe I missed that. I’ve just checked the USGS site to be sure and there’s a paper on there from a couple of days ago that estimates current production rates could be sustained for around 200 years.

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  2. By Forrest on July 31, 2014 at 8:35 am

    Your info spotlights the incredible opportunity to mitigate global pollution from coal. The East has demanded cheap and abundant energy with little regard per pollution concern. They are doing more harm by magnitudes than any expensive government run program in the West could possibly recover the damage. The West is within an domestic cycle to spend ever more precious resources (capital) on increasingly minimal benefits to environment. We are guilty of shooting ourselves in the foot economy wise per theoretical (unmeasurable) benefits to actual environment. This will not result in polluting countries volunteering to change their behavior, It is pure fantasy to expect foreign countries to suddenly be impressed or influenced per our wonderful environmental solutions that are hyper expensive. Coal is the most inexpensive, low tech fuel capable of significant energy production. We could do maximum benefit to environment if improving the technology and lowering cost of clean coal. It’s not enough to lock arms and purpose solutions that appear to be ultimate. The world doesn’t operate that way, nor does reality, or markets. Markets are smarter and more powerful than those whom think they can see the future. We have no scientist with such capability. It is folly to obstruct improvements per competing energy sources as persons fear the improvements may make their wonderful solutions less desirable. The West has no crystal ball or benevolent leadership with prophetic wisdom. The sum total influence of open market competition will make superior decisions than politicians gaming popularity from constituency full of bias and prejudice. Non of use has that level of intelligence to see best path as the path is full of twists and turns as multitudes invest time and money to solve society problems thereupon gaining financially. China has a boat load of inefficient polluting coal plants that are starting to pay extra for import fuel . West’s technological solutions could present them with a attractive solution to cut those cost in half per IGCC power plant which pollutes at a mere fraction. About Germany’s much touted green power production, consumers forced to pay thirty six and one quarter cents per kWh. Not good for the base of the economic pyramid to suffer such a high obstacle.

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    • By Ed_Reid on July 31, 2014 at 9:30 am

      It is important, in any discussion of this topic, to clearly differentiate between criteria pollutants (SOx, NOx and particulates) and “carbon pollution”; or, more accurately, CO2 emissions. China’s current air pollution problems are the result of its failure to apply and operate well known and well established control technology for criteria pollutants. China has numerous small, old, uncontrolled coal powerplants. To deal with its air pollution problems, China must decide which of these plants to control; and, which to replace, because it is not economically feasible to control them. China must also commit to continuous operation of the control equipment installed at its newer coal generators. Increases in existing plant efficiency in China’s rapidly growing economy would not reduce emissions, but merely make more needed electricity available from the same coal consumption and emissions.

      CO2 is a nearly totally different issue. Certainly, increases in the efficiency of new coal plants built in China to increase power availability would reduce CO2 from these plants below what they would otherwise have been, though total CO2 emissions would continue to increase. There is currently no well known and well established control technology for CO2. The potential future control technology (CCS) is unproven at commercial scale; and, it is expected to require substantial parasitic power consumption, this reducing the overall efficiency of the generation process. This parasitic power consumption is expected to increase as the percentage of CO2 capture increases; and, it is not known whether 100% capture is technically or economically feasible.

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      • By Forrest on August 1, 2014 at 8:02 am

        Herein lies the opportunity to supply a solution to China since the country has already decided to burn coal. They want to save fuel costs and will per the high efficiency of IGCC power plants. The modern hot air turbine is about 2x the efficiency, this by definition will result in half the emissions. But, the process is more acceptable to controlling pollutants, as well. As you imply Chinese in particular want lower cost and simple easy to operate solutions. They probably will develop with U.S. technology i.e. GE China an adaption to IGCC to decrease cost and simplify operation. Still a big opportunity upon global air pollution to make a tremendous reduction. Dropping the Chinese projected growth of coal emissions by 50-80% would dwarf all the U.S. and Europe expensive anemic improvements to power production. The magnitude of reduction much higher than our green energy. We could do more for our air pollution, by realizing China is the source. Help them solve energy problems even if compromising utopian dreams. Better to affect reality than to hold out for future notions that upon history never work out as envisioned.

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        • By Ed_Reid on August 1, 2014 at 8:58 am

          Unfortunately, IGCC is not fully commercialized, is more expensive than a conventional steam generation plant and is not as much more efficient as you suggest. The IGCC plants currently in operation appear to be about two thirds the efficiency of NG CCT plants, on a lower heating value basis.

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          • By Forrest on August 1, 2014 at 5:43 pm

            There are plants with integrated coal gasification, one famous in Florida. I remember a article on Energy Insider of the plant. It is not up to present day performance standards and was very expensive. But, it does produce big time. Modern day hot air turbines at 60% efficiency and with such high exhaust temperatures they can accommodate common efficient and low cost steam turbine. The btu of coal gasification gas is highly dependent on process. Wood gasifiers about 2/3 the btu. Coal, wood, and bio-gas can all be processed to pipe line quality natural gas standards.

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            • By Ed_Reid on August 1, 2014 at 6:44 pm

              The 60% efficiency is in combined-cycle operation, not turbine open-cycle efficiency.

              http://www.energy.siemens.com/us/en/fossil-power-generation/gas-turbines/sgt6-8000h.htm

              The Florida Power plant was a demonstration installation. http://www.clean-energy.us/projects/polk_florida.htm

              Syngas is not currently economically competitve.

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            • By Forrest on August 2, 2014 at 5:49 am

              I’m having problems posting?

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            • By Robert Rapier on August 2, 2014 at 11:03 am

              Sometimes the spam filter catches one by mistake, but I didn’t see any of yours in there.

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            • By Forrest on August 2, 2014 at 6:04 am

              The 60% is turbine efficiency, per DOE funding 8 yr project 2,600 deg turbine. The IGCC process may have an advantage over natural gas per the hydrogen. Fuel cell combined cycle is within research per the hydrogen, also. The IGCC is presented as the future of coal power in U.S. The cost of this technology is going down. Business expects 8% growth rate. The process has many variants, but all have ultra low emissions and higher quality (non polluting stable slag). The emissions in line with natural gas. Coal to natural gas is not competitive, but a nice backup.

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            • By Ed_Reid on August 2, 2014 at 7:40 am

              http://energy.gov/fe/doe-technology-successes-breakthrough-gas-turbines

              The 60% is combined-cycle efficiency, according to DOE. Open-cycle turbine efficiency is ~35%.

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            • By Forrest on August 2, 2014 at 9:21 am

              Go to the IGCC DOE site explaining latest teck.The latest turbine development. The advance is compounded upon the ability to power conventional steam turbine. It would eliminate the low efficiency recuperating steam turbine that also is more expensive. And yes it is the hydrogen element that is pushing turbine to extreme efficiency. The combined cycle may lower efficiency of hot air turbine, but combine cycle is better. No info on combined cycle, but must be well above 60%. Also, there is two IGCC commercial production plants in operation. One being constructed in Mississippi. Two, also, operating in Europe.

              http://energy.gov/fe/science-innovation/clean-coal-research/hydrogen-turbines

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            • By T-Wizzle on August 19, 2014 at 3:10 pm

              http://energy.gov/fe/science-innovation/clean-coal-research/hydrogen-coal: “Gasification of coal is a promising technology for the co-production of electric power and hydrogen from integrated gasification combined-cycle (IGCC) technology. However, there currently are no commercial demonstrations of these joint power and hydrogen plants. Conceptual plants have been simulated using computer models to estimate technical and economic performance of co-production facilities.”

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      • By Forrest on August 1, 2014 at 8:47 am

        The CO2 reduction primarily accomplished by higher efficiency. Also, biomass has a natural ability to mitigate the waste stream above that of the percentage of substituting coal. Since biomass can be farmed locally this should be attractive for lowering cost, putting rural citizens to work, and in the process greatly reduce emissions of coal. Maybe the Chinese could be connived of planting groves of trees for the purpose? Dupont R&D efforts with EPA evaluated ultra low cost natural solutions for industrial air pollution. These low cost solutions are automatic and less expensive with huge benefits to society. For example one thousand acre plot of large leaf shade tress cleans air as well as one scrubber. It’s a win win to meet supply of supplemental fuel, clean emissions, put people to work, and enjoy forest.

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        • By T-Wizzle on August 1, 2014 at 11:01 am

          Please share your source for the 1000 tree acres = 1 scrubber

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          • By Forrest on August 1, 2014 at 5:50 pm

            Just do a google search

            .It was months ago read but this link a good start.

            http://www.thehindu.com/todays-paper/tp-opinion/trees-to-combat-pollution/article6099361.ece

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            • By Forrest on August 1, 2014 at 6:14 pm

              This is better link

              http://www.ourmidland.com/news/dow-chemical-nature-conservancy-explore-using-trees-to-clean-pollution/article_7f618e4e-efe0-11e3-89e9-0019bb2963f4.html

              Also, the study was for 1,000 acre and purposed per extrapolation 10,000 acres equals one scrubber. But, the natural path has many advantages to society and private landowners whom may be interested in additional revenue. Our EPA is not much interested in natural unregulated loose controls to pollution. Other countries whom desire easy low cost solutions that need no oversight are much interested. You see EPA desires a legal hammer to extract finances from inability of business to meet their standards. They want hard data and condemnation of industry to excite electorate. They want much litigation and force or power that upon our history was something our country was originally fighting to minimize. Coercive and unlimited abuse of absolute power. EPA modern day has massive power to destroy and unelected. Why fear NSA when EPA has much more corruption power.

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            • By T-Wizzle on August 19, 2014 at 2:55 pm

              10,000 acres to replace one scrubber is not feasible for a number of reasons in the U.S. much less China, where new coal plant openings are calculated by the month.

              As far as the EPA, its administered by political appointees. If you don’t like them run for office or support a candidate who shares your views.

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  3. By Forrest on August 1, 2014 at 8:23 am

    It is good for a country to have an energy policy in which to stabilize energy cost and production. Best to place a value on fuels that dampen market spikes of not meeting sudden changes in supply or increase need. The Germans have learned that gutting coal power will result in greatly increasing chance of power disruption and suffering sudden economy crushing spikes in cost of power. The U.S. is foolishly following a path upon natural gas that will not end good. The short term benefits of low cost less polluting power will result in destabilizing NG market. Large consumers such as power plant companies will sign long term contracts. Resulting in small consumers experiencing the brunt of open market swings and shortages. Natural gas is to valuable and versatile energy source to burn per power production. Better to export, use within hard to fuel transportation needs, or power home and industry use. Do you really want to compete with power plant fuel? Natural gas suppliers should be able to sell their wares to highest bidder, even high paying international customers. That’s good for domestic economy and benefits all citizens. But, domestic energy policy should safe guard energy security and place much value on stable markets and ample supply. Coal seems to be a natural at this. Huge piles of the resource can be banked for certain cost of energy. Very hard for terrorist to blow up coal pile.

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  4. By RBM on August 3, 2014 at 1:17 pm

    Robert, have you heard of Newlight Technologies ?

    [url=http://www.cbsnews.com/news/company-unlocks-secret-to-making-plastic-out-of-air/]Located in Costa Mesa, California, Newlight Technologies is forming plastic out of thin air. Literally. [/url]

    Sounds promising to me and I thought your ChemE. might help to evaluate.

    Thanks.

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    • By Robert Rapier on August 3, 2014 at 4:47 pm

      The problem with any scheme to turn carbon dioxide into pretty much anything other than carbon dioxide is that it always requires significant energy inputs. I covered a story a couple of years ago about a company claiming they could make fuel from carbon dioxide. Technically feasible? Yes. But the energy inputs will always be greater than the fuel value. In other words, doing this increases over carbon dioxide emissions instead of decreasing them.

      I would like to see a life cycle assessment of this process, with a focus on the energy inputs required to split carbon from carbon dioxide. Those energy inputs are significant.

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    • By TimC on August 4, 2014 at 10:08 am

      Thanks for the link, RBM. I was not familiar with Newlight Technologies. After reading the CBS News story, I went to the Newlight website, and it says:

      “… the AirCarbon production process…uses air and methane-based carbon generated at an agricultural digester as inputs to produce material that would otherwise be made from oil.”

      So this is yet another non-innovation. Lots of plastics are already made from air and CH4, and most of those existing processes don’t require expensive enzymes. Anaerobic digestion has been around literally forever, but methane from AD is only used in niche applications due to very high cost compared to natural gas. What is truly remarkable here is how eagerly and breathlessly CBS News reports these non-stories without any background research or due diligence whatsoever.

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      • By Robert Rapier on August 4, 2014 at 11:54 am

        Fully agree Tim. They would do themselves lots of favors by asking a technical person not associated with this process to comment. They could point out the real deal as you do above.

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  5. By Michael Cain on August 7, 2014 at 1:38 pm

    Not only are the coal terminal facilities on the Pacific Coast limited, but the West Coast port cities in the US are all fighting tooth and nail against any expansion.

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  6. By blueburrito on August 8, 2014 at 1:31 am

    Robert, totally off topic, but I hope you’ll stay safe during these 2 hurricanes! Crazy times.

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    • By Robert Rapier on August 8, 2014 at 1:34 am

      Thanks! The first is raging outside right now. I hear the wind howling and the rain pounding the house. It’s going to be a long night.

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  7. By Bob_Wallace on August 31, 2014 at 11:07 pm

    Robert, if we hold aside the ‘big three countries’ in terms of 2012 to 2013 consumption increases (China, the US and India) the rest of the world showed a slight net decrease in coal use.

    China, as you note, is the big consumer. BP reports that China “recorded the weakest absolute growth since 2008″. In fact, China averaged an annual percentage increase of 9.9% for the ten years preceding 2013 (2003 – 2012). In 2013 China increased consumption by 3.7%, a very significant decrease in growth.

    Greenpeace reported that China’s domestic coal production fell by 1.8% in 2013 and imports were basically flat. Any increase probably came from burning reserves. GP also reports that consumption is likely not up for the first half of 2014.

    (They also make an interesting point about coal consumption and GDP.)

    http://m.greenpeace.org/eastasia/high/news/blog/chinas-coal-use-might-just-have-dropped-first/blog/50204/

    We know that China’s leaders are working to reduce coal use. And they have a very aggressive renewable energy program. China may not be a source of increased consumption much longer.

    The US was the second of the significant three. As you point out the EPA is forcing the closure of a large number of US coal plants. It will be hard for the US to burn more coal with 200 fewer plants.

    The third country showing significant 2012/13 increases was India. India’s new government has announced its own aggressive renewable program.

    Seems to me that predicting large increases in world coal consumption going forward might not be a safe move. I’d say the jury is out and may return a “We hit peak coal around 2014″ verdict.

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    • By Robert Rapier on August 31, 2014 at 11:44 pm

      I need to look, but last year outside of China the rest of the world had a decrease in coal consumption.

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