Energy | Ecotrope

What happens when China reaches "peak coal"?

Ecotrope | Dec. 15, 2010 5:05 a.m. | Updated: Feb. 19, 2013 1:43 p.m.

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New reports show China will run out of domestic coal supplies within 38 years while the U.S. has a 245-year supply. That might explain why Ambre Energy wants to export coal from Wyoming and Montana via the Columbia River.

New reports show China will run out of domestic coal supplies within 38 years while the U.S. has a 245-year supply. That might explain why Ambre Energy wants to export coal from Wyoming and Montana via the Columbia River.

There’s a lot of discussion lately about China’s growing demand for coal, which is becoming evermore relevant to the Pacific Northwest as Ambre Energy looks to build the West Coast’s first major coal-export terminal in Longview, Wash.

China now consumes about 47 percent of coal produced globally while estimates show it has just 14 percent of global coal reserves. Demand has risen by about 10 percent a year for the last decade. And government officials have hinted that it might be time to put a cap on coal production – to prolong domestic supplies, they say, but also possibly because moving it around the country has begun to clog the roads.

The New York Times and the Wall Street Journal both picked up on a recent report from a Hong Kong brokerage firm that pegged China’s demand for coal as “unsustainable.” The Times reports “peak coal” in China will put pressure on other countries to deliver, and the Journal reports on estimates that China – where 70 percent of energy currently comes from coal – will run out of domestic coal supplies in 21 to 38 years (meanwhile estimates show the U.S. has enough coal to last 245 years).

Will the Northwest become the new avenue for China to buy coal from Montana and Wyoming’s Powder River Basin? Environmental groups are fighting the proposal in an attempt to stop more coal mining and coal burning worldwide. But won’t China just get it’s coal from somewhere else?

Daniel Jack Chasan at Crosscut offers a thoughtful discussion on why U.S. producers want it to come from the U.S. (part of it has to do with the same forces that lead Portland General Electric to close the Boardman coal-fired power plant early):

“The dispute over the coal port is “really about the geopolitics of climate,” says K.C. Golden, policy director of Climate Solutions. In the past, coal was a resource used regionally, but the market for it is becoming globalized. What is changing now is that “China’s demand has exceeded its own supply,” says Earthjustice attorney Jan Hasselman. “The price point has changed so that it’s economically viable to ship all that coal over to China.” Looking for markets in China is “a direct response to the fact that Americans are largely saying ‘no’ to coal-fired power plants.”

Indeed, while coal still generates roughly half the electricity used in this country, many American utilities are switching to natural gas. (Converting the Canadian-owned AltaVista coal plant in Centralia to natural gas by 2015 is on the Washington environmental community’s new legislative agenda. The governor has been trying to negotiate a conversion by 2025.) As utility companies see carbon regulation or carbon taxes coming down the pike and face the cost of cleaning up their emissions to meet increasingly rigorous environmental standards, while natural gas prices drop, they’re going to Plan B.

Where can coal producers find new markets? In Asia.

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