King Coal, Or Why ‘The Game Is Looking More And More Like Adaptation’

  • Date: 18/06/10

One way to keep perspective amid all the Beltway cogitation over how  to keep a climate component in an energy bill is to pay attention to the global coal industry.  Coal is the prime factor determining the pace of growth in emissions of heat-trapping carbon dioxide as human populations and appetites crest in the next few decades. And regardless of what happens in the United States, the industry’s leaders see nothing but bright prospects ahead. We’re still stuck on the coal rung of  Loren Eiseley’s heat ladder.

Some energy specialists will explain below why the global coal boom renders the legislative debate on climate somewhat moot from the standpoint of the shared global atmosphere, where the source of emissions is irrelevant to their ultimate heating influence.

Here’s the latest signal from the coal industry. Addressing potential investors in Manhattan on Thursday, Gregory Boyce, the chairman and chief executive officer of the world’s biggest coal company,  Peabody Energy, simply gushed as he described how the company is ideally positioned to take advantage of “a long-term supercycle for coal,” driven by rapidly growing demand in Asia. (The company keeps a fast-moving ticker on its Web site tracking coal sales at roughly 8 tons a second or so.) This is how his talk was described in a company news release:

Boyce observed that coal has been the world’s fastest-growing fuel this past decade, with demand growing at nearly twice the rate of natural gas and hydro power and more than four times faster than global oil consumption. “It’s stunning that any mature commodity could expand nearly 50 percent in a decade and speaks to the strong appetite for the products we fuel, as well as coal’s abundance and stable cost,” he said. Coal demand is also expected to grow faster than other fuels in coming decades.

Asia-Pacific nations are leading a historic global build-out in coal-fueled electricity generation. More than 94 gigawatts of new generation are expected to come on line in 2010, representing 375 million tonnes of coal consumption per year. If growth continues at the current pace, generators would add another 1 billion tonnes of new coal demand every three years. Read on…

I ran that release by some specialists in global energy trends to be sure this isn’t hype, including  Richard K. Morse, a talented young Stanford University researcher who has spent much of this year touring Asia’s emerging coal-burning powers. He also is a co-author, with  David G. Victorof the University of California, San Diego, of a must-read article in Boston Review: “ Living With Coal: Climate Policy’s Most Inconvenient Truth.” Here’s his sobering reply:

While Peabody’s PR has taken some creative turns in the past (framing access to coal as a human right), this document reflects a reality that we are watching closely at Stanford: Coal is the world’s fastest growing fossil fuel (for the 8th year now) and likely will be for the next 10-20 at least. According to BP’s  2010 Statistical Review of World Energy released this month, coal now occupies a greater share of the world’s energy mix than at any point since 1970.

This doesn’t receive much attention in the U.S. because our coal market is essentially disconnected from global markets and the domestic trend is quite the opposite. But there is a reason my colleague calls the global energy era we are embarking upon the “renaissance of coal.” China, India, Indonesia, Korea, Taiwan, Malaysia, and most of the rest of Asia are predicating their growth on coal. Simply put, Peabody is absolutely correct. The only issue I would take with the Peabody release is that they don’t have the best positioned assets yet. They’re still working on it. While they have some Australian assets, Indonesia and South Africa are going to be two other key suppliers to the Asian coal boom.

In my view climate regimes that don’t address the coal issue — via addressing mitigation in developing world power sectors at a much larger scale than Kyoto ever accomplished — don’t have much hope from a mitigation perspective. And that is going to be really, really hard. Thus the game is looking more and more like adaptation. As we can see in China and India, they view development of a coal-based electricity infrastructure as essential to economic development…. Peabody is just the tip of the iceberg. We are going to be seeing reports like this for the next 20 years.


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