Sun, Mar 09, 2008 - Page 17 News List

Coal The end is nigh

Oil production may soon 'peak,' but what about coal? Recent figures suggest global reserves may not be nearly as plentiful as the industry and governments have led us to believe

By David Strahan  /  THE GUARDIAN , LONDON

For weeks, South Africa has suffered rolling blackouts caused in part by a shortage of coal. Gripped by unusually bitter snowstorms, China recently banned coal exports for the next two months. And at Newcastle, Australia, the world's largest coal export terminal in the world's largest coal exporting country, the queue of carriers waiting to load has been known to stretch almost to Sydney, 150km to the south.

Coal, for so long the Cinderella of fossil fuels, is suddenly not just in demand but in desperately short supply. The world's biggest producers and exporters are struggling, and the price of imports to Europe has doubled to almost US$140 per tonne over the past year. "It's a global crunch," says John Howland, managing editor of the international coal industry magazine McCloskey's Coal Report.

The immediate reasons for the price spike are soaring demand, inadequate infrastructure and bad weather. But now there are also gnawing doubts that global coal production may, within the next few decades, face fundamental geological constraints, or "peak coal."

Ask most energy analysts how much coal we have left and the answer will be a variant on "plenty." The latest "official" statistics from the World Energy Council put global coal reserves at the end of 2006 at a staggering 847 billion tonnes. Since world coal production that year was just under 6 billion tonnes, the reserves-to-production (R/P) ratio - the theoretical number of years the reserves would last at the current rate of consumption - is well over 100 years.

It is commonly assumed, therefore, that there can be no shortage of coal this century. However, a clutch of recent reports suggest that coal reserves may be hugely inflated: A possibility that has profound implications for global energy supply and climate change.

A report published last year by the EU Institute of Energy pointed out that as demand for coal has soared since the turn of the century, with China famously opening one coal-fired power station per week, the world's reserves have fallen fast. The authors calculated that the R/P ratio had dropped by almost a third, from 277 years in 2000 to just 155 in 2005.

Mysteriously, this fall happened despite a sharp rise in the price of coal, which traditional economic theory suggests should increase the level of reserves by making it possible to exploit more marginal deposits. The report warned that "the world could run out of economically recoverable (at current economic and operating conditions) reserves of coal much earlier than widely anticipated." When the latest data, from 2006, was published last year, the R/P ratio had dropped again to just 144 years.

Energy Watch, a group of scientists led by the German renewable energy consultancy Ludwig Bolkow Systemtechnik, has drawn an even more alarming conclusion. In a report also published last year, the group argues that official coal reserves are likely to be biased on the high side. "As scientists, we were surprised to find that so-called proven reserves were anything but proven," says the report's lead author, Werner Zittel. "It is a clear sign that something is seriously wrong."

Energy Watch found that many countries' reserves figures had remained suspiciously unchanged for decades, China's since 1992, despite having mined 20 percent in the intervening years. But in those countries that had revised their figures, the changes were overwhelmingly negative. For instance, Britain, Germany and Botswana had cut their reserves by over 90 percent, more than could be accounted for by mining alone, suggesting these gloomier updates were based on improved data.

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