Excerpts only. For the complete essay, see the original at Global Public Media.

MuseLetter #179 (March, 2007), “Burning the Furniture” consisted of a summary of the conclusions of a recent study by the Energy Watch Group (EWG) on future global coal supplies. That study, “Coal: Resources and Future Production [PDF] ,” published on April 5, found that global coal production could peak in as few as 15 years. This astonishing conclusion was based on a careful analysis of recent reserves revisions for several nations.

The EWG report has enormous implications for climate change, global energy, and particularly for future electricity supply and steel production in the US and China. Previously, virtually everyone in the fields of energy policy and energy analysis—as well as nearly everyone involved in discussions about climate change—had assumed that the world’s coal endowment was so enormous that no limits would be encountered anytime this century. The EWG’s conclusions turn this assumption on its head.

So far, there is little indication that the study has received even a small fraction of the attention it deserves.

...Therefore any new analysis of global coal supplies, following on the heels of the EWG report, warrants considerable interest.

We have not had to wait long. “The Future of Coal,” a study by B. Kavalov and S. D. Peteves of the Institute for Energy (IFE), prepared for European Commission Joint Research Centre, is ready in final draft and will be published within days.

Unlike the EWG panel, Kavalov and Peteves did not attempt to forecast a peak in global production. Future supply is discussed in terms of the familiar but often misleading reserves-to-production (R/P) ratio. Nevertheless, the IFG’s conclusions are broadly supportive of the EWG report.

The three primary take-away conclusions from the new coal study are as follows:

• “World proven reserves (i.e. the reserves that are economically recoverable at current economic and operating conditions) of coal are decreasing fast….
• “The bulk of coal production and exports is getting concentrated within a few countries and market players, which creates the risk of market imperfections.
• “Coal production costs are steadily rising all over the world, due to the need to develop new fields, increasingly difficult geological conditions and additional infrastructure costs associated with the exploitation of new fields.”

Early in their paper the authors ask, “Will coal be a fuel of the future?” Their disturbing conclusion, many pages later, is that “The analysis in the preceding chapters indicates that coal might not be so abundant, widely available and reliable as an energy source in the future.” Along the way, they state “the world could run out of economically recoverable (at current economic and operating conditions) reserves of coal much earlier than widely anticipated.”

...As prices for coal rise, “the relative gap between coal prices and oil and gas prices will most likely narrow,” with the result that “the future world oil, gas and coal markets will most likely become increasingly inter-related and the energy market will tend to develop into a global market of hydrocarbons.”

The report’s authors indicate that these price increases may discourage the deployment of technologies to capture and bury the carbon from coal so as to reduce greenhouse gas emissions:

...In summary, we now have two authoritative studies reaching largely consistent conclusions with devastating implications for the global economy. Surely these studies deserve follow-up reviews of the data by the IEA and the DoE. If the EWG and IFE conclusions hold, the world will need to respond quickly and with an enormous shift of investment capital in the directions of energy conservation and of developing renewable sources of electricity.