MuseLetter 198/October 2008 by Richard Heinberg

This month's issue is a compilation of several recent short writings. The last of these, a set of frequently asked questions about Peak Oil, is a work in progress that will appear in expanded form at www.postcarbon.org.

Lessons from the Soil

It's hard to learn much or do much about sustainability without getting your hands dirty.

True, global problems of resource depletion and climate change entail some high-level thinking. We need to understand some important numbers—350 parts per million of CO2 (the target necessary to avert catastrophic climate change), 5% production decline rate in existing oilfields (what must be overcome each year to forestall the inevitable peak of global oil output). We need skills in analysis and persuasion. Inevitably, all of this requires much time spent in front of computer screens.

However, while we attend to these technologies and abstractions, we are much more likely to succeed in our ultimate goal of building sustainable culture if we are also grounded in the most basic of activities—obtaining food directly from the Earth.

Reading has taught me a lot. Gardening has taught me as much or more. Often, these lessons tend to be ones that sound trite when put in words: Stay humble; Don't demand too much too fast; Notice the interconnections; Go slow, but always pay attention and be prepared for rapid-onset opportunities and problems. However, when you garden you don't just learn these lessons verbally and mentally. You learn them with your whole body.

Leaving food production entirely to others is the essence of full-time division of labor, the origin and vulnerable taproot of civilization. Only in agricultural civilizations has a rigid class system arisen in which the most important decisions are made by people who don't need to spend any of their time directly contemplating our human dependence on nature. Instead, the managers, accountants, soldiers, and religious functionaries of state societies tend to enclose themselves ever more completely in the language-based solipsistic social matrix that is the source of their power. They pay ever more attention to words, money, and technology; ever less to weather, birds, and insects. And this, ultimately, is why civilizations collapse: the people in charge simply don't notice that the ecological basis of their society is being undermined.

Sound familiar?

There are lots of good reasons to garden these days—given that food prices are soaring and the nutritional quality of supermarket food diminishes by the year. Those of us who are working on sustainability issues have even more reasons to plant and hoe. We must teach our neighbors the survival skills they will need as fossil fuels dribble away; we must set an example, and help create the gardening networks that will provide food for our communities during the hard times ahead.

But perhaps the best of all reasons to garden is simply our need to stay sane. I mean this in two ways. Yes, the garden is a refuge from a world that often seems to be flying apart. Turn off the television and pick up a trowel: you'll feel better. But more importantly, if we garden we are more likely to be psychologically balanced people capable of making sane choices. And the world needs people like that at the moment.

(From this month's edition of The Ecologist)

The Dress Rehearsal Is Over

As oil crosses $100 on its way south, not even a hurricane in the Gulf of Mexico and a statement from OPEC that the cartel will cut production by over 500,000 barrels per day seems capable of halting the bloodletting. In response, the Financial Post features an article (Sept. 11) titled ("Peak Oil peak,") quoting this writer out of context; compare this with my commentary, which was the source of the quote: Hurricane destroys oil infrastructure; oil price falls). Wasn't the price of oil supposed to rise endlessly? Wasn't the world supposed to end by now? What happened? What does it all mean?

First, why did the price of oil rise this summer to nearly $150? On this there is little agreement among the mavens. A new report by hedge fund managers Michael Masters and Adam White (released Sept. 10 by Sens. Byron Dorgan, D-N.D., and Maria Cantwell, D-Wash.) chalks it all up to speculation (Oil speculation blamed for rise in energy prices). Pension funds, college endowments, and other institutional investors bought heavily into commodity index funds earlier this year, and that sent the price of crude to the moon. Recently the same investors have taken their money out of oil futures, and this accounts for petroleum plunging back to earth. Move along, folks, nothing to see here.

But this directly contradicts the findings of an earlier study by the Commodity Futures Trading Commission (CFTC Report on High Oil Prices). That 100-page report concluded that the price run-up was all about supply and demand.

Confused yet?

Then there is the argument spinning through the rumor mill (sorry, no www attribution available on this one) that says the fall in oil prices since the end of July shows support by Wall Street for Republicans as the nation moves toward the November elections. After all, the reasoning goes, JP Morgan controls 40% of the puts and calls in the oil market; add Goldman Sachs and a few other big brokerage houses and there is the potential for manipulation of roughly half the total oil futures market. If gas prices are rising, the electorate will be more likely to want to throw the (Republican) bums out and demand Change™. Wall street likes the favors the Bush administration has doled out over the past few years and wants more of the same. Or so the story goes.

The more prosaic explanation for the price spike: oil demand was rising, supply wasn't, so the price went up. When the price got high enough, it (along with the credit crisis) caused the US (and world) economy to go into recession. That has seriously undercut demand for oil.

One thing we can be sure of: price matters; when the market speaks, people listen. During the weeks when petroleum was breaking a record nearly every day, there was unprecedented discussion of the Peak Oil concept in financial journals, both print and online. What's more significant, people started driving less. Hummers sat on car lots, unsold. Airline companies and auto manufacturers teetered on the verge of bankruptcy. In short, people woke up to the profound vulnerability implied by having based their economy, and by extension their very lives, on an impossibility—the extraction of a non-renewable resource at ever-increasing rates.

As the oil price fell, eyelids drooped.

But the price spike of early 2008 was merely a dress rehearsal. The fall in oil demand gives the world a moment to catch its breath before the inevitable price-ratcheting process starts up again. Meanwhile, at $100 or so, the price of oil is still 50 per cent higher than last year and 10 times the level of a decade ago.

When the next supply crunch comes, we could well see prices of $200, $250, or $300. But again, the rise won't be steady and unending; we will again see a spike followed by a plunge—this time maybe back to $150.

Meanwhile, will oil at $100 be an occasion for sleepwalking or strategic regrouping? For policy makers, this is a time to think clearly about long-term measures to reduce demand pro-actively and support the development of renewable energy sources. For citizens, it is an opportunity to make the effort to change habits, buy a smaller car, and get involved in community Peak Oil prep work. For those of us who have been involved in such work for several years, this is the hour to prepare for the inevitable tsunami, when journalists will call us day and night struggling to understand the concepts, and when city governments, businesses, and national politicians will plead for advice on how to cope. We'd better be ready.

The world has had an unmistakable wake-up call from the global oil alarm clock; merely to press the snooze button would waste what may be our last opportunity to act before necessity makes us react in ways that are less than optimal.

(published September 11 on www.postcarbon.org)

Interview with French monthly La Décroissance ("The Degrowth") on the occasion of the publication of The Party's Over in French ("La Fête est finie")

Q: "The party is over," but who was at the party?

In one sense, the "party" was attended primarily by the peoples of the industrialized world who benefited disproportionately from access to cheap fuel and all that it made possible. Americans and Europeans drove cars and shopped at supermarkets, while people in less industrialized countries often experienced a reduction in quality of life as a result of globalization, pollution, and the other consequences of cheap oil. In another sense, the "party" was a species-wide phenomenon, in that cheap fuel enabled an unprecedented expansion of population and resource extraction. So I suppose one could say that, while some were consuming the wine and caviar and others were serving it (and receiving slave wages), we all were involved in the party in one way or another and our fates are entwined with it.

Q: How was this book received in the US and why such a long time for a French translation?

The book was published in North America by an independent publisher, New Society. Within the independent publishing world, the book was a big success and created something of a phenomenon: I was invited to give at least 300 lectures plus dozens more radio and television interviews. I still receive emails almost daily from people who say that reading my book changed their entire view of the world. However, books published by small, independent presses typically receive almost no notice in mainstream journals, and so the vast majority of Americans have never heard of my book and have never seen its cover in a bookstore.

I have been happy to see translations in German, Italian, Arabic, Korean, Spanish, and now French. Of course, every author likes to see her or his work widely distributed around the world, but translation rights must be sought by publishers.

Q: Oil price has brought a beginning of change in habits, in the rich countries. Do you think that could...soften the shock?

Yes, to a certain extent. The first wave of oil price increases (which we have just seen) has had the effect of destroying considerable discretionary demand. People make fewer unnecessary car trips, for example. However, the next wave of price hikes will hit harder, because most of the easiest, cheapest, and fastest efficiency measures will already have been exhausted. Thus it is important that planning begin now for fundamental infrastructure changes to reduce oil demand on a broader scale. These changes--to our transport and food systems, primarily--will require time and investment. Without foresight and planning, the impacts of high oil prices will increasingly strike at the very foundations of our economy and way of life.

Q: Why the oil price did drop by 50 dollars? Is there a link with the Elections in US?

It is possible that the handlers of Wall Street investment funds specializing in oil futures trades favor the Republican party and therefore are seeking to lower the price of oil prior to the election. But I have no solid evidence for this and therefore only state it as a possibility. Most analysts agree that the main reason for the price collapse was a fall in world demand for oil, which has resulted from the economic turmoil caused by record high energy prices along with the unfolding credit and financial crisis. In the long run the end of cheap oil will have far deeper and more lasting effects than the unwinding of leveraged mortgage-backed derivatives, even though today the newspaper headlines are dominated by stories about bank failures. Unfortunately, however, over the short term the financial crisis will make it much harder to address the energy crisis due to the drying up of investment capital.

Don't Panic; Prepare!

The financial sky is falling. Hey, that's not my opinion; it's news straight from the front pages of the Wall Street Journal and New York Times. America's top mortgage companies and investment banks, and the world's biggest insurer have either already gone bankrupt or are in the process of doing so.

For someone who wrote a book titled "The Party's Over," this might seem like a propitious moment to shock readers into greater depths of fear and apprehension. After all, we're only witnessing the doom of the financial world now; we have yet to see the collapse of the transport and food infrastructure, which is merely fluttering at the moment as the result of high oil prices. When the inevitable and imminent decline in world oil production really starts to bite, the support structure of normalcy will truly come unglued.

Okay, so let's all have a good scream now: AAAAAIIIEEEEEEGGGGGHHHHHHH!!!!!!!

Good. Now that that's out of our systems, let's reflect. Panic helps no one. We have a diminishing amount of time in which to work within a system that still has some semblance of stability. We should take advantage of every remaining moment. Now is the time for careful, methodical action. Chances are, the scaffolding will not come crashing down at once; this will be an extended process lasting many years, perhaps even decades (if John Michael Greer is right in his new book, "The Long Descent"). Nevertheless, certain things will almost certainly become more difficult as "normal life" becomes a fading memory.

Calmly explain to family and friends what's happening (too many people using too much too fast, inevitable depletion of resources, and economic consequences of same) and urge them to take the situation seriously and start reducing their exposure (Garden! Home energy audit! Bicycle! Smaller car!). Get your money out of risky banks and investments and put it to work in your local community (go to www.solari.com for advice in this regard). If you haven't done so already, get to know your neighbors and make connections with others in your community who have similar concerns.

When we're panicked, we tend to think only of our own immediate safety. But now is the time to be thinking of community resilience—because that's what our long-term prospects really depend on.

Of the well-to-do, in particular, few were gravely disturbed in 1930. Many of them had been grievously hurt in the Panic, but they had tried to laugh off their losses, to grin at the jokes about brokers and speculators which were going the rounds. As 1930 wore on, they were aware of the depression chiefly as something that made business slow and uncertain and did terrible things to the prices of securities. To business men in "Middletown," a representative small mid-Western city, until 1932 "the Depression was mainly something they read about in the newspapers"--despite the fact that by 1930 every fourth factory worker in the city had lost his job... When the substantial and well-informed citizens who belonged to the National Economic League were polled in January, 1930, as to what they considered the "paramount problems of the United States of 1930," their vote put the following problems at the head of the list: 1. Administration of Justice; 2. Prohibition; 3. Lawlessness, Disrespect for Law; 4. Crime; 5. Law Enforcement; 6. World Peace—and they put Unemployment down in eighteenth place.

—Frederick Lewis Allen, Since Yesterday

A Few Peak Oil FAQs

1. People have forecast the end of oil many times before. They were wrong every time. Why should anyone take Peak Oil theorists seriously now?

Supply problems with oil are inevitable eventually, since petroleum is a non-renewable, depleting resource. All experts, if pressed, acknowledge that world oil production will reach a peak and decline. Therefore Peak Oil is only a question of when, not if.

So it is perfectly reasonable to investigate the question of when supply problems are likely to appear. Indeed, it would be foolish not to do so.

Like every scientific investigation, the study of oil depletion is typified by a learning curve. In the early days of the oil industry, the data were sketchy and the methods of gathering and analyzing it were—well, crude. As time passed, the analytical tools became more sophisticated and the data pool more robust. Early speculation about oil depletion that was made prior to the 1950s occurred during a period when world discoveries of oil were still increasing. An accurate global peaking forecast was simply not possible then.

M. King Hubbert, perhaps the greatest geophysicist of the last century, did pioneering work in helping elucidate the process of oilfield depletion, and in 1956 correctly forecast that the peak of US oil production would occur around 1970. This was possible largely because US oil discoveries had been declining since 1930 and the US was further along the depletion curve than the world as a whole.

Depletion studies have advanced considerably since Hubbert made that fateful forecast. Moreover, we now have decades more data for exploration, production, and depletion on which to base analysis and forecasts. World oil discoveries have generally declined since 1964, and the average size of oilfields discovered has also declined.

Therefore there is every reason to assume more accuracy for a global oil depletion analysis produced today than, say, an assertion made in 1900 that oil would run out by 1920. Such early pronouncements typically just extrapolated depletion and production declines from existing oilfields without factoring in future discoveries. Today's depletion analysis not only factors in discovery trends, but also the contribution of new technologies for exploration and production.

Modified Hubbert analysis successfully predicted oil production peaks not just for the US, but for Britain, Norway, Mexico, Oman, Russia, and other producing countries. Meanwhile, official agencies like the US Department of Energy and the International Energy Agency, which do not employ any version of Hubbert analysis, failed to forecast these peaks and declines. If past success is a criterion, Hubbert analysis is a winner.

However, some depletion analysts base their peaking forecasts not on Hubbert analysis, but on a painstaking process of adding up scores of individual production projects and their likely contributions and start-up dates, and then subtracting production that will be lost year-by-year due to declines from existing fields. Tellingly, these "bottom-up" analysts forecast dates for the world oil production peak that are very close to those forecast by Hubbert analysts—most forecasts from both camps falling within the period from 2008 to 2013.

In short, the "They were wrong then, so they must be wrong now" platitude is illogical and misleading. But that won't stop yet another oil booster from trotting it out yet again tomorrow, or the day after, or the day after.

Prepare to cringe.

2. I've heard that oil is constantly being created in the Earth's crust, that it's not made out of dead dinosaurs, and that Peak Oil is a scam. Is there truth to these statements?

There is indeed a theory that oil is abiotic—that is, that it is constantly being replenished from deep within the Earth and is either primordial (left over from the early period of planetary formation) or continually generated by geochemical processes; either way, it was not created through the decomposition of ancient algae blooms (no scientist, by the way, thinks oil comes from dead dinosaurs).

This theory is held by a tiny percentage of the world's petroleum geologists, most of whom happen to be Russian (there is some history behind this factoid, which relates to how scientific research was politicized during the days of the USSR). Even in Russia, however, most geologists adhere to the mainstream view about how oil was formed.

The bottom line: the abiotic theory may have the potential to explain the existence of hydrocarbons in a few rare instances, but the conventional biotic theory has held up extremely well as a basis for oil exploration and is supported by abundant evidence. All commercially significant accumulations of oil are associated with sedimentary rocks. And the oil can be traced via "biomarkers" back to the organisms from which it originated. Even if some methane being vented from oceanic ridges turns out to have an abiotic origin, this is likely to have little to no commercial implications. The world's oil and gas fields continue to deplete, and simply drilling deeper isn't likely to accomplish much. For a longer discussion, see Richard Heinberg on Abiotic Oil, Did you hear that Alaska has more oil than the Middle East?.

3. Isn't Peak Oil just a conspiracy by the oil companies to boost profits? Journalist Greg Palast says so in his book Armed Madhouse.

It would take many paragraphs to thoroughly debunk this notion, and even then doubts would linger. After all, the oil companies have a track record of distorting and manipulating the public discussion going all the way back to the early days of John D. Rockefeller's Standard Oil.

The short reply: It's a different situation now; 90 percent of the world's oil production is under the control of national oil companies like Saudi Aramco in Saudi Arabia, or Pemex in Mexico—not independent companies like ExxonMobil. Taken together, these national and independent companies are so competitive and have so little in common—and hold so many secrets from one another—that it is highly improbable that they could successfully collaborate in a conspiracy to force up the world oil price. Where's the actual evidence that they have done this? On the other side, there is abundant publicly available evidence that most of these producers are struggling to keep production up.

For a longer reply—which is directed specifically to Greg Palast's conspiracy allegations—see An Open Letter to Greg Palast on Peak Oil

4. Could Peak Oil be a conspiracy on the part of OPEC, then, to raise prices?

OPEC controls about 43 percent of world oil production, 40 percent of exports. It is true that OPEC countries have the ability to raise prices be cutting production, and there have been historical instances where the organization has indeed done this.

One might wonder, then, why OPEC doesn't just force the price up to $200 or $300 a barrel—after all, its member nations rely primarily on oil sales for government income, so there would appear to be every motive for them to maximize their profits.

Working against this motive, however, is the realization—which has been a long-held belief within the organization—that prices should not be too high, or several undesirable consequences will ensue. First, high oil prices are likely to trigger a global recession, which would undercut demand for petroleum. Further, if powerful oil importing nations were to perceive OPEC's profit maximization as a direct economic threat, this could lead to forceful efforts—covert or otherwise—to destabilize OPEC nations, many of which are highly vulnerable to this sort of persuasion. Finally, OPEC economists have for many years held that if oil prices are too high for too long, this will force fundamental economic shifts in petroleum consuming economies: electric cars will appear on the market in large numbers, commuters will ride public transit, and so on.

This raises the question: was the oil price spike of 2006 to 2008 engineered by OPEC, or did OPEC merely benefit from it? Clearly, oil exporting nations benefited financially from rising oil prices. Indeed, as the price rose past historic benchmarks without visible calamitous effects on the world economy, OPEC members were jubilant. Once the price surpassed $100 a barrel and began approaching $150, however, it became clear that the world was in fact experiencing severe economic impacts, and that a shift toward electric cars and other oil conservation measures had been provoked. At this point prices began to fall.

All of this might seem to be good circumstantial evidence for an OPEC plot—except for two things: there is no evidence for collusion to raise prices, and the oil price spike can be explained without recourse to conspiracy.

During the three years from 2005 through mid-2008, OPEC members, rather than sitting on large surplus production capacity, were pumping oil at virtually maximum rates. Everyone expects OPEC to maintain some surplus capacity—that is one of the cartel's main ostensible functions in the world oil market. But during the three years in question, that surplus capacity amounted (according to most authoritative analysts) to no more than 1.5 million barrels per day—a historically small amount. This fact helped push prices up.

It could be objected that OPEC members have failed to invest sufficiently in recent years in exploration, new technology, and the drilling out of existing oilfields. However, in fact investments have in many cases been large—even unprecedented—by historic standards. The problem is that OPEC members' giant and supergiant fields are aging, so in order to maintain production growth much greater increments of investment are required now than in the past.

Should OPEC be vilified for failure to satisfy the world's gluttonous demand for ever larger quantities of a non-renewable, depleting resource? The answer, of course, depends on one's point of view. But it is perhaps not so difficult to put oneself in the shoes of OPEC member states and imagine why a negative answer to the question might make sense from their perspective.

5. An author named Lindsey Williams says there was a humongous oil discovery on a place called Gull Island near Alaska back in the 1970s, and the oil companies (under orders from the government) just capped the wells to keep oil prices from collapsing, bankrupting the oil companies. How do you know Williams isn't right?

Williams's claims have been investigated and found to be worthless. You can find the whole story at The facts have not slowed the legend of Gull Island oil

Here's a quote from that article:

Three wells were drilled from Gull Island. The drilling results were initially closely held, but now the well data are public.

The first two wells were drilled in 1976 and 1977.

In a response to Stump's 1981 letter, Alaska Oil and Gas Commissioner Harry Kugler said Gull Island No. 1 well tested 1,144 barrels of oil per day from one underground reservoir, while the Gull Island No. 2 well tested 2,971 barrels of oil per day from other.

"We do not believe the evidence from these two wells indicates a massive new oil find," Kugler said. More wells would need to be drilled before deciding if it made sense to develop the reservoirs, he said. The third well was drilled in 1992.

Geologist Peter Barker was among those monitoring and interpreting Gull Island No. 1 as it was drilled in 1976. The objective was to test a deep structure north of the huge Prudhoe Bay field, the first North Slope field developed, Barker said recently.

"There was an (oil and gas) trap there, but there wasn't an economic quantity of oil," he said.

Ken Bird, of the U.S. Geological Survey and an expert on North Slope geology, recently provided some perspective on the Gull Island drilling.

Since 1980 at least four oil pools, the West Beach, Niakuk, Point McIntyre and North Prudhoe pools, as well as Prudhoe Bay satellites, have been developed in the area immediately around the Gull Island wells, Bird said. The four pools in the immediate Gull Island area are in production: According to Alaska's Division of Oil and Gas 2007 annual report, Point McIntyre had a cumulative production of 396 million barrels of oil at the end of 2006, with 164 million barrels of remaining reserves. The other three pools are much smaller than Point McIntyre. That compares with Prudhoe Bay's 11.4 billion barrels of oil already produced and Kuparuk River field's 2.1 billion barrels.

"Both the geologic evidence and the small area not yet developed into oil fields around the Gull Island wells preclude the possibility of a giant oil accumulation," Bird said.

You can find more at Did you hear that Alaska has more oil than the Middle East?

For coal, the future of both extraction and consumption depends on new technology. If successfully deployed, innovative technologies could enable the use of coal that is unminable by gasifying it underground; reduce coal's carbon emissions; or allow coal to take the place of natural gas or petroleum. Without them, coal simply may not have much of a future. Are these technologies close to development? Are they economical? Will they work?

The technologies discussed in this chapter go by some rather unwieldy names, and so we shall call them by their customary acronyms: Coal-to-Liquids (CTL), Underground Coal Gasification (UCG), Integrated Gasification Combined Cycle (IGCC), and Carbon Capture and Storage (CCS).

Many energy experts believe that these technologies may largely define the world's energy path for the next few decades.

Integrated Gasification Combined Cycle (IGCC)

Among these technologies, gasification of coal is a recurring theme. Once coal is reduced to a gas, the gas can be burned to turn a turbine to generate electricity, or it can be made into a liquid fuel, chemicals, or fertilizers. Carbon can be stripped from the gas and buried, thus reducing the climate impact from burning coal.

In most instances (with the exception of underground gasification, or UCG), gasification is accomplished in—of all things—a gasifier, into which coal, water, and air are fed. Heat and pressure reduce the coal to "synthesis gas" or "syngas"—a mixture of carbon monoxide and hydrogen, along with solid waste byproducts consisting of ash and slag, which can be used in making concrete or roadbeds.

The hot syngas must then be cleansed of contaminants including hydrogen sulfide, ammonia, mercury, and particulates) via heat exchangers, particulate filters, and quench chambers, which also cool the syngas to room temperature. A bed of charcoal captures over 90 percent of the syngas mercury (used charcoal is sent to a hazardous-waste landfill). Finally, sulfur impurities are separated out in acid gas removal units, which produce sulfuric acid or elemental sulfur that can be sold as byproducts.

An IGCC power plant then uses the syngas the way most coal is already used—to make electricity. The plant is called "Integrated" because syngas is produced in the plant itself, in a way that optimizes the product for its intended purpose. The "Combined Cycle" in the name refers to the use of gas in a turbine generator whose waste heat is passed to a steam turbine system. This way the energy of the syngas is used as fully and efficiently as possible.

Efficiency is important not only for its own sake (energy efficiency is almost always a good idea), but also because it is necessary from a cost standpoint: gasifying the coal is expensive, so if IGCC electricity is to be cost-competitive, savings must come from efficiency advantages elsewhere in the process. (It is also possible to capture waste heat from a conventional coal power plant; this is often done simply by piping hot air to commercial and residential buildings. The process, whether it uses coal or some other fuel, is called "cogeneration," or "combined heat and power," or CHP.)

The advantages of IGCC over conventional coal power plants include greater thermal efficiency (IGCC power plants use less coal and produce much lower emissions of carbon dioxide and other pollutants than conventional power plants) plus product flexibility: coal gasification enables the production of not only electricity, but a range of chemicals and by-products for industrial use (including transport fuels—see CTL below). IGCC is sometimes mentioned as a pathway to a hydrogen-centered economy, since syngas is a source of hydrogen. Last but hardly least, carbon capture and storage will be much easier and cheaper in IGCC plants than in regular coal power plants.

As of 2008 there are only two IGCC plants operating in the US, following the closure of one of the three demonstration plants constructed in the 1990s with the help of the Department of Energy Clean Coal Demonstration Project (Wabash River Power Station in West Terre Haute, Indiana; Polk Power Station in Tampa, Florida; and Pinon Pine in Reno, Nevada). The Reno demonstration project failed when researchers found that then-current IGCC technology would not work at more than 300 feet (100 meters) above sea level.

These first-generation IGCC plants generated less air pollution than regular coal power stations, but polluted water to a greater degree.

New-generation IGCC power plants in the US are in the planning and approval process and are being developed by Excelsior Energy, AEP, Duke Energy, and Southern Company. If successfully completed, these are expected to come online between 2012 and 2020.

The principal drawback of IGCC technology is its high cost. The US Department of Energy has estimated a cost of $1491 per kilowatt of installed capacity in 2005 dollars for an IGCC plant, versus $1290 for a conventional pulverized coal station. (Electricity Market Module) However, the example of Excelsior Energy's Mesaba project (an IGCC plant in northern Minnesota slated to begin operation in 2012) suggests that a realistic figure might be in excess of $3,600 per kW. Operating costs are also high, likely to be up to double those of a conventional coal plant even without CCS technology being added on. Further, the Minnestota Department of Commerce has concluded that the pollution profile of the proposed Mesaba plant would not be substantially better than that of a standard coal power plant. (Testimony of Dr. Elion Amit, Minnesota Dept. of Commerce.) An analysis of the proposal for an IGCC plant in Delaware by Delmarva and a state consultant arrived at essentially the same conclusions.

The high-cost hurdle is perhaps reflected in the recent US Government revocation of support for its FutureGen low emissions coal gasification project, developed as a public-private partnership between the US Department of Energy and a non-profit consortium of 12 American and international energy companies. The proposed IGCC plant site at Mattoon, Illinois, had been selected after a hard-fought battle with two sites in Texas and another in Illinois.

Other countries have had somewhat better experiences with the technology. The 250 MW Buggenum plant in the Netherlands currently uses about 30 percent biomass feedstock as a supplement to coal (the Dutch government pays the plant's owner, NUON, an incentive fee to use the biomass). NUON is currently building another 1300 MW IGCC plant that will be commissioned in 2011. (www.nuon.com) Other refinery-based IGCC plants are operating in Puertollano, Spain (operated by Elcogas, startup in 1998) and Vresova in the Czech Republic (operated by Sokolovska Uhelna, startup in 1996); as well as several in Italy and Germany, and one in Portugal. More European IGCC power plants are being planned by Centrica in the UK, and by E.ON and RWE in Germany.

Japan has been operating an IGCC pilot plant since the early 1990s and commissioned a new demonstration plant in Nakaso in 2007.

While the high cost of IGCC is the biggest obstacle to its wider adoption, most energy executives recognize that carbon regulation is coming soon. Adding carbon capture, the cost of electricity from an IGCC plant would increase approximately 30 percent—slightly less of a percentage than for a natural gas plant and less than half the price increase for a pulverized coal power plant. This potential for cheaper carbon capture leads many analysts to view IGCC as an attractive choice to keep coal cost-competitive in a carbon-regulated world.

Nevertheless, there is no getting around the fact that the price of IGCC electricity is higher than electricity from a conventional coal plant, and adding carbon capture will increase that price still further. The future of IGCC hinges on these questions: Which will be a bigger issue, affordability of energy or carbon neutrality? Will carbon capture work as planned? Will it be scaleable? And when will it be ready for wide deployment? If energy affordability turns out to be society's more important concern, or if CCS technology cannot developed successfully and soon, the case for IGCC falls apart.

Coal to Liquids (CTL)

In the last few years, as world oil prices have gyrated upward to the point of seriously imperiling the world economy, farmers, truckers, airlines, and ordinary commuters have all felt the effects. The world's transport infrastructure is 95 percent dependent on liquid fuels; with time and investment, gasoline-powered cars can be replaced with electric vehicles, but for air travel, trucking, and shipping there are currently no large-scale alternatives to petroleum-based fuels.

One possible solution would be to turn coal into a synthetic liquid fuel to replace petroleum. Coal, after all, is still cheap and abundant, and the technology for liquefying it already exists.

The basic process for CTL was developed at the beginning of the 20^th century and was used by Germany during World War II, when the Allies cut off access to petroleum imports. At its peak output period in 1944, Germany produced about 125,000 barrels of synthetic fuel daily from 25 CTL plants, meeting 90 percent of the nation's needs. South Africa's apartheid regime revived the process during the 1980s, when trade embargoes made oil scarce for that nation. The South African company Sasol is currently the world's only commercial producer of liquid fuels from coal, making about 150,000 barrels per day.

The fact that CTL has been developed for use only twice, and both times in a situation where access to regular petroleum had been cut off, suggests that the economics are unfavorable. An April 2008 article in Oil and Gas Journal ("GTL, CTL Finding Roles in Global Energy Supply") noted that, based on Sasol's experience, it currently costs about $67 to $82 to make a barrel of CTL fuel, depending on coal and water prices. Given that oil prices are now far above that range, the growth of interest in CTL is predictable. But building coal liquefaction plants is also costly—about $25,000 per barrel of installed production capacity as of 2005 according to the National Academies, though projects currently under construction appear to be aiming to spend up to $120,000 per barrel of capacity. (Producing Liquid Fuels from Coal; but compare this to American Clean Coal Fuels's investment of $3.6 billion in a plant designed produce only 30,000 barrels per day Liquefied-coal industry gains energy)

Often, discussions about the economics of CTL turn on the question, How high does the oil price have to rise in order to CTL to be competitive? Back in 2006, one source calculated that CTL could compete with $40 oil (The World's Biggest Investors Moving into CTL). But since then, as oil prices have surpassed that level, rising infrastructure costs have marked up the estimated price tag for producing CTL fuels. This ratcheting effect will likely continue: as the price of oil goes up, the cost of building and running CTL plants will rise as well. Ongoing hikes in the price of coal must be factored in additionally. Altogether, then, the cost-competitiveness of CTL cannot be defined by a couple of static numbers; the break-even price is a moving target—and usually it moves the wrong way to make this technology attractive.

From an energy standpoint, the process only makes sense if liquid fuels are at a premium for qualities other than their energy content, because coal turned into electricity at high efficiency will power electric vehicles three times as far as liquid fuel made from an equivalent amount of coal will push a combustion-engined vehicle.

Since large or swift electric aircraft are impracticable, the aviation industry (including military aviation) will need liquid fuels even after those fuels' prices have risen far above those of other energy sources on a per-BTU basis, so this is likely a long-term market for CTL fuels.

Two different CTL technologies are being considered. The process used by the Nazis and by Sasol is called indirect CTL; it entails gasifying the coal at high pressure and temperature, then using the Fischer-Tropsch process to synthesize a liquid fuel from the syngas. This first process is sometimes also known as "coal gas-to-liquids" or "coal GTL." Shenhua in China is working on a different process, direct CTL, that bypasses the gasification stage.

One drawback for both processes is the fact that CTL will entail carbon emissions. In the case of indirect CTL, much of the carbon in the coal could be captured at the gasification stage and then sequestered, though this would add significantly to the already high cost of the finished fuel. However, even if this were done, CO2 would still be emitted when the liquid fuel is burned.

A 2007 GAO study on Peak Oil (www.gao.gov) identified significant problems with CTL:

This fuel is commercially produced outside the United States, but none of the production facilities are considered profitable. DOE reported that high capital investments—both in money and time—deter the commercial development of coal GTL in the United States. Specifically, DOE estimates that construction of a coal GTL conversion plant could cost up to $3.5 billion and would require at least 5 to 6 years to construct. Furthermore, potential investors are deterred from this investment because of the risks associated with the lengthy, uncertain, and costly regulatory process required to build such a facility. An expert at DOE also expressed concern that the infrastructure required to produce or transport coal may be insufficient. For example, the rail network for transporting western coal is already operating at full capacity and, owing to safety and environmental concerns there is significant uncertainty about the feasibility of expanding the production capabilities of eastern coal mines.

China stands poised to invest in CTL technology soonest and on the largest scale. (see chapter on Coal in China). In Canada, Alter NRG Corp. has proposed a CTL project that will use the company's coal reserves in the Fox Creek Area of Alberta as a feedstock to produce synthetic diesel fuel and naphtha. The project, with a targeted production capacity of 40,000 barrels per day, will require an investment of approximately C$4.5 billion. Alter NRG Proposing Canada’s First Coal-to-Liquids Project

In the US, the Air Force is offering a pilot site for a CTL project at a base in Montana. Funding will come from the private sector, but the Air Force will guarantee purchase of the fuel at a price that guarantees a profit. The Defense Department is working on plans to eventually fuel much of the Air Force fleet with a mixture of CTL fuel and traditional kerosene, and has already tested several planes on synthetic fuels. Each CTL refinery will cost about as much as an aircraft carrier, and use about as much steel for its construction.

In addition, CONSOL corporation is planning a CTL plant in West Virginia, with startup slated for 2012. The goal is to annually produce 720,000 metric tonnes of methanol that can be used as feedstock for the chemical industry, as well as about 100 million gallons of liquid vehicle fuel (or about 7,000 barrels per day). DKRW, founded by four former employees of Enron, is developing a liquefied coal plant near Medicine Bow, Wyo., with a planned startup date of 2013. And American Clean Coal Fuels is investing $3.6 billion in a plant in Oakland, Ill., with plans to produce 30,000 barrels of fuel per day and a startup in 2012 or 2013.

Currently, while development of CTL enjoys bipartisan political support in the US, European countries are slower to endorse the technology because of its climate implications.

Underground Coal Gasification (UCG)

UCG offers an alternative to conventional coal mining for some resources that are otherwise not commercially viable to extract. The basic process consists of drilling one well into the coal for the injection of air or oxygen, and another to bring the resulting gas to surface, and then initiating underground combustion. Often the natural permeability of the coal is too low to allow the gas to pass through it, and various methods must be used to fracture the coal. A recent variation on the method involves drilling dedicated inseam boreholes and a moveable injection point, using technology adapted from the oil and gas industry.

Once the gas has been withdrawn, it can be purified and used to produce chemicals or liquid motor fuels, or to generate electricity.

In 1868, Sir William Siemens was the first to propose gasifying waste and unminable coal in place, without having first to extract it from mines. An initial experiment along these lines began in Co. Durham (UK) in 1912; however, work was left incomplete at the commencement of World War I and no further UCG efforts were undertaken in Western Europe until after World War II.

Meanwhile, however, the USSR began UCG research in the 1930s, leading to industrial-scale implementation in the 1950s and '60s at several coal sites. Soviet interest in the technology subsequently declined after the discovery of extensive and cheap natural gas resources; today only one site in Uzbekistan is still operational.

Renewed European interest in UCG emerged between the years 1944 and 1959 due to energy shortages. Research focused on gasification of coal in thin seams and at shallow depth. Though an attempt was made to develop a commercial pilot plant in Newman Spinney in the UK in 1958, all European UCG work stopped during the 1960s due to falling energy prices.

The US started an experimental UCG program in 1972, building on Russian experience, and European interest was rekindled in 1989 when the European Working Group on UCG recommended a series of trials to evaluate commercial feasibility. The trials took place in Spain, the UK, and Belgium, with mixed results.

More recently, Australia conducted a trial lasting from 1999 to 2003, and has plans for a commercial startup in the immediate future; and China initiated several UCG trials, of which 16 are ongoing.

Some highly inflated claims have been made regarding the potential of this technology to turn a large proportion of coal resources into reserves. However, the reality is that UCG is only practical if coal seams possess special properties. They must be between 300 and 1900 feet (100 and 600 meters) underground (preferably more than 1000 feet), with a seam thickness of more than 15 feet (5 meters). There must be minimal discontinuities in the seam, and no good water aquifers close by. The coal itself must have ash content less than 60 percent. Altogether, this description applies to only a small portion of the world's coal reserves. The World Energy Council estimates that UCG will increase economically recoverable reserves by only 600 million tons, adding to the current world total of 847,488 million tons of official booked reserves (WEC 2007).

Thus while UCG projects are expanding and the technology is headed for wider deployment, it is unlikely to dramatically increase the amount of coal that can be extracted and used worldwide.

Carbon Capture and Storage (CCS)

The world demands growing quantities of energy, and developing countries especially need cheap energy. At the same time, the world faces a climate Armageddon due in great part to the effects from the burning of our cheapest and most abundant fossil energy resource, coal. To many energy experts there seems to be only one way out of this impasse: capture the carbon from coal and bury it, while continuing to benefit from coal's cheap, abundant energy.

For the coal industry, which is concerned that coal is being cast as the major climate villain, this is a way to make their product look ecologically acceptable. For mainstream environmental organizations, CCS offers a strategy to reduce climate impacts without having to call for painful reductions in coal consumption and thus in all likelihood a reduction in both total energy use and economic growth—a politically untenable position. The Intergovernmental Panel on Climate Change (IPCC) is also supportive, suggesting that CCS could someday provide up to 55 percent of the emissions reduction needed to avoid the worst effects of global warming.

With endorsement from both the coal industry and climate scientists, there is little wonder that CCS is being embraced by policy makers. Wealthier countries (the US, Australia, Europe, Japan) are committed to advancing the technology with public funds, with the hope that as CCS gets cheaper with frequent application, it will become affordable by poorer countries like India and China. In early 2008, the Group of Eight (G-8) energy ministers, meeting in Japan, called for the launch of 20 large-scale CCS demonstration projects globally by 2010.

There are three different types of CCS technologies in development: Post-combustion, pre-combustion, and oxyfuel combustion.

In post-combustion, the CO2 is removed after coal is burned in conventional power plants. The technology is well understood but expensive to deploy.

In pre-combustion, the coal is partially oxidized in a gasifier (see IGCC, above); then the resulting syngas, consisting of carbon monoxide (CO) and hydrogen (H2), is transformed into carbon dioxide (CO2) and H2. The CO2 can be captured relatively easily prior to the combustion of the H2—which can also be used for industrial processes or to fuel transportation.

In Oxy-fuel combustion, coal is burned in oxygen instead of air. To limit flame temperatures to the levels of conventional combustion, cooled flue gas (consisting of CO2 and water vapor) is re-circulated and injected into the combustion chamber. The water vapor is collected via condensation, leaving an almost pure stream of CO2 to be collected, transported, and stored. This method results in the highest percentage of carbon being captured from the fuel; however, the initial step of separating oxygen from air requires considerable energy, and so final electricity costs from such a system are likely to be high. A different version of this method, called chemical looping combustion (CLC), is currently being researched. It uses metal oxide particles as an oxygen carrier; these react with coal to make CO2 and water vapor before being circulated to a second stage where they react with air, producing heat and regenerated metal oxide particles.

After CO2 is captured, it must be transported to suitable storage sites. This will almost certainly be accomplished via pipeline. There are already approximately 4,000 miles (5,800 km) of CO2 pipelines in the United States currently being used to carry carbon dioxide to oilfields where it is injected to force oil toward boreholes to maintain production levels when natural pressure wanes. However, the market for CO2 is limited and is destined to shrink in coming decades as depletion gradually forces the oil industry into retirement. Moreover, in the meantime, the burning of additional oil derived from CO2-enhanced recovery methods will offset much or all of the reduction in CO2 emissions that is achieved at the power plant, so this method of storage will not help much with climate mitigation efforts.

If and when carbon is captured on a large scale, power producers will have to pay for both CO2 transport and storage. Transport will require the construction of thousands of miles of pipelines, and storage will require drilling and other infrastructure investments.

The main forms of permanent storage for captured CO2 currently under discussion include gaseous storage in various deep geological formations (including saline formations and exhausted gas fields), liquid storage in the ocean, and solid storage by reaction of CO2 with metal oxides to produce stable carbonates.

Geological storage, also known as geo-sequestration, involves injecting carbon dioxide directly into oilfields, gasfields, saline formations, unminable coal seams, and saline-filled basalt formations. Several pilot programs are testing the long-term storage of CO2 in non-oil producing geologic formations.

Unminable coal seams can be used to store CO2, which adsorbs to the surface of coal; however, only coal beds with adequate permeability will work for this purpose. There is a potential side benefit: as CO2 is absorbed, coal releases previously absorbed methane, which can be recovered and sold to offset a portion of the cost of the CO2 storage (however, methane burned or released into the atmosphere means added carbon emissions).

Saline formations containing highly mineralized brines have been used for storage of chemical waste in a few cases. These have a large potential storage volume and are commonly found, so the distances over which CO2 would have to be transported could be minimized. However, relatively little is known about these formations on an individual basis, so each would have to be explored and evaluated, adding to costs.

Ocean storage could be accomplished by "dissolution"—injecting CO2 by ship or pipeline to depths of 1000 meters or more, where the CO2 would subsequently dissolve; by "lake" deposition, where CO2 would be deposited directly onto the sea floor at depths greater than 3000 m, where CO2 is denser than water and would form a "lake" that presumably would remain stable for a long time; by conversion of CO2 to bicarbonates (using limestone); or by storing the CO2 in solid clathrates (also known as methane hydrates) already existing on the ocean floor. The environmental impacts of oceanic storage are likely to be negative (the oceans are already suffering from acidification as a result of elevated atmospheric CO2 levels), but not enough experiments have been performed on a large enough scale to indicate just how bad those impacts would be.

Mineral storage, by reacting naturally occurring magnesium and calcium containing minerals with CO2 to form carbonates would produce a stable material. The raw materials are abundant. However, the process is slow under ambient temperatures and pressures; speeding up the process would require large energy inputs.

Will sequestered CO2 leak back into the environment, and at what rate? The IPCC has assessed the risks, and concludes that for well-selected, -designed, and -managed geological storage sites, 99 percent of CO2 would likely be retained for over 1000 years. With ocean storage, CO2 retention would depend on depth, with 30–85 percent retained after 500 years for depths 1000–3000 meters. Mineral storage would not pose any leakage risks. However, liability issues regarding leaked CO2 are already being explored, with Texas leading the way having passed a bill assuming state liability and asserting the doctrine of sovereign immunity (in effect, no carbon leakage lawsuit in Texas could ever be litigated).

The biggest problems with implementing CCS are the added cost for electricity production, the long lead-time for widespread application of the technology, and the sheer scale of the undertaking.

Capturing and storing carbon will require up-front investment in new infrastructure (including pipelines), and it will also increase operating costs at power plants. These higher costs will inevitably be passed along via high electricity rates. The GAO predicts that electricity from pre-combustion clean coal plants will cost up to 78 percent more than electricity from conventional coal plants, not counting carbon pricing. Adding CCS technology to existing plants (post-combustion) would be still more expensive.

This added financial cost conceals an arguably even more important energy cost from CCS: capturing, moving, and storing CO2 will require energy, making the process of producing electricity from coal less energy-efficient, even as the energy content of coal being mined is declining. For example, the IPCC estimates that a power plant using mineral storage would need 60 to 180 percent more energy than a power plant without CCS; thus, if this storage strategy were adopted, consumption of coal would need to more than double (in all likelihood) in order for society to realize an equivalent energy benefit.

According to a December 2006 GAO report, "[the Department of Energy] and industry have not demonstrated the technological feasibility of the long-term storage of carbon dioxide captured by a large-scale, coal-based power plant," and the DOE doesn't expect to have demonstrated the feasibility for at least a decade. While several CCS research sites are likely to be operating within a few years, widespread commercial application of the technology is not likely until 2035 at the earliest (in US Senate testimony, Dr. Mark Myers, head of the US Geological Survey, forecast that widespread use of CCS could be possible "in the 2045 timeframe)". Richard Bell : Wanna Bet the Farm on Carbon Capture and Sequestration? By this time, US and world coal production will be headed downhill (assuming the EWG analysis is correct). Thus society will be burdened simultaneously with four new interlinked costs and risks with regard to coal:

• The need for substantial investment in new CCS technology,
• Higher coal prices and shortages due to depletion,
• Higher electricity generating costs due to the use of IGCC and CCS, and
• Lower electricity generation efficiencies due to the use of CCS, requiring more coal to produce an equivalent amount of electricity.

On top of these economic and energy concerns there is the practical matter of the sheer scale of the enterprise being proposed. The amount of CO2 that would have to be moved is staggering.

Total world annual carbon dioxide production from the consumption and flaring of fossil fuels amounted to 28.2 billion metric tonnes in 2005. Of this, about 40 percent or 11.4 billion metric tonnes came from the burning of coal. (World Energy Overview: 1995-2005)

Leaving open the question of which carbon storage method is chosen (though assuming that mineral storage is ruled out for reasons of cost), and assuming that the CO2 is liquefied and stored at a temperature of 0º C (32ºF) and a pressure of 200 atmospheres (2940 pounds per square inch), the density of the liquid would be 1050 kilograms per cubic meter. This is slightly higher than the density of water (1000 kg per cubic meter).

Thus the volume of liquid carbon dioxide that would need to be buried every year would be equal to 11,400 billion kg divided by 1050 kg per cubic meter, which is 10.9 billion cubic meters, or 10.9 cubic kilometers. To put this in perspective: World annual coal production is over 5 billion metric tonnes, which equates to only about 4 cubic kilometers. World annual total ore mined in all mining operations is 17 billion tonnes (Mining Explained). World annual total earth moved (for mining and construction, etc.) is estimated at 30-35 billion tonnes (HUMAN IMPACTS ON THE LANDSCAPE). Assuming the average density of the earth moved was 2500 kg per cubic meter, this equates to 30 trillion kg divided by 2500 kg per cubic meter, or 12 cubic kilometers (compared to 10.9 cubic kilometers of CO2 from coal needing to be sequestered). Within the larger CCS discussion, this information is a useful supplement to calculations of dollars per ton or dollars per kilowatt-hour. (Thanks to David Roberts for these calculations: Coal Cant.)

A close look at the daunting economic, technical, and infrastructural challenges to implementing CCS coal leads inevitably to the conclusion that coal can be cheap or "clean" (relatively speaking), but not both. And if coal is about to get much more expensive anyway due to depletion and transport issues, then most nations are likely to deem the added cost required to make coal "clean" to be one burden too many.

Conclusions

Given plenty of cheap available energy, technology can work wonders. It is understandable that our society has fetishized technology, given the spectacular societal changes it has wrought in the past century. In the last twenty years alone, computers, cell phones, and a suite of other digital communications technologies have created industries and fortunes, altered our habits, and morphed our vocabulary. The evolution of computers has been subject to Moore's Law, according to which processor speed, memory capacity, and even the resolution of digital cameras are expected to double every two years. It is tempting to extrapolate these rapid developments in communication technologies to the fields of transportation and energy production. But in these areas technological change is slower and more expensive, and more obviously dependent on continued consumption of non-renewable resources such as oil, natural gas, coal, and iron ore.

Each of the coal technologies surveyed here holds promise for addressing one problem or another. None of them is a magic bullet that can overcome long-term production declines of either coal or other fossil fuels due to the depletion of high-grade resources; nor can any of them, even if successfully deployed, truly make coal environmentally benign. All are expensive in economic terms; only IGCC, with its greater efficiencies, avoids also imposing new energy costs on society.

Time will tell which if any of these technologies is deployed on a large scale. Meanwhile, one truism remains: Investing in new coal technologies means increasing our societal dependence on coal, and therefore exacerbating our collective vulnerability to inevitable coal supply problems.

(This month's essay is another chapter from the retitled book-in-progress, BLACKOUT: Coal, Climate and the Last Energy Crisis.)

Recent reports on global coal reserves, surveyed in previous chapters, generally point to the likelihood of supply limits appearing relatively soon—within the next two decades (a contrary view is represented solely by the BGR report ["Lignite and Hard Coal: Energy Suppliers for World Needs until the Year 2100 – An Outlook," 2007]). According to this near-consensus, coal output in China, the world's foremost producer, could begin to decline within just a few years.

Since coal is the most significant source of human-generated greenhouse gas emissions, releasing about twice as much carbon dioxide per unit of energy produced as natural gas, the news that there may be much less coal available to be burned than commonly thought should be heartening to climate scientists and environmental activists, and to policy makers and citizens concerned about the fate of the planet. Reduced estimates of future coal supplies should be factored into climate models—which typically assume that there is enough coal available to permit continued expansion of usage well into the next century.

At the same time, because global warming has emerged as the central environmental issue of our era, climate concerns will inevitably impact how much coal we continue to burn and how we burn it—whether these concerns come to be expressed through caps on emissions, carbon taxes, cancellation of orders for new coal-fired power plants, or the promotion of new carbon sequestration technologies. In any case, the coal industry will be—indeed, already is being—forced to change.

These two trends are surely destined to interact, and the uncertain result will shape climate and energy policy in the years to come.

A Tale of Two Crises

The idea that carbon dioxide emissions from burning fossil fuels might contribute to a greenhouse effect raising global temperatures was initially floated in the 1950s. The first evidence that global atmospheric carbon dioxide (CO₂) levels and global temperatures were both indeed increasing appeared in the early 1960s. The 1980s saw the first calls for international action to limit carbon emissions, with the first Congressional hearings held in 1988, the same year Margaret Thatcher delivered a Climate Change speech to the Royal Society. The UN's International Panel on Climate Change (IPCC) released its initial report in 1990. In 1992, the Earth Summit in Rio de Janeiro produced the UN Framework Convention on Climate Change. The third IPCC report, issued in 2001, stated that global warming, unprecedented since the end of last Ice Age, is "very likely," with severe surprises possible. By this time, debate among scientists over the question of whether human activities were contributing substantially to Climate Change had effectively ended. In 2003, numerous observations raised concern that the collapse of ice sheets in West Antarctica and Greenland could raise sea levels faster than most had believed possible. That same year, a deadly summer heat wave in Europe riveted public opinion on the issue. Work to retard emissions accelerated in Japan and Western Europe, and among US regional governments and corporations. In 2007 the fourth IPCC report warned that serious effects of warming have already become evident, and that the cost of reducing emissions would be far less than that of the damage they will cause. In the same year, the north polar ice cap melted to such an extent that the northwest shipping passage was opened for the first time in history.

In short, over the past 50 years anthropogenic Climate Change has evolved from a mere hypothesis to a robustly documented and widely researched phenomenon; and from a concern on the part of just a few climate scientists to a center-stage issue dominating not just environmental studies, but economic planning and global politics as well.

Yet while Climate Change is the greatest environmental crisis that humanity has ever faced, it is not the only serious challenge confronting us. Climate Change is a "sink" problem—the result of dumping into the environment a waste product from the burning of fossil fuels. But there is a simultaneous "source" problem arising from the gradual depletion of the fuels we are burning.

At about the same time the greenhouse hypothesis was first being proposed, geophysicist M. King Hubbert was publishing his first study on the phenomenon of oil depletion. Previously, supply concerns about fossil fuels had centered on the question of when they would run out, and by most estimates that would not happen for a very long time. Hubbert reframed the discussion by pointing out that the rate of extraction of fossil fuels within any given region, or the world as a whole, will reach a maximum and begin to decline long before the resource is exhausted; further, he suggested that it is this peaking of production that is critical for economic planning. By the mid-1970s, US oil production had peaked and begun to decline, as Hubbert had estimated that it would. By this time, Hubbert and a few other petroleum geologists were forecasting a peak in global oil production around the turn of the century. In 1998, Colin Campbell and Jean Laherrère published a landmark article in Scientific American titled "The End of Cheap Oil," in which they argued that oil reserves in the Middle East were overstated, and that world petroleum production would hit its maximum before 2010. At the time, the world oil price was hovering in the range of $12 per barrel. By 2000, British oil production from the North Sea had begun to fall, and it was apparent that about half the world's other oil producing nations were also in plateau or decline. In 2005, a study for the US Department of Energy concluded that the world oil production peak would have "unprecedented" social, economic, and political consequences. In 2008, the International Energy Agency warned of a severe mismatch between world petroleum supply and demand in the years immediately ahead. By this time oil's price had risen to nearly $150 a barrel, and soaring fuel costs were severely impacting the automobile industry, the airline industry, the trucking industry, and tourism.

Because natural gas and coal are also non-renewable, it is inevitable that depletion will result in peaks and declines of output for these fuels as well. However, studies—even unofficial ones—of Peak Gas and Peak Coal have lagged behind those of Peak Oil. While some awareness of coal limits can be traced back at least to the work of Andrew Crichton in 1948, the discussion of Peak Coal really started with the appearance of reports from Energy Watch Group and the National Academy of Sciences, both in 2007. A report from Energy Watch Group on global natural gas supplies is due later this year.

Meanwhile, though the timing of the global oil, gas, and coal production peaks is still controversial, the peaking concept has become sufficiently accepted that its significance for Climate Change has begun to be explored.

Climate Models and Fossil Fuel Supplies

Models for future impacts of Climate Change must be based on two essential parameters: the quantity of future greenhouse gas emissions that can reasonably be anticipated; and the sensitivity of climate to added increments of atmospheric greenhouse gases. Both of these parameters are subject to ongoing research and revision.

In its Special Reports on Emissions Scenarios (SRES), the International Panel on Climate Change (IPCC) has published a series of 40 scenarios for the fossil fuel contribution to future Climate Change. The latest of these reports, in 2007, was a multi-year effort involving more than 1,000 authors and more than 1,000 reviewers. In the assessment modeling, limitations in fossil fuel supplies are not considered critically. For example, in 17 of the scenarios, world oil production is higher in 2100 than it was in 2000—a situation not considered likely even by OPEC.

In 1996 the European Environment Council had said that the global average surface temperature increase should be held to a maximum of 2 degrees C above pre-industrial levels, and that to accomplish this the atmospheric concentration of CO₂ will have to be stabilized at 550 parts per million (the pre-industrial level was 280 ppm and current concentration is close to 390 ppm, though the addition of other greenhouse gases raises the figure to the equivalent of 440 to 450 ppm of CO₂). The European Union has more recently adopted a target of 450 ppm of CO₂, in line with recommendations from climate scientists.

However, the IPCC scenarios suggest that if fossil fuel consumption continues to increase throughout the century, CO₂ concentrations could reach a staggering 960 ppm by 2100, which would result in six or more degrees of warming, tilting the global climate into an entirely new regime and triggering an endless list of environmental horrors.

Jean Laherrère was an early critic of the SRES, arguing in 2001 that failure to understand realistic limits to fossil fuel supplies and to incorporate these into climate models was resulting in highly unrealistic estimates of future atmospheric CO₂ concentrations, future temperature increases, and future effects on climate, ocean levels, and so on. ("Estimates of Oil Reserves")

In April 2007, James E. Hansen, head of the NASA Goddard Institute for Space Studies in New York City, who has arguably done more than any other scientist in recent years to both assess and publicize the likely impacts of Climate Change, co-authored an important paper (together with P. A. Kharecha of the Columbia University Earth Institute) that discusses fossil fuel supply limits. These authors explicitly mention Peak Oil, and stress that, "[I]t is important to estimate expected atmospheric CO₂ levels for realistic estimates of fossil fuel reserves and to determine how the CO₂ level depends upon possible constraints on coal use."

In this paper, ("Implications of 'Peak Oil' for Atmospheric CO₂ and Climate,"), Kharecha and Hansen discuss five scenarios. In their Business as Usual base case, "Peak oil emission . . . occurs in 2016 ± 2 yr, peak gas in 2026 ± 2 yr, and peak coal in 2077 ± 2 yr." Most of the IPCC scenarios show far higher CO₂ concentrations than Kharecha and Hansen's Business As Usual (BAU) scenario.

The authors also discuss a "Coal Phase-out" scenario that "moves peak coal up to 2022." This second scenario "is meant to approximate a situation in which developed countries freeze their CO₂ emissions from coal by 2012 and a decade later developing countries similarly halt increases in coal emissions." This Coal Phase-out scenario shows a peak of atmospheric CO₂ concentrations at about 445 ppm in 2046.

One message from the paper is that climate mitigation efforts should not focus so much on reducing oil and gas demand, as these fuels are supply-limited. Rather, they should concentrate on reducing the exploitation of coal and unconventional fossil fuels, since these are demand rather than supply limited for the time being. This message is more explicit in Hansen's June 23, 2008 Congressional testimony:

Phase out of coal use except where the carbon is captured and stored below ground is the primary requirement for solving global warming. Oil is used in vehicles where it is impractical to capture the carbon. But oil is running out. To preserve our planet we must also ensure that the next mobile energy source is not obtained by squeezing oil from coal. Global Warming Twenty Years Later: Tipping Points Near

However, it appears that Kharecha and Hansen did not take fully into account the recent coal supply reports surveyed in this book (though they do mention the NRC report of 2007). The authors write, "[E]ven if coal reserves are much lower than historically assumed . . . there is surely enough coal to take the world past 450 ppm CO₂ without mitigation efforts such as those described here," but they do not define what they mean by "much lower." In fact, the EWG, Höök et al., Laherrère, and Rutledge forecasts cited in this book all show future coal supply limits that are roughly in accord with Kharecha and Hansen's Coal Phase-out scenario, and that achieve a target of approximately 450 ppm CO₂.

A month after the release of the Kharecha and Hansen paper, Kjell Aleklett, professor of Physics at Uppsala University and President of Association for the Study of Peak Oil (ASPO), published an article provocatively titled, "Global Warming Exaggerated, Insufficient Oil, Natural Gas and Coal" (May 18, 2007). Aleklett's main purpose was to take the IPCC to task:

The sum of all fossil resources that the industry considers available is presented annually in BP Statistical Review. According to this rather optimistic estimate, the total energy of all oil, natural gas and coal amounts to 36 Zeta joules (ZJ), a gigantic amount of energy. This is more than what our research group considers likely, but it is still less than what do the [SRES] scenario families A1, A2, B1 and B2 require. . . . Up to 2100, IPCC prognosticates that A2 will need between 70 and 90 ZJ, that is, twice as much as the industry believes is available. . . . We need a new assessment of future temperature increases based on a realistic consumption of oil, natural gas and coal.

David Rutledge published his paper, "The Coal Question and Climate Change," cited throughout this book, in June 2007. In it, he compared the results of Hubbert linearization modeling of future coal production with the IPCC models. He concluded, "Our Producer-Limited Profile has future fossil-fuel production that is lower than all 40 of the IPCC scenarios, so it seems that producer limitations could provide useful constraints in climate modeling." More specifically, "The Producer-Limited Profile gives a peak of 460 ppm in 2070"—which is only marginally above the widely accepted target of 450 ppm. The implication is clear: sufficient greenhouse gas reductions will be accomplished by fossil fuel depletion alone, without any need for carbon emissions regulatory policy.

In short, the implication of the latest research might appear to be that Peak Oil, Peak Gas, and Peak Coal will together solve the problem of global Climate Change, without need for intervention by policy makers.

However, this could be a dangerously premature conclusion.

Climate Sensitivity

Recall that climate models depend not only on future carbon emissions (which are contingent, as we have just seen, on fossil fuel supplies as well as on energy policy) but also on climate sensitivity. How will the global climate respond to a given additional increment of carbon dioxide? In general, as observations of impacts from Climate Change are being logged, they are tending to show that past assumptions about climate sensitivity have, if anything, been too timid and conservative.

Most climate sensitivity models are now being seen as subject to three problems. First, they tend to assume a linear relationship between atmospheric greenhouse gas concentrations and global temperature increase, whereas there is mounting evidence that the relationship is actually non-linear. Second, they tend to assume a linear relationship between global temperature increase and actual impacts to ecosystems and human society, whereas there is mounting evidence that this relationship is also non-linear. Third, such models have created a questionable basis for policy: it has been widely accepted that a future temperature increase of two degrees C (which is assumed to be tied to a greenhouse gas concentration of 450 ppm) must be our target limit, above which changes to the climate will be catastrophic, irreversible, and unacceptable—whereas, in fact, we may already be seeing degrees of change that are catastrophic, effectively irreversible, and unacceptable.

Non-linearity in the relationship between greenhouse gases and temperature increase was demonstrated by a 2005 study by researchers at the Potsdam Institute for Climate Impact in Germany, which concluded that—to keep the temperature from increasing more than two degrees C—the atmospheric concentration of CO₂ would need to be stabilized at then-current levels (i.e., 380 ppm). Among other things, the study pointed out that the biosphere's ability to absorb carbon is being reduced by human activity, and this must be factored into the equations; by 2030, this carbon-absorbing ability will have been reduced from the current four billion tons per year to 2.7 billion tons.

Non-linearity of the consequences of global warming is illustrated by several self-reinforcing feedback mechanisms that, if triggered, could result in effects spiraling far out of human control. Perhaps the scariest of these has to do with the vast amounts of methane (a greenhouse gas over 20 times more potent than carbon dioxide) locked in the ocean floor and in the frozen soils of Siberia, Northern Europe, and North America. Climate warming could trigger a rapid thawing that would release billions of tons of this stored methane into the atmosphere. More methane in the atmosphere would create more warming, which would release still more methane. The ultimate consequence might be the tipping of the planet into a new climate regime so different from the current one that many higher life forms (including humans) might find survival difficult or impossible.

The inadequacy of policies that use 450 ppm and a two degree average global temperature increase as targets or limits is illustrated by evidence that catastrophic Climate Change has already been set in motion on the basis of a mere one degree C global temperature rise. For example: Recent observations have established that oceans are absorbing increasing amounts of carbon dioxide from the atmosphere, resulting in their gradual acidification. In the last two centuries, the oceans have absorbed roughly half of the amount of CO₂ emitted by fossil fuel use and cement production. This has caused ocean pH to fall. Ocean acidity will be devastating to the marine environment within a short period of time—tens of years instead of hundreds of years. Seawater undersaturated in calcium carbonate will make it difficult for shelled organisms to create skeletons and shells. These organisms form an essential link in the aquatic food chain; thus all life in the seas will be impacted. Given that the oceans have already absorbed a substantial amount of carbon dioxide, we are already committed to an irreversible amount of ocean acidification. It is likely that rebalancing the ocean pH will take thousands, or even hundreds of thousands, of years.

Ocean acidification again illustrates the disturbing fact that very little about "global warming" is simple or linear. Instead, the consequences of greenhouse gas emissions are complex, mutually interacting, and far-reaching. Rather than merely having to accustom ourselves to winters and summers a degree or two hotter, we will see far more severe storms of all kinds, as well as rising sea levels, collapsing ecosystems, disease outbreaks, species extinctions, profound challenges to agricultural production, and more. We may already have committed ourselves to centuries of overwhelming environmental damage.

If we are already seeing fundamental changes to the world's oceanic food chain, to the Arctic sea ice, and to glaciers that feed some of the world's most important river systems, can we afford to commit ourselves to still higher atmospheric greenhouse concentrations (450 ppm instead of the current 390), and to a two degree temperature increase above pre-industrial levels instead of the single degree that has already produced these impacts?

In a recent paper, "Target Atmospheric CO2: Where Should Humanity Aim?", James Hansen, along with eight co-authors, questioned the 450 ppm target and suggested a new one:

Our current analysis suggests that humanity must aim for an even lower level of GHGs. Paleoclimate data and ongoing global changes indicate that 'slow' climate feedback processes not included in most climate models, such as ice sheet disintegration, vegetation migration, and GHG release from soils, tundra or ocean sediments, may begin to come into play on time scales as short as centuries or less. Rapid on-going climate changes and realization that Earth is out of energy balance, implying that more warming is 'in the pipeline,' add urgency to investigation of the dangerous level of GHGs. . . . We use paleoclimate data to show that long-term climate has high sensitivity to climate forcings and that the present global mean CO₂, 385 ppm, is already in the dangerous zone. . . . Ongoing Arctic and ice sheet changes, examples of rapid paleoclimate change, and other criteria cited above all drive us to consider scenarios that bring CO₂ more rapidly back to 350 ppm or less.

On the basis of this article and the recent findings that prompted it, climate activists such as Bill McKibben and George Monbiot have also begun to call for more stringent targets—350 ppm target for atmospheric CO₂ concentrations and a 100 percent reduction in carbon emissions by 2050.

This is a far more rapid and drastic reduction in carbon emissions than can be achieved by fossil fuel resource depletion alone.

Further, relying on fossil fuel depletion to safeguard the world's climate would entail a serious risk: What if the new lower estimates of coal reserves turn out to be wrong? Clearly, the world's oil and coal reserves are a mere fraction of total resources. If somehow a way were found to transform a significant portion of remaining resources into reserves, this could entail a significant increase in atmospheric carbon emissions.

This risk also extends to unconventional fossil fuels such as tar sands, shale oil, and methane hydrates. While the potential for the development of these resources is often overstated, since current technology will permit only a very slow extraction rate for tar sands and perhaps no commercial extraction at all of oil shale and methane hydrates, nevertheless there is always the possibility that new technologies will enable their exploitation on a wide scale. Without a stringent emissions policy in place, the consequences for the global climate would be profound.

In general, human society faces a conundrum: unless non-fossil sources of energy are developed quickly, or unless society finds a way to operate with much less energy, and preferably both, the depletion of higher-quality fuels (natural gas and oil) will mean that efforts to obtain more energy will entail burning ever dirtier fuels, and doing so in proportionally larger quantities in order to derive equivalent amounts of energy.

Therefore, to the question, "Will coal, oil, and gas depletion solve Climate Change?", the answer is an unequivocal no.

Will Climate Change Solve Peak Coal?

If some Peak Oil-Coal-Gas analysts suggest that depletion will stop Climate Change, climate activists look at the matter the other way around. While peaks and declines in the production of fossil fuels will undoubtedly have enormous societal consequences, these nevertheless pale compared to the potential ecological effects of Climate Change. Peak Oil may result in the collapse of the global economy; Climate Change could do so as well, while also devastating Earth's ecosystems in a way that would require millennia, perhaps millions of years, for planetary recovery.

But if we proactively deal with Climate Change by reducing fossil fuel consumption, the result will obviously be a reduction in dependence on fossil fuels—and therefore a solution to the problems of Peak Oil, Gas, and Coal. Therefore all that is needed is a clear, sustained, vigorous policy focus on reducing greenhouse gas emissions.

There is some evidence to support this argument. Efforts to reduce carbon emissions are already having an impact on the coal industry, primarily in the US and Europe (though not nearly to the same degree in China and India). In the US, nearly 90 percent of all new coal power plant projects proposed between 2000 and 2006 were delayed or cancelled, according to an October 2007 report by the US Department of Energy—many over concerns about future carbon emissions regulations. Of 151 proposals for new plants submitted in early 2007, almost half had been dropped by year's end, many blocked by state governments or delayed by court challenges. Most recently, in July 2008 a judge in Georgia threw out an air pollution permit for a new coal-fired power plant because the permit did not set limits on carbon dioxide emissions. In Europe new coal plants are faring better only because higher-efficiency power plants are being proposed.

Climate mitigation efforts typically center on "cap and trade" (or "cap and dividend" or "cap and share"—alternative regimes being proposed by a number of economic equity activists), or on carbon taxes. Any of these policies to restrict carbon emissions will inevitably reduce fossil fuel consumption, impacting coal more than other fuels simply because of coal's higher carbon content. While future coal-burning power plants could be constructed to capture carbon, which could then be permanently sequestered underground (a technology discussed in the next chapter), over the short term reducing carbon emissions simply means using less coal.

If these efforts were to pick up speed, they would reduce demand for coal (and other fossil fuels), thus heading off shortages and keeping prices lower.

But will climate concerns succeed in driving policy in the face of energy scarcity? Currently, global coal consumption is still growing—faster by volume, indeed, than the consumption of any other energy resource. Can nations experiencing shortages of oil and battered by high energy prices be persuaded to forgo the still relatively cheap energy from coal in order to avert environmental consequences for future generations?

From the perspective of climate scientists and activists, there can be no question: whatever short-term economic pain society may experience as a result of deliberately reducing fossil fuel consumption can hardly be compared with the overwhelming catastrophe that unbridled Climate Change would bring. However, policy makers may look at the evidence through an entirely different lens—one that discounts the future in favor of the present.

In financial markets, the discount rate is the rate that a stock analyst might use to discount a company's future earnings stream for the purposes of present investment. In his book Material Concerns: Pollution, Profit and Quality of Life, Professor of Sustainable Development and UK government advisor Tim Jackson describes it this way:

[F]uture costs and benefits are taken to have a lower value than present costs and benefits. We can think of the discount rate as the rate of return which is required on capital invested by the company. The higher the discount rate, the lower the value of future costs against present costs. For example, a cost of $200,000 which occurs twenty years in the future has a net present value of $44,000 at 5 percent and $10,400 at 10 percent discount rate. The further into the future costs and benefits arise, the lower their value compared with present costs and benefits.

Environmental psychologists argue that discount rates are rooted in fundamental human psychology, and perhaps even hardwired into our genes and nervous systems. We instinctively value the concrete present over the likely or hypothesized future.

The relevance for Climate Change—and other environmental issues, such as resource depletion—is clear: we tend to discount future costs (such as the impact of melting glaciers) just as we do future profits. Thus, asking society to endure present pain in order to avert more widespread suffering in the future is problematic. The present pain must be minor, and the future suffering profound and credible and not too many years distant, in order to persuade us to take an action that we will find uncomfortable or unpleasant.

In the early years of the decade, as the global economy was booming, policy makers in many nations gave considerable attention to Climate Change. Heads of state conferred, strategies were debated, and agreements were forged. Today, as energy scarcity cripples national economies with pain that is both palpable and growing, there is likely to be a greater tendency to discount the future costs of Climate Change in favor of satisfying immediate demand for fuel, no matter how carbon-intensive it may be. There is abundant evidence that this is indeed occurring.

In Europe, while top climate experts offer ever-shriller warnings about the effects of carbon emissions, Italy is planning to increase its reliance on coal from 14 percent of total energy to 33 percent. Throughout the continent, about 50 new coal-fired power stations are being planned for the next five years. The driver for this new coal boom is unequivocally clear: higher natural gas prices. In Germany, 27 new coal plants are planned by 2020, many fueled by lignite—which can produce a ton of carbon emissions for every ton of coal burned.

In the US, despite the cancellation of so many new coal plants in recent years, the National Mining Association projects that about 54 percent of the nation's electric power will be coal-fired by 2030, up from the current 48 percent.

Depletion defeats climate policy in other ways. Carbon taxes become a harder policy to sell as energy prices climb; coal cutbacks are more difficult to make when natural gas is getting more expensive and electricity grids are browning out; and using coal to make liquid fuels starts to look attractive as diesel prices escalate.

Will efforts to address Climate Change solve the economic problems arising from coal, oil, and gas depletion and increasing scarcity? It is possible in principle, but in reality the stronger likelihood is that energy scarcity will rivet the attention of policy makers and private citizens alike because it is an immediate and unavoidable crisis. The result: as scarcity deepens, support for climate policy may fade even as climate impacts worsen.

A Combined Approach

Clearly, the world needs energy policies that successfully address both Climate Change and fuel scarcity. Such policies are likely to be devised and implemented only if both crises are acknowledged and taken into account in a strategically sensible way.

If policy makers focus only on one of these problems, some of the strategies they are likely to promote could simply exacerbate the other crisis. For example, some actions that might help reduce the impact of Peak Oil—such as exploitation of tar sands or oil shale, or the conversion of coal to a liquid fuel—will result in an increase in carbon emissions. On the other hand, some actions aimed to help reduce carbon emissions—such as carbon sequestration or carbon taxes—will make energy more expensive, which, in a situation of energy scarcity and high prices, may be politically problematic and therefore a waste of climate activists' and policy makers' limited resources.

However, many policies will help with both problems—including any effort to develop renewable energy sources or to reduce energy consumption.

For strategic purposes, it is important to understand our human tendency to discount future problems. We must assess which threats will come soonest, and make sure that our sometimes frantic efforts to respond to these immediate necessities do not exacerbate problems that will show up later. Peak oil is clearly the most immediate energy and resource threat that policy makers must deal with. Peak Coal and Climate Change may seem comparatively distant. But all must be taken seriously if we are to do any better than merely to lurch from crisis to crisis, with each new one worse than the last.

If energy scarcity forces policy changes before climate fears can do so, then perhaps world leaders will find that it makes more sense to ration fuels themselves by quota, rather than the emissions they produce. In any case, it will help everyone concerned to have a clear idea of the ultimate extent of coal, oil, and natural gas reserves and future production, as well as a realistic understanding of climate sensitivity and hence the environmental and economic costs of continuing to burn fossil fuels even in depletion-constrained amounts. Otherwise, the policies pursued may simply waste precious time and investment capital while actually making matters worse.

Coal in China

China is the world's foremost coal producer and consumer, surpassing the United States by a factor of two on both scores and accounting for 40 percent of total world production. Moreover, its coal consumption has been rising rapidly, at a rate of up to ten percent per year (which translates to a doubling of demand every 7 years). While China is a significant producer of oil and natural gas, coal dominates the nation's fossil-fuel reserve base. About 70 percent of China's total energy is derived from coal, and about 80 percent of its electricity. The country has recently become the world's foremost greenhouse gas emitter due to its growing, coal-fed energy appetite.

This nation's coal-mining history is probably the world's longest, dating back up to two millennia—though modern mining methods were not introduced until the late 19th Century by European, and later by Japanese companies. Production achieved one million tons per year in 1903, growing at an average annual rate of over ten percent. Growth slowed during the civil wars of the 1920s, but resumed strongly in the mid-1930s. After the establishment of the People's Republic in 1949, coal production again slumped, then quickly increased to over 400 million tons per year by 1960, only to fall again during the turbulent years of the Cultural Revolution. Production accelerated from the 1970s on, achieving one billion tons per year in 1989. In 1996, China began addressing problems of mine safety and low productivity by closing its smallest and least efficient mines. This led to a temporary decline in production lasting until 2000; since then, production has grown with astonishing rapidity to the present annual output of roughly 2.5 billion metric tons (tonnes) or 2.7 billion US short tons.

China's coal consumption in 2000 was 30 times its volume a half-century earlier, at the time of the establishment of the People's Republic. And just since 2000, consumption has more than doubled.

China currently has roughly 25,000 coalmines, with 3.4 million registered employees. Many of these mines are small, private, local—and even illegal—operations that can respond quickly to the market; but they are less efficient than larger, centralized mines and tend to have more environmental and safety problems.

The productivity of China's coal mining is low: in 1999, 289 tons of coal were produced per miner averaged across all the nation's mines, versus almost 12,000 tons per miner in the US. This productivity rate resulted from still-low levels of mechanization within the mining industry. However, the strong trend during the past decade has been toward greater mechanization.

Thin overburden allows surface mining in some areas, but only four to seven percent of China's reserves are suitable for surface mining, and of these most consist of lignite. Today the average mining depth in China is 400 meters, a figure that is slowly increasing, and 95 percent of mines are shaft mines (compared to 48 percent in the US).

Uncontrolled underground coal fires, some of which will burn for decades, have become an enormous environmental problem in China, consuming an estimated 200 million tons of coal annually—an amount equal to about 10 percent of the nation's coal production. These ultra-hot fires can occur naturally, but most are caused by sparks from cutting and welding, electrical work, explosives, or cigarette smoking. Across the northern region of Xinjiang, fires at small illegal mines have resulted from miners using abandoned mines for shelter, and burning coal within the shafts for heat. China's underground coal fires make an enormous, hidden contribution to global warming, annually releasing 360 million tons of carbon dioxide—as much as all the cars and light trucks in the United States.

The pace of China's headlong dash toward increased coal consumption is legendary: in recent years an average of one new coal-fed power plant has fired up every week. The resulting annual capacity addition is comparable to the size of Britain's entire power grid. The price being paid in environmental quality and human health for this coal bonanza is likewise well known—to citizens and visitors alike: coal power plants emit deadly clouds of soot, sulfur dioxide, and other toxic pollutants, as well as millions of tons of carbon dioxide. As a consequence, areas in southern China such as Sichuan, Guangxi, Hunan, Jiangxi, and Guangdong have increasing problems with acid rain; many of China's cities are shrouded in a continual pall of smoke reminiscent of London or Pittsburgh in 1900; and respiratory ailments now account for 26 percent of all deaths.

China's coal is used not only for electricity generation, but also for the production of iron, steel, and building materials (primarily cement), and as fertilizer feedstock. These main drivers of increased demand are themselves powered by heavy industrial growth, infrastructure development, urbanization (roughly 300 million additional people will live in Chinese cities by 2020), and rising per-capita GDP.

All of these trends in turn emerge from China's recent history. At the end of the Communist revolution in 1949, the country was impoverished and war-ravaged; the overwhelming majority of its people consisted of rural peasants. Communist Party chairman Mao Zedong's stated goal was to bring prosperity to his populous, resource-rich nation. A period of economic growth and infrastructure development ensued, lasting until the mid-1960s. At this point, Mao appears to have had second thoughts: concerned that further industrialization would create or deepen class divisions, he unleashed the Cultural Revolution, lasting from 1966 to the mid-1970s, during which industrial and agricultural output fell. As Mao's health declined, a vicious power struggle ensued, from which emerged the reforms of Deng Xiaoping. Economic growth became a higher priority than ever before, and it followed in spectacular fashion from widespread privatization and the application of market principles. "To get rich is glorious," Communist officials now proclaimed.

During the 1950s, '60s, and '70s, the populace worked hard, sacrificed, and endured grinding poverty for the good of the nation. Now a small segment of that populace—mostly in the coastal cities—is enjoying a middle-class existence, and in some cases spectacular riches. This wealth disparity is bearable only as long as the middle class continues to expand in numbers, offering the promise of economic opportunity to hundreds of millions of poor peasants in the interior of the country.

In effect, rapid economic expansion and increasing prosperity (for a small, influential portion of the population) are being used to divert domestic attention from frustrated democratic political aspirations and regional rivalries. But China's central government has unleashed a firestorm of entrepreneurial, profit-driven economic activity, which it cannot effectively contain. China's central government and its legal institutions are relatively weak; meanwhile the uncontrollably dynamic economy is export-dependent and ill-suited to meeting domestic needs.

In short, China has encouraged rapid export-led economic growth as a way of putting off dealing with its internal political and social problems. Economic growth requires energy, and China's energy comes overwhelmingly from coal. The nation's short-term survival strategy thus centers on producing enormous quantities of coal today, and far more in the future.

However, there are signs that China's domestic coal production growth may not be able to keep up with rising demand for much longer.

As in the US, coal transport bottlenecks raise production costs and inhibit growth. Most coal transport is by rail, which has grown faster than road and water transport. But only half of China's coal production is from rail-connected mines. Lack of rail capacity is leading to increased demand for diesel fuel for coal trucks, and thus to higher diesel prices (and increasingly frequent shortages), and these in turn result in more coal delivery problems.

The lack of diesel fuel for coal transport could potentially be solved by turning coal into a liquid fuel (a process discussed in more detail in Chapter 6). China's largest coal firm, the Shenhua Group, recently opened the country's first coal-to-liquids (CTL) plant, and it plans to start seven more by 2020. Other CTL plants are also in the works—including several in Northern China that Shenhua will construct with partners Shell and Sasol, slated to open in 2012; and one being planned by the Yankuang coal group, the second-largest coal producer in China, near Erdos.

If only a few of these proposed CTL plants are constructed, China will lead the world in production of synthetic liquid fuels from coal. But even if all of them come on line, this will offset only a small portion of China's oil imports (the current goal is to produce 286,000 barrels per day by 2020, while the nation currently imports over three million barrels of petroleum per day, with that amount growing rapidly). In any case, CTL will entail substantial new coal demand as well as severe environmental consequences. According to China's Coal Research Institute, each barrel of synthetic oil produced from coal will consume at least 360 gallons of fresh water. (For comparison: 360 gallons equals roughly 8.5 barrels; thus at this ratio of CTL to water, 286,000 barrels per day of CTL would require approximately 2.5 million bpd of water.) And most areas of China are already experiencing water scarcity.

The irony inherent in China's grand experiment with CTL is that in order to solve coal supply problems stemming from diesel shortages, the country must produce even more coal.

Aside from transport bottlenecks, supply problems are also resulting from crackdowns on mines that are unsafe, polluting, or wasteful of energy.

China is producing its best coal first. The country has yet to exploit its reserves of lignite, which has high moisture and ash content and entails much higher CO2 emissions. A new technology (Integrated Drying Gasification Combined Cycle, or IDGCC) developed in Australia, and now being studied by the Chinese government, is capable of burning this coal efficiently and reducing greenhouse gas emissions; but if lignite grows as a share of total coal production, this will exacerbate transport problems, because much more material will have to be mined and moved in order to deliver the same amount of energy.

All of these difficulties with producing and delivering sufficient coal are leading to increased imports. China has been an international coal supplier since the early 20^th century, when nearly all its exports went to Japan. In 2001, China's coal exports amounted to 90 million tons—a quantity equal to the total production of Indonesia. But Chinese coal imports doubled between 2005 and 2007, making the nation a net importer of the resource. This trend toward increasing coal imports, which is driving up international coal prices and impacting the economies of other coal importers such as India and Japan, seems almost certain to accelerate.

China's electric power generation is becoming more efficient, but even an extensive rollout of the highest-efficiency plants could only dent growth in coal consumption before 2020. Meanwhile, these new power plants will impose greater up-front costs.

In sum, continually increasing coal consumption is central to China's economic existence; however there are signs that the country is already experiencing difficulty in maintaining its furious growth pace in producing the resource. The amount of coal available in the future will crucially determine the direction of the nation's economy and likely its internal social and political stability as well.

Resource Characteristics and History of Reserves Estimates

China's coal resources are concentrated mainly in the northern half of the country, with fully half of all reserves located within the three provinces of Inner Mongolia, Shanxi, and Shaanxi. Reserves comprise the complete range of coals, from lignite to anthracite, with bituminous the most abundant (according to the 1992 BP proven reserves estimate, 13.5 percent of China's coal reserves consist of lignite, 24 percent non-coking bituminous coal, 28 percent coking bituminous coal, and 18.5 percent anthracite). Locally, seam quality is highly variable, although sulfur levels are in most cases low.

While recoverable reserves are a matter for debate, China's total coal resources are clearly vast, with government figures listing a resource base of about a trillion tons. As always, location, seam thickness, quality, and depth determine how much of the resource will ever be mined. China's coal reserves to a depth of 150 meters are relatively small, with resources at depths of 300–600m forming the majority of the future reserve base.

Early reserves estimates of China's coal were imprecise, because thorough surveys were impeded by the turbulence of the nation's political history during the last century. In the 1930s, reserves were estimated at somewhat over 200 billion tons, sufficient for over 5,000 years of production at then-current levels of output.

In 1987, BP Statistical Review of World Energy listed reserves of 156.4 billion tons. In 1990, BP reported Chinese coal reserves as 152.8 billion tons. By 1992, the amount had fallen to 114.5 billion tons. Oddly, that official number has not changed in the succeeding 16 years, during which the nation has produced over 20 billion tons of coal.

There are differing opinions on this anomaly: World Energy Council politely notes that it "indicates a degree of continuity in the official assessments of China's coal reserves." However, Energy Watch Group calls that reasoning "strange," since Chinese coal reserves had been downgraded two times since 1987, evidently at least partly due to the subtraction of produced quantities.

Reserves were thrown further into question in 2002, when the Chinese Ministry of Land and Natural Resources declared that the country's proven recoverable coal reserves amounted to 186.6 billion tons. However, this large number has not been adopted by the World Energy Council, the International Energy Agency, or BP Statistical Review.

Within China, Mongolia is something of a wild card, with undoubtedly large resources but poor transport facilities and incomplete geological surveys. It is as yet unclear how much of its coal resources should be listed as reserves.

Recent Studies

1. Coal: Resources and Future Production (Werner Zittel and Jörg Schindler, Energy Watch Group [EWG], March 2007, www.energywatchgroup.org).

As noted above, the EWG authors question WEC figures for China's reserves, pointing out that these evidently do not account for amounts produced since 1992, nor for amounts lost to coal fires (EWG does not discuss the much larger reserves number published by the Chinese government). The report's authors write:

China's reported coal reserves are 62.2 billion tons of bituminous coal, 33.7 billion tons of sub-bituminous coal and 18.6 billion tons of lignite. Subtracting the produced quantities since 1992 (the latest data update) results in remaining reserves of about 44 billion tons of bituminous coal, 33.7 billion tons of sub-bituminous coal and 17.8 billion tons of lignite.

This indicates total remaining recoverable reserves of about 96 billion tons. EWG uses this updated reserves figure (which still does not account for amounts lost to uncontrolled underground coal fires) to plot a possible future production profile, using a logistic curve. Their results:

This scenario demonstrates that the high growth rates of the last years must decrease over the next few years and that China will reach maximum production within the next 5–15 years, probably around 2015. The already produced quantities of about 35 billion tons will rise to 113 billion tons (+ 11 billion tons of lignite) until 2050 and finally end at about 120 billion tons (+19 billion tons of lignite) around 2100. The steep rise in production of the past years must be followed by a steep decline after 2020.

The EWG authors restate their conclusion several times: "either the reported coal reserves are highly unreliable and much larger in reality than reported, or the Chinese coal production will reach its peak very soon and start to decline rapidly."

In addition to near-term peaking in quantities of coal produced, declining coal quality is also a problem: "projected produced quantities of coal will show a steadily declining energy content." Currently, China produces very little of its lignite. This is likely to change as higher-quality coals are exhausted. But the nation's lignite reserves are too small to have much influence on total coal production, and lignite's energy content is only about one-quarter that of high-quality bituminous coal.

The EWG report discusses China's plans for CTL development, suggesting that this will hike coal demand by "several hundred million tons per year," pushing the nation's production capacity "very fast to its limits."

2. "What is the limit of Chinese coal supplies—A STELLA model of Hubbert Peak" by Zaipu Tao and Mingyu Li, Energy Policy Volume 35, Issue 6, June 2007.

These two authors, from the Northeastern University PRC School of Business and Administration, apply Hubbert analysis (linearization and peaking) to Chinese coal production, basing their analysis on the official Chinese government proven recoverable reserves figure of 186.6 billion tons. In doing so, they use STELLA, a software platform for modeling the behavior of complex, dynamic systems.

Tao and Li write that Hubbert linearization indicates yet-to-produce reserves of 71.73 billion tons, with a maximum production rate of 1.41 billion tons/year and the all-time production peak in 2006. But this cannot be correct, as in fact the current production rate is much higher and production continues to increase. The problem, the authors suggest, is that linearization in this instance gives a false result for yet-to-produce reserves: "We know," they write, that the number should be the official government figure of 186.6 billion tons. Therefore they substitute that amount in the equations, with the result that, "According to the standard run, the Hubbert Peak for China's raw coal production appears to be in 2029 with a value of 37.84 hundred million tonnes."

The STELLA software allows for the addition of various parameters (such as annual reserves additions, growth rates, and CO2 emissions), and results in differing decline curves. Tao and Li conclude:

According to this simulation . . . the peak in China comes between 2025 and 2032 with peak production about 3339–4452 million tons. Chinese raw coal output will grow by about 3–4% annually before the peak, which probably is a good chance for the development of China's coal industry. However, the corresponding amount of greenhouse gases produced may act as an enormous obstacle to increasing the coal production. . . . To meet the increasing demand, China should consider new energy development policies related to supply diversification before the peak comes.

3. Lignite and Hard Coal: Energy Suppliers for World Needs until the Year 2100 – An Outlook (Thomas Thielemann, Sandro Schmidt, and J. Peter Gerling, German Federal Institute for Geosciences and Natural Resources [BGR], International Journal of Coal GeologyVolume 72, Issue 1, 3 September 2007, www.sciencedirect.com).

The BGR report concludes that, "from a raw-material angle in this scenario there will be no bottleneck in coal supplies until 2100." However, the assumptions and reasoning that lead to this judgment are questionable in light of considerations brought up by EWG. The BGR authors write: "Should the annual rise in output be greater than 1%/a, Asia will have to convert resources into reserves on a much larger scale than presumed here." But as noted above, China's rate of growth in coal consumption has in fact recently been closer to 10 percent per year. The BGR authors do not explain how or why that rate will slow so much. Also, the conversion of resources to reserves that the authors assume will occur in the future is not explained adequately. The historic trend has been in the opposite direction—that is, for booked reserves to be downgraded to mere resources—and it is unclear why that trend should reverse itself.

The BGR authors do note that "Since it will certainly be possible to