Peak Coal?

by Richard T. Stuebi

One of the more passionate debates in the energy community these days centers on the concept of “peak oil”. Peak oil does not mean oil supplies running out; rather, the term “peak oil” refers to the moment in time when oil extraction levels reach their maximum, followed by a long decline — no matter how much oil prices rise and no matter how much new technology is applied in an attempt to lift more oil from underground.

For those who know a fair amount about petroleum geology, supplies and economics, there is a general recognition that peak oil will occur at some point in the future: the debate is when — a few months from now, a few years from now, or a few decades from now. Peak oil is impossible to predict with high confidence because there’s no “dipstick” in the ground to tell observers how much oil is really left in each of the fields — and even if there were, there’s no absolute way of knowing how much of the remaining oil can be yielded due to geologic issues.

Most agree that, once the peak oil moment occurs, the world will begin its transition away from oil for transportation fuels — whether it has prepared for that moment or not. In other words, if we haven’t meaningfully eased our dependence on oil, the decades after peak oil will truly be tumultuous for the modern mobility-reliant culture upon which the human species currently is based.

These types of concerns have never been raised about the supplies of coal. It has been widely assumed that there is an abundant supply of coal (especially in the U.S.), enough to last for centuries. Coal has been increasingly viewed as the “backstop” fossil fuel: plentiful, cheap, known. As long as we can deal with coal’s environmental issues, particularly CO2 emissions, we can always fall back to coal — not only for power generation, but for producing transportation fuels as well.

A recent essay by Richard Heinberg brings these important preconceptions into question. In his essay, “Burning the Furniture”, Heinberg reviews a recently released study by a German organization named Energy Watch Group, in which it is asserted that worldwide coal production will peak in the next 10-15 years.

Without having access to the report, it’s hard for me to opine on the quality of the analysis behind this conclusion. However, if the analysis is basically sound, and the conclusion is directionally valid, this insight is a very, very big deal.

If true, the world energy markets will not be able to rely upon coal as a safety net. The coal plants being built every week in China will face depleting supplies and increasing prices. Price volatility in coal markets will increase dramatically. CO2 emissions will not increase exponentially — the fuel to produce those emissions will be shrinking. Hydrogen and renewables will have to come to the fore, faster and in greater scale — and if these technologies are not economically viable, then there will be forced reductions (e.g., curtailments) in energy use. The U.S. (not the Middle East) will become the geographic region with extreme geopolitical leverage in energy.

If oil and coal both are near the end of their eras, then the world as we know it will change so profoundly, it is hard to imagine. One thing would be for certain: good opportunities for cleantech.

Essay: “Burning the Furniture”

Richard T. Stuebi is the BP Fellow for Energy and Environmental Advancement at The Cleveland Foundation, and is also the Founder and President of NextWave Energy, Inc.

4 replies
  1. Anonymous
    Anonymous says:

    I think that peak coal for China may have already passed because of the vast quantity of coal (over 900 million tons) they are consuming each year in their thermal plants. They have to move to a more sustainable source of power in a few decades, there is no question about that unless they plan on importing coal as they do now with oil Years ago, China used to export oil. adrianakau@aol.com

  2. Shaun Chamberlin
    Shaun Chamberlin says:

    Richard,The Energy Watch Group report is freely available on the internet. I wrote a summary of it for The Oil Drum, which is available at http://tinyurl.com/yvzudv and which contains a link to the full report.Best wishes,Shaun ChamberlinThe Lean Economy Connection

  3. Chad
    Chad says:

    In addition natural gas is going to peak in the near future according to most reports. This leaves nuclear and renewables that are not anywhere near a peak. Renewables make a very small percentage of our energy market, and do we really want to run that much nuclear?Houston is looking like a good place to live in the near future. With the wind farm in the gulf, a mass transit rail system in progress, and winters that aren't cold enough to kill it is a good place to be when the gas runs out, and heating is too expensive to afford.

  4. daniel
    daniel says:

    Coal stocks are an interesting pick because it still remains attractive for long-term play. Many factors continue to drive the demand for coal upwards, therefore, increasing coal stock as a whole. I recommend this report i found, it has been very valuable to me so far… Coal Stock Report Cheers!

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