Coal boom could stymie climate plans

Posted: 27 June 2008

In an important statement on the dangers of climate change, reported on this website, Dr James Hansen director of the NASA Goddard Institute for Space Studies, said that 'the phasing out of coal use except where the carbon is captured and stored below ground is the primary requirement for solving global warming.' However, it seems that the demand for coal has never been so high, as a recent report in the Washington Post made clear.

In an investigative report, Steven Mulford and Blaine Harden found that coal is suddenly in short supply and high demand worldwide.

"An untimely confluence of bad weather, flawed energy policies, low stockpiles and voracious growth in Asia's appetite has driven international spot prices of coal up by 50 per cent or more in the past five months [they wrote in March], surpassing the escalation in oil prices.

"The signs of a coal crisis have been showing up from mine mouths to factory gates and living rooms: As many as 45 ships were stacked up in Australian ports waiting for coal deliveries slowed by torrential rains. China and Vietnam, which have thrived by sending goods abroad, abruptly banned coal exports, while India's import demands are up. Factory hours have been shortened in parts of China, and blackouts have rippled across South Africa and Indonesia's most populous island, Java.

"Meanwhile mining companies are enjoying a windfall. Freight cars in Appalachia are brimming with coal for export, and old coal mines in Japan have been reopened or expanded. European and Japanese coal buyers, worried about future supplies, have begun locking in long-term contracts at high prices, and world steel and concrete prices have risen already, fueling inflation."

The value of coal exports from the United States grew by 19 per cent last year, to $4.1 billion, the National Mining Association said. And an even bigger increase is expected this year.

"As increasing numbers of the world's poor join the middle classes, hooking up to electricity grids and buying up more manufactured goods, demand for coal grows. World consumption of coal has grown 30 per cent in the past six years, twice as much as any other energy source. About two-thirds of the fuel supplies electricity plants, and just under a third heads to industrial users, mostly steel and concrete makers...

China's appetite

"Expensive or not, coal is almost always dirtier to burn than are other fossil fuels. Although its use accounts for a quarter of world energy consumption, it generates 39 per cent of energy-related carbon dioxide emissions. Climate change concerns could lead to legislation in many countries imposing higher costs on those who burn coal, forcing utilities and factories to become more efficient and curtail its use. Climatologists warn that without technology to capture and store carbon dioxide emissions, burning more coal would be disastrous."

Emissions from Jinzhushan power plant in Hunan province. Photo Hunan Datang Xianyi Technology Co Ltd
Emissions from Jinzhushan power plant in Hunan province. Photo Hunan Datang Xianyi Technology Co Ltd
Greenhouse gas emissions stream from the stacks at China's coal-fired Jinzhushan power plant in Hunan province. Photo courtesy Hunan Datang Xianyi Technology
China, the world's largest consumer of coal, is burning through more than the United States, European Union and Japan combined, say the authors. And its consumption is increasing by about 10 per cent a year. In 2006, it installed power plants with more capacity than all of Britain.

China has vast coal resources, but its growing appetite has outstripped production. In January 2007, it imported more coal than it exported for the first time, according to government figures.

India also relies on outdated energy policies, they report. "The economy is growing at 8 to 9 per cent a year, and by 2012 India expects to add 76,000 megawatts of power, according to Upendra Kumar, a member of the mining committee at the Confederation of Indian Industries.

"But 94 per cent of India's coal mining is in the hands of government-owned companies. The biggest, Coal India, produces four-fifths of the country's coal. Because the government is worried about social unrest, the prices for coal and electricity are kept low.

"Today our coal prices are about 40 per cent lower than international coal prices," said K. Ranganath, Coal India's director of marketing. And, he notes, the "lower the prices, the higher the demand."

Elsewhere in Asia, rising coal prices are squeezing Japan and South Korea, which depend largely on imports for energy, say Mufson and Harden. All of whihc results in a bonanza for coal mining companies, they say.

"The price hike has revived long-neglected mines in Hokkaido, a region in northern Japan that has been producing coal for more than a century. As global coal prices have more than doubled, the Japanese mines have suddenly become competitive and they are attracting the attention of utilities and companies that use coal for power."

German dilemma

In the United States, it is getting harder to license and borrow money to build new coal plants. But Peabody Energy's chief executive Gregory H. Boyce says foreign demand will sustain mining output. "Coal is the sustainable fuel best able to close the gap of growing demand vs. scarce and expensive alternatives," he said at a conference last month {February].

"All this is especially bad news for those worried about climate change." the authors say."Germany, for example, is caught between its pledge to eliminate nuclear power and its pledge to slash carbon emissions. Because nuclear energy accounts for a quarter of the country's electricity needs, utilities have filed applications for permits to build two dozen coal-fired plants over the next few years.

"'You reach a point where people say you have to stop burning coal,' said Per Nicolai Martens, director of the Institute of Mining Engineering at the Aachen Technical University in Germany. 'But when you reach that point, you are forced to ask the question of what happens when you shut it off?'"

"In the developing world, where growth is paramount, there is no thought of shutting off coal, especially when, on average, a person in China emits about one-sixth and an Indian less than one-tenth as many greenhouse gases as an American 'Coal will continue to be king in India. There is no way out,' said Kumar, of the Confederation of Indian Industries. 'The other choice is asking the country to stay poor. . . . The question is, are we going to allow poverty or allow a little bit of pollution?'"

Harden reported for the Washingtn Post from Tokyo. Correspondents Ariana Eunjung Cha in Shanghai, Craig Timberg in Johannesburg, Shannon Smiley in Berlin, Jill Colvin in London and Rama Lakshmi in New Delhi contributed to the full report, whihc can be seen at washingtonpost.com