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Coal reserves in a carbon constrained future

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World Coal,

In a new report from the IEA Clean Coal Centre, Paul Baruya revisits the analysis of fossil fuel depletion and how various approaches to peak analysis and projections can impact the understanding of coal reserves.

Between 2001 and 2011, the global demand for coal increased by as much as all the other sources of primary energy combined (in energy terms). With such a massive rise in demand, and barely any change in the reported level of global reserves, it seemed as though less coal is available in the world than first anticipated. News and journal media reports suggest that the reserves of cheap coal have been used and only high cost coal will be available in the future.

While this is true for some regions, the global picture is less clear. Energy reserves are quite well understood and have been recorded for many decades with varying degrees of accuracy. In 2009, the IEA Clean Coal Centre (IEA CCC) published a report entitled "Future coal supply prospects" to examine the world’s coal reserves data. This discussed the various definitions of reserves and the issues that affect the accuracy of the published statistics. It appears that global recoverable reserves of coal could last in excess of 100 years, although this cannot be stated with absolute confidence. Generally, the coal industry seems optimistic about reserves, but the coal reserves could face depletion in areas of high or rapidly growing production, not least countries such as China and Indonesia. In OECD countries, carbon constraining policies could depress future demand, which at first glance appears problematic for the coal industries, although such policies could greatly extend the life of world coal reserves for a more sustainable and securer energy future.

Consequently, analyses of a peak supply of coal (akin to peak oil) in coming years have grown in importance. In addition, many groups worldwide have factored in the more important demand peak, necessary to curb the rise in fossil fuel growth and lessen the rise in cumulative emissions of CO2. Examples of such peak trends are described in the report. Yet, statistical analysis of peak coal production treats coal as a homogenous commodity for simplicity. These analyses therefore ignore the wide variation in coal rank and quality - yet these differences in coal must be considered especially as many coals are not substitutable. Peak production may therefore occur for one type of coal, but not for another, and so future developments in this area of research perhaps should address the differences in coals.

The basis of all peak coal analysis depends on starting with quantifying the amount of coal in the ground that can be mined under current and future market conditions. This is not straightforward when the terms reserves and resources are often mistaken for each other, making the world’s availability of coal difficult to understand or easily misinterpreted by the casual reader. This report then attempts to clarify various definitions in a concise manner to allow the reader to pursue other detailed research where necessary. The report attempts to disaggregate different reserves data that are available into broad coal types based on the end user, namely steam and coking coals.

The added detail may help to better understand how much coal exists for each major end-user market, namely:

  • High rank steam coal for heat raising for power generation and industrial boilers.
  • High rank coking coal for coke production and steel manufacture.
  • Low rank steam coal for heat raising for power generation and industrial boilers.

For all types of coal, future policy scenarios may illustrate a sweeping change to the way the world uses coal, either by replacing it with alternative fuels or introducing technologies to reduce coal use and hence emissions (combustion and process).

Much of the report compiles a selection of long-term demand scenarios (up to and beyond 2035) and considers the impacts on reserves, specifically related to coal used in the power sector, but discussion on coking coal is included. Some of the findings support the idea that all coal types are in abundance, but in a few sub-regions within the US and China they have peaked already.

Worldwide, carbon capture and storage poses a potential boost to coal demand (with a 80 – 90% reduction in CO2 emissions) due to the extra fuel needed to operate the capture systems, the rise in efficiency in power station technologies and the rise in renewables and gas-fired power should not threaten the depletion of existing coal reserves. The report also considers how coal reserves can be extended, either through improved mining efficiency and therefore a more sustainable method of extraction or alternative method of extraction. All of these aspects deserve more research and effort to establish a more accurate assessment of the world’s reserves, and also the prospects of shortening the life of current reserves given the rise in demand for coal in recent years.

Coal will remain the most abundant form of fossil energy resource for the foreseeable future, and could remain a significant proportion of the world’s energy economy for some decades, even under low carbon scenarios. Reserve depletion (or abundance) is just one factor to influence the future value of coal, whether it is from the perspective of long term business strategies for mining companies, or power utilities looking to invest in generating assets. The availability and affordability of coal over the very long term will depend heavily the amount of coal and where it is to be found in the world today.

The full report "Coal reserves in a carbon constrained future" by Paul Baruya is available from the IEA CCC Bookshop.

Written by Paul Baruya. Edited by

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