Peak Coal?

“The perception that coal is the fossil fuel of last resort may well be an illusion.” Energy Watch. Professor David Rutledge of CalTech in a lecture last October, suggests that world coal reserves are grossly overstated and could be substantially exhausted this century.

The New Scientist of 19 Jan 2008 carries an article, “Coal: Bleak outlook for the black stuff”(subscription required for full article), belatedly drawing attention to an interesting piece of analysis by Professor David Rutledge of CalTech in a lecture last October, where he suggests that world coal reserves are grossly overstated and could be substantially exhausted this century. It’s well worth watching the whole hour of the lecture, because the PowerPoint alone [3MB] doesn’t do his argument justice.

The implications of his work, if it should be borne out in the real world, spread all over the whole spectrum of debate on climate change, peak oil and oil substitutes. The good news? If he’s right, there isn’t enough fossil fuel around to get as far as the worst scenarios for global heating. On the other side, if he’s right, the world economy is going downhill from about 2021 on, as the decline in energy supply enforces the end to economic growth everywhere whether we like it or not.

It turns out that Prof Rutledge is himself working from even earlier work from the German Energy Watch group. Their “Coal Report” from last March cast significant doubt on the declared coal reserves of many countries and predicted that world coal production could peak in the 2020s – essentially at the point at which China’s production peaks, given that China is producing something like 50% of the world’s coal production, yet is still a net importer of coal (as are all of the biggest producers other than Australia).

The Energy Watch analysis is a classic bottom-up survey of declared reserves and a check over the history of those reserves: the questions they raise over the validity of the statistics come from the many deep anomalies in the declared numbers. They point out that, in theory, reserves are the remaining known coal deposits that could be recovered with today’s technology and prices. As technology improves and the price rises, reserves should increase, as more of the deposits could be economically mined. Now, both of those things have been happening for the last many years, with the coal price in particular increasing sharply alongside oil. And what has happened to the declared reserves? – they’ve gone down. In fact, they’ve gone down by considerably more than the amount that has been mined – at the extreme edge, Germany quietly reduced its declared reserves in 2004 by a mere 99% – from 23 billion tonnes to 183 million tonnes. Assuming that coal is not one of those rare goods that has a negative price elasticity, something else is going on, and the “proven reserves” are turning out to be nothing of the sort.

Prof Rutledge does something completely different to Energy Watch to make his own projections of coal production: he applies the toolkit of the Hubbert Peak analysis across from oil to coal. Briefly, for the not-too-mathematically-challenged, Hubbert’s analysis takes oil production as being a normal (bell-shaped) curve – and we now know that Hubbert was completely correct on US oil production being that shape, and many other production curves have historically justified his assumption, for example the UK coal production curve in Rutledge’s slides. Transforming that bell curve into a cumulative plot gives you a (much smoother) logistic S-curve. One more transformation of that curve, known as Hubbert Linearisation, brings us to the curve of production as a proportion of cumulative production to date. The useful thing about this curve is that 1) it’s a straight line, 2) trending down and 3) where it cuts the X-axis is a prediction of the total all-time production limit.

Prof Rutledge also supplies a handy Excel spreadsheet with all of his data and projections, so you can have fun running your own alternative analyses if you so wish. Again, if you watch the lecture it will help understand the spreadsheet, particularly the several alternative production estimates for China. For our purposes, we’ll stick with his best guess predictions.

His “top-down” core predictions differ in detail from the Energy Watch survey predictions, but the overall production curve is the same: to hit the high point, China is estimated to have 96 billion tonnes of usable coal remaining vs 44 billion tonnes extracted and 2.4 billion tonnes coming out each year (5 million miners, 4-6,000 deaths per annum from 5 accidents every day), hits the halfway point in ten years time, and it’s all downhill from there, until by 2076 90% of all the usable coal in the world is exhausted.

One significant difference between the predictions is the ultimate total of coal extractions. Energy Watch quotes (but questions) World Energy Council reserves estimates as 4.5Tboe (trillion barrels of oil equivalent), while Rutledge puts reserves at 3.5Tboe and projected actual remaining production as 1.6Tboe. The surprising thing about all of these estimates is that ALL of them, including the “official” figures, are way below the numbers used in A
LL of the IPCC scenarios, which work on an ultimate extraction of 18Tboe, with up to 11Tboe being extracted and burnt in this century.

Rutledge also revisits the oil and gas projections using the same techniques, with the usual observations about OPEC reserves and a production midpoint (aka “peak”) also around 2020 – a relatively optimistic assumption compared to the ASPO worst-case. His figure for remaining oil and gas reserves is 3.2Tboe, vs declared reserves of 2.6Tboe. In parallel with the coal prediction, he points out that this figure is way below EVERY ONE of the IPCC scenarios, which assume 11-15Tboe burnt in this century.

What would this mean for the climate?

If Rutledge is right, there simply isn’t enough fossil fuel in the ground to reach the more unpleasant end of the IPCC scenarios: the temperature rise he gets from plugging his numbers into a climate change model is 1.7°C – which is still enough to probably get to the death of the barrier reef and the melting of the Greenland ice cap, but not to the really nasty bits (see Six Degrees). He also points out that the world takes 800 years or more to recover from that rise, rendering the question of when exactly we burn the oil and coal relatively unimportant – if we burn it any time in the next few hundred years, we get the temperature rise – and anyway at least one degree of that rise is coming from the oil and coal we’ve already burnt – done is done.

This is pretty optimistic as global heating predictions run these days, and has been criticised for that by those who fear it could cause complacency – but complacency wouldn’t be a reasonable reaction for at least three reasons.

1. Non-conventional oil

One of the obvious impacts of Rutledge’s analysis is that in his “business-as-not-very-usual” scenario – ie with no externally imposed restrictions on burning fossil fuels – conventional fossil-fuel production peaks in 2021 and is pretty much over by the end of the century. If this is right, I can’t see any prospect of stopping the exploitation of murky stuff like the Canadian and Alberta oil/tar sands, which probably only add 1Tboe at most, but have god-awful climate impacts, and would push that heating prediction over the 2°C which even the optimists agree gets us to “dangerous climate change“. [Link is to another fascinating hour’s video lecture by NASA’s James Hansen on the CalTech site]

2. And then there’s the impact on the economy …

If fossil-fuel production peaks in 2021, as Rutledge predicts, then the main engine of economic growth is gone. World economic growth after that can only come from increases in energy intensity, ie the amount of GDP you get out of each unit of energy: historically, this has been quite appreciable, and in times of crisis has been as high as 1.5%pa; or out of growth in non-fossil-fuel sources of energy: wind, solar, geothermal, nuclear. For the last, let’s just mention the term “Peak Uranium” and leave it at that (Energy Watch have a report on it). For the others, it would be optimistic to expect them to replace more than 15% of electricity production each over the long term – reversing some growth numbers out of that, electricity accounts for around 40% of fuel use, so in round terms 20% of total fuel use could come from them over 20 years or so – say a 1%pa growth in energy availability (possibly double-counted a little with that energy intensity growth number).

So, in a good year, the limit to economic growth will be 2.5% or less, and that drops to 1.5% or less after 2040 or so. World population growth rate is a little over 1.1%pa, so GDP/head growth would be limited to 1.4% or less to 2040, and three parts of bugger-all after that. Compare this to yesterday’s IMF forecast:

The IMF’s chief economist calls it a significant global slowdown. For the major developed economies, the IMF predicts continued, but much weaker, growth this year. The new forecast for global economic growth this year is 4.1%, after nearly 5% last year. There is a very sluggish period ahead for the main rich countries.

So, 4.1% will be very sluggish – how does a maximum of 2.5% or 1.5% sound?

3. and Food? and Deforestation?

The ability of the world to feed nearly 7 billion population is completely dependent on mechanised agriculture – without it, the carrying capacity of the planet is much lower. It probably won’t come to that – but mechanised agriculture, like many other fuel uses, will probably be sustained by biofuels – ie diverting food production into fuel production, making foods as well as fuel scarcer and more expensive – and maybe promoting huge amounts of deforestation for palm oil production, adding significantly to Rutledge’s global heating prediction. The good news for the world’s agrarian societies is a major transfer of wealth from the eaters
to the growers – but that probably doesn’t include Australia: remember, in the three-degree world:

“The combination of fire, heat and drought will make life in Australia increasingly untenable as the world warms. Farming and food production will tip into irreversible decline.”

and “none of the continent of Australia … will be able to support significant crop production in the four-degree world”.

Still, we’ll be getting a good price for the coal.

Complacency?

So, I don’t think Rutledge’s predictions can lead to complacency. My problem, I guess, is that his predictions and the consequences outlined above are probably the most optimistic forecast I’ve seen lately, so I suppose I have to hope he’s right …