Goldman Sachs: “Peak Coal” Is Here

37 Comments on "Goldman Sachs: “Peak Coal” Is Here"

James Tipper on Thu, 24th Sep 2015 7:37 pm 



This is the first article in an extremely long time where I learned something new that I didn’t already know. Great job, peakoil. com, you’ve finally added new information! It’s only been like weeks(perhaps months) of the same drivel. But I digress, I like a good deal of the content, so it’s my fault I come on here anyway.

It’s not very surprising that multiple energy sources would peak at the same time. Although I thought peak coal was predicted for 2040, the fact remains that the coal we get now is much lower quality than the coal we had 100 years ago.

“The decline is not enormous, but given the fact that not too long ago coal producers around the world expected strong growth for the next few decades, the downturn in coal demand is monumental.”

That is pretty surprising I will give you that. Now I mean naturally because it’s Goldman Sachs I have to be suspicious. On the other hand since it’s not corn-porn, “We’re going to be fine, the markets can handle it” drivel I’m much more inclined to believe it.

“The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues”

Yes but the conditions of these coal mines will simply get worse as who wants to do anything but the most basic repairs on old mines?

Davy on Thu, 24th Sep 2015 8:26 pm 



It should be noted that coal is an extremely important segment of the Chinese economy. If it is in decline along with the Chinese economy it is likely China will see some of the same pressures tight oil is seeing in the U.S.

This will be a systematic disturbance. Many people are employees in Chinese coal mines . Many industrial jobs are indirectly related to Chinese coal complex.

What’s good is also bad in this day and age. We humans can’t win for losin. We save the climate only to lose the economy. Unfortunately we lost the climate now we are going to lose the economy. We went for the Faustian bargain and now the devil wants his dues.

makati1 on Thu, 24th Sep 2015 8:51 pm 



If the Devil has a partner, Goldman Sacs is it.

China is increasing their ‘renewable’ energy production as they shut down old coal plants. Nothing new to those who follow Asia’s growth. But China bashing is the “IN” thing these days if you are an America.

But, you can stop China’s growth. Just stop buying anything made there, or has Chinese parts. Ooops! That would make living in America pretty difficult wouldn’t it? LOL

Half of Us electric is still powered by coal.

paulo1 on Thu, 24th Sep 2015 11:06 pm 



Glad to see the downturn in coal as there are a few mine proposals on Vancouver Island and there is very big opposition. I always find it difficult to oppose folks needing to put bread on the table, but I suppose even meth dealers buy groceries and pay rent. Likewise, it will be good to see the demise of coal.

Ralph on Fri, 25th Sep 2015 2:28 am 



This is not geologic peak coal as in peak oil. The coal is there and it is still relatively cheap to dig out. China economy might recover, and US coal has been supplanted by cheap shale gas. Shale gas is unlikely to sty that cheap.

apneaman on Fri, 25th Sep 2015 2:57 am 



Coal is the future. Steam power will return (at a much smaller scale) before the end. No environmental regs either.

rockman on Fri, 25th Sep 2015 6:33 am 



Ralph – Exactly. The article is ridiculous because it completely ignores the HUGE amount of PROVEN coal reserves in the world. If coal has peaked it’s because economic conditions have reduced demand…not a lack of the resources. If/when the economics/demand change coal could come back big time. Given the ultimate decline of other fossil fuels, the very slow development of the alts and the very easy to predict increase in global demand for energy it’s easy IMHO to imagine coal again become a major source of global energy.

makati1 on Fri, 25th Sep 2015 7:43 am 



I’m not so sure about that. Coal today is barely above the net energy of wood. The really good coal is mostly gone. The future is not going to have billions of tons to waste on anything not an absolute necessity.

Are you aware that, if you average out the amount of coal produced in the world per year, it is about one ton per capita. How will those 7 billion tons get mined without oil energy? Are you and each member of your family going to go into the mines and dig out your personal ton every year?

When I was a kid, my grandparents house was warmed with anthracite coal. About 5-6 tons per winter. I remember the smell even now 60+ years later. I also remember the number of carbon monoxide deaths.

I don’t see steam being a future energy to power much of anything. 60 years ago, the coal veins were near the surface. Then they began strip mining for the lower coal veins, then they started to move mountains because it was deeper down. Now … well, you may have to work a month at hard, unsafe labor for your ton each year.

I’m not making fun of you, nor belittling your idea. I just pointed out why I think is not going to be possible. What do you think?

JuanP on Fri, 25th Sep 2015 7:55 am 



I am with Ralph, Apneaman, and Rockman on this. I expect coal extraction and consumption to outlast and replace oil and gas as they decline in the future. I have held this opinion for many years now and nothing I’ve read since has made me change my mind. Coal will be the last fossil fuel standing.

I have never been particularly concerned with the greenhouse gases produced by burning gas and oil. Even if we completely stopped burning gas and oil today, the amount of available coal is several times more than needed to send climate change ballistic. It is mostly our coal burning and the methane hydrates evaporating from the permafrost and oceans that guarantee that the planet will eventually become uninhabitable. Oil and gas are insignificant by comparison.

JuanP on Fri, 25th Sep 2015 7:56 am 



Mak brought a good point up in that wood burning is also one of the things that will do us in.

godq3 on Fri, 25th Sep 2015 8:25 am 



rockman – Still talking bullshit, huh?
There always will be coal, oil, a NG in the ground. Just demand for it will fall, and then quite fast vanish. The demand will/is falling, because it’s too expensive to extract/mine these resources, at current world economy efficiency of turning these energy resources into GDP.

apneaman on Fri, 25th Sep 2015 8:25 am 



JuanP, ballistic is already locked in. That is, another 1 to 1.5 degree C if we stop everything within the next 5 minutes. This does not include the many already underway positive self reinforcing feedback loops. 1 degree above baseline is where we are at today. 1 degree above baseline was the scientifically estimated safe upper limit from 1990. 2 degree was always an economic policy target – not scientific.

onlooker on Fri, 25th Sep 2015 8:43 am 



I think the reality should be framed in a draconian manner because it has come to this. By the way this locked in GW is just the beginning. 1C will be 2C soon as lag effects from Carbon burnt and emitted in the last 20 to 30 years begins to manifest. Then that increase will take us eventually up and up to at least 6C above above baseline. This is according to a very informative and credibly sourced book named “6 degrees our future on a hotter planet” by Mark Lynas. Of course this is discounting further emitting of FF and without a clear understanding of how feedback loops will accelerate the process. Only that in accord with the CO2 already in the atmosphere which according to Paleolithic records sets up conditions for a much warmer Earth and the already noticeable feedback activity underway climate change and global warming are set to warm the Earth for thousands of years to come.

Kenz300 on Fri, 25th Sep 2015 8:58 am 



If the world is to have any hope of dealing with Climate Change we have to stop building any more coal fired power plants and begin to shut down the oldest and dirtiest ones.

India’s Cochin International Airport Goes 100 Percent Solar – Renewable Energy World

http://www.renewableenergyworld.com/articles/2015/09/india-s-cochin-international-airport-goes-100-percent-solar.html

onlooker on Fri, 25th Sep 2015 9:03 am 



https://www.youtube.com/watch?v=xfvd5eVGqO0
This is a link to the distinguished climate scientist Dr. James Hansen calling for less coal and meat use to forestall climate change.

makati1 on Fri, 25th Sep 2015 10:20 am 



Kenz, and what good does that minuscule amount of solar mean? Nothing. It supports one of the most polluting means of transportation in the world. Both will die along with oil.

joe on Fri, 25th Sep 2015 10:27 am 



Fact is, if/when peak oil hits, it’s toast for coal as well. Coal was once used as transportation fuel, when oil came along oil fueled heavy industrial mining and coal switched to a utility fuel only as it was millenia before (energy for heat, light and cooking). Peak oil will make oil a high cost transportation fuel, and coal coal will be harder to get given that the ‘Easy Coal’ is gone decades ago. What powers the big monster strip mining machines is gas/electric generators easy oil powers tough coal. The reason China is still ‘communist’ is because like most developing economies and poor countries, they use armies of men with drills and shovels. It is simply a fact that the oil powered US overlooks. This is also a massive problem for China. Peak coal will mean peak demand for labour, and that prospect leaves China with 2 choices, 1 get oil and become a services economy like the US, 2 become a harsher regime again and regress to be more like north Korea.
With the world clearly praying that fusion and Iter will sold the world’s energy problem, only time will tell.

rockman on Fri, 25th Sep 2015 11:11 am 



mak – Nothing you’ve said is entirely wrong. But it doesn’t change the fact that global economies will always move towards the cheapest fossil fuel source to satisfy their needs. So the question remains: in the future what will be the cheapest ABUNDANT source of energy? I’m not predicting coal will fit that role but can you name any other energy source that might?

As far as not having enough oil-derived fuel to power coal extraction there will always be enough. That’s not the critical question: what will that fuel cost and how well could the coal extraction industry compete with other consumers for that fuel. If demand/prices for coal is high enough then that industry will be able to outbid other consumers for what it needs.

YES – FUTURE COAL CONSUMPTION WOULD BE BAD FOR PLANETARY HEALTH. But folks need to set aside that concern and focus on the economic dynamics that could drive increased coal consumption in the future. Otherwise they’ll continue to be blindsided by REALITY. None of the VALID concerns over AGW have had any significant effect on the ACTUAL SITUATION we face today IMHO. Thus I see little reason for policies to change in the future just because burning more coal would worsen the environmental impact.

BC on Fri, 25th Sep 2015 11:23 am 



http://www.chinaknowledge.com/Newswires/NewsDetail.aspx?Cat=INV

China’s electricity consumption has decelerated to a 12-month average below 2%. This fits with a nominal GDP per capita of ~2% or less, i.e., same as the US since 2007. Who knows what China’s deflator is to estimate real GDP per capita at this point.

China’s money supply to GDP is ~200%, implying plunging velocity. To maintain nominal GDP growth of reported ~8-9%, this implies money supply needs to grow 16-18%, which is at a compounding doubling time of 46-52 months. That’s a banana republic-like rate. But M2 is growing at a SAAR of 9% and M1 at 4%.

There is a 0% probability that China is growing 7% real.

Rather, with production and exports contracting YoY, wages and consumer and gov’t spending at ~10% YoY, the Chinese economy is growing at best at a nominal rate of 2-2.5% (1.5-2% per capita) with plunging money velocity and ongoing risk of debt/asset and price deflation.

Joe is right. Peak Coal for China is reflective of the end of growth for China, which in turn means that they will not voluntarily transition successfully from a production and export-based economy to a services economy; rather, it will occur by default but with no growth in real terms per capita.

China and India are 40-45 to 80+ years too late to the oil-, auto-, debt-based, financialized Anglo-American economic model.

I anticipate that the Chinese will do what they have historically done: face economic, financial, geopolitical, internal political, and social crises and turn inward from the rest of the world by necessity to deal with domestic instability. I further expect the emerging generation of PLA generals in Beijing to assert political power and even seize power during a economic hard landing/collapse, which is increasingly likely.

Kenz300 on Fri, 25th Sep 2015 12:38 pm 



China has hit the law of large numbers…….

When the economy was smaller it was easy to grow at a high rate. That is much more difficult now.

Most countries would love to have the slowing growth rate that China has……. How many countries are growing at a 5% rate or better?

Bob Owens on Fri, 25th Sep 2015 4:02 pm 



There is a great substitute for any fuel you use to keep warm. Insulation! That, and some Winter clothes, a tiny bit of heat, and you are good! The insulation types available today are excellent! Spray foam insulation seals and insulates better than anything else. As soon as the fuel sources run low people will figure these things out. You can also live in smaller houses. My grandparents had a 2 BR 1BA home with oil heat. They used less than 1/2 the fuel used in today’s oversized homes and they didn’t even have much insulation! We will only learn after our current options are exhausted.

antaris on Fri, 25th Sep 2015 5:19 pm 



Bob. Just like the old saying “There is no such thing as bad weather, only inappropriate clothing.” — Sir Rannulph Fiennes

makati1 on Fri, 25th Sep 2015 11:44 pm 



BC, I like your hypothesis about China’s future. There is a high probability that you are correct. What does that signify for the West and especially the US? Any ideas?

makati1 on Fri, 25th Sep 2015 11:45 pm 



Bob, by then it will be too late.

JuanP on Sat, 26th Sep 2015 7:58 am 



Joe “Fact is, if/when peak oil hits, it’s toast for coal as well.”

First, there is no if about Peak Oil, it’s only a matter of when. There are limited amounts of oil on this planet and production has to come down at some point. If you don’t understand this, you have much to learn. To sustain oil extraction at today’s levels would require the planet to produce oil as fast as we extract it. The oil creation process is millions of times slower than our oil consumption levels.

Regarding the relationship between oil and coal extraction, I beg you to read Rock’s comment above on this subject. All my research has led me to completely agree with him. Many people think that Peak Oil necessarily implies a comparative simultaneous fall in coal extraction. This is an overly simplistic view of how the world works. As oil production declines, its consumption will be prioritized differently. Oil needed to extract coal will become a higher priority than oil used for driving or flying. The same will happen with oil used for food production, IMHO. Keeping the masses fed and entertained will be the first and second priorities, together with keeping the military working and the lights on. Oil for coal mines, tractors, tanks, and electricity will last much longer than most of us imagine.

JuanP on Sat, 26th Sep 2015 8:04 am 



BC, I disagree with Joe, but I completely agree with you that China, India, and other such countries are too late to the development party and will never become post industrial consumer societies. I do not necessarily consider that a bad thing, but the people in those countries will be sorely disappointed when they realize this. I also agree that the PLA will take over the government at some point and that China will turn inward.

ghung on Sat, 26th Sep 2015 8:41 am 



I’m not so sure about China turning inward. They have about 20% of the world’s population and barely 8% of the arable land. Hence, they’ve been engaged in a sort of neocolonialism, buying up agricultural property worldwide, mainly in Africa, and South and North America. They’ve acquired almost $100 million worth of ag properties in the US, not to mention buying large agribusinesses such as the giant Smithfield Foods in the US, one of North America’s largest meat/pork producers and one of the largest meat packing plants, here in NC. The Smithfield prize includes brands such as Ekrich, Gwaltney, Aberdeen, John Morell, Weight Watchers, more…

They’ve also bought up fishing fleets and seafood processors, and are plying the world’s oceans for protein. I’ve noticed some of the wild-caught Alaskan salmon/fish I’ve bought is labelled Product of USA, Processed in China, AKA: Chinese-flagged factory ships.

China will starve if they turn inward. No better reason to go imperial than that, and Asia, as a whole, has little if any food surplus capacity. I imagine they’ll be converting some of their US debt into more real property in the west (may already be doing that).

Manufacturing? Countries like the US can’t function without Chinese manufacturing. How much energy can be mustered to keep the nuts and bolts flowing to the West is anybody’s guess, but the US doesn’t make enough of these things to make a difference. It’s one reason I hoard things like hardware and critical electronic components made of Chinese parts.

Societies in deep overshoot can’t make u-turns. They stay the course until they go off the cliff.

Davy on Sat, 26th Sep 2015 9:09 am 



Well friggen said G-man as usual!

ghung on Sat, 26th Sep 2015 9:35 am 



Thanks, Davy. Here’s a nice little chart of Chinese acquisitions in the US over the last 20 or so years. Move your cursor over the dots to see who and what is now Chinese-owned, including financial and energy assets:

http://money.cnn.com/interactive/economy/chinese-acquisitions-us-companies/

As of last March, they also spent over $28 billion on US homes in the last year alone:

” Chinese buyers topped Canadians to rank as the biggest foreign purchasers of U.S. homes by both sales and dollar volume, accounting for more than a quarter of all international spending.

Buyers from China spent $28.6 billion on U.S. homes and made up 16 percent of transactions by foreigners in the 12 months through March, according to an annual report released Wednesday by the National Association of Realtors. Canadians, which had led international purchases since 2008, ranked second with $11.2 billion in spending and a 14 percent share of sales…..

http://www.bloomberg.com/news/articles/2015-06-17/chinese-top-list-of-foreign-buyers-of-u-s-homes

They’re doing anything but turning inward at this point. Of course, the Chinese are just following the example of the Americans, Brits, and Germans, who have been buying up real capital, worldwide, for decades.

JuanP on Sat, 26th Sep 2015 9:51 am 



Ghung, I am aware of all the points you made, but the end of globalization pretty much guarantees that all countries will turn inward eventually. I never said there would be no wars before that happened or that it would happen soon. It is only a matter of when, not if, IMO. I agree with you that there will be wars, very many of them all over the world, IMO. But at some point in the future people will starve and nations will turn inward. Those Chinese purchases abroad will turn to nothing in time as the global economy implodes. What are the Chinese going to do? Invade the whole world, including the USA to claim their rights? Those Chinese investments are mal investments and will be lost eventually, just like all the loans they’ve made to Venezuela and others.

JuanP on Sat, 26th Sep 2015 9:56 am 



Ghung, I think your comment was more about the past, present, and short term future, while I was more focused on the long term. I don’t see a contradiction between your views and mine. We are just talking about different points along the line.

ghung on Sat, 26th Sep 2015 10:39 am 



Yeah, Juan, I’m sure you know by now general my assessment of things going forward. It’s going to be fun watching the great global game of musical chairs play out; the massive unwinding of all things global as those world powers in overshoot gobble up (and drive deeper into overshoot) those countries with little ability to defend themselves and their resource wealth. I imagine the meme of ISIS will expand as trans-national movements rise up to oppose world powers scrambling for resources. As the saying goes “you can’t un-deplete resources”, and it ALWAYS comes down to resources.

At some point, I expect regional alliances agreeing to divvy up what resources are left rather than fight large-scale wars that no one can afford or win. Hope I’m not wrong on that one, but I doubt the West will be in a position to object militarily if China/Russia decide they want all the oil/gas left in the South China Sea, or that a Chinese administration in places like Uganda is ‘necessary’ to defend Chinese interests there.

What can the US, a country founded largely on radicalism, genocide and slavery, do when another world power decides those things are essential to its survival? Oh, sure, we’ll bitch a lot, but won’t be in much position to come to anybody’s “aid”.

Look for the time when the US loses its dollar hegemony. That’s when the real fun begins, eh?

joe on Sat, 26th Sep 2015 10:40 am 



Dude read my comment again. I WAS talking about resource applications, and peak oil will mean peak coal. A man hasn’t worked harder than a machine since the 1800s. It’s physics.

JuanP on Sat, 26th Sep 2015 11:01 am 



Ghung, I have been reading your comments for years now, since long before I started posting mine. I agree completely with almost everything you’ve ever written. I consider you the most experienced and knowledgeable prepper on this board. I respect your opinions a lot, and let me tell you that I don’t respect most people’s opinions, as you must be aware by now. When I see your name on the comments thread I always click to read what you’ve written. I was thinking about this a couple of days ago. I am very grateful to have met you online. It’s been a real pleasure!

I don’t pretend to own the truth and I love being proved wrong because it means I’ve learnt something new. I don’t care about being right or wrong, I care about learning the truth. I change my mind about things everyday as I am confronted with new knowledge.

ghung on Sat, 26th Sep 2015 12:20 pm 



Gosh, Juan, that’s quite flattering, especially coming from you. Not sure it’s deserved, but I just call it as I see it, and am always open to being proven wrong. I try to maintain an advantage by not being politically or religiously affiliated/motivated, and avoid subscribing to any ideology or dogma, hard as that is. Interferes with clarity, and the world has a severe shortage of morally pragmatic people.

I think Levon Helm’s last line in the movies was “Once you think you’ve got things figured out, YOU’RE WRONG! On the other hand, some things are so glaringly obvious…..

Going through life with blinders on is a helluva way to waste that life, IMO, no matter what clarity brings, though I think some us got screwed when they handed out the cognitive dissonance genes, as delusion seems mighty convenient in times like these.

Forgive them, for they know not what they do… The ones that simply don’t care can rot in hell.

JuanP on Sat, 26th Sep 2015 12:41 pm 



Ghung, I always liked that Jesus line.

Kenz300 on Mon, 28th Sep 2015 9:25 am 



If the world is to have any hope of dealing with Climate Change we need to stop building any more coal fired power plants and begin to shut down the oldest and dirtiest ones.