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Page added on August 4, 2014
Robert Rapier: King Coal Deposed in West, but Reigns in East
This is the 3rd installment in a series that examines data from the recently released Statistical Review of World Energy 2014. The previous posts – World Sets New Oil Production and Consumption Records and The US and Russia are Gas Giants – delved into world oil and natural gas production and consumption figures. Today’s post looks at the global coal picture.
Coal Consumption
In the US, coal consumption has been flat to declining for the past 20 years. Just since 2007, US coal consumption has fallen by more than 20%. This is the primary reason the US leads all countries in reducing carbon dioxide emissions over that same time period. (This will be covered in an upcoming article). Still, the US accounted for 11.9% of the global demand of coal in 2013. This was good for 2nd place globally among countries for coal consumption, but the 455.7 million metric tons of oil equivalent (Mtoe) that the US consumed in 2013 was roughly the amount we consumed in 1987.
The declining demand story is the same in the European Union (EU). Since 2007, coal consumption in the EU has fallen by 12%. While the consumption decline since 2007 is not as dramatic as that in the US, the decline in EU coal consumption since the late 1980s has been greater. In 1989, US and EU coal consumption were almost identical (480.5 Mtoe for the US versus 487.6 Mtoe for the EU), but then consumption in the EU fell sharply during the 1990s. Today the EU share of the world’s coal consumption is 7.5%.
The story of declining coal consumption in recent years holds true for most of the developed world. Canada, Australia, and New Zealand have all seen their coal consumption decline since 2008. Japan’s coal consumption was on the decline until the 2010 Fukushima nuclear power plant accident, but has been increasing since as Japan tries to make up for the loss of nuclear power. Germany is a notable exception in the EU. It has seen coal consumption rise in three of the past four years, but there too the general trend for the past 40 years has been sharply lower coal consumption.
So if you live in the West, and you tend to get your news sources from the West, you might believe that global coal consumption is on the decline. But you would be very wrong.
The Chinese Dragon is Fueled by Coal
In 1980, the US, the EU, and Asia Pacific each consumed some 400 to 500 Mtoe of coal. EU coal consumption never went much beyond that level before beginning to decline to the 2013 level of 285.4 Mtoe. US coal consumption rose a little bit, but topped out at 574.2 Mtoe in 2005.
But in the developing world, coal consumption trends have been very different. In fact, coal’s gains in the developing world are shocking:
In 1980 the combined coal consumption of the US and the EU was 866 Mtoe. Today, the combined coal consumption of the two is 741 Mtoe. But the increase in Asia Pacific’s coal consumption since 1980 is 2196 Mtoe — nearly triple today’s combined coal consumption of the US and EU.
China is the world’s top consumer of coal, and was responsible for nearly 74% of Asia Pacific’s gains since 1980. In 2013, China consumed 1925 Mtoe, 50.3% of the global total. This represents a more than six-fold increase in China’s coal consumption since 1980, which is of course partially explained by the outsourcing of manufacturing from developed countries.
No other country comes close to China’s coal consumption. The US was a distant second at 456 Mtoe (11.9% of the global total), followed by India at 324 Mtoe (8.5%), Japan at 129 Mtoe (3.4%), and Russia at 93.5 Mtoe (2.4%).
Coal Production and Exports
China also produces the most coal. The 1840 Mtoe mined there in 2013 was 47.4% of the world’s total, but not enough to satisfy China’s coal demand. As with the consumption figures, the US was also a distant second in production at 500.5 Mtoe, which was more than the US consumed and 12.9% of global production. US coal exports are on the rise as a result. Following the US in coal production were Australia at 269 Mtoe, Indonesia at 259 Mtoe, and India at 229 Mtoe.
Australia and Indonesia both produce far more coal than they consume, and as a result they are major exporters to Asia. In fact Australia is the world’s top coal exporter, with nearly 90 percent of its exports destined for Japan, China or South Korea. US coal producers would love to expand into this market but are at a geographical disadvantage. Further, there aren’t many options for US producers wishing to export coal from the west coast. As a result, most US coal exports are destined for Europe.
Coal Reserves
Nevertheless, the US has 26.6% of global proved coal reserves — the most of any country, with a reserves-to-production (R/P) ratio of 266 years. At current market prices for coal, these reserves would be valued at some $15 trillion, so there will be tremendous economic incentive to mine this coal. But there will also be tremendous environmental pressure to leave it in the ground as concerns about climate change continue to mount.
Following the US in coal reserves are Russia with 17.6% of global reserves, China with 12.8%, Australia with 8.6%, and India with 6.8% of global reserves. The BP Statistical Review indicates that each of these countries has enough proved reserves to produce coal for at least 100 years at 2013 rates except for China, which has only enough reserves for 31 years of production at its 2013 consumption rate. Russia, on the other hand, has enough proved coal reserves to produce at its 2013 rate for over 450 years.
Conclusions
The global coal markets are the story of skyrocketing consumption in the Asia Pacific region that far more than offsets the consumption declines in the West. The US has the world’s largest coal reserves, and because the US Environmental Protection Agency is attempting to phase coal out in the US, coal producers would like to grow their coal exports. However, these producers are constrained by geography and the availability of west coast coal export terminals in tapping into the growing Asia Pacific market.
10 Comments on "Robert Rapier: King Coal Deposed in West, but Reigns in East"
rockman on Mon, 4th Aug 2014 4:20 pm
“In the US, coal consumption has been flat to declining for the past 20 years.” True. As is the fact, according to that chart we are currently consuming more coal then at anytime between 1965 and 1986. The US is also producing more coal today then at any other time before 1998 thanks to surge in coal exports.
“…producers are constrained by geography and the availability of west coast coal export terminals…” Have no fear…the US gov’t is here. While west coasters fight the terminals Texas welcomes them with open arms. Federal agencies are currently expediting approval for the expansion of Texas coal export terminals. Thy simply move that gov’t coal from the western lands in train cars pulled by diesel locomotives. A bit more GHG production from those trains but that US coal will still make it overseas to be converted into more GHG.
BTW according to the EIA more then half the US coal exports during 2013 went to Europe…more then 5x as much as shipped to China. In fact more US coal that year was exported to just the Netherlands then all of China.
Bottom line: US coal might have slipped a bit in the last few years but IMHO it’s still a long way from being a dying industry in the US. And that’s with $4/mcf NG. We’ll see how it does in the future when NG prices double. Or triple.
steve on Mon, 4th Aug 2014 6:06 pm
Yes I am also confused by this consumption as well. I thought the consumption of coal was going up in both Germany and Japan…not flat…What happens to the earth if all this coal is burnt? I get so mad liberals will complain about coal consumption but they don’t mind using tons of energy for their personal use…it is easy to talk the talk…We need to tax the shit out of energy for personal use….
Makati1 on Mon, 4th Aug 2014 9:08 pm
Lets talk about East/West coal use in a few years when the frak gas bubble has burst and coal is cheaper than any other hydrocarbon.
The world is burning more and more coal, and THAT is the climate changing event, not who burns it. If the West is serious about cutting emissions, then close down the coal mines and stop shipping it to your factories in 3rd world countries. Simple, yes?
Davy on Tue, 5th Aug 2014 6:33 am
A clear example how the cancerous growth in Asia is destroying the world. These number show what should be obvious that China is the CC culprit. Coal will remain a driver in the US by necessity. The gas bubble will burst leaving the thermo electric market turning back to coal albeit in a diminished state. I see coal decline stabilizing but still declining with the coming descent. There is not the reserves claimed by the cornucopians anywhere in the world when one considers the cost of extraction in a world in economic diminishing returns. Economic forces are a double negative with increasing capex costs and decreasing energy content/reserve placement. The coals growth days are numbered but do not expect coal to go away. It will be the fall back fuel when descent accelerates. Sorry CC folks you are stuck with coal until the bitter end.
rockman on Tue, 5th Aug 2014 7:51 am
M – Yes…very simple. And the answer is no. Everyone is fine with someone else making sacrifices. Not so much for themselves.
synapsid on Tue, 5th Aug 2014 9:18 am
Makati,
Precisely.
But, to quote Hemingway: “Isn’t it pretty to think so?”
JuanP on Tue, 5th Aug 2014 10:10 am
Great, great article. The author makes several excellent points and this is a great review of the current global coal situation and its recent past. This a thorough review for its length.
I think it is amazing how coal use has increased in the world in the past decade. I personally consider it the worst tragedy that has happened so far in the 21st century, everything else pales in comparison to the consequences that burning this coal will have. Coal worries me a lot. When I think of the worst climate change scenarios possible in the future, it’s always coal and methane that take me there. I am not too worried about the oil and gas we use, I think it will be the coal consumption that will do us in.
I hope the author includes some mention of the fact that the East has become the world’s factory, and that much of that coal used in Asia is used to manufacture the products we consume in the Western world in his coming emissions article.
I think it is unfair to bring up Asian coal consumption without also mentioning that we are partially responsible for it as global consumers. I live in the USA and, unfortunately, most of the stuff I consume was manufactured in Southeast Asia.
JuanP on Tue, 5th Aug 2014 10:19 am
Rock, “And that’s with $4/mcf NG. We’ll see how it does in the future when NG prices double. Or triple.”
This is what we were talking about earlier elsewhere. I think you see the current low gas prices as not sufficient to maintain current production in the long run because they are too low to support investment in new future production. That’s the way I understand things with NG prices, they will have to increase significantly in the future to maintain production levels. IOW, if prices stay this low, at some point production will begin to decline.
Nony on Tue, 5th Aug 2014 10:43 am
Rock is going to need to wait a generation for that $8 NG that he wants. The supply glut from the land rush is well over (the rigs moved away 2 years ago, the wells have fast decline).
The reason for the low prices is that the Marcellus has a metric butt ton (official unit) of NG resource at less than $5/MCF. IPs are stunning and more than make up for the decline rate (which itself is not as bad as the Haynesville that Rogers/Berman have mistakenly used as a comparison since 2009!)
Kenz300 on Tue, 5th Aug 2014 12:28 pm
The world needs to stop building any more coal fired power plants if we are to have any hope of dealing with Climate Change.
There are safer, cleaner and cheaper ways to generate electricity.
Wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste are the future.