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Page added on January 15, 2016
We Might Have Finally Seen Peak Coal
Chinese coal use peaked back in 2013, as Climate Progress first reported in May. Since China was responsible for some 80 percent of the growth in global demand since 2000 — and since the United States and most of the industrialized world have also started cutting coal use — the key remaining question for the dirtiest fossil fuel was, “Will a handful of developing countries, particularly India, see enough growth in coal consumption to overcome that drop?”
Goldman Sachs, among others, says the answer is no. “Peak coal is coming sooner than expected,” Goldman told clients in a September research note. Goldman projects global demand for coal used in electricity generation will drop from a peak of 6.15 billion metric tons in 2013 to 5.98 billion in 2019 (the end of its forecast range).
Global coal demand in 2009 and 2014 (and projected for 2019) in billion metric tons. The Compound Annual Growth Rate (CAGR) was +3.6% from 2009 to 2014, as China’s massive growth was boosted by India’s, while the Rest of World (RoW) was flat. Goldman Sachs projects that from 2014 to 2019, coal’s CAGR will be -0.3%, as China’s use drops more than India’s rises, while demand in the RoW is down slightly.
“The industry does not require new investment given the ability of existing assets to satisfy flat demand,” explained Goldman Sachs commodity analysts Christian Lelong and Amber Cai. “So prices will remain under pressure as the deflationary cycle continues.”
In short, there’s no foreseeable recovery for coal futures, which have already plunged 77 percent since 2008 and 63 percent since 2011. No wonder, then, that Arch Coal — the second largest supplier of U.S. coal — filed for bankruptcy on Monday, joining troubled competitors like Patriot Coal, Walter Energy, and Alpha Natural Resources.
Goldman Sachs explains the private sector has all but stopped investing in new coal mines, stating: “In any case, capital markets are largely closed [for funding coal mines] with the exception of private equity investors on the hunt for distressed assets.”
And China itself won’t be approving new mines for at least the next three years, as we reported last week. “Chinese coal consumption enters downward spiral,” was the key conclusion of a major analysis last month of Beijing’s energy and climate policies from the Center for American Progress. China’s coal consumption dropped nearly 3 percent in 2014 and at least 5 percent in 2015. One analyst in Beijing projected recently, “coal consumption will drop by between 2.5 percent and 3 percent in 2016.”
Unsurprisingly, China’s coal imports have totally collapsed. In 2015 they dropped a remarkable 30 percent, the biggest decline on record. Bloomberg quotes a director with China Coal Transport and Distribution Association saying, “China doesn’t need overseas coal supplies anymore as it already faces a big domestic oversupply.”
It’s not just China reducing coal imports. India’s Minister of Energy Piyush Goyal said last May, “We are confident that in the next year or two, we will be able to stop imports of thermal coal.” Indeed, a 2014 solar auction revealed “solar PV is cheaper for Indian users than the electricity price needed to pay for imports of coal from Australia” for new thermal coal-fired power plants.
And it’s not just China cutting domestic coal use — the rest of the world also slashed coal last year. Remarkably, all of this has happened before most major countries have even adopted a serious price for carbon that comes anywhere near approximating the harm to human health and well-being caused by burning fossil fuels, like coal.
The successful Paris climate talks should make obvious to all what the world’s top climate scientists and governments already know and have stated publicly: The world has to go to zero total carbon pollution long before 2100 and indeed as close to 2050 as possible — before actually going carbon negative.
In December, some 200 leading nations unanimously embraced a plan that committed to an ongoing effort of increasingly deeper emissions reductions aimed at keeping total warming “to well below 2°C [3.6°F] above preindustrial levels.” In short, as I wrote last month from Paris, “World Unanimously Agrees To Not Burn Most Fossil Fuels.”
Because coal is the most carbon intensive fossil fuel and generally burned the most inefficiently, it’s crucial that it stays in the ground. Indeed, a 2015 article in the journal Nature, “The geographical distribution of fossil fuels unused when limiting global warming to 2 °C,” concluded that, “over 80 percent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2 °C.”
That, of course, is precisely why 350.org’s founder Bill McKibben and others have been urging people and institutions to divest their portfolios from investment in fossil fuels like coal for more than two years. Congrats to all those who listened.
Change happens slowly, until it happens fast.
31 Comments on "We Might Have Finally Seen Peak Coal"
dave thompson on Fri, 15th Jan 2016 10:27 am
Nat gas has replaced the use of coal in many instances. The Gas is cheaper to use at this point in time. Once the gas is expensive again, coal will be used in place of gas.
Kenz300 on Fri, 15th Jan 2016 10:29 am
Climate change is real and will impact all of us.
The world needs to stop building any more coal fired power plants and begin to shut down the oldest and dirtiest ones.
Renewables to Overtake Coal as World’s Largest Power Source, Says IEA
https://ecowatch.com/2015/11/10/renewables-to-overtake-coal/
rockman on Fri, 15th Jan 2016 11:04 am
The global population continues to grow. Govts of less developed countries continue to strive to improve their economies. Coal is a huge source of relatively cheap energy. There is no global authority that can forcibly regulate GHG emissions today and never will be IMHO.
So do the math…it ain’t hard.
ghung on Fri, 15th Jan 2016 11:17 am
Agreed, Rock. Governments and markets will do whatever it takes to maintain and grow their economies and standards of living. Screw the climate.
We have our priorities. A dramatic decline in coal use represents contraction; simply not acceptable. “Our way of life is not negotiable”.
OFT on Fri, 15th Jan 2016 11:25 am
Valid point. Population growth will continue for a couple of decades yet, and those new faces will want just as much or more than their fellow citizens. Renewables may be favoured, but gas and the the other culprits will be used to fill a lot of the demand.
Last time I looked Bangladesh was still running a 15-20% energy shortage (hence rolling power cuts) and Egypt is busting a gut to bring Zohr gas field on line to keep the aircon working in the summers and stop the masses revolting.
GregT on Fri, 15th Jan 2016 11:52 am
“So do the math…it ain’t hard.”
The same as lemmings, locusts, or yeast. Except for one small difference; We’re taking down the entire planet with us. Some call it evolution……
JN2 on Fri, 15th Jan 2016 12:01 pm
Rock: maybe, just maybe, the falling cost of wind and solar might make coal a relatively *expensive* source of energy. We live in hope…
Apneaman on Fri, 15th Jan 2016 12:13 pm
I think we’ll hit 7.4 billion apes very soon. It’s a trap.
Current World Population
7,395,042,180
http://www.worldometers.info/world-population/
Lawfish1964 on Fri, 15th Jan 2016 12:54 pm
Bold prediction there, Apneaman. Really going out on a limb.
Apneaman on Fri, 15th Jan 2016 1:27 pm
I’m also making the call that tomorrow will be Saturday.
tahoe1780 on Fri, 15th Jan 2016 2:01 pm
“63 of the 89 analyzed NNRs (Non-renewable Natural Resources – essential to growing/maintaining industrial societies) were scarce globally in 2008.” “All indications are that we will attempt to reestablish and maintain or exceed pre-recession economic output (GDP) levels and growth rates, both domestically (US) and globally. We will soon discover, however, that ever-increasing NNR scarcity has rendered these goals physically impossible, and that the implications and consequences for human societal wellbeing associated with this reality are catastrophic.” Source – Scarcity, Humanity’s Final Chapter? Christopher Clugston
Davy on Fri, 15th Jan 2016 2:08 pm
Tahoe, I have that book on my wish list at Amazon. I am just wondering if it will enlighten me anymore than what we talk about here. IOW is it worth buying? I am always looking for great books to add to my library
GregT on Fri, 15th Jan 2016 2:17 pm
“I think we’ll hit 7.4 billion apes very soon.”
Might just happen sometime in the next few weeks, absent some catastrophic and catalyzing event – like a new Pearl Harbor. 🙂
pennsyguy on Fri, 15th Jan 2016 2:27 pm
7.4 billion apes in 2016, between 0 to 2 billion in 2100.
Apneaman on Fri, 15th Jan 2016 3:04 pm
Why would TPTB let in a bunch of
workersrefugees so easily?More people in Europe are dying than are being born
http://phys.org/news/2016-01-people-europe-dying-born.html
JuanP on Fri, 15th Jan 2016 3:14 pm
China, Russia buying gold, http://www.mining.com/china-russia-lead-central-banks-gold-buying-spree/
Go Speed Racer on Fri, 15th Jan 2016 5:27 pm
If we stop digging up the coal now, then when we run out of everything else, we can dig it up and burn it later.
tahoe1780 on Fri, 15th Jan 2016 5:55 pm
Davy, I would consider it library worthy. Goes well beyond fossil fuels. Provides a detailed analysis of each of the 89 NNRs looked at (many needed to build out the “alternative” infrastructure) and is loaded with references/links.
Davy on Fri, 15th Jan 2016 6:07 pm
T, thanks
makati1 on Fri, 15th Jan 2016 7:15 pm
I.E.A. says that coal use will more than double in the next 50 years. Who is correct? We will use coal until it is no longer mine-able.
Kenz300 on Sat, 16th Jan 2016 9:28 am
Too many people……….create too much pollution and demand too many resources….
China made great progress in moving its people out of poverty…….one reason was slowing population growth…..
If you can not provide for yourself you can not provide for a child.
CLIMATE CHANGE, declining fish stocks, droughts, floods, air water and land pollution, poverty, water and food shortages all stem from the worlds worst environmental problem……. OVER POPULATION.
Yet the world adds 80 million more mouths to feed, clothe, house and provide energy and water for every year… this is unsustainable… and is a big part of the Climate Change problem
Birth Control Permanent Methods: Learn About Effectiveness
http://www.emedicinehealth.com/birth_control_permanent_methods/article_em.htm
Apneaman on Sat, 16th Jan 2016 10:25 am
Kenz, too many first worlders.
https://www.youtube.com/watch?v=rcx-nf3kH_M
makati1 on Sat, 16th Jan 2016 6:24 pm
Kenz, if the 320,000,000 Americans were removed from the consumer base, there would be room for 1,500,000,000 new people. The US is ~5% of the worlds population consumes 25+% of the world’s resources. Do you think that is fair?
Kenz300 on Sun, 17th Jan 2016 7:59 am
The worlds poorest people are having the most children. They have not figured out the connection between their poverty and family size. Endless population growth is not sustainable. If you can not provide for yourself you can not provide for a child.
Birth Control Permanent Methods: Learn About Effectiveness
http://www.emedicinehealth.com/birth_control_permanent_methods/article_em.htm
onlooker on Sun, 17th Jan 2016 8:16 am
Or maybe they do not have ready access to birth control and maybe having children is actually seen as a support and insurance policy for the parents in their old age.
makati1 on Sun, 17th Jan 2016 9:33 am
Onlooker, the idiot child has not accepted that those ‘poorest’ people may just be more intelligent then he. In less wealthy lands, many children are/were needed to insure a few survive to take care of their parents in their old age, as you stated. That, and the fact that most religions push big families, is the cause of a ballooning population, not ignorance. Also, the inability to have access to simple birth control methods is another reason.
For instance: condoms are about $0.50 each here. That same $0.50 will buy a kilo of rice, providing about two meals for the family. If he makes less than $2 per day, it may mean deciding to eat and forgo birth control. And, yes, there are other methods that do not cost money, but they also require a bit of luck or total sustenance and meticulous attention to cycles and dates.
So easy to blame population instead of consumption as the problem. Typical of the wasteful consumers of the 1st world and most Americans in particular.
http://visual.ly/resource-consumption-country
Note that if you multiply the US consumption by the number of times the US population would go into China’s population (~4), the US is number one in consumption everywhere. Not a good thing when the SHTF.
makati1 on Sun, 17th Jan 2016 9:34 am
LOL Meant … “a bit of luck or total abstinence”…
Davy on Sun, 17th Jan 2016 10:01 am
More extremist per-capita blather crying over spilled milk. The fact is the majority of overpopulation and overconsumption is in Asia. Every major indices of consumption is dominated by Asia. Pollution is off the chart in Asia. Population levels are madness in Asia.
Extremist like to dive for cover however they can and claiming fairness sounds so wholesome. The west and the US are living disgustingly in relation to the world poor but that does not change the reality of the situation. Nature could give a rat’s ass about human fairness. Nature just cares about the net effect of all humans. Why not admit we are all to blame and all will suffer the consequences.
Apneaman on Sun, 17th Jan 2016 10:50 am
Davy the 1%er cocksucker defending 1%er consumption levels again. You and yours will deserve the suffering more than most.
Davy on Sun, 17th Jan 2016 11:00 am
Talk to you chum buddies Juan the haun and widle Greg. Greg flipped a 1mil house and Juan the Haun lives in the heart of Miami beach turning high priced real estate. I am a goat farmer. Tell me who is 1%er. We know you are not because you are a capital B u m.
Kenz300 on Mon, 18th Jan 2016 10:12 am
The transition away from fossil fuels continues…..
3 Reasons Big Coal Had a Bad Week
http://ecowatch.com/2016/01/16/big-coal-had-a-bad-week/