(This is a guest post by Euan Mearns, an energy analyst at The Oil Drum. This post appears under a Creative Commons Attribution-Share Alike 3.0 United States License)
In July of this year I wrote a story called The Chinese Coal Monster drawing attention to the fact that China would soon account for 50% of global coal production and consumption. 10% per annum growth in Chinese coal is clearly unsustainable and I posed the question "How long can this go on?"
An article published in the Wall Street Journal earlier this week called China's Coal Crisis suggests the answer to this question is not much longer.
"Policy makers [in Beijing] are mulling an annual cap of between 3.6 billion tons and 3.8 billion tons in the next five-year plan, running from 2011 to 2015, the state-run Xinhua news agency reported earlier."
A Nature publication called The End of Cheap Coal by Heinberg and Fridley was also published this week. This refers to earlier work such as Blackout (Heinberg), Hubbert's peak - the coal question (Rutledge) and A global coal production forecast with multi-Hubbert cycle analysis (Patzek and Croft). The most notable thing about Heinberg and Fridley's (on The Oil Drum known as Sparaxis) comment is that it is published in Nature. More commentary and full reproduction of The Chinese Coal Monster below the fold.
Let's begin with a few excerpts from the WSJ article:
"State-run media reported that Beijing is considering capping domestic coal output in the 2011-2015 period, partly because officials worry miners are running down reserves too quickly to meet the needs of a rapidly expanding economy."
"Imposing a cap would be significant as China's mining sector is already finding it hard to keep up with domestic coal demand, which has grown around 10% annually over the past decade."
So the cap has been set because the mining industry is finding it increasingly difficult to maintain and grow production.
"In the three years to September 2010, Chinese companies spent $20.96 billion on overseas coal-sector acquisitions, according to Dealogic."
"Even if no official limits are introduced, China can't keep growing coal output much beyond another decade, analysts say. The mining sector is constrained by chronic infrastructure bottlenecks, especially road and rail, and those coal deposits that are easiest to mine have already been tapped.
Experts are starting to predict when China's coal reserves will run out—a nightmare scenario in a country where 70% of its energy is derived from coal."
This is a key issue. China may well have vast reserves remaining, but these may be further away, deeper down, thinner seams and lower energy content, and at some point it just becomes impossible to achieve what you achieved the previous year when so many variables work against you.
READ FULL STORY HERE