China Coal and The Great Doubling

Back in 2005 it was clear to a number of observers that China’s trailing rate of coal consumption was so strong, that its demand was on course to double by the end of the decade. As of 2010, this is precisely what’s happened. From a jump between 2002-2003, around 850 Mtoe (million tonnes oil equivalent), China is now consuming 1713.5 Mtoe as of last year, according to the BP Statistical Review. | see: China Coal Consumption in Mtoe 2000-2010.

It only took China 7-8 years to achieve this great doubling. While the sustainability of this rate of growth is certainly in doubt, it bears mentioning that last year a number of global coal producers increased production to help China meet its needs. Indonesia, in particular, raised its production of coal by an almost insane 20% over 2009. Indeed, a number of the regions that I have previously identified as having deep, recoverable reserves raised production in 2010 by substantial margins. The global transition back to coal is fully on course, with a veritable second Age of Coal now on the horizon.

-Gregor

  • Anonymous

    Just curious Gregor, what are people doing with all the coal ash being produced by all of this?

  • Doji Star

    Construction and high speed rail.  There is a (conspiracy?) theory going around that there isn’t enough high quality fly ash being produced in China for all of the high speed rail construction so it will have massive problems.

  • How long do you think China can keep this up?

    looks like Germany and Japan are gong to burn more coal as well …

  • gregor.us

    Well, it’s complex. As you know, alot of this coal is devoted to manufacturing. In other words, this is really OECD industrial/energy consumption that’s been arbitraged to China. But that said, assuming the current trajectory–say, because China continues to convert into a consumer of its own production–I’d say until around 2015. This enormous growth spurt in coal production I think is sort of a last hurrah. Of course, oil supply will continue flat.

    Just as with oil, Steve, I favor the Orlov Descent model: at some point, higher energy costs no longer are enough to support higher priced supply–then a feedback starts that encourages descent, with each successive reduction in demand taking off tranches of previously high-cost oil and coal supply. Thus reducing supply, and leading to more economic contraction.

    We are probably there with oil already, but a ways to go in coal.

    G

  • gregor.us

    Well, it’s complex. As you know, alot of this coal is devoted to manufacturing. In other words, this is really OECD industrial/energy consumption that’s been arbitraged to China. But that said, assuming the current trajectory–say, because China continues to convert into a consumer of its own production–I’d say until around 2015. This enormous growth spurt in coal production I think is sort of a last hurrah. Of course, oil supply will continue flat.

    Just as with oil, Steve, I favor the Orlov Descent model: at some point, higher energy costs no longer are enough to support higher priced supply–then a feedback starts that encourages descent, with each successive reduction in demand taking off tranches of previously high-cost oil and coal supply. Thus reducing supply, and leading to more economic contraction.

    We are probably there with oil already, but a ways to go in coal.

    G