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Coaled comfort

David Strachan

The pit-prop that supports much of the current energy debate about what we will do once Hubbert's Peak has passed, is the belief that the world has plenty of coal. Well, David Strachan*, who brought us "The Last Oil Shock" has some more bad news…

Geoscientist 18.3 March 2008

Depending on your standpoint, coal represents either a massive threat to the climate, or a potentially vital substitute fuel as global oil production heads for terminal decline. Either way, it is commonly agreed that coal will last for well over a century. But a number of recent reports suggest that coal reserves may be hugely over-inflated, with profound implications for both oil depletion and global warming debates.

The latest ‘official’ statistics (World Energy Council Survey of Energy Resources) give global coal reserves as 847 billion tonnes at the end of 2006. Since coal production that year amounted to just under six billion tonnes, these reserves appear ample to sustain output well beyond even the most distant planning horizon. In the context of recent trends, however, these numbers are not so reassuring. Reserves have fallen by over 170 billion tonnes over the last 20 years, and in terms of the reserves-to-production (R/P) ratio (the number of years the reserves would theoretically last at current consumption) the deterioration has been even more dramatic.

A report from the EU Institute of Energy published in February 2007 calculated that the R/P ratio dropped by almost a third - from 277 years in 2000 to just 155 in 2005. If this rate of decline were to continue, the report warned, “the world could run out of economically recoverable reserves of coal (at current economic and operating conditions) much earlier than widely anticipated.” In 2006 the R/P dropped again to 144. The question of why coal reserves are falling so fast, and whether the trend will continue, is only now beginning to be asked.

One reason is clear: consumption is soaring, particularly in the developing world. In 2006 China alone added 102 gigawatts of coal-fired generating capacity - enough to produce three times more electricity than California consumed that year. China is already the world’s largest coal producer; yet such is its appetite that in 2007 it still became a net importer.

Another less often remarked reason is that in recent years many countries’ official coal reserves have been revised downwards, sometimes massively, and often by far more than those countries had mined since the previous assessment. For instance Britain, Germany and Botswana have all cut their reserves by over 90%, and Poland by 50%. Global reserves of high quality ‘hard coal’ have been reduced by 15% - again more than could be explained by mining alone. Meanwhile other countries (e.g., China, Vietnam) have left their official reserves numbers suspiciously unchanged for decades while producing billions of tonnes of coal in the interim.

As a result, according to a report from Energy Watch, a group of independent scientists led by the German renewable energy consultancy Ludwig Bölkow Systemtechnik (LBST), coal reserves data are likely to be biased on the high side. “As scientists we were surprised to find that so-called proven reserves were anything but proven”, says lead author Dr Werner Zittel; “It’s a clear sign that something is seriously wrong”.

Since the preponderance of reserve revisions has been downwards, and since it is widely accepted that major new discoveries of coal are unlikely, Energy Watch concluded that the current reserves figures are likely to represent the upper limit of available coal, meaning that production will stall far sooner than expected. On the basis of a country-by-country analysis, the group forecasts that global coal output could rise by about 30% over the next decade but will peak as early as 2025 and then fall into terminal decline. From that point on they say there will be progressively much less coal available than is widely assumed by policymakers, who are generally guided by the much higher forecasts of the International Energy Agency’s World Energy Outlook (WEO), which are in turn based on the ‘official’ reserves figures.

According to Jörg Schindler of Energy Watch and LBST, policymakers are in for a shock. “The perception that coal is the fossil resource of last resort, that you can come back to when you run into problems with all the others, is probably an illusion”.

According to the Energy Watch analysis, world coal production will peak in around 2025. In that case output would undershoot official forecasts from the International Energy Agency’s World Energy Outlook (WEO) by a substantial margin.

Mine camp

However, most senior figures in the coal industry reject this analysis out of hand. David Brewer, director general of CoalPro, the British mine owners’ association, agrees that most countries’ reserves are “probably overstated”, but insists “it doesn’t mean it’s a lid”. Milton Catelin, chief executive of the World Coal Institute, the international producers’ trade body, admits that he does not understand why the reserves reductions are happening, but nevertheless claims it is not because of a lack of coal. “With regard to coal the world is not resource limited; it’s limited only by the economics of recovery and environmental concerns”.

The industry is sanguine because the traditional view is that "reserves" are essentially an economic concept, defined as the amount of coal known to be producible at current prices using existing technology. As such reserves are expected to be replenished from resources - the total that exists in nature – as prices rise. Resources by definition contain all the seams that are sub-economic – too thin, too deep, too remote from markets – but if shortage bites and prices rise, some of that coal becomes economic and can be re-categorised as reserves. And because global coal resources are vastly greater than even the official reserve numbers, in the industry view there can be no imminent shortage. “It’s there if the price is high enough” says David Brewer. “It’s all a matter of price”.

Unfortunately this piece of economic lore currently appears to be having as little effect on coal reserves as on oil – where oil majors are increasingly failing to replace the oil they produce with fresh reserves, despite the soaring crude prices. Similarly, although the price of coal has quintupled since 2002, most countries’ reserves have stayed static or fallen.

Northwest Europe Steam Coal Marker Price. Source: McCloskey Group.The failure of coal reserves and production to respond smartly to soaring prices has brought some other experts to a similar conclusion. “Normally when prices go up, mine managers get every wheelbarrow out of the shed and ramp up production as fast as possible, and shortage quickly turns to glut”, says Graham Chapman of the consultancy Energy Edge, “but this time it hasn’t happened.” In part, this is because the industry’s transport capacity is limited – last year, ships carrying coals from Newcastle, Australia - the world's biggest coal export terminal in the world's biggest coal exporting country - were forced to queue for up to a month. But Chapman believes the problem is also reserves.

Top ten coal producing countries. Source: World Energy Council, Survey of Energy Resources, 2007

With 20 years’ experience as a coal geologist, Chapman concludes the industry has already produced most of the easily mined coal, and “from now on it’s a significant challenge”. In China, for example, much of the remaining coal is more than 1000 metres below the surface, says Chapman, while in South Africa the geology is extremely complex. Elsewhere, flooding and subsidence may have sterilised significant reserves: it may be there, but will almost certainly never be mined. As a result, Chapman agrees that true reserves are probably much lower than the official figure, a conclusion reinforced by soaring prices. “Coal is enjoying a boom like no other because people don’t have the reserves to bring on stream easily”.

Top ten holders of proved recoverable coal reserves. Source: World Energy Council, Survey of Energy Resources, 2007

Industry accepts that the reserves data are unreliable. “We don’t have good reserves numbers in the coal business” admits David Brewer; “it’s not like oil”. Such an unflattering comparison with the industry that spawned the Shell reserves scandal, and leaked reports from Kuwait suggesting that OPEC countries have been grossly inflating their reserves for decades, was perhaps unfortunate. But a closer look at how the coal figures are produced suggests it may also be fair comment.

‘Official’ world coal reserve numbers, published in a triennial report from the World Energy Council and then reproduced annually in the BP Statistical Review, are compiled by a Dorset-based husband-and-wife energy consultancy, Energy Data Associates, who work principally by sending out a questionnaire to the governments of 100 coal producing countries. Officials are asked to supply figures for their coal reserves against clearly defined guidelines - but many do not. “About two thirds of the countries reply”, says Alan Clarke of Energy Data Associates, “and maybe 50 are usable”.

Some countries have been known to enter their coal resources number in the box for reserves, massively inflating the figures. It was the unwinding of some of these apparently innocent mistakes that led to some of the big downward revisions in countries such as Botswana and Brazil. Other countries provide more consistent numbers, but fail to specify important criteria such as maximum depth and minimum thickness of the seams included in their claimed reserves, making meaningful international comparisons impossible.

Although Clarke defends his data robustly as the best available, he is the first to admit their shortcomings. “It’s no secret the result is a bit of a rag-bag. It ranges from well established estimates of reserves for some countries, and others that are fairly airy-fairy, and others that are highly political and not to be believed”. Data for two of the worlds biggest coal producers are particularly hard to glean: Russia has failed to update its numbers since 1996, China since 1990. “The great message is there is really nothing very certain or clear-cut about reserves figures anywhere”.

This is worrying because the common assumption is that reserves – whatever number you accept - are an indication of the future level of coal production. But according to Professor Dave Rutledge, chair of Engineering and Applied Science at the California Institute of Technology, it’s the other way around. According to his analysis , coal reserves are little use in predicting future output; and historically, falling output has forced the downward revision of reserves (to bring them into line with reality). This insight led him to turn the whole business on its head. Instead of forecasting production from reserves, he forecasts ‘reserves’ – or total future coal production – solely from past production trends. The results are even more dramatic than those of Energy Watch.

Rutledge borrowed a statistical technique developed for oil forecasting known as ‘Hubbert linearisation’, named after the Shell geologist who founded the "peak oil" school of thought. It was M King Hubbert who famously predicted in 1956 that US oil production would peak and go into terminal decline within 15 years, and who was vindicated in 1970. Although astonishingly accurate, Hubbert’s initial forecast was made using a rather basic technique. He later he went on to develop more sophisticated methods, culminating in the linearisation approach, which he published in 1982.

US oil production since WWII. Source: IHS Energy

Off to the races

The reason that Hubbert’s approaches might work for coal as well as oil is that the two commodities seem to deplete in a similar way. The historical production profiles of US oil and British coal bear a striking family resemblance. Both are roughly symmetrical plots, meaning the production peak and decline comes at the midpoint of depletion – when only half the commodity that will ultimately be produced has actually been extracted.

Graph 6: UK coal production peaked since 1855. It peaked as long ago as 1913.

The idea of mid-point peaking allowed Hubbert to make his earliest forecasts. But the problem with applying Hubbert’s simplest technique to coal is that it requires a reasonably accurate estimate of the total amount of the resource that will ever be produced – ‘ultimate reserves’ – and coal data seem too unreliable. Hubbert linearisation solves this problem simply by presenting the historical production numbers in a different way.

GRAPH 7 Hubbert linearization of UK coal production, using the same data as graph 3. Source: Prof Dave Rutledge, Caltech

It works by plotting annual production divided by cumulative production on the y axis, against cumulative production on the x. This produces a graph that shows how the growth rate of cumulative production slows inexorably from almost the earliest days of production, even though annual output is still rising (compare graphs 6 and 7). Cumulative production soon establishes a roughly straight-line decline, which can then be extended to the bottom of the graph to deduce the total amount of coal that will ever be produced. “Once you have a straight line” says Rutledge, “you’re off to the races”.

Rutledge argues that Hubbert linearisation provides a far more powerful explanation of the fall in British coal output from its peak in 1913 than traditional economics, which tend to blame above-ground factors, such as competition from foreign producers, Churchill’s decision to switch the navy to oil, and later, the displacement of coal by natural gas. Because the straight-line decline in the growth rate of cumulative production starts long before the peak and continues long after, for Rutledge this suggests the cause is fundamentally geological - reflecting the increasing difficulty of expanding production while exploiting resources of progressively poorer quality. In other words, Hubbert linearisation reflects the obvious truth that it is harder to catch a fish the longer you have been hauling fish out of the pond. And this deceptively simple insight makes it possible to forecast not only the total resource that will ever be produced, but also future rates of production. “Had you known this method in the 1920s”, says Professor Rutledge, “you could have predicted accurately where British coal output is today.” By contrast, it is now clear that only a fraction of the enormous UK reserves estimates from that period will ever be produced.

Rutledge has applied the same technique to all the major coal producing countries – including United States, China, Russia, India, Australia, South Africa - and come up with even more startling results. Hubbert linearisation suggests that future global coal production will amount to around 450 gigatonnes - little more than half the current official proved reserves. That number represents an even smaller fraction of the coal inputs to the SRES scenarios that form the basis of the IPCC’s climate forecasts, because these assume more or less infinite replenishment of reserves from resources in line with traditional economic theory (despite the fact that this is not currently happening). Less coal of course means less carbon dioxide, so the impact on emissions is enormous.

Using MAGICC, one of the simpler climate models used in the IPCC’s Third Assessment Report, Rutledge forecasts total fossil fuel emissions of CO2 will be lower than in all 40 IPCC-SRES scenarios. Atmospheric concentrations of CO2 will peak in 2070 at just 460ppm, fractionally above what many scientists believe is the threshold for runaway climate change. “In some sense this is good news”, says Rutledge, “production limits mean we are likely to hit the general target without any policy intervention”.

GRAPH 8: C02 emissions and peak concentration are lower Rutledge’s producer-limited profile than all 40 IPCC SRES scenarios. Source: Professor Dave Rutledge, Caltech

Neither the authors of the Energy Watch report nor Rutledge could remotely be described as climate change "deniers" – quite the reverse - but their findings worry many climate scientists, including Pushker Kharecha, a postdoctoral researcher at the NASA Goddard Institute for Space Studies. He agrees that coal reserves are probably overstated but insists that proactive curtailment of coal emissions is still needed to combat climate change.

In a recent paper with GISS director Jim Hansen, currently in review, Kharecha argues that eliminating coal emissions by 2050 using carbon capture and sequestration (CCS) could hold peak atmospheric concentration of CO2 to 420-440 ppm, below the supposed threshold for ‘dangerous’ climate change (graph 9). But if the coal is going to run out soon anyway, why bother? Kharecha replies with another question: “What are the risks if the low-coal people are wrong?”

GRAPH 9 The impact of peak oil and a deliberate policy of carbon capture for coal emissions produce emissions profiles lower than all six IPCC marker scenarios. Source: Kharecha, P.A., and J.E. Hansen, 2007:

Kharecha points out that the overstated carbon inputs are not the only shortcomings of current IPCC models. On the other side of the balance, feedback loops such as the disappearing Arctic sea ice and thawing Siberian permafrost are developing much faster than expected, and are not yet factored in. So the 450ppm threshold might be too generous: “it could be 400ppm for all we know”.

In addition, Kharecha fears the “low-coal people” may underestimate the desperation of coal-deprived countries, who may accept massively lower economic and energy returns simply in order to secure supplies. So to frame public policy around their conclusions would be dangerously complacent because if their results are only marginally wrong the additional emissions could ensure catastrophe. “If coal peaks within a decade we’re probably fine. But if not, it could well be the final nail sealing us into the coffin of dangerous climate change”. And since we can’t be sure, he says, we must start to eliminate coal emissions through CCS within 10 years, or risk passing irreversible tipping points. The same applies to carbon-intensive non-conventional fuels such as oil sands and shales.

Low coal knowledge

But if the low-coal people are right, it could make the world’s looming energy crisis more severe. In the International Energy Agency’s latest long-term forecast, satisfying economic growth requires global coal production to rise over 70% by 2030; but many agree these predictions now look fanciful. And as global oil production goes into terminal decline within the next decade or so, there is even less chance that synthetic coal-to-liquids fuels can make up the yawning deficit of crude.

Whoever turns out to be right, the good news is that the imperatives of climate change and peak oil are identical. “In the long run, economies that rely on depletable resources are doomed to fail”, says Werner Zittel of Energy Watch. “The coal peak makes it even more urgent to switch to renewable energy without delay”.

© David Strahan

* David Strahan is author of The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man, (John Murray Ltd). Read him on Hubbert at Geoscientist Online: (April 2007 issue). The Last Oil Shock was reviewed by Dr John Milsom in the January issue.


  1. The Future of Coal, B Kavalov, S D Peteves, DG JRC Institute for Energy February 2007
  2. Coal: Resources and Future Production, Energy Watch Group March 2007 
  3. Prof Dave Rutledge, California Institute of Technology,
  4. Implications of "peak oil" for atmospheric CO2 and climate, Kharecha, P A & J E Hansen, 2007. Global Biogeochem. Cycles, submitted. []

The Last Oil Shock by David Strachan