Global coalification – by Terence Corcoran (National Post – October 11, 2012)

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Europe and Asia are massively expanding?

I’ve been looking into the coal industry, in a superficial way. And here’s the scoop. The coal industry is dead and dying, in the U.S. and elsewhere — if not right now, then pretty soon. Scientific American in May trumpeted the news: “The End of Coal Burning in the U.S.” The Wall Street Journal noted: “The Coal Age Nears its End.” And then there’s Canada’s in-house peakster: “Is Peak Coal Coming?” asks economist/author Jeff Rubin.

So there you have it, except that’s only the half of it. The other half is this: “Coal Era Beckons for Europe,” says BusinessWeek. Bloomberg reports that “Merkel’s Green Shift Forces Germany to Burn More Coal.” Another report, citing the World Resources Institute, said 1,231 new coal plants with total power capacity of 1.4 million megawatts are planned worldwide.

“Beyond the biggest users — China, India and the United States,” reports ClimateWire, “the assessment finds a heavy coal demand building in Russia, Vietnam, Turkey and South Africa. The United States, with 79 coal plants in the pipeline, ranks fourth in this category.”

These two contradictory views of coal cannot long coexist, and a gambler might be well advised to put his money on a coming coal boom. The idea that coal is dying seems to be mostly wishful thinking on the part of green activists, as well as some politicians and regulators in the United States and parts of Canada. Ontario aims to end dirty coal-fired power generation, at great cost to consumers who are now paying high prices for the putative clean alternatives, wind and solar. The United States, via regulation from the Environmental Protection Agency, has established rules that are said to present the coal-power industry with a “dead end.”

Meanwhile, back in the real world, global consumption of coal grew by 5.4% in 2011, according to BP Statistical Review, the only fossil fuel to record above-average growth and the fastest-growing form of energy outside renewables. Asia leads the consumption race. There also seems to be a lot of coal around, with world proved reserves said to be sufficient to meet 112 years of global production, the highest reserves-to-production ratio of any fossil fuel.

The development of vast new gas resources around the world could pose a major price and commodity competitor to coal. However, it would be dangerous if not foolhardy to try to predict the movement of prices or supply and demand for competing fossil fuels and alternative-energy sources. Maybe gas will threaten coal in some markets and over time, but the investment behaviour of electricity producers and governments suggests big money will still be placed on new coal-fired power plants and new coal production.

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