Bad combo

Cheap coal and $100 oil

Posted by Tom Philpott at 4:11 PM on 04 Jan 2008

Read more about: energy | oil | coal | economy | climate

Amid vague talk of how $100/barrel oil might represent a kind of sea change, inspiring corporations and individuals to lower their carbon footprints, the smart money is betting on another direction: the burning of more coal.

That's a harrowing trend. As NASA climatologist James Hanson recently put it:

Coal will determine whether we continue to increase climate change or slow the human impact ... Increased fossil fuel CO2 in the air today, compared to the pre-industrial atmosphere, is due 50% to coal, 35% to oil and 15% to gas.

Hanson must be frowning at recent reports of a coal boom in Asia. The latest from today's Wall Street Journal:

Vast coal reserves in Asia are gaining attention as major energy consumers such as China and India grapple with the reality of oil prices around $100 a barrel and the risks they pose to their economies.

Unlike most of the Journal's excellent coverage of this topic, this article doesn't explicitly state that a huge chunk of the energy burned by China and India goes to making imports for the U.S. market. But the article remains worth reading.

How much cheaper is coal than oil? One energy analyst tells the Journal that "Coal prices would have to rise nearly fivefold to match current oil prices on a unit-of-energy basis" (emphasis added).

Worse, the price difference between the commodities "is actually widening," the analyst adds. Somewhere, James Hanson is probably seething with anger, if he's not shaking with fear.

Other interesting tidbits:

China and India together account for 45 percent of global coal use -- and will likely "account for more than four-fifths of the increase in global consumption over the next two decades."
A third of the globe's proven coal reserves lie in Asia, which also happens increasingly to be the globe's manufacturing base. Meaning when every time you buy imported cheap stuff, you probably just burned through some Asian coal.
It's been widely reported but bears repeating: China is steadily moving to build out its coal-to-liquid-fuels infrastructure:
This year, Shenhua Group Corp. will start China's first large-scale coal-to-liquids plant, in the coal-rich region of Inner Mongolia. The plant will have a daily output of 20,000 barrels in its first phase, before raising output to 100,000 barrels a day in future years.

Other CTL plants in the works involve foreign investors, such as Sasol Ltd. and Royal Dutch Shell PLC. By 2030, the IEA said, China's nonconventional oil supply from coal-to-liquids plants will reach 750,000 barrels a day.

Incidentally and slightly off-topic, I've just finished Nassim Nicholas Taleb's Fooled By Randomness, a provocative read. Taleb, a former hotshot Wall Street trader, has plenty of fun at the expense of his old colleagues on the Street. He paints most of them as more fools of chance than Masters of the Universe.

One of the things he beards them for is keeping their noses tucked into their Wall Street Journals during their long train rides from Connecticut into the city. He portrays the Journal as an inane rag that befuddles minds with all manner of useless information on market fluctuations.

There's plenty of that, to be sure; and there will be more, now that that ham-fisted philistine Rupert Murdoch has added the Journal to his trophy case. But for now, the paper remains essential reading on important long-term trends -- such as the way the U.S. has moved its manufacturing base to China, from where we stock our Wal-Marts with the fruits of cheap labor and cheaper coal.

For story: Bad combo
13 Comments | Post a Comment

Yeap

What scares me is that Cellulosic "Solid Biomass Liquid Conversion" is one hair's breath away from turning Coal, also a Solid Biomass, into a Liquid.

Which is why it should be no surprise that Rightwingers love the idea.

Any technology breakthrough with Cellulosics could be directly applied towards Coal-to-Liquids.

by GreyFlcn at 12:06 AM on 05 Jan 2008

Does this have to be a bad thing?

Or, alternatively, technology breakthroughs with coal-to-liquids can be applied directly to cellulosics.

Many in the CTL space are now adding Carbon Capture and Sequestration technologies, and blending in biomass (including cellulosics) to reduce the lifecycle carbon footprint. using BCTL+CCS (Biomass and Coal To Liquids + Carbon Capture and Sequestration) it is actually technically and economically feasible to produce synthetic fuels that have a neutral carbon fooptrint.

Ironically, this large spread between coal and oil could be the best thing that ever happened for the large-scale deployment of second-generation bioenergy-sourced fuels production.

I just happens to use coal. If the carbon footprint is neutral, and the coal is not sourced by blowing mountaintops into valleys in appalacia, then there is no longer a downside, right?

I know this doesnt exactly fit the party line here, but we can acutally leverage cheap coal to enhance and accelerate second generation biofuels, and promote the production of reduced or neutral carbon footprint fuels.

Of course, this requires responsible development practices, which is why publications like Grist have a lot of value in many cases, to help encourage aggressive environmental standards that will require CTL players to develop responsibly with the climate in mind. But if we can use the resource, without the carbon impact, viably, as recent studies have proven, and use it as a bridge toward renewables which is possible with gasification and FT, then I would argue we should look at this as an opportunity, not a threat.
- Stephen

by sfj4076 at 6:23 AM on 05 Jan 2008

Once again, To What End Here?

Tom,

Thanks for your good reporting and insights.

Once again, I am lead to ask, "What is the end here?". If it is a quest for sustainability, none of this indicates such. If the end is economic growth, jobs, prosperity, consumer satisfaction, maintaining a positive GDP, then this gets the job done ... temporarily. But all of this utterly fails the key test of reducing our dependence on fossil fuels. Even without the threat of climate change, why should we keep moving out on the branch of finite energy sources and increasing the odds of a global collapse? There is no magic bullet to sustain our currently overbuilt infrastructure so why keep building on it with more blind faith?

The insanity of all this is getting just too surreal and ridiculous to bear. I am just about to lose it.

by justlou at 6:58 AM on 05 Jan 2008

Prediction

Fooled By Randomness was a good read, though it takes some reader attention to expand its message to the broadest vistas of human prediction.

The follow-on, The Black Swan does that explicitly but is a tad slow for a "Fooled" reader.

This "broadest" view of prediction is especially apparent if you cross-read with Stumbling on Happiness.

Prediction is central to who we are as a species. We do it well for some things, but of course push the envelope to predict things that we really cant.

In ancient times it was "should I try fishing or hunting today?" In the modern era we have to address "is anthropogenic global warming true?"

Tougher question.

You know, somebody with some chops could do a good piece on how the stock market "mis-priced" risk (a form of bad prediction, a-la Taleb) in the sub-prime crisis, and then take that back to this idea that the market can appropriately "price" AGW risk.

I think that after we acknowledge that we are bad at prediction the next step is to put simple rational insurance policies in place. Not because we know we need them (sorry Doomers) but because we can never be sure that we do not.

by odograph at 9:00 AM on 05 Jan 2008

Insider trading

That is how hedge funds make money, when they do. Not by using majical scientific market analysis. None of the analysis holds up to back testing. If it did, any tradeable pattern would soon be used up by the big boys.

The coal to liquid technology ramping up in Montana will no doubt be exported to China and India. This disaster is happening right now, right under our collective noses, the pollution blowing east on the wind.

Perpetrated with the help of a democratic governor who got into office on green issues, mainly cleaning up the mining pollution in Montana. Instead a huge new source of GHG and fuel to extend gas guzzling is what Montana green voters got for their support.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 10:03 AM on 05 Jan 2008

Almost Level WV

To the person who suggested coal might or could be mined without mountain top removal, I suggest reading up on the history of mining, labor, general industry and even capitalism. The coal industry has already broke (I use that word loosely) the union in order to increase profit margins and are not going to spend more on underground mines. As a native West Virginian, there will be no shift away from mountain top removal until people no longer need coal. Likewise there will be no relief for the people and diverse flora and fauna who make their home there.

I have heard the marketing fellow from WalkerCat (they make equipment,etc) explain, to West Virginians, that we need to sacrifice for "our urban brothers and sisters". If I need to elaborate on that I can.

by PearlFizzberry at 10:23 AM on 05 Jan 2008

Cheap Coal

John Bevins Branch Obituary

It may seem a little odd to deliver a eulogy for a hollow or small valley down here in Pike County but then again since we are now making a habit of burring them I find it altogether proper and fitting. As a boy I used to play and hunt in this valley and stay all night in an old cabin built around 1865 constructed of hand hewn popular logs, it was built by the hollows name sake John Bevins. He was the son of one of the first settlers of Pike County, one James Bevins a Revolutionary War veteran and one of the first magistrates in Pike County. James owned a trading post in the Millard area at the forks or junction of the Levisa and Russell Fork of the Big Sandy around the early 1800's. The old cabin burned in the early 1970's, I believe even then there was talk about putting it on a historic register. I don't know if it was the county historic register or state or national. At any rate the old cabin with two foot wide virgin poplar logs burned, I don't know how much diesel fuel and how many tires it took to finish it off but since it was sitting on a coal seam I figured someone thought it was worth the expense.
It was not just a part of our county heritage that got buried up here at Lower Pompey. I used to plunder the creek that run out of Johns Bevins Branch and find all kinds of aquatic life, most of it I still don't know what it was. We used to catch horny head minnows for fishing bait and a creature called a hellgamite that lay under rocks in the stream, also used for fish bait. The hellgamite was the larvae of a large flying insect that stayed in the water until it transformed. Soft shell crawdads which are really just regular crawdads that you catch in the right time of year when their shells are soft. There is nothing in that stream now or the main creek that runs in front of my house. The water has too much iron and the creek bed is red from it and no oxygen in the water during summer, just slick slimy green algae.
The cabin was a creepy place to spend the night, with the screech owls hollering and the hoot owls. There used to be a family of flying squirrel that used the loft and surrounding trees. The bottoms above and below the cabin were good rabbit hunting when various uncles of mine were not using them for gardens. Of course the hollow had squirrel and possum, I used to jump what we called partridge and chase them all around both sides of the valley, they would rise in a group and fly several hundred feet and land, you could just keep jumping them and with an old single shot Stevens, might hit one every now and then. Gooseberry grew along the ridge on the left hand side going up in the hollow and mountain grouse loved that stuff. There was no deer in those days but they started to drift in off the Federal property up at Fishtrap before the major stripping started. Had a cousin take a nice one up there, and the turkey population is still heavy around the fringes of the old valley. The mast produced a large amount of seed so the ground squirrel population was always heavy which meant the wild cat and fox population was always healthy. I could not believe the variety of wild life in one concentrated area.
There was an old coal bank that my uncles would get their house coal from. It had been a larger operation during WWII when Jessie Bevins and my uncle Arlan Thacker run the mines and I had another uncle who hauled coal for them. I never thought back in those days that, that coal would be the demise of the valley. They all did some digging in the valley in those days but not to the extent of harming the eco system. You could find barrel holes on both side of the branch where they used to make Moonshine Whiskey. I guess when the mines were down they turned to the only other source of making money they knew. Uncle Arlan and Woodrow Burchfield logged in there but they did it with mules and never hurt the land. Anyway they did not stay in there long as my uncle Arlan lost a leg in that logging operation, between the mines and logging about all of them were missing some kind of appendage.
Well its all gone now, buried under several hundred feet of strip mine overburden one big wide, bare, dusty, sometimes muddy eye sore, barren of life and a perfect monument for a dead hollow. They tell me its progress and the new economic lifeblood of the area and to not to complain because this is where your electricity comes from. I know from seeing it done that drift mouth mining and shaft mining don't destroy whole valleys and I remember the time that it employed thousands of miners here in the County. I live under this mess and in constant fear of being washed off from a sediment pond that has already failed once and caused me extensive damage. I guess its easy money, those little seams a few inches wide several feet apart under a 100 feet of overburden but you can't tell me it is worth destroying whole valleys for and having to live with this environmental disaster for generations with no one to clean it up. It can never be cleaned up or brought back to its original state when you bury it under thousands of tons of debris. But I digress a eulogy is supposed to highlight the good parts of a persons or valleys life. Old man John Bevins got to enjoy it and several generations of the Thacker and Adkins's clan. In the eons of time it had been there it had probably served its purpose. We will leave this big dead eyesore to posterity and in a hundred years maybe no one will blame us for it. So in closing all I can say is as soon as they get through burring you John Bevins Branch, rest in peace.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

by Pompey Road at 1:20 PM on 05 Jan 2008

flying pigs and Santa Claus

This is in response to sfj4976, who asks whether this has to be a bad thing. After all (s)he asks, would it be so bad if everyone burns more coal, perhaps in liquid form, as long as all of it's sequestered, and it isn't mined by mountaintop removal, and the miners are union, and somehow the extra CO2 in the resultant fuel is also captured, and the water below the mines and plants is kept from pollution, and 120,000 pound coal trucks are not killing people on narrow roads...while we're assuming all that, why don't we just assume a magical energy source to replace coal? Are you an economist, by any chance? Nobody wields the big assumptions like an economist...
I live in WV too, and the coal pushers are trying to tell us they'll sequester all the CO2 somehow someday. But they are not telling us they'll get the coal from deep mines. They're telling us they'll up mountaintop removal by at least 20% and maybe up to double. If you don't know what MTR is, check out www.ohvec.org to look at the pretty pictures.

by mwildfire at 4:18 PM on 05 Jan 2008

Real good writing

I can imagine a bunch of coal is still mined in Appalachia, although not as much as in the past. It is a shame, since the area is hilly and mountainous and quite beautiful. I wish they would stop mining coal there, all of it.

The Powder River area in Wyoming is the largest coaling facility in the US, and is basically nothing but flatland prairie. Yes, they make huge messes but it's basically an open pit operation in the middle of absolutely nowhere. I've made the drive and it is quite scary how big and flat and boring the land is. According to Wikipedia, about 80 trains leave the area each day to supply coal-powered utilities all over the US.

I agree that the concept of blowing up mountains for coal is quite foolish.

Onward through the fog

by Sam Wells at 4:23 PM on 05 Jan 2008

Bad Combo:

Miser Mining

Why we do hollow fills, the truth of the matter. Because we are cheap, not to be confused with thrifty or frugal, we take miserliness to a whole nother level and consider it an art form. During the bad old days of having to put a mountain back on its original contour we had to set aside a little topsoil then when we got the coal stripped off a mountain, we had to pile all the debris back up, sprinkle the topsoil back on like the icing on a cake and then spray our weed mixture on it. You never had to get it exactly back on the original contour "by the way we are trying to do away with that term" just stack it back up until it looks close then move on to another mountain. Upon applying autistic accounting methods we found that you can transfer pure profit into the obscene profit column by forgoing the process of stacking the debris back up on a mountain. When you just shove it all over into the valley you forgo the last act of attrition and save mega bucks, thus the need to kill the phrase "putting it back on the original contour". Its was going well until of late, its funny how the people who did not really notice or mind the looks of a bald mountain are now getting themselves in a tizzy over getting a valley filled up level with a sheared off peak, or peak to peak as the case may be. Well there you have it, this is why we scrooge strip or miser mine, we are just unabashedly cheap. You save all the extra time, labor, wear on equipment and fuel by just shoving it all into a hollow, striking it off level and spraying a good weed mix on the hard pack debris. Now that you all have been educated on the process you all need to get with the program, we are really just trying to make you all flatlanders, only on a slightly higher elevation. Lets call it a plateau, who needs peaks when you can look at a nice plateau. Pike Plateau, that's got a nice ring to it.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

by Pompey Road at 12:54 PM on 08 Jan 2008

Bad Combo

Tree Hugging Hillbillies

Tree Hugging Hillbillies not to be confused with a ridge runner who is enamored with or has a special relationship with his favorite beech tree. It's a new breed of semi-unwilling, halfhearted Appalachian environmentalist. Oh, I don't mean they are strong enough in their convictions to ties themselves to a tree, except of course during deer hunting season and then only to keep from falling out of their tree stand. It's a latter day generation of mountain folk who where probably raised by a coal miner or in coal country and now has conflicted emotions about this new type of mining called mountain top removal and hollow fill method. Remembering the time when the drift shaft mines were king. They employed thousands and feed us all and formed in us over time some positive convictions about the need for us to be able to mine coal. We don't do factories, we don't do textile mills, we don't grow wheat, we dig coal. They watched the development of auger mines that graded a little ring around the mountain and bored out coal, well just made an easy road to hunt off of. They watched the early stripping for coal when they had to put it back on the original contour, those bald peaks just looked funny and they started to get an uneasy feeling. Now they are doing hollow fills, to cheap to stack the overburden back up on the mountain and filling the valleys they used to hunt in or where they just got back to nature when they had to do some serious thinking. Torn between two worlds, the old type of mining that feed them and did not completely destroy the environment and this new type of mining that is supposed to be their new life's blood and economic savior. Now we have this new type of creature down here in Dogpatch, the reluctant or halfhearted tree hugger.
It seems awkward and makes them feel out of place to say anything negative about any kind of coal mining yet generations of ancestors living in valleys has given them a genetic makeup predisposed to living in valleys, not on plateau's. If they had wanted to be flat landers they could have moved 100 miles north or south or have stayed out of state when they had to do the Route 23 Exodus during the bad ol days when the coal business was down. Strange times we live in, strange creatures, these hillbilly tree huggers.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

by Pompey Road at 12:58 PM on 08 Jan 2008

Almost Level WV

I have seen a commercial by WalkerCat promoting mountain top removal and hollow fills. They use a little carton bug and the jest of the message is don't stop a valley fill over a cartoon bug that will move right back in after the mountain top removal and valley fill is done. It's on uTube and I may try to post it here latter, its a hoot. The little green cartoon bug may come back after a valley fill, however every other living animal, tree and plant native to that valley will not. Duh! its been covered up with tons of debris and sprayed with a weed seed mix over hard pack. How can they? I have been scouring the area down here looking for that little green cartoon bug, have only found it on WalkerCats commercial and utube.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

by Pompey Road at 1:29 PM on 08 Jan 2008
[ Parent ]

RE: Almost Level West Virginia

Biography of a Cartoon Bug

Hi, I am the cartoon bug from the Walker/Cat commercial that is now running on TV in this area. I am helping them promote Mountain top Removal and Hollow Fill in WV and East Kentucky. My name is Mr. Bug and I am on that courtroom bench waiting for the gavel to fall, be a merciful end compared to what I have been through. I was living a good life in a cartoon valley with a bunch of other cartoon characters before they did a cartoon mountain top removal and cartoon hollow fill. I drifted around for a while watching my other cartoon buddies find work, Bugs Bunny, Daffy Duck, The Road Runner. No one would hire me because of my relationship with Walker/Cat and Hollow fill mining. You know the liberal, tree hugging Hollywood type's. The stigma connected with the association killed my acting career. I tried to rehabilitate my career by doing a year in the Peace Corps and joining the Sierra Club and Green Peace. A lot of good it did me. I went to a Hollywood event to raise money to fight Global Warming just to get bitch slapped by Al Gore. Scorned and penniless I had to come back after the Hollow fill was finished. Now I am hung out here on this barren plateau, cold wind blowing up my butt with a bulls eye on my back. The target of every hungry Sparrow and Red Bird that fly's by. I feel like Bill after he got caught with Monica, everybody is watching me now. I had good cover back in my old cartoon valley. I would love to find me some warm Drift Shaft mine to crawl back into but I got to stay here. They made me do it tortured me pulled my wings off, holding my grandpa as hostage at this very moment. Holding a can of Raid on him and threatening to throw him in a bug zapper. I got PTSD, my nerves are shot, took to snorting pills and trying to get on the draw. Thanks a lot Walker/Cat you are singing almost level West Virginia and I am stuck here singing the blues.

The eons of time and nature was good to us down here. It was not until we become civilized that destroying our habitat become fathomable or fashionable.

by Pompey Road at 11:01 AM on 10 Jan 2008
[ Parent ]

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