Coal reserves

This article is part of the Global Energy Monitor coverage of coal and power industry data

Articles:

Coal Coal mining Coal reserves Global use and production of coal Coal exports (global) Coal terminals Coal-fired power plant capacity and generation Corporate market share of global coal export trade Coal studies Peak coal Foreign ownership of U.S. coal mines

Defining Reserves

Perhaps no question has more relevance to strategies for dealing with the global warming crisis than the distribution and quantity of coal available for future mining. Compared to elusive petroleum deposits, coal deposits are easily found and measured. What makes the problem tricky is the huge difference between the amount of coal in the ground and the amount of coal that will ultimately be mined, assuming constraints ranging from physical barriers to technological limitations to environmental regulations. As Table 1 shows, even in the comparatively well-studied United States, the exact definition of reserves and resources results in a 200-fold difference between U.S. estimates of "total resources" (4,000 billion short tons) and "recoverable reserves at active mines" (19 billion short tons).

Table 1: U.S. Coal Resources and Reserves in 2005

Category	Amount (billion short tons)
Recoverable Reserves at Active Mines	19
Estimated Recoverable Reserves	270
Demonstrated Reserve Base	490
Identified Resources	1,700
Total Resources (above plus undiscovered resources)	4,000

Worldwide Reserves

Every three years, the World Energy Council (WEC) publishes its Survey of Energy Resources, of which the most recent edition was released in 2010. The WEC's survey is widely used and is the basis for estimates by the International Energy Agency (World Energy Outlook), the U.S. Energy Information Administration (International Energy Outlook), and British Petroleum (Statistical Review of World Energy).

Table 2: World Energy Council estimates of proved recoverable reserves (hard coal and lignite) at end-2008 (Billion Metric Tons)

Region	Recoverable Reserves	Share of Recoverable Reserves
US and Canada	243.9	28.3%
Russian Federation	157.0	18.2%
China	114.5	13.3%
Europe (incl. Turkey)	110.4	12.8%
Australia	76.4	8.9%
India	60.6	7.0%
Kazakhstan	33.6	3.9%
South Africa	30.2	3.5%
All Other	34.3	4.0%
World Total	860.9	100%

The Problem of Inconsistent Definitions

Definitions of coal reserves vary from one country to the next. The U.S. Geological Survey defines coal resources as "naturally occuring deposts in such forms and amounts that economic extraction is currently or potentially feasible.". USGS defines coal reserves as "the part of the coal resource that can be mined economically, at the present time, given existing environmental, legal, and technological constraints." Other countries use different definitions.

Poor Data Quality

In 2007, the National Resource Council released an official assessment of U.S. coal reserves, Coal: Research and Dvelopment to Support National Energy Policy. The report concluded:

[T]here is probably sufficient coal to meet the nation's coal needs for more than 100 years at current production levels. However, it is not possible to confirm that there is a sufficient supply of coal for the next 250 years, as is often asserted. A combination of increased rates of production with more detailed reserve analyses that take into account location, quality, recoverability, and transportation issues may substantially reduce the estimated nuimber of years of supply. This increasing uncertainty associated wtih the longer-term projections arises because signficant information is incomplete or unreliable. The data that are publicly available for such projections are outdated, fragmentary, or inaccurate....

Reassessment of the Gillette field

The Gillette field in the Powder River Basin coal region of Wyoming is the world's most productive coal mining area. In 2006 it produced 431 million tons of coal, or 37 percent of total United States production. In 2008 the U.S. Geological Survey released a detailed assessment of the coal resource in the Gillette field. USGS concluded that the portion of the recoverable coal that can be mined, processed, and marketed at a profit, based on conditions in 2007, including $10.47 per ton and assuming an 8 percent rate of return, is 10.1 billion short tons for the six coal beds evaluated. This is about half the estimate arrived at by a 2002 study of the same field, which arrived at an economically recoverable resource of 23 billion short tons. However, if the price of coal is assumed to be $14.00 per ton, matching the sales price of coal for the Gillette coalfield as of March 2008, the reserve would be 18.5 billion short tons, assuming no increase from 2007 operating costs. If cost per ton rose to $60, the estimated reserve would rise to 77 billion short tons.

Are Published Reserve Figures Overstated?

Several analyses of coal reserves have concluded that published figures are too high.

Energy Watch Group: In 2007, Energy Watch Group, a private research group initiated by the German member of parliament Hans-Josef Fell, completed an analysis of worldwide reserve figures. The study concluded that "data quality of coal reserves and resources is poor, both on global and national levels." Although published reserve figures were lowered by 50 percent between 1980 and 2005, the study argued that the worldwide reserve estimates still appeared to be too high. In a number of countries, careful evaluation of published reserve figures had resulted in a downgrading of those figures, in several cases by 99 percent. For example:

• Germany: In 2004, without explanation, Germany downgraded its estimate of proven hard coal reserves from 23 billion tons to 0.183 billion tons, a 99 percent reduction.
• United Kingdom: The "proved recoverable coal reserves" were of the United Kingdom were reported at 45 billion tons in 1980. In 2004 the figure was reduced to 0.22 billion tons, a 99+ percent reduction.
• Botswana: In 1980 Botswana reported 3.5 billions tons of "proved recoverable reserves." In the WEC 2004 Survey the "proved recoverable reserves" were lowered to 40 million tons, a 99 percent reduction.

Another problem was that published figures had not been revised to account for production over time. For example, China's official coal reserve figures have not been revised since in 1992, "in spite of the fact that about 20 percent of their then stated reserves have been produced since then."

Only two countries have increased their reserve estimates: India, from 12.6 billion tons of hard coal in 1987 to 90 billion tons in 2005, and Australia, from 29.1 billion tons of hard coal in 1987 to 38.6 billion tons in 2005. The study predicted that "global coal production may still increase over the next 10 to 15 years by about 30 percent, mainly driven by Australia, China, the Former Soviet Union countries (Russia, Ukraine, Kazakhstan) and South Africa. Production will then reach a plateau and will eventually decline thereafter." Peak production would occur around 2025 and would fall to roughly half the current level by the end of the century.

The EWG study specifically challenged the conventional view that as coal prices rise, increasingly marginal portions of the resource base tend to become economical to mine, thereby increasing economically minable reserves:

Normally it is argued that reserves are part of the resources. Over time and with coal prices increasing more and more resources will be converted into recoverable reserves. This suggests the analogy to an iceberg of which only the tip is visible whereas 90% are under water. However, as detailed in Annex 1, the present and past practice of reserve reporting does not support that view. Many countries have not reassessed their reserves for a long time, and if so, revisions have been mostly downward instead of upward, contrary to what should be expected.

Dave Rutledge: In 2007, CalTech professor Dave Rutledge made an independent analysis of ultimate coal output based on a technique borrowed from "peak oil" analysis known as Hubbert Linearization. Like Energy Watch Group, Rutledge concluded that published coal reserve figures are significantly overstated. As of the end of 2005, Rutledge projected future coal use of 382 billion metric tons (Gt), compared to a World Energy Council "recoverable reserves" figure of 847.5 Gt.

Table 3: David Rutledge Projection of future production as of January 1, 2006 (Billion Metric Tons)

Region	Production through 2005	Future Production	Share of Total Projection
Europe (incl. Turkey)	114.7	40	11%
US and Canada	66.5	75	20%
China (incl. Japan & S. Korea)	43.8	71	19%
South Asia (incl. Indonesia & Philippines)	12.0	66	17%
Russia (incl. Kazakhistan, Uzbekistan)	26.3	48	12%
Australia and New Zealand	8.9	50	13%
Africa	7.4	15	4%
Latin America	1.6	17	5%
World Total	281.2	382	100%

Patzek/Croft Study: In a peer-reviewed article published in the journal Energy, two researchers - Tadeusz Patzek, a University of Texas engineering professor, and Greg Croft, a St. Mary's College of California earth science professor - write that the world will hit "peak coal" production in 2011 or shortly thereafter, and then mining would begin a long, steep decline. The authors believe the 7 billion tons of coal the world is now mining and burning each year is as high as it can get, due to harder to reach coal reserves and rising demand. The study was funded through a University of California, Berkeley graduate student fellowship.

The pair's prediction is based on the "Hubbert Cycle," the resource-depletion theory that American geophysicist M. King Hubbert used in the 1950s to correctly forecast that U.S. oil production would peak two decades later. Patzek predicts coal will peak not because supplies are running out but because the remaining deposits are increasingly difficult to mine. Alaska's North Slope, for example, has coal reserves that rival those of the continental United States, but turning that coal into energy would be practically impossible, Patzek argues: "It would take 10 or 11 of the largest coal terminals on the Earth operating 24-7, 365 to load ships above the Arctic Circle during the polar night." Russia, China and other energy consumers face similar logistical difficulties with coal, and while global supplies are set to trail off, the stage is set for demand to spike, Patzek said. U.S. consumers use slightly less than 1 billion tons of coal annually, the Chinese use an estimated 3.5 billion tons, and emerging energy giants like India and Indonesia are steadily using more.

Patzek and Croft's peak-coal prediction is being contradicted by government economists and industry groups. The federal Energy Information Agency estimates the United States alone has about 260 billion tons of recoverable coal, enough to support current consumption levels for at least two centuries, said George Warholic, an EIA coal economist. And the National Mining Association said the United States is sitting on enough recoverable coal to power the country for the next 440 years.

The researchers and agencies are making forecasts using different methodologies. The Hubbert cycle analysis looks at past production trends to predict future results. EIA and the mining trade group prefer to measure current consumption rates against estimated future reserves. Jerry Taylor, a resource economist and senior fellow at the libertarian CATO Institute said much of the disparity comes because there are too many variables contributing to coal production to make precise predictions. New mining technology could boost production by making previously untouchable reserves cheap to recover, Taylor said. Alternatively, coal production would drop if an influx of cheap oil and natural gas curbed demand, he said, pointing to the boost in natural gas drilling due to hydraulic fracturing.

The researchers are also skeptical about emissions from burning fossil fuels causing catastrophic climate change: they accept the science connecting human greenhouse gas emissions to global warming, but think the remaining accessible fossil fuel stores only contain enough carbon to raise global temperatures by about 0.8 degrees Celsius, said Croft. (It should be noted that the scientific consensus is the earth has already warmed 1 degree Celsius, and many climate scientists like James Hansen believe any additional increase could set into motions feedbacks toward warming beyond human control.) Therefore, Croft said, he advocates not a cap-and-trade law for carbon emissions and investment in carbon capture and storage, but instead incentives for renewable energy and possibly a carbon tax to promote efficiency.

Barbara Freese, a senior coal policy analyst for the Union of Concerned Scientists, said she could not judge whether the peak-coal prediction was accurate without more analysis but that the study should prompt policymakers to question some of their assumptions about the fossil fuel: "We spend a lot of time talking about whether we can rely on renewables and efficiency and whether that's practical and affordable, but we've kind of given a pass to coal proponents. We need to see evidence that we have the economically recoverable reserves."

Coal reserves and climate change

Most climate policy recommendations having to do with coal and climate change have focused on measures to limit the yearly output of greenhouse gases; for example placing a moratorium on new coal-fired power plants that do not sequester their carbon dioxide emissions and then phasing out existing plants. Such recommendations generally assume that coal reserves are too massive to not pose a potential limitation to climate change. If anything, coal usage would rise if other sources, particularly oil, were to run short. For example, in 2004, the Intergovernmental Panel on Climate Change (IPCC) concluded:

Absolute fossil fuel scarcity at the global level is not a significant factor in considering climate change mitigation. Conventional oil production will eventually peak, but it is uncertain exactly when and what the repercussions will be. The energy in conventional natural gas is more abundant than in conventional oil but, like oil, is not distributed evenly around the globe. In the future, lack of security of oil and gas supplies for consuming nations may drive a shift to coal, nuclear power and/or renewable energy. There is also a trend towards more efficient and convenient energy carriers (electricity, and liquid and gaseous fuels) instead of solids (high agreement, much evidence) [4.3.1].

According to Dave Rutledge's analysis, the IPCC scenarios assume levels of coal far higher than actually will be mined. For example, the IPCC maximum scenario depends on an ultimate coal usage (past production plus projected future production) of 3,400 billion metric tons (Gt), compared to 663 Gt projected by the analysis.

An implication of the suggestions that coal reserves are significantly overstated is the possibility that depletion of coal reserves, or "peak coal," might limit the extent of potential warming caused by coal, especially if those reserves could be reduced yet further by policies to move some coal into off-limits status. Noting that the a third of U.S. coal reserves are located on federal lands, Dave Rutledge suggests that a government program aimed at sidetracking a portion of those reserves would be more effective in limiting ultimate global warming than attempting to limit annual usage of coal.

Effect of Rutledge projection on global warming

Rutledge used the MAGICC climate model to assess the implications of his lower coal reserve estimates. Applied his projection of coal reserves to the MAGICC climate model, Rutledge If the Rutledge analysis is correct, then the impact of future coal usage is 0.3 degrees C. Of that total, the share attributable to future U.S. coal burning is 0.05 degree C.

Kharecha/Hansen analysis

A contrasting study to that done by Rutledge is a 2008 study by Pushker Kharecha and James Hansen, "Implications of 'peak oil' for atmospheric CO2 and climate." Kharecha and Hansen modeled a coal phase-out scenario in which developed countries leveled out their coal usage from 2012 to 2022, then reduced it at a straightline pace until zeroing it out in 2050. Developing countries would level their usage out in 2022 and would also zero out their usage by 2050. This coal phase-out scenario, which would release 110 Gt of carbon from coal into the atmosphere from 2007 through 2050, was then analyzed in connection with a variety of assumptions about oil and gas depletion. The peak carbon dioxide level connected to the various scenarios ranged from 428 to 446 parts per million (ppm). A "business as usual" scenario in which coal usage was not limited produced a peak carbon dioxide level of 563 ppm.

The implication of the Kharecha/Hansen scenario is a climate policy that focuses heavily on coal: with the phenomenon of peak oil limiting other fossil fuel emissions, proactive limits on coal alone are sufficient to curb climate impacts below 450 ppm.

Comparing Rutledge's conclusions to the Kharecha/Hansen conclusions

Rutledge's study implies a contribution of future coal, inherently limited by "peak coal" dynamic, of 201 Gt of carbon, compared to 110 Gt of carbon for the Kharecha/Hansen coal phase-out scenario. In other words, achieving the carbon emission levels of the Kharecha/Hansen coal phase-out scenario implies that carbon emissions are 91 Gt lower than would occur under a business-as-usual continuation of trends to the present. This coal phase-out represents a 45 percent reduction (91 Gt/201 Gt) from Rutledge's projection of ultimate future coal usage.

Note that neither Rutledge nor Kharecha/Hansen includes the contribution to global warming from unconventional sources such as tar sands and oil shale. Nor do they include any role for carbon capture and storage technology. Development of tar sands and oil shale would decrease the amount of "acceptable" coal use; development of carbon capture and storage would increase it.

In addition, neither Rutledge nor Kharecha/Hansen analyzes scenarios that would limit carbon dioxide levels to 350 ppm, a level more recently suggested as a "safe" threshold by climate scientists.

Examples of coal placed off limits to mining by private or public conservation measures

Nature Conservancy

• Dolly Sods Wilderness Area: In the 1970s The Nature Conservancy acquired 15,000 acres of coal rights and transferred them to the U.S. Forest Service, allowing for the creation of the 10,000 acre Dolly Sods Wilderness Area. In the early 1990s, the Conservancy acquired over 6000 acres (known as "Dolly Sods North") for the Forest Service. The Preserve was created in 2000 with the donation of 477 acres by Dominion, an energy company based in Virginia. The Conservancy also has 147 acres in conservation easements.

U.S. Federal government

• Grand Staircase-Escalante National Monument: Established in 1996 during the Clinton administration, the Grand Staircase-Escalante National Monument in Utah effectively placed 11.375 billion tons of recoverable coal on reserve. That amount of coal is sufficient to provide a lifetime supply to 165 500-megawatt coal plants running at an 85 percent capacity factor.

Ownership of U.S. coal reserves

Table 4: Major Holders of U.S. Coal Reserves (Billion short tons). Note: Figure for U.S. Government is based on a National Mining Association calculation based on federal ownership of about one-third of the United States' coal reserves of 264 billion short tons.

Holder	Estimate Reserves
1. U.S. Government	88.000
2. Great Northern Properties LP	20.000
3. Peabody Energy	8.200
4. CONSOL Energy	4.422
5. Arch Coal	2.900
6. North American Coal	2.400
7. Massey Energy	2.300
8. Natural Resource Partners LP	2.300
9. Pocahontas Land Corp. (Norfolk Southern)	1.730
10. Murray Energy	1.685
11. Foundation Coal	1.585
12. Rio Tinto	1.400
13. Luminant (formerly TXU and Alcoa)	1.300
14. Patriot Coal Corp. (formerly Peabody mines)	1.263
15. International Coal Group	0.965
16. Westmoreland Coal	0.946
17. Penn Virginia Resource Partners, LP	0.818
18. Alliance Resource Partners	0.713
19. Magnum Coal Company	0.650
20. Alpha Natural Resources	0.618

Federal ownership

As shown in the map below of the Gillette field, the core production area of the Powder River Basin, the Federal government is the primary owner of coal in most western states.

Reserves, exports, and regulations

The group Carbon Tracker estimates that coal reserves held by companies listed on the London Stock Exchange is equivalent to 44.56 gigatonnes of CO2 owned by 16 companies; of that, around half of the coal owned by these UK-listed companies is exported to China, Russia, India and South Africa. The six companies with the most reserves are, respectively: Anglo American, Xstrata, BHP Billiton Group, Evraz Group (Russian steel producer), Bumi Plc, and Rio Tinto. Most of the reserves held (one-third) are located in Australia.

The Carbon Tracker report, "Unburnable Carbon - Are the world's financial markets carrying a carbon bubble?" concludes that if the world is to achieve the internationally agreed target of limiting average temperature rises to 2°C, only a little over 20 per cent of all listed fossil fuel reserves (565 GtCO2 of the listed 2,795 GtCO2) can be burned.

Resources

Related GEM.wiki articles

• China and coal
• Coal
• Federal coal leasing
• Peak coal
• Powder River Basin

State and regional reports

Utah

• Joe Bauman, "Utah's coal reserves raise a burning question," Deseret News, January 13, 2008

Powder River Basin

• "Assessment of Coal Geology, Resources, and Reserves in the Gillette Coalfield, Powder River Basin, Wyoming," Luppens, J. A.., Scott, D. C., Haacke, J. E., Osmonson, L. M., Rohrbacher, T. J., and Ellis, M. S., U.S. Geological Survey Open-File Report 2008-1202, 2008 (PDF file)

Appalachia

• "Appalachian Coal: the faucet is almost dry," Raising Kaine, 10/30/07

External links

• Margo Kingston, "Peak Coal?" Webdiary, accessed September 2008
• Coal production trends, Wikipedia
• "A supply-driven forecast for the future global coal production" (preprint) Mikael Hööka et al
• "Coal: Resources and Future Production" Energy Watch Group 3/07
• "Hubbert's Peak, The Coal Question, and Climate Change", Dave Rutledge, October 2007
• "The Coal Question and Climate Change", Dave Rutledge (text version posted on Oil Drum blog), June 25, 2007.
• "Implications of 'peak oil' for atmospheric CO2 and climate," Pushker A. Kharecha and James E. Hansen, Global Biochemical Cycles, August 5, 2008
• Matthew L. Wald, "Science panel finds fault with estimates of coal supply," New York Times, 6/21/07
• 2007 Coal Producers Survey, National Mining Association, 2008
• Mikael Höök, Kjell Aleklett, "Historical trends in American coal production and a possible future outlook," International Journal of Coal Geology, Volume 78, Issue 3, May 1, 2009, pp 201-216
• Robert C. Milici, "Coal-to-Liquids: Potential Impact on U.S. Coal Reserves," Natural Resources Research, Volume 18, Number 2, 85-94, DOI: 10.1007/s11053-009-9093-1
• Gregory D. Croft and Tad W. Patzek, "Potential for Coal-to-Liquids Conversion in the U.S.-Resource Base," Natural Resources Research, Volume 18, Number 3, 173-180, DOI: 10.1007/s11053-009-9097-x
• U.S. Coal Resources Databases (USCOAL)
• David Roberts, "New climate strategy: Buy the damn coal and keep it in the ground," Grist, April 13, 2012