Last week I wrote about a coming report on world coal reserves from the Energy Group in Germany, based on the IEA World Energy Outlook 2006.
Here's the report. The nut:
This analysis reveals 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. (my emphasis)
Note that the projections take into account climate policy:
The possible production growth until about 2020 according to this analysis is in line with the two demand scenarios of the International Energy Agency (IEA) in the 2006 edition of the World Energy Outlook. However, the projected development beyond 2020 is only compatible with the IEA alternative policy scenario in which coal production is constrained by climate policy measures while the IEA reference scenario assumes further increasing coal consumption (and production) until at least 2030. According to our analysis, this will not be possible due to limited reserves.
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Ron Steenblik Posted 4:10 pm
11 Apr 2007
Back in 1982, when I was working with some operations researchers on the Energy Information Administration's International Coal Trade Model (ICTM), we kept running up against the question of how to deal with the very large potential coal supplies of Australia and South Africa, which if those countries cared only about covering costs (including a normal profit) could have theoretically supplied most or all of the international market (about 10% of total world coal consumed).
One scenario we therefore built into the model allowed for a non-cooperative Curnot-Nash equilibrium, which would involve both countries exporting less and at a higher price (ceding some of the market to a competitive fringe), thereby earning a higher profit.
As a caveat, however, we noted that for a country like Australia, mine owners with foresight would realize there would be a risk to sitting on unsold, economically exploitable coal reserves, should the world start imposing policies to limit atmospheric emissions of carbon dioxide. It might therefore be rational for them to forgo some higher profits in the short and medium term (some of which were being skimmed off by the state-owned Queensland railways) in order to sell more of their coal while the going was good -- i.e., before the fuel started loosing its market.
That was not offered as advice, I should add, but was simply our analysis of what we saw at the time would be the possible ways in which the trade might develop.
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