Remember Peak Oil? That was the notion, au courant a few years ago, that we have reached the limit of how much petroleum the planet can produce in a year. Of course, the shale revolution and continued exploration have proved that thesis wrong. And we should be careful about making projections about long-term developments in energy use. I still remember coming home in a panic from eighth-grade science class in 1980, when Mr. Smith told us there was enough oil left on the planet for only 30 to 35 more years.
But it now appears we may be reaching another peak, with a different fossil fuel. Only this time, the peak isn’t in production—it may be in consumption. I’m talking about Peak Coal.
The Stone Age didn’t end because the world ran out of stone, the saying goes. It ended because humans decided to use other materials. The same may hold true for coal.
We’re not running out of coal anytime soon. According to the U.S. Energy Information Administration, the U.S. has 480 billion short tons of demonstrated reserves—that’s several hundred years’ worth of supply at current consumption rates. And coal remains a very attractive fuel for its primary use—generating electricity. Moreover, billions of people across the planet are just beginning to plug in and enjoy the conveniences of modern life. All of which suggests that coal-powered electricity plants—among the most effective ways of scaling up electricity production—should be around for a long time.
But there’s mounting evidence that the U.S.—and even the world at large—may be deciding that it prefers to use less coal.
In the U.S., cheap natural gas, the rise of renewables, and regulations are combining to reduce the use of coal in electricity generation. Between 2007 and 2014, coal’s share of electricity generation in the U.S. fell from 48.5 percent to 38.7 percent. And the Energy Information Administration forecasts it will fall again this year and next, to 37.2 percent in 2015 and 36.6 percent in 2016. Why? Everywhere you look, companies and power generators like the Tennessee Valley Authority are announcing plans to shutter coal-fired plants and replace them with wind, solar, and plants that use cleaner-burning natural gas. The American Coalition for Clean Coal Electricity reports that by the end of 2015, about 49,000 megawatts of coal capacity “will have retired or converted,” and that “[b]etween 2016 and 2018, an additional 16,000 MW are expected to retire or convert.” (In 2012 the U.S. had about 310,000 megawatts of coal-generating capacity, according to the EIA.) “In the last ten years, without really knowing it, we have embarked on the largest peacetime deconstruction project in the history of the world,” writes Richard Martin in the forthcoming book Coal Wars: The Future of Energy and the Fate of the Planet.
Power generators are turning away from coal for a host of reasons: In some instances natural gas is cheaper; many states are requiring utilities to generate a certain portion of electricity from renewable resources; individual cities (and even an entire Canadian province) have decided to stop purchasing electricity created by burning coal; and new Environmental Protection Agency regulations are making it more expensive and less economical to use coal plants. Some companies fear that future carbon taxes will render their coal plants uncompetitive. It all adds up to lower demand. In the power sector, which accounts for 93 percent of coal usage in the U.S., coal consumption fell about 1 percent in 2014, and is expected to fall an additional 2.6 percent by 2016, according to the EIA.
So it’s no surprise that coal production in the U.S., which rose marginally in 2014, from 984 million tons to 997 million tons, stands 9 percent below its 2011 peak. This has been bad news for mine owners and for coal miners. According to SNL Energy, between the end of 2011 and mid-2014, U.S. employment at coal mines fell by more than 13,000—or about 14 percent. States such as Kentucky, West Virginia, and Wyoming have been among the hardest hit. And the EIA forecasts that production will fall 5.4 percent in 2015. Meanwhile, as domestic use falls, exports—which had been a bright spot—are falling, too. According to the EIA, U.S. coal exports are expected to fall 31 percent between 2013 and 2016. It’s possible, then, that the U.S. may have reached its peak of coal production and consumption.
For years the refutation of the bearish case was the developing world at large, and China in particular. A nation that essentially sat out most of the 20th century finally woke up and turned into a voracious, rapidly growing industrial powerhouse. China’s modern economy runs on coal. As the EIA (it really is a treasure trove of information) reported last year, China makes and burns almost as much coal as the rest of the world does. It relies on coal for nearly 70 percent of electricity generation.
But there are signs that China may be reaching its limits, too. It is difficult to overstate the degree and impact of air pollution in China, much of it caused by coal-fired electricity generation. You only have to spend a few days in the country to sense its awfulness—the taste in your mouth, the depressing haze that covers the land. While on a trip there last summer, my colleagues and I made a grim sport of downloading pollution-monitoring apps and tallying our exposure to pollutants. China’s air quality, which affects elites as well as peasants, is harming the country’s qualify of life and its image. Earlier this year a documentary produced by a citizen filmmaker on the horrors of pollution, Under the Dome, notched more than 100 million views.
Now we’re seeing signs that China’s love affair with coal may be ending. Coal consumption there, which has risen about sevenfold in the past three decades, may have actually fallen in 2014. China’s stated ambition is to burn less coal in coming years than it has in the past. At the National People’s Congress a few days ago, the Washington Post reported Chinese officials “said they would cut coal consumption by 160 million tons over the next five years.”
It’s a truism that as countries rise from poverty, they tend to become less tolerant of pollution and more discerning about their energy sources. It happened in the U.S., and it may be happening in China. And it may be true of India. Less developed than China but nearly as populous and starved of electricity, India still stands as a great hope for big coal. But last year India doubled its tax on coal. And earlier this month, its government proposed to double it again and to use the proceeds to fund clean energy projects.
The assault on coal consumption, until recently a developed-world affair, is starting to look something like a world war.
