Further to Peak Coal for the Chicoms
by David Archibald
26 November 2021
Back in 2013, this paper included this graph of forecast Chicom coal production:
Figure 1: Peak coal for the Chicoms arrives on schedule
Cheap coal has been the Chicom’s source of strength, enabling them to threaten most of their neighbours and bully others as far away as Lithuania. But peak coal has arrived on schedule for the Chicoms and they are now staring into the abyss of rapidly declining coal production.
Coal consumption at 4,000 million tonnes per annum is the energy equivalent of 50 million barrels of oil per day, which in turn is half of world daily oil consumption. The cost of resource extraction tends to rise strongly once half the resource is extracted. The Chicoms are halfway through their initial coal endowment, and are now entering a world of hurt.
The decline could be faster than that as this graph from that paper shows:
Figure 2: Coal production profiles of France, Belgium, Japan and Spain
Nuclear reactors were popular in the 1970s because of what happened in the 1950s and 1960s — many developed countries ran out of coal. Coal production for these countries peaked at about 5% of remaining resources in the 1960s and then fell to near zero within 40 years. China could yet do the same. It is hard to see their nuclear rollout increasing fast enough to compensate for the rate of decline of domestic coal production.
Apart from underwriting their export industry, cheap power from coal also keeps China fed. China uses 393 kg/hectare of nitrogen fertiliser to produce an average of six tonnes of grain to the hectare. By comparison, Australia uses 130 kg/hectare to produce three tonnes of grain to the hectare, which is two thirds of the nitrogen intensity. Nitrogenous fertiliser in China is made using coal as the energy source.
Figure 3: Chicom coal production by province
Chicom coal production is now concentrated in three of China’s 23 provinces: Shanxi, Shaanxi and Inner Mongolia. Production from other provinces in aggregate peaked a decade ago. China started importing coal once its own production costs rose above the price of imported coal. Imports have risen to about 10% of Chinese coal consumption. A sign of the coal shortage in China was the development of the coalfields of Xinjiang, scene of much correction of stabby Muslims. Xinjiang is too far from the demand centres on the east coast for transport by train, so the Chicoms built three ultra high voltage lines operating on direct current. This technology has very low transmission losses.
Xinjiang is also the place the Chicoms expanded their silicon smelting industry to meet demand for photovoltaic panels. Making polysilicon wafers takes 117 kWh of power per kg. Some 45% of the world’s polysilicon is now made in Xinjiang, in the deserts in the fartherest reaches of China. Peak coal for the Chicoms means that renewable energy will become too expensive for the rest of the world to install. Renewable energy made from solar panels made in China is already too expensive to make more solar panels, so it is already not renewable or sustainable. Peak coal for the Chicoms means that it will become even more expensive to maintain the renewables charade.
Figure 4: Chicom coal production by coal type
The dashed line is production from open pit mines, largely reflecting the rise of production from Inner Mongolia. Winter in northern China came 20 days early this year, at a time when power industry coal stocks were short 40 million tonnes. In response, the Chicom authorities bought coal from as far away as Kazakhstan, with shipment from the Black Sea and some LNG cargoes at prices equivalent to US$200/bbl in energy terms. Coal mine operators were exhorted to increase production and a waiver was given for fatalities. Monthly production rose to 440 million tonnes in response.
Figure 5: Chicom energy consumption by source in 2019
More than half of China’s energy comes from coal. China’s peak oil production was in 2015. In 2020 China produced 3.9 million barrels per day out of consumption of 14.2 million barrels per day.
With respect to relative energy endowment, China’s 1,400 million people share a remaining resource of about 185 billion tonnes of coal, equating to 132 tonnes per head. By comparison, Australia’s 25 million people have a remaining endowment of 155 billion tonnes, equating to 6,200 tonnes per capita, which is 47 times as much as what each Chicom has inherited.
David Archibald is the author of The Anticancer Garden in Australia.