Wednesday, March 9, 2011

China's vast coal reserves are the new 'Middle East' of the future

Fred Palmer, the chairman of the  World Coal Association and a key executive at Peabody Energy, the world's largest privately owned coal company, says the vast reserves of coal in the far west of China mean it is set to become the "new Middle East." He added that China is leading the US in efforts to develop technology to "clean" coal of its carbon emissions by burying them underground.

In an interview with the Guardian (UK), he dismissed the idea that the world might ever experience "peak coal" – the point at which maximum global coal production rate is reached. "The Dakotas, Mississippi, Alabama, Louisiana, Texas all have large, large amounts of lignite [brown coal]," he said. "Or in western China and Mongolia you have lower-ranked coals. So I don't think there's a peak coal problem. I think Xinjiang province in the west of China, where they say there's a trillion tonnes of resources, will be the new Middle East. Anyone who has the notion that we're going to move away from fossil fuels just isn't paying attention."

China is "ahead of the US" when it comes to developing 'low-carbon coal' technology, he said  and "we should be doing what they are doing". With the Chinese government announcing a new five-year plan, which included a pledge to reduce emissions growth relative to GDP by 17 per cent, Palmer says the world should "applaud" China for consuming so much coal "because it makes the world better for everyone for no other reason that it takes huge price pressures off of oil".

Peabody Energy has confirmed it intends to build a vast new port in Washington state by 2015, to ship coal mined in Wyoming across to China. Palmer dismissed the notion that such exports would only act to exacerbate global carbon emissions: "I want to be absolutely clear that [Peabody is] in the 'low-carbon coal' camp and we need to drive that. China could easily tell the world that they're not going to do anything on climate. But they are not doing that. They are a major coal user. They know the concern is there and they are embracing the technology for 'low-carbon coal' and they want to deploy it. And that's where we are, too."

Palmer says Peabody will continue to resist any regulation aimed at taxing or capping carbon emissions and will instead seek to overcome the "deep concern around the world about carbon emissions" with technology. "I don't think a carbon tax will ever be there from a worldwide perspective," he said. "It will be a technology path."

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