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- Oct 2 2015 at 7:30 AM
- Updated Oct 2 2015 at 7:30 AM
Carbon climate crushing old king coal
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/j/x/v/6/s/image.related.afrArticleLead.620x350.gjzayx.png/1443735030180.jpg[/img]Bank of England governor Mark Carney warned investors that they face huge climate change losses.Bloomberg
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by Matthew Stevens
It has been another defining and difficult week across both hemispheres of the energy globe once dominated by old king coal.
Down here in the southern hemisphere Australia's third biggest coal producer Rio Tinto quietly but effectively described its exit strategy from the fossil fuel cycle through the sale of a small Hunter Valley coal project and the broader restructure that allowed this pretty staggering $US606 million deal to be completed.
Then, wedged serendipitously between the Tuesday's formal consummation and Wednesday's announcement of that deal, the Governor of the Bank of England described climate change as the "tragedy of the horizon" before warning systemic financial risk could be triggered by the rigorous enforcement of a 2 degree world.
In what will stand a landmark in the great carbon debate, former Goldman's banker (which is globally synonymous with the phrase "smart guy") and current BoE boss, Mark Carney, talked of the risk to the global financial system of the potential that the carbon constraint the global community now regards as essential to managing climate change.
In a high-level address to an equally high-level host at Lloyds of London, Carney talked of the potential that a wealth of fossil fuel assets could necessarily be rendered worthless by this shift in energy demand required to meet future emissions targets. In doing so he used language that more usually decorates the commentary of the anti-carbon lobby.
Most notably, the Governor talked of the risk that vast reserves of oil, gas and coal that currently sit as assets on the balance sheets of miners and petroleum companies would be left "stranded" by this shift in global energy priorities.
"Take, for example, the IPCC (Intergovernment Panel on Climate Change) estimate of a carbon budget that would likely limit global temperature rises to 2 degrees above pre-industrial levels," Carney proposed.
"That budget amounts to between one fifth and one third (of) the world's proven reserves of oil, gas and coal. If that estimate is even approximately correct it would render the vast majority of reserves `stranded' – oil, gas and coal that will literally be un-burnable with expensive carbon capture technology, which itself alters fossil fuel economics.
"The exposure of UK investors, including insurance companies, to these shifts is potentially huge," he said.
Carney noted that 19 per cent of FTSE100 companies are in the natural resources business and that another 11 per cent by value are either customers of service providers to the miners and drillers.
Carney said that "de-carbonisation" of the global economy implied a "sweeping reallocation of resources and a technological revolution" that would necessarily require investment in long-term infrastructure assets at roughly quadruple the present rate.
"For this to happen, 'green' finance cannot conceivably remain a niche interest over the medium term," he advised a room populated by the elites of London's financial community.
As you might expect, the views of the BoE's man have caused a bit of heartburn around a fossil fuel world that is working desperately across a host of critical constituencies to promote the potential of technology to effectively mitigate fossil fuel emissions risk and the unyielding reality that coal will continue to be the energy building block the majority of the world's emerging economies.
Meanwhile, global mining is trying to get its head around the idea that Rio Tinto might very soon not be a coal miner. This is a concept that would have seemed inconceivable even two years ago and it is one that has even Rio people shaking their heads in amazement. But the decision is made.
The financial hard-heads have recovered control of this famously disciplined business and their view is that coal as an asset class would never again be competitive in Rio's internal race for capital and that it carries a now definable and undesirable long-tail of financial and reputational risk.
A shaping fact in this decision is that Rio is essentially a thermal coal producer and, on a global scale, not a massively big one. Past management attempted to change the product and geographic balance of Rio coal portfolio in 2011 through the $US3.7 billion acquisition of coking coal opportunities in Mozambique.
But, for a bunch of reasons including quality and a lack of logistics infrastructure, that investment was a dud. Within two years Rio had written off $US3 billion and the bloke who laid the bet, energy boss Doug Ritchie, was sacked. So was his boss, the Rio chief executive, Tom Albanese.
The longer result of that failure is that Rio is leaving coal. But that decision would likely have been more textured had the coking coal play proved successful.
Rio's in-house view is that coking and thermal coal are now set on quite different trajectories. That is because the world might find replacements for thermal coal (which is used to fuel power stations) but technology has so far given us nothing that can replace coking coal in the steel and aluminium cycle.
This view of a coal world divided will be welcomed at BHP Billiton. It has very famously reduced itself to a business of four pillars that includes coal. But the vast majority of its coal output is coking coal.
There is a bit more to the BHP coal story than there might appear. In November 2011 – at the very same time that Rio was completing its Mozambique mistake – the BHP board was asked to consider the results of Project Fresh. The idea was to bundle up the coal business and deliver it in a demerger to BHP shareholders. Management had recommended the deal and proposed that then chief financial officer Alex Vanselow should run it.
The logic was that coal prices had peaked and it was an asset class that could be left uncompetitive against other investment options and that its risk profile potentially left it ill-suited to the Global Australian's investment proposition, which remains that it offers defensive, annuity exposure to the resources sector.
If that all sounds familiar, then it should. The board decided to keep coal. But the possibilities of de-merger lived on through the Project River team that ended up generating South32.
There is something deeply miserable in the fact that Arrium might sell the best of itself to secure a future for its legacy operations, but such are the decisions forced on those who have arrived at the bottom of their business cycle with too much debt.
Just ask Santos.
That Arrium's debt is priced in US dollars and has been thrown at a second tier (and I am being kind there) iron ore business only makes diversified steel-maker's dilemma all the more disappointing.
But Arrium has confirmed that the sale of its world class "mining consumables" business has moved to a definitive final stage that will see a handful of bidders make their best pitch. Arrium has apparently made it clear to the bidders for Moly-Cop that they should not imagine a deal is done, it will not sell unless value hurdles are cleared.
Whether or not the bidders believe that, time will tell. And time is one of the few things working here in Arrium's favour. Its view is that it has not callable debt obligations until 2018 so it is under no particular pressure to make a deal.
Mind you, to accept that, you have to accept that Arrium is prepared to sit in a semi-permanent standstill, forced by its dysfunctional balance sheet, that is punctuated only by further cost cutting through both its steel and mining operations.
But, in reality, that is not an option. Given Arriun can manufacture a future from its legacy, then there are big investment decisions ahead. Not the least of them will be deciding at some point before the end of the decade whether or not to extend the life of Whyalla's blast furnace and thus the whole South Australian steel complex. To make that happen Arrium needs to lift the anchor of debt from its balance sheet.
So Arrium has time but it really has no option. In the end, Moly-Cop will be sold.
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Five-year deadline for clean coal: International Energy Agency- THE AUSTRALIAN
- OCTOBER 6, 2015 12:00AM
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The International Energy Agency's executive director Fatih Birol says commercialising carbon capture and storage was critical for the coal industry.
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The coal industry has less than five years to prove “clean-coal” technologies are commercially viable or face demand constraints caused by climate change policies, the head of the International Energy Agency has declared.
IEA executive director Fatih Birol said commercialising carbon capture and storage was critical for the coal industry, which has accounted for 15 per cent of Australia’s exports over the past five years.
“Demand for coal will be depending on whether or not the coal industry will be able to make use of the clean-coal technologies, including carbon capture and storage,’’ Dr Birol said.
He was speaking after the G20 energy ministers’ meeting in Turkey, where he met Australia’s Resources Minister, Josh Frydenberg, who told him Australia was significantly increasing its use of renewable energy and pursuit of energy efficiency, but this was not mutually exclusive to continuing energy exports, particularly coal and gas.
With a month to the start of the Paris climate change conference, Dr Birol said he was “really impressed’’ by the Australian commitment to renewables and energy efficiency.
The IEA predicts worldwide energy demand will grow a third by 2040 and three-quarters of that additional demand will be met by fossil fuels. The wildcard was the Paris conference.
“If we receive a signal from Paris that climate change is becoming more and more important in economic decisions, then we will see an acceleration in the renewable energies and acceleration of the energy efficiency investments,’’ Dr Birol said.
He declared the medium-term prospects for Australia’s LNG export industry were bright despite current low prices, which would be prolonged by the prospect of new supply coming online.
Dr Birol said whatever the signal from Paris, gas would increase its market share “even in a carbon-constrained world’’.
Australia is expected to be the biggest exporter of LNG by the end of the decade.
Dr Birol predicted renewable technologies such as hydro-electric power, solar and wind would comprise half of the new power generation capacity added worldwide over the next five years.
He said while wind and solar were becoming cheaper, and some of the best wind sites were becoming commercially competitive with fossil fuels, renewables in general would likely still need government subsidies to compete with fossil fuels by 2020, although less than current levels.
While the prospects for the gas industry were strong, it would first have to weather difficult times over the next few years.
He expected low prices could produce a slowdown in investment, but this would be a “temporary situation’’.
Rising demand for electricity in the Asia-Pacific region would drive demand for Australian gas which would ultimately fuel a further round of investment growth in the industry.
Dr Birol played down predictions by environmentalists of the end of the coal industry. “To declare that coal is dead may be in my view (is) a rather premature way of thinking,’’ he said.
Rising demand from India, which has 350 million people without access to electricity, would underpin coal demand, but he said new coal plants should be high-efficiency, low-emissions plants.
He said carbon capture and storage remained a “most critical technology’’ for the coal industry and declared the “signals’’ from current efforts to develop the technology in Australia, Canada and the US “not as strong as I would like to see’’.
“You really need to see in the next four or five years that CCS is now ready to go,’’ he said. CCS technology was still “promising’’.
Technology problems had to be solved and it had to be proven economically viable quickly because investments were being made now and it was difficult to retrofit existing plants.
The first commercial-scale CCS electricity project began operating last year in Canada in the Boundary Dam power plant. Australia has several trial plants operating, including a project in the Otway Basin in Victoria. The giant Gorgon gas project in Western Australia will also sequester carbon as part of its operations.
Internationally, there are 14 plants in operation across all industries and eight under construction.
The IEA predicts gas will gain significant levels of a market share, while oil and coal will slightly lose market share under its current growth scenarios.
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India seen driving next wave of coal M&A in Australia
DateOctober 12, 2015 - 10:47AM- 23 reading now
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Angela Macdonald-Smith
India's quest to lock in sources of supply of metallurgical coal is set to drive a new wave of coal M&A in Australia just as recent acquisitions in the sector have highlighted a keen appetite for strategic investments in the sector, according to Bede Boyle at consultancy Coal Ventures Ltd.
Mr Boyle pointed to an Indian government coal delegation to Sydney earlier this month, where Coal India director Pradeep Kumar Tiwari estimated that Coal India would require some $US4.5 billion to invest in the acquisition of overseas coal assets.
"India has scarce high quality metallurgical coal reserves and will have a continuing dependence on Australian high quality metallurgical coals to supply Indian steel industry," said Shri Narendra Singh Tomar, the minister of steel and mines, who led the delegation, Mr Boyle told clients in a report.
India's emergence as a major steel-producer is driving growth for metallurgical coal imports, while it is also expected to increase demand for higher quality, low-ash thermal coal because of a government directive that requires all new coal-fired power plants to use super-critical technology starting in 2017. India's own coal resources are typically low-energy and high-ash, used for the sub-critical technology that dominates the Indian market at present.
The forecast for increased Indian investment in Australia's coal sector comes as M&A activity picks up with a number of recent investment, including Glencore's link-up with privately owned Bloomfield Group to buy Vale's Integra mine in the Hunter Valley, and Stanmore Coal's acquisition of metallurgical coal areas in Queensland's Bowen Basin from Peabody Energy, with the intention of extending the Isaac Plains mine.
New Hope Corporation Limited has agreed to acquire Rio Tinto's 40 per cent interest in the Bengalla thermal coal joint venture in NSW.
Meanwhile, Mr Boyle pointed to reports by IHS that Australian "clean coal" technology company Exergen is acquiring the Wilkie Creek mine in Queensland mine from Peabody for $10 million, conditional on a capital raising and on finalising port and rail haulage contracts.
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Australia's coal exports set to rise as south-east Asia demand surges
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/8/7/8/9/image.related.afrArticleLead.620x350.gk7sms.png/1444727707958.jpg[/img]Australia could regain its crown as the world's largest thermal coal exporter by 2020. Brendon Thorne
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by Ben Potter
South-east Asian coal demand is set to triple in the next 25 years, bucking a global trend and giving Australia's coal exporters a sorely needed boost, a new International Energy Agency report predicts.
The forecast surge in demand for energy coal – also known as thermal coal and Australia's third-biggest export – in south-east Asia comes as China's demand is thought by some analysts to have peaked and India focuses on renewables and domestic coal production.
The report is a rare piece of good news for Australia's struggling coal producers because the growth in domestic energy demand in south-east Asia will exceed the capacity of domestic suppliers, especially Indonesia, to expand to meet it.
As a result, the International Energy Agency predicts that Australia will surpass Indonesia as the world's largest thermal coal exporter again by 2020, regaining a position it gave up in 2006.
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The growth of coal power generation in south-east Asia comes as Australian financial institutions face global pressure to walk away from coal. Many expect a United Nations climate conference in December to bring a global agreement to reduce planet-warming carbon dioxide emissions – of which coal is the biggest source.
Chinese group Shenhua's Watermark coal mine in north-western NSW and Indian group Adani's Carmichael mine in Queensland are awaiting federal government approval, in the face of persistent protests by farmers and green groups.
South-east Asia's embrace of coal comes with a geopolitical twist.
STEP INTO THE BREACH
As Western financial institutions such as the World Bank and European and American development banks walk away from funding coal, the IEA predicts that Chinese-led institutions such as the recently formed Asian Infrastructure Investment Bank will step into the breach to help south-east Asia meet the higher cost of low-emission coal technology.
Paul Flynn, chief executive of Whitehaven Coal, operator of the Maules Creek mine in north-western NSW, said the IEA projections were consistent with the demand the company was seeing from countries such as Vietnam, Malaysia and the Philippines.
Mr Flynn said analysts predicting the decline of Australian coal exports ignored the higher energy content of Australian coal, which made it more suitable for new high-efficiency coal plants, which emit up to a third less carbon dioxide than conventional power plants.
He said 70 gigawatts of new coal-fired power stations would be opened across Asia in the next five years, requiring another 150 million to 180 million tonnes of coal a year. Even if only half of that came from Australia, it didn't have the capacity.
"That does see the supply-demand dynamic tightening," Mr Flynn said. "You cannot deny the build-out of power stations in those countries. That is happening and they don't have the coal to service it."
Anti-coal activists and "peak coal" advocates dismissed the IEA report, South-east Asia Energy Outlook 2015, which contradicts the economic case for divesting from coal companies on the grounds that their future demand will collapse.
ONLY GROWING COAL MARKET
Tim Buckley, former Citigroup analyst and now director of Australasian energy finance at the Institute for Energy Economics and Financial Analysis, said the report focused on the only growing coal market and south-east Asia's demand growth couldn't offset future declines in the much larger markets of China, Japan and India.
"I can see a scenario where w south-east Asian demand grows and I can see a scenario where Australia gains market share because we keep building new capacity," Mr Buckley said.
But he said with coal prices at decade-lows, most Australian coal miners would have "profitless prosperity and the coal price will keep falling".
The IEA predicts energy demand in south-east Asia will jump by 80 per cent as governments seek to extend electricity to 120 million people who don't have it and cleaner cooking and heating fuels to 276 million people who rely on polluting solid fuels such as wood or dung.
Because the region's oil production is shrinking and natural gas production is growing more slowly, the majority of the increase in demand will have to be met from the region's coal production and imports.
The IEA forecasts that south-east Asian thermal coal production will increase from its current level by about 230 million tonnes a year, while demand will increase by about 300 million tonnes.
SURGE IN COAL USE
The IEA says the surge in coal use is "underpinned by economic factors, abundant supplies and the need for rapid electrification" to meet the demands of a rapidly growing middle class.
It also highlights the need to accelerate the deployment of more efficient coal plant technologies to address the rise in local pollution and carbon dioxide emissions, with less-efficient, conventional plant still forecast to account for half of coal-fired capacity even as average efficiency increases by five percentage points.
Energy from renewables – hydro, wind and solar energy – will treble, while oil and gas will lose share.
New Resources Minister Josh Frydenberg, speaking from the Asia-Pacific Economic Co-operation energy ministers meeting in Cebu, said coal importance had been reinforced at the meeting.
"There is a unanimous call for more investment in renewables but at the same time everyone understands the key role that fossil fuels are playing.
"Nobody is under any illusions at these international meetings that coal is going away."
With Angela Macdonald-Smith
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No comeback in sight for coal as slowing China goes green
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/i/1/z/k/q/image.related.afrArticleLead.620x350.gk9kuh.png/1444891671821.jpg[/img]China is the world's biggest consumer, producer and importer of coal. Qilai Shen
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by Lisa Murray
A few years ago, Chinese coal demand wasn't expected to "peak" until halfway through next decade, a trajectory which unsettled environmental policymakers around the world and drove billions of dollars into mining investments.
More recently, that prediction has been turned on its head. There is even debate about whether we missed the turning point and China's coal demand actually peaked in 2013.
A lot has happened since Chinese President Xi Jinping and Premier Li Keqiang came to power in March of that year, declaring a war on pollution and vowing to move the economy away from a reliance on infrastructure investment and manufacturing to one driven by consumption and the services sector.
China is the world's biggest consumer, producer and importer of coal, which meant both these policy commitments wreaked havoc on the global mining industry. But arguably the sharper-than-expected economic slowdown has been even more damaging for coal companies.
You don't have to look far to see the impact.
During the first half of this year, electricity consumption in China – which is two-thirds supplied by coal – rose by just 1.3 per cent, the lowest in 30 years. Last year, the average utilisation rates of coal-fired power plants across the country were the worst since 1978. And in the past few weeks, China's two biggest coal companies – Shenhua Group and China Coal – have engaged in a price war to protect their market share.
Meanwhile, trade data released this week showed China's coal imports slumped 30 per cent in the first nine months of the year compared to the same period in 2014. On paper, the rate of decline is actually moderating but that's because imports have now been falling for 15 straight months.
So how did the coal industry, environmental policymakers and most energy analysts get it so wrong?
Tim Buckley, former Citigroup analyst and now director of energy research at theInstitute for Energy Economics and Financial Analysis says the mining sector underestimated Beijing's commitment to tackling air pollution and transitioning the economy away from a reliance on the manufacturing sector.
Huge investment has been made in hydropower schemes, wind turbines, solar farms and other renewable energy sources. China is now the largest investor in the renewable sector and according to the International Energy Agency, will account for 40 per cent of global capacity growth.
That's not to say China isn't still investing in coal. Since the end of 2011, China has invested 1.69 trillion yuan ($365 billion) into the coal industry, according to Deutsche Bank's Hong-Kong based analyst James Kan. However, he expects only half of the investments will turn out to be effective capacity and China will need to ramp up exports to relieve the industry from oversupply.
The real game changer for the global coal sector, according to Kan, will be the completion of China's Ultra High Voltage (UHV) transmission projects, which are being rolled out across the country. These are aimed at connecting hydro, wind, solar and mine-mouth thermal power plants in southwestern and northern China to the coastal areas, which are the biggest customers for imported coal.
Kan said in a report published in August that during visits with power companies he realised the completion of the UHV transmission plans would "unlock stranded power" and "reduce pollutant emissions in China's coastal areas." He forecasts coastal thermal coal demand to shrink by 160 million tonnes to 640 million tonnes, a similar amount to China's imports in 2015.
All of these developments are being bolstered by Beijing's continuing focus on the environment. President Xi announced late last month China would introduce a national emissions trading scheme in 2017, which despite likely implementation and enforcement issues is confirmation of the government's shift on environmental policy. It will allow the country to put a price on pollution and move to a more effective measurement system for emissions.
China is currently working on its next five year energy plan for 2016 to 2020 and there is speculation it will introduce a nation-wide absolute cap on coal consumption. While there are still some analysts who believe the "peak" is some way off, there is little doubt coal's share of the energy mix will continue to decline in line with new spending on transmission projects and renewable energy sources. And all of this is happening at the same time as China is moving away from a reliance on the power-hungry heavy manufacturing industry for economic growth.
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India won't save Australian coal producers
NaN of
[img=620x0]http://www.afr.com/content/dam/images/g/k/d/b/x/o/image.related.afrArticleLead.620x350.gkq272.png/1446575411756.jpg[/img]"The idea that as China's coal demand slows India opens up as an export market looks to be pretty superficial analysis." Fairfax Media
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by Angus Grigg
Hopes that rising Indian coal demand would insulate Australian miners from slowing consumption in China has been knocked down as "superficial analysis" by new research, which also casts doubt on the prospects for LNG.
In a report delivered at its Shanghai's conference on Tuesday, Bloomberg News Energy Finance said India's thermal coal imports would peak next year and it was on track to be self sufficient by 2023.
"The growth in India's coal consumption is not going to be met by the seaborne market [imports]," said Kobad Bhavnagri the Australian head of Bloomberg's research and consulting arm.
"The idea that as China's coal demand slows India opens up as an export market looks to be pretty superficial analysis."
The firm is forecasting India's electricity demand to increase more than three-fold over the next 35 years.
It believes much of this will be met by burning coal, but it will be domestically produced coal rather than imports from Australia or Indonesia.
On Bloomberg's analysis, Asia's will still be burning as much coal in 2040 as it does today, but the big growth markets in Indian and South East Asia will be domestically supplied.
"From an emission point of view the world is going from a China coal problem in the 2000s to an Indian coal problem in the 2020s," he said.
While China's carbon emissions are set to peak around 2020, India's are set to rise three and half times between 2014 and 2040 as it ramps up coal fired generation.
"The next great strategic challenge for the world is how to get India to develop more cleanly," he said.
Australian coal exporters have been badly hurt by falling demand in China this year, as the economy slows and Beijing begins to tackle its chronic air pollution.
Imported coal volumes fell 30 per cent in September compared to the same period in 2014, while China's overall coal use was down 5.7 per cent over the same timeframe.
That has left China's coal-fired power plants running at a utilisation rate of just 49.5 per cent in the year to September.
And in a further blow to Australia, Bloomberg believes it will be renewables, not LNG which sits beside coal as the region's major energy source.
"It [LNG] can't compete with coal on price and it has to be imported so does meet the demands of domestic energy security," said Mr Bhavnagri.
Bloomberg is forecasting LNG demand to grow by 31 per cent over the next 25 years, which is far slower than other projections which had forecast a doubling or even more over the period.
"It's a pretty bad story for Australian LNG hopes," said Mr Bhavnagri. "The energy mix is going to be coal plus renewables for Asia."
Bloomberg believes 67 per cent of all new electricity generation capacity in Asia will be renewables by 2040 with solar and wind dominating.
In India, for example, it believes newly installed solar and wind generation capacity will be double that of additional coal capacity by 2040.
In China this shift will be more pronounced with new renewables and nuclear capacity being triple new coal capacity.
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http://www.nytimes.com/2015/11/04/world/....html?_r=0
China Burns Much More Coal Than Reported, Complicating Climate Talks
点击查看本文中文版 Read in Chinese
By CHRIS BUCKLEYNOV. 3, 2015
00:03
06:12
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Chinese Coexist With Coal
Despite China’s pledge to cap and then reduce carbon emissions, coal production continues to grow, creating tough choices for those who work in and live near the mines.
By Jonah M. Kessel on Publish DateNovember 3, 2015. Photo by Kevin Frayer/Getty Images. Watch in Times Video »
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BEIJING — China, the world’s leading emitter of greenhouse gases from coal, has been burning up to 17 percent more coal a year than the government previously disclosed, according to newly released data. The finding could complicate the already difficult efforts to limitglobal warming.
Even for a country of China’s size, the scale of the correction is immense. The sharp upward revision in official figures means that China has released much more carbon dioxide — almost a billion more tons a year according to initial calculations — than previously estimated.
The increase alone is greater than the whole German economy emits annually from fossil fuels.
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Officials from around the world will have to come to grips with the new figures when they[url=http://www.nytimes.com/news-event/un-climate-change-conference]gather in Paris this month to negotiate an international framework for curtailing greenhouse-gas pollution. The data also pose a challenge for scientists who are trying to reduce China’s smog, which often bathes whole regions in acrid, unhealthy haze.
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China Revises Estimates of Coal Use
[Image: chinacoal-Artboard_1.png]In billions of tons
Revised coal
consumption
figures
5
4
3
Previous figures
2
1
'00
'05
'10
'13
Source: China Energy Statistical Yearbooks, 2013 and 2014
By The New York Times
The Chinese government has promised to halt the growth of its emissions of carbon dioxide, the main greenhouse pollutant from coal and other fossil fuels, by 2030. The new data suggest that the task of meeting that deadline by reducing China’s dependence on coal will be more daunting and urgent than expected, said Yang Fuqiang, a former energy official in China who now advises the Natural Resources Defense Council.
“This will have a big impact, because China has been burning so much more coal than we believed,” Mr. Yang said. “It turns out that it was an even bigger emitter than we imagined. This helps to explain why China’s air quality is so poor, and that will make it easier to get national leaders to take this seriously.”
The new data, which appeared recently in an energy statistics yearbook published without fanfare by China’s statistical agency, show that coal consumption has been underestimated since 2000, and particularly in recent years. The revisions were based on a census of the economy in 2013 that exposed gaps in data collection, especially from small companies and factories.
Illustrating the scale of the revision, the new figures add about 600 million tons to China’s coal consumption in 2012 — an amount equivalent to more than 70 percent of the total coal used annually by the United States.
“It’s been a confusing situation for a long time,” said Ayaka Jones, a China analyst at the United States Energy Information Administration in Washington. She said the new data vindicated her earlier analysis of China’s preliminary statistics, which flagged significantly increased numbers for coal use and overall energy consumption.
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[Image: 04CHINACOAL-2-articleLarge.jpg]
A street sweeper in Beijing last month amid heavy smog. CreditKevin Frayer/Getty Images AsiaPac
The new data indicated that much of the change came from heavy industry — including plants that produce coal chemicals and cement, as well as those using coking coal, which goes to make steel, Ms. Jones said. The correction for coal use in electric power generation was much smaller.
Officials accepted the need to correct worsening distortions in the old data but have not commented publicly on the changes, according to Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University in eastern China. Mr. Lin said in a telephone interview that this was partly because the new figures made it more complicated to set and assess the country’s clean-energy goals.
“It’s created a lot of bewilderment,” he said. “Our basic data will have to be adjusted, and the international agencies will also have to adjust their databases. This is troublesome because many forecasts and commitments were based on the previous data.”
When President Xi Jinping proposed that China’s emissions stop growing by 2030, he did not say what level they would reach by then. The new numbers may mean that the peak will be higher, but they also raise hopes that emissions will crest many years sooner, Mr. Yang, the climate adviser, said.
“I think this implies that we’re closer to a peak, because there’s also been a falloff in coal consumption in the past couple of years,” he said.
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[Image: 04CHINACOAL-1-articleLarge.jpg]
The Haizhou coal mine in Fuxin, in northeastern China, was shut down at the end of 2014. Chinese leaders want the country’s emissions to stop growing by 2030. CreditXiao Lu Chu/Getty Images
Chinese energy and statistics agency officials did not respond to faxed requests for comment on the data revisions.
The press office of the International Energy Agency said by email that the organization would revise its own data to reflect China’s revisions, starting with numbers for 2011 to 2013 that will be released Wednesday. The agency estimated, based on the new figures, that China’s carbon dioxide pollution in 2011 and 2012 was 4 percent to 6 percent greater than previously thought.
But some scientists said the difference could be much larger.
Jan Ivar Korsbakken, a senior researcher at the Center for International Climate and Environmental Research in Oslo, said that based on his preliminary analysis, the new data implied that China had released about 900 million metric tons more carbon dioxide from 2011 to 2013.
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That would be an 11 percent increase in emissions, he said. For comparison, the International Energy Agency estimated before the revision that China had emitted 8.25 billion tons of carbon dioxide from fossil fuels in 2012. Dr. Korsbakken, a physicist, emphasized that deeper analysis of the new data was needed before firm conclusions could be drawn.
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When estimating emissions, scientists prefer to account for coal use by the amount of energy in it rather than by its raw mass, which includes impurities that end up as ash. Measured in energy terms, Dr. Korsbakken said, China consumed 10 percent to 15 percent more coal than the old data had showed from 2005 to 2013, the last year for which the new and old figures can be compared. The revisions for 2001 through 2004 were smaller.
Economists have grown increasingly skeptical about the economic data China publishes, and the revisions open a new episode in the debate over its energy use and greenhouse-gas emissions.
China burned or otherwise consumed 4.2 billion metric tons in 2013, according to the new data, and its emissions now far exceed those of any other country, including the United States, the second-largest emitter.
This is not the first time China has underestimated its coal consumption. In the late 1990s, small coal mines were ordered to close, but many of them simply stopped reporting their output to the government. For a time, this created an erroneous impression that China had succeeded in generating economic growth without increasing emissions.
More recently, some scientists concluded that China’s emissions were lower than widely believed because the coal it was using burned less efficiently than researchers had generally assumed. But Mr. Yang said that conclusion had been disputed.
The revised numbers do not alter scientists’ estimates of the total amount of carbon dioxide in the air. That is measured directly, not inferred from fuel consumption statistics the way countries’ emissions are usually estimated.
So if China’s emissions have been much greater than believed, researchers will want to understand where the extra carbon dioxide output ended up — for example, how it might have been absorbed in natural “sinks” like forests or oceans, said Josep G. Canadell, executive director of the Global Carbon Project, which studies the sources and flows of greenhouse-gas pollution.
“If the emissions are partially wrong,” Mr. Canadell said, “we’ll be wrong in attributing carbon sources and sinks.”
Correction: November 4, 2015
Because of an editing error, an earlier version of this article misstated the amount of China’s emissions in 2013. The country did not emit 4.2 billion metric tons of carbon dioxide. That number referred to the amount of coal consumed that year.
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BHP sees coal price getting worse before it gets better
[img=620x0]http://www.afr.com/content/dam/images/g/i/w/9/b/l/image.related.afrArticleLead.620x350.gl7az1.png/1448438640242.jpg[/img]The approval of the huge Carmichael coal mine is the wrong move for Australia and the wrong direction to be travelling in in a rapidly warming world. Glenn Hunt
[Image: 1425442782668.png]
by Mark Ludlow
A senior BHP Billiton executive has warned the market for Australian resources will get a lot worse before it gets better, saying it would be "dangerous" to invest in a new mine based on the assumption coal prices will recover.
As big miners continue to cut costs following a plunge in international coal prices, BHP Billiton Mitsubishi Alliance asset president Rag Udd painted a bleak picture of the resources sector in Australia.
"I think it's dangerous to try and align a business around prices improving in metallurgical coal. I personally think it will get worse before it gets better," Mr Udd told a Queensland Resources Council forum in Brisbane on Wednesday.
"The reality is we need an ever-green strategy to see ourselves through these sort of fundamentals. We have to design a business model which is going to work with these prices and even lower prices to ensure we have a low-cost environment so we can put jobs in place for Queenslanders."
Mr Udd said there had been a flood of low-cost producers into the metallurgical coal market in the past few years, including Mozambique and Mongolia.
The price of metallurgical or coking coal has slumped to $US70 a tonne after once being as high as $110 a tonne. The price of thermal coal, used for power generation, has also plummeted since the global downturn. The price of iron ore, Australia's biggest export commodity, has also slumped to almost $US40.
ONGOING COST CUTS
Both BHP and Rio Tinto have been involved in driving efficiencies in their Australian coal operations by cutting staff and costs. This is expected to continue indefinitely.
BHP BMA operates seven coal mines in the Bowen Basin in Queensland, including Goonyella Riverside, Broadmeadow, Daunia, Peak Downs, Saraj, Crinum, Blackwater and Caval Ridge, as well as the Hay Point coal terminal near Mackay.
BHP BMA announced in August it was moving to service contracts for a range of operational activities at its Blackwater mine to ensure the on-going viability of the mine.
Mr Udd told The Australian Financial Review most of the 300 workers had been re-deployed to other mines, but there were not plans yet to expand the labour hire strategy to other BHP BMA mines.
Thiess managing director Michael Wright told the forum Australia needed to become more competitive to take on low-cost producers in other countries.
"We want people to be employed in the resources sector, but it has to be at a lower cost base. Rather than looking at commodity prices we should be looking at labour costs," he said.
Altona Mining managing director Alistair Cowden, who runs the copper exploration company based in Perth, said the end result of the current downturn was junior players hitting the wall.
"I've been through this many times in the past 30 years, but this one feels bad," he said. "Where I'm based in Western Australia, in west Perth, you can shoot a cannon down the street because all the juniors are dying. It couldn't be worse."
Other industry players at the resources forum remained a bit more optimistic about the future.
Rio Tinto Bauxite and Alumina president Phillip Strachan said while China's growth had slowed in recent years, the future for alumina production was strong because of the growing consumer market.
"There are still some strong fundamentals for growth over the next five, 10 and 15 years," he said.
Stanmore Coal managing director Nick Jorss - who is defying the market trend by attempting to develop a new coking coal mine in Queensland - said the demand side of the equation for coal would eventually turn back in their favour.
"I'm not sure whether we'll see a boom like we did last time, but we're still bullish in the long-term," he said.
Queensland Resources Council chief executive Michael Roche told 700 miners at the annual forum that despite the predictions of doom and gloom the outlook was strong for coal exports, especially coking coal.
"There is no viable substitute for coking coal in the production of blast furnace steel," he said.
"And according to the International Energy Agency, the world will continue to use coal, gas and uranium to produce electricity for decades to come."
Queensland Premier Annastacia Palaszczuk said the resources sector would remain the backbone of the state's economy, despite current prices, saying there was a record 219 million tonnes exported last financial year.
"Whatever change may be ahead in the global energy mix, demand for steel will remain very strong into the future," she said.
"Also, new emerging lower emission technologies will present new opportunities for our resources sector."
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