With the price of gasoline so volatile of late, it is not hard to accept the argument that the world may be entering the period of "peak oil," a time in which the extraction of oil from the ground becomes limited by geological constraints on the amount globally available. Resource analysts differ in their assessments. Some believe the peak in oil production from conventional sources (which is to say, easily exploited ones) has already arrived. Others project that this key turning point may not come for another decade or more.

click for full image and caption

But one thing is for sure: The notion of peak oil has been on lots of people's minds. Books and Web sites are full of the topic. Now a new study from a European organization called the Energy Watch Group proposes another daunting prospect: that the world might soon have to grapple with a peak in the production of coal, too.

This conclusion flies in the face of accepted wisdom on the topic, which is typically based on a comparison of the amount of coal left to be mined (reserves) with the amount used every year (production). The ratio of reserves to production provides a crude measure of how many years are left before the resource runs out, assuming that reserves don't expand and that consumption stays constant. According to the Energy Information Administration, which provides official U.S. government energy statistics, the ratio of world reserves (tons of coal) to production (tons used per year) in 2002 was more than 200. That is to say, we might expect coal to last another 200 years. Considering the United States in isolation yields an even more optimistic number: 240 years.

One problem with such simpleminded assessments is that they ignore the way natural resources are actually depleted. Production does not continue at some constant rate for centuries and then suddenly stop. Rather, it tends to ramp upward to some peak rate, then decline. A reasonable expectation is that the production curve is symmetrical, with the peak taking place when about half of the total resource is used.

The lead author of the new study, Werner Zittel of the German consultancy Ludwig Bölkow Systemtechnik, points out that the ramifications of this dynamic will soon affect China, which currently leads the world in coal production. The BP Statistical Review of World Energy for 2006 lists China's reserves-to-production ratio for coal at only 52 years. But Zittel says this number is misleading, because it is based on a 1992 estimate of Chinese coal reserves. So one should subtract the last 15 years of production from it, which suggests that China has about 37 years of domestic coal left. Of course, the fast-growing Chinese economy is assuredly going to be using coal at ever-increasing rates; hence the reserve-to-production ratio will soon be well below 37 years. And if depletion follows the usual symmetrical pattern, production of coal in China should peak within a couple of decades. Zittel notes that coal production in China is increasing at 10 to 15 percent a year and says that, "according to present data, [the peak] will be in 10 to 15 years."

The situation in the United States may not be rosy either. The U.S. has the largest coal reserves of any country. But the new study reveals that 60 percent of that coal is concentrated in just three states: Illinois, Montana and Wyoming. Production from Illinois has dropped by 50 percent in the last two decades, perhaps because Illinois coal is high in sulfur, which is costly to remove from power-plant emissions. And production of low-sulfur coal from Montana has remained constant over the past two decades, despite recently increasing coal prices, most likely because of the many environmental concerns associated with surface mining—casting doubt on whether that state's vast reserves will ever be amenable to broader exploitation. The Energy Watch Group suggests that the peak in U.S. coal production may come as soon as 2025.

Could such near-term peaking of coal really happen? Colin Campbell of the Association for the Study of Peak Oil says he regards Zittel as a serious analyst: "I would have a lot of confidence in what he says." Campbell, a geologist and former oil-industry consultant, notes that coal is similar to tar sands in that both are relatively difficult to mine without troubling environmental consequences. And with the many problems of extraction, handling and transport, the ratio of energy returned to energy invested can easily become too small to be economical.

Vaclav Smil of the University of Manitoba agrees with the Energy Watch Group that it is important to consider the possibility that environmental issues may limit the extent to which coal is exploited. But he is not terribly concerned about the consequences of any coming peak in production—for coal or even for oil—because the world is using these energy sources so inefficiently at the moment. "We can get away with [using] half of it," says Smil. And he believes that making do with less is far more sensible than trying to repair the environmental damage that is done in extracting and using ever-more-copious amounts of fossil fuel. In particular, the increasingly popular idea of capturing and sequestering the carbon dioxide generated at coal-fired power plants by pumping it underground or into the deep sea is "totally crazy" in Smil's view, because to be meaningful, such an undertaking would have to take place on an impossibly massive scale—something like two to three times the size of the oil industry. "I don't see this happening," says Smil.

Zittel, too, is skeptical about the prospects for carbon sequestration, but for a different reason. He notes that it will probably take 10 or 15 years before the engineering challenges of sequestration can be worked out, and by that time comparatively few new coal-fired power plants will be coming on line, because coal production will have already peaked. That is, not a lot of new coal-fired power plants will be constructed, because by then existing, conventional facilities will be using the world's entire coal-production capacity.

It's startling to think that even such large producers as the U.S. and China might face coal shortages within a couple of decades—rather than in a couple of centuries. The rest of the world will presumably confront problems even sooner, given that coal, unlike oil, is difficult to transport economically over long distances. But perhaps some will find comfort in the conclusions of the new report. Its projection of worldwide coal use over the coming decades almost matches the International Energy Agency's "alternative" scenario, for which coal use is curtailed by policies put in place to guard against dangerously altering the planet's climate. That is to say, if the Energy Watch Group is correct, global coal use will follow what's regarded as a relatively climate-friendly evolution—not because the nations of the world voluntarily choose to cut back their carbon-dioxide output but because limits on coal resources force it on them. But before celebrating such a forecast, or getting too gloomy about anticipated shortages, one does well to remember what Niels Bohr once said: "Prediction is very difficult, particularly about the future."—David Schneider