By Tom Konrad, Ph.D./Alternative Energy Stocks

A couple years ago, I began to see reports that coal supplies might not last the 200+ years we’ve all been lead to believe, so I wrote an article about what you could do to prepare your portfolio for Peak Coal.

Now two years have passed, and Peak Coal is undeniably 2 years closer.  (Did you ever wonder why people who have been saying that we have 200 years of coal for 20 years aren’t now talking about 180 years of coal?)  But more than being 2 years closer, the evidence continues to mount.  Caltech Professor David Rutledge, has been spreading the peak coal word for most of the time since.  I recommend the video of his 2007 lecture on the subject.

It’s great that the NY Times is asking “Is America Ready to Quit Coal?” but the real question may be “Will we have any choice?”

On February 12th, Clean Energy Action released a report on Powder River Basin coal supplies, based in part on a 2008 USGS report.  The Powder River Basin matters because Western coal has been the only source of new coal production in the US for the last two decades.  Appalachian and Interior coal production has been declining, despite mostly increasing prices, and uniformly increasing prices since 2003.  Northern Appalachian coal production having peaked in the middle of the last century, while Interior coal production peaked at the start of this decade.  When production declines in the face of rising prices, constraints other than economics must be coming into play.  Future increases in production in these regions seems unlikely.

Of the top 6 coal producing states in the US, only Wyoming and Montana are still increasing production.  West Virginia, Kentucky, Pennsylvania, and Texas all peaked in the 1900s.  With existing Wyoming mines, which dominate current production, all having less than 20 years of reserves remaining, only Montana will remain… and we simply don’t know much about the geology to know how much can be recovered.  Jim Hansen, author of the Master Resource Report, tells me that available rail supply lines out of Montana are likely to be another critical limiting factor on that state’s production.

The 2007 report from Energy Watch Group (which triggered my earlier article), David Rutledge, and Clean Energy Action all found that what we don’t know about our coal reserves far outweighs what we do know.   What we do know should be very worrying to anyone who hopes that we might be able to replace our current coal fired electricity generation with any sort of “Clean Coal.”  Any attempt to sequester CO2 by pumping it underground or to the bottom of the sea would require considerably more energy than simply releasing it into the atmosphere, as we do now.  That energy would come at a cost of less net energy from what will likely prove to be very limited coal supplies.

Peak Coal Accounting

If “Clean Coal” can be made to work, and we are able to replace part of our electricity supply with this technology, it seems increasingly unlikely that we will be able to supply as much electricity from coal 30 years from now as we do today.  Coal plants are intended as 50 to 60 year investments, and part of the reason they are considered so “cheap” is that the construction costs are depreciated over more than half a century of payments.  If, in reality, those construction costs must be paid over a shorter period, the effective cost of coal fired electricity will be considerably higher… even if the accounts do not yet show it.

READ THE COMPLETE ARTICLE HERE.