Wednesday, September 24, 2008

Coal: unfortunately, will be a major part of the U.S. and Chinese energy mix for years to come

As reported by an NY Times article, the use of coal in the U.S. is only expected to increase going forward, even though renewables will form a larger slice of the pie.

The U.S. Department of Energy projects that overall energy production will rise by an estimated 20% from 2006 to 2030. There's a fairly large uncertainty around that estimate, which ranges from -5% to 36%.

Coal also contains probably the most carbon per unit energy among other potential fuels. Oil has less carbon per unit energy, but since it's far more expensive, it isn't economical for power generation. The article maintains that natural gas supplies in North America are dwindling, and so the use of natural gas should remain flat.

On the other hand, I've heard that total U.S. supplies of natural gas are pretty abundant, with all the new extraction from shale formations. There are folks who are actually forecasting a supply glut, although I don't agree with that argument yet.

Either way, in addition to improving the U.S. energy mix, Americans will have to consume less energy. The government will need to provide incentives to do so.

And then there's China. China wasn't covered in the article, but coal is very abundant in China. China's economy and standard of living are growing very rapidly. We can expect them to open many, many new coal plants in the coming years. Not good news.

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