Coal and Development in Asia

By Paul Sullivan,
Georgetown University

Coal was one of the driving forces of the start and development of the Industrial Revolutions in the United Kingdom, Continental Europe, the United States and more in the mid-18th and 19th centuries. With the invention of the steam engine, steam boats and more the world changed drastically. The steam engine allowed the development of railways in many ways. It also allowed for greater extraction of coal from mines across the world. The steam engine produced the power mechanism for the pumps that cleared water from the coal mines. It was also the power that moved trains as industries started developed so long ago. The steam engine also was used to move cargo in ships. The steam ship was also early on powered with coal. The steam ship allowed cargo to be transported often faster than the previous sailing ships. Ships no longer needed to tack back and forth to the side of the wind, but could go right into it. Many homes and other buildings in Europe, the US and more that once used wood to heat and cook were turning to coal. The first electricity plants used coal. Coal was the original source for the energy to run many of the textile mills, steel mills, cement factories and more that drove these countries to their wealth.
One could easily and correctly say that one of the main driving forces of the growth and development of Western Europe and the United States during their early industrial years was coal. The same could be said for Australia and many other countries.
Oil was really not that important until the late 19th century. Oil’s main importance in the development of the West was to refine it and then use its refined products, gasoline and diesel, for transport. Oil used to be used a lot more for heating in the United States in the earlier years. Kerosene was also used for lighting, mostly prior to the development of the massive electricity grids of the US and Western Europe. Oil had some significant uses in industrial processes, but transport was to be its key use. Oil has been a feedstock into the production of tens of thousands of products, from plastics to vanilla flavoring, but that is another issue. Natural gas was considered a waste product to oil production until well into the 20th century. Then countries began to realize it could be used for producing electricity, fertilizers and more. Natural gas transport is not yet here in a big way. Nuclear energy really only started in the late 20th century. Renewables such was wind, solar, and geothermal remain some of the smaller sources of energy in the world, especially compared to coal, oil and natural gas, which account for the bulk of the developed world’s energy needs.
However, wind, solar geothermal and some other renewable energy sources could really be considered rather ancient sources that in many ways date back well before the advent of massive industrial uses of coal and oil. Ancient peoples used these natural sources of energy for many things. Hydropower was used to mill grains and run factories in some places before the advent of what many call the “modern” fuels of coal, oil and gas.
Ancient China also had uses for natural gas.
India and China have had an amazing run with economic development in the last few decades, and especially in the last decade. What many do not understand is that the reforms started in China in the 1970s through the 1990s really do not make any gigantic differences in development and poverty alleviation until the late 1990s and the 2000s. India’s reforms, infrastructure programs and investment programs really did not take hold until the 2000s. India still has a long way to go to get to the growth patterns and wealth of China, but it is well on its way. Some of the greatest anti-poverty programs in the history of the world have occurred in China and India in the last decade. Some of the greatest programs for the electrification of countries, and especially of the villages happened in India and China in the last couple of decades, and especially in the last decade or so. It is truly astonishing how these countries have changed.
Coal was a very big part of these changes. If one looks at the International Energy Agency and the Energy Information Agency (US) graphs on what fuels are used to produce electricity in these two countries it is clear that coal dominates and has dominated for some time. The largest increases in the uses of coal in these countries correspond very closely with their economic growth of the last decade. India relies 75 percent on coal for its electricity. The next most important source for India is hydropower at about 15 percent or so, depending on how the rains and the monsoons are going. 45 percent of all modern energy in India is from coal. About 25 percent of the energy needs for India is in the form of biomass. (About 25 percent of the people of India do not have access to electricity. Many people in India still cook with cow dung, other agricultural waste or anything else that these poor people can find.) If we took out the biomass used in the villages and even by the poor in the cities overall modern energy use in India would be about 70 percent coal. About 70 percent of the energy needs for China are from coal. About 65 percent of all Chinese electricity production capacity is from coal. Another 22 percent is from hydropower. Wind is number three with about 6 percent.
China is beginning to import more and more coal, especially the coal used in metallurgy, such as steel making. India also is importing a lot of coal. Both countries have very large coal resources. China is drawing its down very rapidly. It looks to be facing internal peak coal by about 2030. In other words, they will have possibly a sharp drop off in coal production due to their wearing down the mines. India has been increasingly importing coal from places like Indonesia, Australia, South Africa and the United States. Its coal dependence is increasing. China’s coal import dependence is also increasing. It gets a lot of its coal from Mongolia, Russia, Indonesia, Australia and the United States.
Both countries will likely need to import more and more coal in order to keep up with their energy needs—most particularly their electricity needs as their economies continue to grow at fairly rapid paces.
Both countries increasingly rely on oil imports for transport mostly. China has significant oil production, but it cannot keep up with its growing needs. India does not have much in oil reserves and produces only a small proportion of its needs. Both rely about 70 to 75 percent on oil imports from the Arabian Gulf, but that is another article. Natural gas is not a big source of energy just yet for either of these countries. There are huge shale gas reserves in China and significant ones in some parts of India, but it is to be seen how they might access these and use them given the water issues that both countries face in some of the areas where the most significant shale gas reserves could be.
Even with all of the talk about nuclear power for both of these countries compared to coal nuclear is small. Renewables have been increasing, especially in China, which is one of the largest investors in the world in the building of capacity for various types of wind, solar and other renewables, including biofuels, oddly for a country with such water stress. India has put significant efforts into increasing its hydropower capacity and in wind and some forms of solar power. Both countries are not going to push large amounts of coal use away any time soon with their moves toward renewable energy. It is just too tiny just yet.
China and India will likely be “coal states” for some time to come. They will likely put massive investments into trying to move from this, but will likely not be as successful as soon as they would like to be. Both countries face potentially large civil instability issues if jobs are not produced. This is more important for China than India right now. However, China’s population growth rate is about one-half of India’s. India’s population could surpass China’s in the not too distant future. India could also get its infrastructure, management, and political acts together and grow even faster than China in the coming couple of decades.
Energy is needed to produce jobs. Coal is the most likely to be used for at least the next couple of decades.
Mongolia is a big bank of all types of coal that these and other countries will need in their future developments. Mongolia itself relies hugely on coal for its economy. Its future development will also likely be based on coal. These are the realities of the basic economics and politics of the country. Coal will be one of the most important sources of Mongolia’s future wealth. It could be even more important if it could get its coal out to places like India, Japan, South Korea, and more via greater transport diversification. Mongolia could also turn its coal into gas and get it out that way via pipelines. There are lots of opportunities there.
Even with the environmental and other concerns attached to coal it is clear that for India, China and Mongolia it is there to stay for many years to come. Transitioning to other sources when coal is so dominant today is unlikely to happen any time soon.
Western Europe and the United States moved from coal to other sources over long time periods and also because they had those resources available in their own lands, under seas near to them, or they were affordable to them as imports to some extent. Diversification away from coal for the United States has only just begun in many ways. It is being driven more by the price of natural gas dropping like a rock via the extraction of massive shale gas reserves in the country. Coal is still close to 45 percent of the fuel used to produce electricity in the United States. Its importance is dropping mostly due to an alternative being fairly easily and more cheaply available.
The coal future of Asia will likely be determined more by alternative fuels that can be developed, and the supply of water to produce energy, rather than any international agreements or internal laws and regulations related to environmental issues. Developing Asia wants to continue to develop. In many ways, it is on that fast train and has to keep stoking the fuel in…or there will be big trouble ahead.

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Posted by on Dec 13 2012. Filed under Opinion. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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