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China could face peak coal

BEIJING, Dec. 15 (UPI) -- China could be faced with the very real possibility of peak coal -- the point at which demand for coal will outstrip domestic production capacity.

With domestic coal demand increasing around 10 percent each year, China would run out of coal in 21 years, even if it were to cut demand by 5 percent, Hong Kong brokerage CLSA Asia-Pacific Markets said in a recent report.

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Beijing is considering an annual coal production cap of 3.6 billion-3.8 billion tons in its upcoming five-year plan to be released early next year, state-run news agency Xinhua reported.

Using the World Coal Institute figures showing China's coal reserves totaling around 110 billion tons, that would mean the country has enough coal for about 30 years of consumption at the 3.5 billion ton level.

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China produces more than three times as much coal as the United States, which is ranked second globally in terms of production. If the current pace of growth continues, China would produce four times as much coal than the United States by 2012.

Now the world's biggest consumer of energy, the International Energy Agency predicts that China's thirst for energy will rise by 75 percent until 2035, when it will account for more than one-third of global demand.

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China currently relies on coal for about 70 percent of its power.

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A report from HSBC's alternative energy research unit in London released this week predicts that over the next 10 years, China would double its total electricity generating capacity to 1,800 gigawatts, from the current level of around 900 gigawatts. But most of that growth will still come from coal-fired power.

Richard Heinberg, a senior fellow at the Post-Carbon Institute in Santa Rosa, Calif., wrote in a recent report, "China's reliance on coal cannot be significantly reduced as long as its demand for electrical power continues to grow at anything like current rates. And even if energy demand growth tapers off and alternative energy sources come on line quickly, the country's ability to supply enough coal domestically will still be challenged."

To meet its demand for coal, China is relying more and more on imports from the United States, Canada, Australia, Indonesia, Colombia and South Africa.

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In 2009, the United States exported 2,714 tons of coal to China, says the U.S. Energy Information Administration. That figure skyrocketed to 2.9 million tons just in the first six months of this year.

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