Headlines from the same day:

• Reuters: China’s coal riches could ease oil insecurity

• Business Week: Report: China faces coal shortage by 2010

From the first:

Optimists say China could be making as much as 1.2 million barrels per day (bpd) of liquid fuel from coal in 10 years, equivalent to more than a sixth of current demand, as high prices and a growing import reliance renew interest in the process.

Pessimists say uncertainty over the price of oil—or that of coal, which has also surged—will impede development.

And from the second:

China now produces about 1.67 billion tons of coal a year, the state-run newspaper China Daily quoted Wang Xianzheng, a vice director of the State Administration of Work Safety, as saying.

By 2010, output is expected to rise to 1.87 billion tons a year, far below the projected level of consumption, he said.

“The present size and scale of China’s coal industry are far from being able to meet the country’s future market demand. Insufficient supply will continue to be a major problem,” Wang was quoted as telling an energy conference in Beijing.

The likely outcome is that both statements will be true. If peak oil production occurs, as seems likely, sometime during the next few years, then nations endowed with rich coal resources will turn to variants of the basic Fischer-Tropsch process to generate synthetic fuels to fill part of the resulting fuels gap.

But given the increased demand pressures on coal not only for synthetic fuels, but also for electricity generation (a major problem for China), the second statement is likely true as well. There just won’t be enough coal produced to go around.

The US is in a similar situation. Congressman Roscoe Bartlett used the EIA chart to the right to point out the same issue in his series of presentations on peak oil to the House.

Once one starts to factor in some ongoing economic growth, the reserve life of coal begins to drop dramatically from the multiple hundred year figure often bandied about. Once one factors in the conversion of coal to fuels (the lower bars in the graph) the lifespan decreases dramatically. (The graph is from the Energy Information Administration’s Annual Energy review 1999).