COAL:

China's booming economy may produce the majority of world coal emissions by 2035 -- EIA

China's growth kept churning through the 2009 global financial crisis that left the United States and Europe in economic shambles. That kept China's global carbon emissions on a steadily upward trajectory, according to the U.S. Energy Information Administration.

EIA emissions data released last month add weight to a body of evidence suggesting that, in terms of greenhouse gas emissions, slumping Western economies will be no match for growth in China and India.

China's carbon emissions increased 23 percent from 2007 through 2009. China kept producing steel and electricity as the economy grew at a 10 percent annual clip. But power demand plummeted in the industrialized world amid the collapse of Western banks. U.S. emissions declined nearly 10 percent in 2009 compared to 2007.

Economic growth is a measuring stick of future carbon pollution in the eyes of U.S. energy analysts. In that vein, it's significant that China plans to tap its massive coal resources in the north and consume boatloads of imported coal to meet the needs of its economy.

A lot of that coal is expected to come from Australia, if buying coal in the global market remains cheaper than the cost of shipping China's domestic supply.

In the past two months, torrential rains have flooded mines in the state of Queensland, the world's largest exporter of steel-making coal. Yesterday, rails and ports were closed again as Cyclone Yasi whipped across the Great Barrier Reef and swept across the northeastern coast. Just as coal mines deluged by rain in December and January began operating again and prices stabilized, the new storm is driving prices up again.

U.S. coal emissions grow much more slowly

Through 2035, according to EIA, global carbon emissions from burning coal will increase by 56 percent. Coal, the most carbon-intensive fuel there is, will increase its footprint primarily in China, India and other emerging economies. The growth is outside of the Organisation for Economic Co-operation and Development (OECD), which is the 34-member group of mostly North American and European countries that for the past 50 years had been the dominant contributors to rising levels of carbon dioxide in the atmosphere.

Emissions tied to burning coal in China are projected to grow 2.6 percent a year to 10 billion metric tons by 2035, according to EIA data. That's 55 percent of the world's total carbon emissions from coal. In the United States, EIA projects carbon emissions tied to coal will increase 0.3 percent to 2.4 billion metric tons in 2035. That's about 12 percent of the world total.

"At the end of 2007, China had an estimated 496 gigawatts of coal-fired capacity in operation," said EIA's latest International Energy Outlook. "To meet the demand for electricity that accompanies its rapid economic growth, an additional 736 gigawatts of coal-fired capacity is expected to be brought on line in China by 2035, requiring large financial investments in new coal-fired power plants and associated electricity transmission and distribution systems."

The U.S. agency predicts economic growth will average 5.2 percent a year through 2035 in Asia's developing countries. The dominant emerging economies, China and India, have been growing closer to 10 percent a year.

China is using more coal, but it is also expected to use more of other fuels and resources to produce electricity. EIA expects coal's share of China's total power generation to drop from about 80 percent today to 74 percent in 2035.

Coal also remains the dominant fuel for making steel China needs to build cities for the millions of people migrating from the countryside.

U.S. coal producers prepare to feed China

An increasing amount of that metallurgical coal is expected to be imported from Australia, Indonesia and the United States. U.S. coal producers are joining forces and building capital in order to be part of that growing international market for coal.

Alpha Natural Resources on Saturday agreed to buy Massey Energy for $7.1 billion in the hope the combined company can produce 27 million tons of steel-making coal by 2013. Alpha said it is willing to pay a high premium for its rival Massey, which suffered heavy financial losses in the aftermath of the Big Branch mine explosion in West Virginia last April.

St. Louis-based Arch, the second-largest U.S. coal producer, has been securing port capacity in recent months to ship coal from the Western United States to China and other Asian buyers.

Earlier this month, Arch signed a five-year agreement with an export terminal near Prince Rupert, British Columbia. The deal with Canadian Crown corporation Ridley Terminals Inc. provides enough port capacity to ship 2 million metric tons of coal in 2011 and 2.5 million metric tons from 2012 to 2015.

Late last year, Arch took an equity interest in Millennium Bulk Terminals, which owns a port on the Columbia River near Longview, Wash. Under the deal, Arch will control 39 percent of the terminal's throughput and storage capacity. Once permits are rounded up and minor upgrades are made, Arch will be able to use the infrastructure in place to handle up to 5 million tons of coal a year.