Richard K. Morse

The Real Drivers of Carbon Capture and Storage In China and Implications for Climate Policy

The capture and permanent storage of CO2 emissions from coal combustion is now widely viewed as imperative for stabilization of the global climate. Coal is the world’s fastest growing fossil fuel. This trend presents a forceful case for the development and wide dissemination of technologies that can decouple coal consumption from CO2 emissions - the leading candidate technology to do this is carbon capture and storage (CCS). China simultaneously presents the most challenging and critical test for CCS deployment at scale. While China has begun an handful of marquee CCS demonstration projects, the stark reality to be explored in this paper is that China’s incentives for keeping on the forefront of CCS technology learning do not translate into incentives to massively deploy CCS in power plant applications as CO2 mitigation scenarios would have it. In fact, fundamental and interrelated Chinese interests - in energy security, economic growth and development, and macroeconomic stability - directly argue against large-scale implementation of CCS in China unless such an implementation can be almost entirely supported by outside funding. This paper considers how these core Chinese goals play out in the specific context of the country’s coal and power markets, and uses this analysis to draw conclusions about the path of CCS implementation in China’s energy sector. Finally, the paper argues that effective climate change policy will require both the vigorous promotion and careful calculation of CCS’s role in Chinese power generation. As the world approaches the end of the Kyoto Protocol in 2012 and crafts a new policy architecture for a global climate deal, international offset policy and potential US offset standards need to create methodologies that directly address CCS funding at scale. The more closely these policies are aligned with China’s own incentives and the unique context of its coal and power markets, the better chance they have of realizing the optimal role for CCS in global climate efforts.

The World's Greatest Coal Arbitrage: China's Coal Import Behavior and Implications for the Global Coal Market

In 2009 the global coal market witnessed one of the most dramatic realignments it has ever seen – China, long a net exporter of coal, suddenly imported a record-smashing 126 Mt tons (103 Mt net). This inversion of China’s role in global coal markets meant that Chinese imports accounted for nearly 15% of all globally traded coal, and China became the focal point of global demand as traditional import markets like Europe and Japan stagnated in the wake of the financial crisis. The middle kingdoms appetite for imported coal seems insatiable, and the “China Factor” appears to have ushered in a new paradigm for the global coal market.But China doesn’t ”need” the coal. The worlds largest coal producer cranked out 2.96 Bt of production in 2009, backed up by 114.5 Bt of reserves. While the world’s other fastest growing importer, India, is plagued by a growing gap between coal supply and power demand that it is unable to fill domestically, this is not the case in China. The spike in Chinese demand for imported coal is therefore a more complex (and less easily predictable) phenomenon that requires careful examination if the world is to understand what impact China might have on global energy markets in the coming decade.In this paper Richard Morse and Gang He devise a model that explains Chinese coal import patterns and that can allow the coal market to understand, and to some degree predict, China’s coal import behavior. They argue that the unique structure of the Chinese coal market creates a series of key arbitrage relationships between Chinese domestic coal markets and international coal markets that determine Chinese import patterns.The implications of this argument are significant for the development of the global coal trade in the coming decade. The arbitrage relationships that Morse and He describe directly link the domestic price of coal in China to the global price of coal. Developments in China‘s domestic coal market will be a dominant factor determining global coal prices and trade flows (and by implication power prices in many regions). This makes understanding the domestic Chinese coal market, which operates according to a unique economic and political logic, crucial for any participant in the global markets.

Australia's black coal industry: past achievements and future challenges

This paper reviews the technical, economic, political, and regulatory factors that have shaped the black coal industries of Queensland and New South Wales (NSW) over the post-WWII period. It also assesses the factors which are expected to shape the black coal industries of Queensland and NSW over the next 20 years. Its purpose is to document the critical challenges facing the black coal industries of Queensland and NSW and describe the likely futures that might emerge from the resolution of those challenges over time. 1 1 The author would like to thank the following individuals for their assistance in preparing this paper: Richard Morse of PESD for conducting multiple reviews of earlier drafts of this paper and offering very insightful comments and suggestions that greatly improved the quality of this paper; Mark Thurber also of PESD for the very detailed comments that he provided to an early draft of this paper; Mike Friederich, a consulting coal geologist from Brisbane, Australia, who provided many insights into the coal mining industries of both Queensland and NSW; Pat Markey, chief operating officer for globalCOAL for his very helpful review of earlier drafts of the paper; Cliff Mallett of Carbon Energy for arranging a visit to Carbon Energy‘s Bloodworth UCG demonstration site in Queensland; and Rhonda Dublewicz, Carol Mische, Peter Thurgood and James Belov at Coal Services Pty. Ltd. for providing information on coal production, exports and domestic consumption, labor productivity and other measures of performance for Australia‘s black coal industry for the period 1947 through 2008.

The Global Coal Market : supplying the major fuel for emerging economies

Coal has been the worlds fastest-growing energy source in absolute terms for over a decade. Coal also emits more CO2 than any other fossil fuel and contributes to serious air pollution problems in many regions of the world. If we hope to satisfy the demand for affordable energy in emerging economies while protecting the environment we need to develop a keen understanding of the market that supplies coal. This book offers an in-depth analysis of the key producers and consumers that will most influence coal production, transport, and use in the future. By exploring how countries such as China, India, Indonesia, Australia, and South Africa have developed their respective coal industries - and how these industries link together through the international coal trade - experts shed light on how the global coal market may evolve, and the economic and environmental implications. This book is the most comprehensive treatment of these topics to date and will appeal to a wide readership, including scholars and practitioners working on energy economics and policy.