Asian energy consumers are attracted to coal because:
- Asia has a third of the world’s proven coal reserves, according to BP PLC’s most recent statistical review of world energy. Most of Asia’s reserves are shared by three countries: China, India and Australia.
- sharp increases in oil prices in recent years. Coal prices would have to rise nearly fivefold to match current oil prices on a unit-of-energy basis, according to Cambridge Energy Research Associates.
China and India, which account for 45% of world coal use, will account for more than 80% of the increase in global consumption over the next two decades, according to the IEA. In particular, Asian energy consumers are examining the feasibility of building coal-to-liquids plants to make gasoline and fuel. Creating such synthetic fuels from coal is attractive to China and India because of their dependency on crude imports, which run close to respectively 50% and 70% of their oil needs.
Most CTL plants need oil prices to stay consistently above $45 a barrel to justify the initial investment and turn a profit, industry insiders say. But more restrictive policies in many Asia countries in response to climate change and other environmental concerns could act as constraints on the nascent CTL industry.
Each ton of oil produced from liquefying coal requires five to 18 tons of water. Converting coal to oil also involves the release of carbon dioxide, usually at seven to 10 times the amount that is released in refining oil.
Source: WSJ, 04/01/08
