Tech Talk - of Wheat and Coal

The release of the latest assessment of the IPCC on the future of the planet, failing their push to cut greenhouse gas emissions, has brought forth headlines and supportive editorials in papers around the world. Yet I could not help but note a couple of things that form the basis for this tech talk. The first was that the report discussed the impacts of climate change (for which I suspect in this case they mean global warming) on agricultural production. They stress the negative impacts on crops such as wheat, and so, being curious, I went to the Wikipedia page that provides a table of wheat production over the past eighteen years, and plotted the data.

Figure 1. Global wheat production in millions of metric tons (after the Food and Agricultural Organization via Wikipedia)

Clearly wheat production is growing rather than, as the IPCC report implies, declining with the increase in carbon dioxide levels and longer growing seasons in parts of the world. More to the point – which is providing more food – (h/t Joules Burn) the two staple crops wheat and corn, have both seen growing production, but it is the slower pace of growth of wheat (at about 0.9%) over corn (at about 1.6%) that is of current concern, and which is to be addressed with new investments in the International Wheat Yield Partnership that plan to more than double yields in the next 20 years. This is needed in large part to match the continued growth in world population, which is likely to continue to rely on wheat to provide roughly 20% of the calories that this population will consume. Gains come both from increased land acreage being used, but also from the yields of that land. In the UK, for example, yields now average 7.8 tonnes per hectare up from 2.5 tonnes in 1940, the current target is to reach 20 tonnes per hectare in the next 20 years. Given that the global average is still down around 3 tonnes per hectare, the ability to bring this productivity to the broader community will give significant help to feeding the world.

I mention this because of the clear disparity between this information and the way that material is presented by the IPCC. Further the real needs of the world and its nations are now increasingly being addressed with less attention to the strident demand of the more alarmist of those who push the climate change agenda, in part perhaps because of the overhyping of the message. The latest illustration of this comes from Japan.

Following the devastation of the tsunami following the Great East Japan Earthquake on March 11, 2011 the Japanese public has been very nervous about the use of nuclear power, banning the restart of 48 nuclear power stations until after a new series of safety checks. This has had two short-term consequences, the financial melt-down of the power companies, which is now being addressed through government bailout and the need to switch to alternate fossil fuels to replace the power that the country obtained from the reactors. The switch was largely to natural gas, and to oil but this has proved to be an expensive undertaking with companies feeling that they could only raise power prices to a limited degree, hence their need now for government funding.

Figure 2. The changing face of electricity supply in Japan following the Earthquake, (MIT technology review )

But the sustained high cost of the gas and oil is estimated to be costing the companies over $30 billion a year and even with the government bailouts this is not an acceptable long term solution, given that it is likely to be years before the safety changes are made in the reactors, and also given the continued public opposition to restarting the reactors. As a result the companies have sought permission to switch back to coal-fired power plants. Concurrently the Japanese Coal Energy Center has been looking for coal resources around the world ranging from Mongolia to Mozambique.

in 2012 Japan was the second largest of the coal-importing nations at 189 million tons (behind China at 289 million) and current plans are to increase the amount of power that the fuel will provide by roughly 20% through construction of new power stations. (Some of these will be needed since, while some nuclear power stations may come back on line others are proving to be too expensive to restart under the new codes, and thus will be permanently closed).

It is this clear benefit of cost that is driving the change, and that benefit is unlikely to disappear over the next couple of decades. The renewable energy industry has not been able to overcome the advantages of coal’s ubiquitous presence and low cost of production. In the case of Japan supplies are anticipated to come from Canada and the United States easing their dependence on Australia and perhaps helping reduce their costs as they develop more international suppliers. Glencore, for example, their Australian supplier, has now reduced costs to $88 a ton, from the $95 being paid last year. It is estimated that there is currently a glut of about 5% of the coal market, and the reduced demands for thermal coal in the United States and Europe is unlikely to change that picture in the short term.

The longer term remains more cloudy, since the potential for the United States to enter, in a significant way, the LNG market and potentially to change those supply costs is not yet clear. It seems, however, unlikely that the volumes that will become available will not have much impact on price, and if that remains the case then coal will continue to grow as the price differential continues to add pressure for the its use in generating cheaper electricity.

Whether this will change the recently better-defined coal resources off the British Isles into a reserve remains, in the short term, unlikely, but even in the UK power costs can only rise so far before the public complaints begin to have an effect.