BHP – one of the world’s largest producers of thermal coal making almost 10% of its revenue -  have seemingly acknowledged the need for action on climate change, even though the mining industry (the Minerals Council of Australia), was a very vocal opponent of Rudd’s emissions trading scheme.

Although this observation hasn’t received a good reception from politicians, the hung vote and several weeks later a survey indicating if another election were held Labor and the Coalition would lose even more seats just shows how out of touch they are with the people and how beholding they are to the fossil fuel industries. Are both sides of politics  too scared to canvass the end of the coal industry because it would not be welcome by their financial sponsors or because it will highlight to the public how much of what they spend is dependant on what corporations sell off each week.

Both parties back the oxymoron ‘clean coal technology’ and the non-event of carbon capture and storage. Australia’s energy production is particularly carbon intensive and the highest among OECD countries in terms of tonnes of carbon emitted per unit of energy. Coal-fired power stations account for almost half of the country’s emissions and therefore, is a prime example of the need to look beyond just coal.

Minister for Climate Change Greg Combet is charged with developing a policy involving a price on carbon and said ‘my three priority areas are support for renewable energy, greater energy efficiency in industry and households and working towards the introduction of a carbon price; I will be working with other parliamentarians, the business community and the environmental movement to build consensus and to discuss the best way we can achieve a price on carbon’; however, he is reported to have assured the coal industry it had a sound future.

There is a need for revenue generated by any carbon price to be returned to the economy – say – through tax cuts, to offset the cost impact of businesses and individuals.

If Australia did take the lead by implementing a carbon price before a global agreement was struck, Mr Kloppers said ‘it needed to ensure investment did not go offshore to countries without a price on carbon’.

Tony Abbott (who has polarized and alienated many with his hard-man opposition for the sake of opposition) has ruled out allowing Coalition MPs to sit on a cross-party committee to be established by the month’s end to discuss potential responses to climate change.  But is BHP just playing the uranium card ?

BP became the company Beyond Petroleum in 2000, but under new management in 2007 with Tony Hayward, they dropped the green washed label by resuming tar sands operations, winding back wind and solar operations, closing alternative energy headquarters in London and finally, the cream on atop the cake, the Gulf of Mexico oil spill.

With Peak Coal predicted for Australia in 2040, is BHP more interested in nuclear power for Australia so they can dig more coal to sell elsewhere; is it an announcement to push the South Australian government to OK the Olympic Dam mine expansion; would nuclear reactors reduce our greenhouse emissions ?

Whatever the question and answer, if an honest approach is used, then nuclear power will not be a solution … ever; the simple reason is that an honest approach is one where the embodied energy and GHG emissions emitted in developing the land, building and commission a nuclear power plant and decommissioning the plant and ensuing emissions to do so are added to the emissions of the plant while it is running and being maintained; and then when you have added that in and then considered – rationally – where the nuclear waste is to be stored, that the real cost emerges; and it won’t be a simple Prof Ross Garnaut type solution like dumping tailings at sea either.

This story is part of a special series that explores energy issues; for more, visit The Great Energy Challenge.

No matter how bad coal might be for the planet, the conventional wisdom is that there is so much of it underground that the world’s leading fuel for electricity will continue to dominate the energy scene unless global action is taken on climate change, but what if conventional wisdom is wrong?

A new study seeks to shake up the assumption that use of coal, the most carbon-intensive fossil fuel, is bound to continue its inexorable rise; in fact, the authors predict that world coal production may reach its peak as early as next year and then begin a permanent decline.

The study, led by Tad Patzek, chairman of the Department of Petroleum and Geosystems Engineering at the University of Texas at Austin, and published in the August issue of Energy, predicts that by mid-century, the world’s coal mining will supply only half as much energy as today.  The idea that the world will face “peak coal” as soon as 2011 flies in the face of most earlier estimates and analysis. (Related: “The High Cost of Cheap Coal”)

The London-based World Coal Institute, an industry group including the largest international coal producers, says “the use of coal will rise 60 percent over the next 20 years,” and that “coal will last us for at least 119 years.” And the U.S. Energy Information Administration, in its most recent international outlook, projects that coal consumption for electricity will grow more than 50 percent by 2035 unless policies are put in place to stop the growth of greenhouse gas emissions.  However, the Patzek study paints a far different picture—and not because people will use up the last of the coal in the ground. Rather, the world will finish off the coal that is easy to reach and high-quality—the coal that produces a large amount of energy per ton, the new study says. What remains will often be of lower quality, and progressively harder to dig up and bring to where it is used.  (Related: “Mine Tragedy Amid Push to Produce More”)

The study’s prediction for the time of the peak—actually a peak in the energy produced by global coal production—may not turn out to be exactly right, Patzek said. “I’m not saying that on July 1, 2011, there will be a peak.”  But the main thrust of the study is stark: “We are near or at the peak right now,” he said.

Economic Costs

If true, this could have a vast impact on the world economy. Coal-fired power plants supply 40 percent of the world’s electricity, and energy for two-thirds of the world’s steel production. “If we are right,” Patzek’s study said, “major restructuring and shrinking of the global economy will follow.”  Many countries are counting on coal to continue powering their economies for decades to come.

“The United States is the Saudi Arabia of coal,” said President Barack Obama earlier this year, referring to estimates that the United States has the largest coal reserves of any country. Citing the huge stores and the need for clean energy, Obama made the remark at the launch of a task force to study how to deploy technology to “clean up” coal, through carbon capture and storage technology, in the next 10 years.

(Related: “Lighting a Fire Under Clean Coal”)

However, Patzek argues that the reserves estimates of the United States and other countries overstate how much coal is actually practical to mine and use.  “In my study, I disregard completely these [reserve] estimates,” Patzek said. “They’re not credible.”

“The only estimate that’s credible,” he argued, “is what actually comes out of the mines, and how you project that into the future.”

For instance, the study notes that estimates of Illinois’ proven reserves are still high—second only to Montana in the United States—even though coal production has declined to a little more than half of what was produced there 20 years ago.

But there are numerous reasons for that drop, including the fact that Illinois coal is high in sulfur. Electric utilities have shifted to buying lower-sulfur coal from the Powder River Basin of Wyoming and Montana, despite its lower heat content, as a way to meet federal regulations for control of acid rain.

Other analyses that have taken the shift to lower-quality coal into account have concluded that reserves are robust, including a 2007 assessment of U.S. coal research and development needs, organized by the National Academy of Sciences (NAS). Despite what the panel admitted were “significant” uncertainties in reserve estimates, the NAS concluded there was sufficient coal to meet the nation’s needs at current rates of consumption for more than 100 years. That study said the United States had about 270 billion tons of coal reserves, plus more than 1,500 billion tons of “resources”—known deposits that are not currently economical to produce, but that may be possible to develop later.

“It is safe to conclude that the U.S. is not running out of reserves,” said Raja Ramani, a mining engineer at the University of Pennsylvania and co-author of the NAS paper. “I do not see 2011 as the peak year of coal production.”  However, the NAS admitted that its 2007 estimates of coal reserves were based upon methods and data that had not been reviewed or revised since the early 1970s. The NAS called for a coordinated government and industry initiative to determine the magnitude and characteristics of the nation’s recoverable coal reserves.

Will Coal Follow Oil Curve?

Patzek’s study uses a version of a method developed by the legendary father of “peak oil” theory, Marion King Hubbert, to analyze coal reserves. Hubbert, at the time a Shell Oil petroleum geologist, used prior production history to correctly predict 15 years in advance that U.S. oil production would peak in the early 1970s.  Hubbert’s method, a controversial one, assumes that production follows a bell-shaped curve over time.  When there are many different oil wells or coal mines operating independently, the sum of all their production tends to follow such a bell curve over time—starting off small, rising to a peak, and then dropping again as the resources are depleted. Oil in the United States has followed this pattern, as has coal in the United Kingdom.

Patzek’s study, “A global coal production forecast with multi-Hubbert cycle analysis,” modifies Hubbert’s method to allow for several bell curves, to reflect the development of coal mines in different parts of the world and the use of different technologies.

Patzek’s study is not the only one to conclude that the reserve estimates are often too high. In recent years, chemical engineers at Newcastle University in Australia, the electrical engineer David Rutledge at the California Institute of Technology, and a German nonprofit called Energy Watch Group all have estimated that coal production would most likely peak in the next couple of decades.

One of the most important questions involving the peak coal studies is what they mean for climate change policy. Patzek’s study notes that its projections would mean that carbon emissions from global coal production would decline by 50 percent by 2050. That’s significantly below most of the carbon emissions scenarios produced by the Nobel Prize-winning Intergovernmental Panel on Climate Change. Patzek’s paper opens with a swipe at the IPCC scenarios, saying they are “based on economic and policy considerations that appear to be unconstrained by geophysics.”

But the paper concludes with an appeal that climate action advocates could only applaud—a plea for using less energy and more efficient electricity generation. “The global community should be devoting its attention to conservation and increasing efficiency of electrical power generation from coal,” the paper said. “Immediate upgrades of the existing electrical coal-fired power stations to new, ultra supercritical steam turbines that deliver [greater efficiency than current power plants] are urgently needed.”  The paper underscores the different drivers behind the push for a new path forward on energy—the call is much the same, whether the worry is too much coal or too little.

What is clearly an initiative by the Coal Industry, they want to only pay for emissions post coal being burned.

What is it?

• Combating climate change is an urgent global issue.   This is Correct
• ETS A) are being considered in most major developed countries and B) are being phased in sensibly in Europe.  A) is Correct and B) Incorrect; the whole life cycle process must be included when working out the contamination known as global warming; financially punishing drug addicts rather than the people making the drugs makes as much sense.
• Aim to reduce greenhouse emissions over a time.  Incorrect, by the time self regulation or a watered down ETS takes effect, it will already be too late.
• However, the government’s proposed scheme (called CPRS – Carbon Pollution reduction Scheme) is flawed. It’s the only scheme in the world that taxes emissions produced during coal mining. Incorrect, it is not flawed, it rightly appropriates energy consumption and the wastes from that consumption as part of the whole process (see drug analogy above).

Who will it affect?

• It is projected this new tax will result in 16 mines closing prematurely. It will cut thousands of jobs in the coal industry.  Fact; what this clearly demonstrates is that the coal industry knows the emissions from these 16 mines is far in excess of any environmental / financial benefit. Do we really want mines with old technology to pollute the environment ?  While this may result in some job losses, the required land restoration will create ‘thousands’ of more jobs.
• For every direct coal job lost its estimated that at least two more jobs will go with them – mainly in regional towns. Fact; Coal companies already have more coal mines to come on stream to replace ones to phased out. Job losses in regional towns are far more adversely affected by drought; financially supporting a profitable business that already obtains hundreds of millions of dollars in federal government hand-outs to pay for a few extra jobs is hardly good management.
• Unemployment in some regional areas will rise even more. Property prices could be impacted. Many families will have to move away to find new lives and employment.  Fact; When the mines are no longer profitable, the coal mining companies will pull out without any concern for the region; and property prices driven up dramatically by the mines will stabilize, making housing more affordable.

The worst part

• World demand for coal is predicted to increase for many decades. True, but this actually means more greenhouse gas emissions, not less; when you’re in a big hole, its not logical to keep digging. We need to focus on energy efficiency and alternative energy sources like solar power; Australia receives in excess of 100,000 times it’s energy use from the Sun every day.
• When Australian mines are forced to close and we export less coal than is needed, coal mines overseas will immediatley produce more to fill the gap. False; the reason we export coal is because other countries coal reserves are diminishing; why pay for coal if you’ve got your own.
• Therefore, Australia will close mines lose jobs and vital export income, all for no reduction in global emissions. Wrong; The quality of our coal is superior, so we will retain much of our market, but every market is already shrinking due to the global economic crash (which will never reach those heights again) and remember, other countries will still be taxed on their coal emissions.

The Green Mafia is a name given to the Fossil Fuel industry in Australia, they have the governments ear so much so, that for every $1 alternative energy receives for solar power technology and all others, the fossil fuel industry receives more than $10,000.

In my email – which I doubt the coal association will forward on, I said ….’Imposing a emissions trading scheme that includes extraction of any fossil fuels (coal, oil or gas) is the correct method that all countries around the world should implement.  Misinformation and spin-doctoring by the coal or any other industry is but a childish way to manipulate the outcome to suit their / your own vested interests … Carbon capture / geo-sequestration will never work. Suck it in and be a good corporate citizen for a change, instead of pollution the very country that provides you work, puts money in your (large) pockets and keeps your families in a lifestyle envied by the majority of other Australians’.

The Fairview collapse “was to do with getting the funding balance right”, according to a Santos spokesperson quoted in the Australian Financial Review last Friday. That, of course, is code for “we want more money from governments”, tactfully argued by a company whose last half-year profits were $304 million and whose project has already been handed $75 million in taxpayer funds.

The Fairview collapse echoed the failure early this year of the global pin-up for coal geosequestration, FutureGen in the United States. FutureGen, which the Howard government had invested in, alongside various other governments and coal multinationals, fell over after the Bush Administration decided it was too far over budget and behind time to justify continued funding.

Of course, taxpayers in Australia, the US and elsewhere, would be entitled to ask why they should pay at all for cleaning up the act of an industry that has made many billions of dollars in profits out of polluting our planet for more than two centuries. BHP Billiton made a record US$15 billion last year and Rio Tinto US$7.4 billion. If these corporate giants were interested in cleaning up their act, they would pay for it out of their mammoth profits. It is both bad economic policy and a direct breach of the polluter pays principle to spend taxpayers’ money doing their job for them.

The question of who should pay for developing geosequestration technology, however, is only one of the issues that the Rudd Government has ignored as it does everything it can to make sure the coal industry is not left out of pocket. Despite a host of unanswered technical and legal questions, Rudd Government ministers rarely (if ever) mention climate change without making sure to point out that the coal sector has never had a better friend.

By supporting these so-called “clean coal” projects with funding, the Rudd Government is delaying recognition of just how limited their real-world usefulness actually is. It was not funding issues, for instance, that knocked over Hydrogen Energy inWA, a major joint venture between Rio Tinto and BP. It was the small fact, somehow overlooked in the initial work that they trumpeted around the world last year, that the geological formation off Perth that they were planning to fill with carbon had a large hole in it.

This exposes a key technical problem that is starting to worry even some inside the coal sector itself: where can you find enough safe storage space to bury permanently the vast quantities of carbon dioxide that our coal power plants pump out every year?

Australia’s coal power emissions alone would require permanent safe storage more than 2500 times the size of the storage trial started recently in the Otways – 250 million tonnes every year. According to Shell, a full system to transport carbon captured from the world’s power stations to storage would mean moving twice the volume of the entire current global gas industry.

The larger the amount of storage and transport, the more likely it is that corners will be cut, second-rate storage used, and leakage will occur.  Leakage on any scale, of course, defeats the whole purpose of the exercise. Billions of dollars would have been spent capturing, transporting and storing carbon dioxide for nothing. But, in addition, leakage also brings the liability monster bubbling to the surface.

The coal corporations are following in the footsteps of the nuclear industry, telling governments that no progress will be made until they are absolved of any liability in case stored carbon leaks. In other words – yet again – they want to privatise the profits and socialise the risk.

Following the bailouts of Fannie Mae, Freddie Mac, Northern Rock and others caught up in the sub-prime crisis, where government have been forced to carry the can for failed capitalist enterprises, one might have thought that governments would be reluctant to set themselves up for a similar fall with geosequestration. However, the Rudd Government has conspicuously failed to deal with the issue of liability before committing many hundreds of millions of dollars to another industry with an even higher chance of failure. The regulatory framework that the Government currently has before Parliament squibs on the issue, leaving open the question of who will carry liability after a storage site is closed.

The Government’s support for coal and geosequestration goes hand in glove with its position that Australia can get away with high emissions for decades into the future. The fatal flaw of coal, even with ideal geosequestration efficiency, is that it will always emit some carbon dioxide – and that amount won’t be less than 10 per cent of current coal. The deeper the emissions cuts you need to achieve, the less relevant carbon capture becomes. In a world where we only needed to reduce emissions marginally over a long time – say 60 per cent by 2050, as is the Government’s aim – geosequestration might be an option. But that isn’t our world.

The science is clear that we are already entering the zone of dangerous climate change, and that minimising the risk of catastrophic, runaway change means heading for net zero emissions as soon as feasible.  In our real world, we need zero emissions energy sources, and we need them fast. Coal with geosequestration doesn’t fit the bill.

It’s hard to see how this plan of the Government’s is actually going to amount to anything. When we have had no more success than anyone else in the world, why is the Government throwing $100 million each year at a making Australia a global hub for technical and legal knowledge on coal? Will the world really come to us for advice when our projects are falling over? Will governments be inspired by our legal expertise when we have failed to even address the largest regulatory issue facing the industry?

Surely it would have been better to invest that money into bringing home our world-leading solar scientists – the Australians who have fled to Germany, China and the USA in recent years to get the support they deserve and the situation demands?  As one of the world’s sunniest countries, we should be making Australia the global solar hub, the Saudi Arabia of solar, demonstrating baseload solar thermal power, the world’s most efficient solar cells, solar water heating and the best possible regulatory measures to roll out all those alternatives.

Instead of giving us that inspiring vision, Rudd is responding to growing economic and environmental uncertainty by deepening Australia’s vulnerability to those problems. This “clean coal” funding is simply throwing more money at a solution which does nothing except make it seem acceptable for us to keep mining huge amounts of coal.

Rudd’s research institute is unlikely to produce any real results -wasting money that could be far better spent on truly clean renewable energy and energy efficiency alternatives – technologies that have already leapfrogged clean coal’s “best case” scenario, and actually work

“In the last 15 years, more than three million jobs have been directly and indirectly lost in Kano with the closure of more than two-thirds of our industries — due mainly to power shortages,” said Ahmed Rabiu, vice-president of the city’s Chamber of Commerce.”There were 500 industries in Kano in the mid-1990s, but more than 400 have since closed down and the workers left without a means of earning a living,” he told AFP on Monday.

Nigeria has been grappling with a power crisis for almost two decades with its generating plants described as a shambles amid corruption and mismanagement within its sole national power generating company PHCN.

A review of the sector issued last week by a special presidential committee said 85 billion dollars (54 billion euros) would be needed for the country of 140 million people to enjoy a “stable power” supply. Nigeria poured 16 billion dollars into its epileptic power sector under former President Olusegun Obasanjo over the past eight years, but manufacturers say power has become even less reliable.

Twice in recent days, the country was thrown into total darkness with the collapse of the power generation system at its only source of electricity at Shiroro hydro station in central Niger state.

Despite nine new thermal stations being slated for completion, Nigeria remains drastically under-supplied — with the head of the Nigerian Electricity Regulatory Commission (NERC), Ransom Owan, telling AFP last May that demand stood at 20,000 megawatts but that generation capacity was only 3,000 megawatts.

In Kano alone, the daily power requirement stands at 250 megawatts but PHCN’s supply does not exceed 80 megawatts, according to PHCN officials. There are now less than 100 factories operating, under strain, because none of them is producing at half of capacity due to high production costs as a result of lack of power,” said Ali Madugu, head of the Manufacturers Association of Nigeria (MAN) in Kano.

Increased production costs are attributed to the price of diesel, needed to power machinery. Kano once had flourishing textile, plastic, food and beverage industries, as well as foundries and tanneries. But a visit to the city’s three industrial estates of Sharada, Challawa and Bompai shows them desolate with the bulk of the factories now closed.

President Umaru Yar’Adua promised to declare a state of emergency in the power sector by the end of June, but has yet to do so as he fights corruption and unrest in his stated bid to use the country’s vast oil wealth potential to propel its economy into the world’s top 20.

Saidu Dattijo Adhama, a garment manufacturer who closed down his factory and laid-off 314 workers, cited the lack of power as his major reason.  “High interest on bank loans and stiff competition from cheaply produced Asian goods kill local industries, but these pale in significance compared to the lethal blow lack of power inflicts on industries,” Adhama said.

Kano state government has for the past five years been promising to set up an independent power plant, but negotiations with Canadian and Indonesian firms have yet to result in concrete proposals.

And China

A worsening coal shortage means that China faces the prospect this summer of the most extensive power cuts it has seen in four years. Despite encouragement to keep the current flowing, with new approval to raise electricity prices, power generators are struggling to find enough fuel, in part due to China’s clampdown on illegal coal mines.

This, coupled with robust demand for electricity, explains why the National Development and Reform Commission recently said the power shortfall this summer could be as high as 10 gigawatts, with 60% of the disparity in Guangdong province, a manufacturing hub.  But analysts say the shortfall may well be larger than the government economic-planning agency’s forecast.

Cuts are already causing major problems, and the situation may well get worse, not least due to inadequate connections, which hinder regions with surpluses from filling gaps elsewhere. Electricity rationing has been imposed in several provinces, and many power plants are struggling with shrinking coal stocks.

On July 6, inventories at 541 coal-fired power plants connected to the state grid averaged 34.64 million metric tons — the equivalent of 11 to 12 days of stock, below the normal level of 15 days — according to domestic media reports. Stocks at 64 plants were below three days’ supply, while an additional 181 had stocks of less than seven days.

On Tuesday, shares in Aluminum Corp. of China Ltd., China’s largest alumina producer by output, slumped in Hong Kong after the company said two of its smelters in Shanxi province were forced to cut production because of a power shortage.

The Chinese government has been stepping up efforts to close down illegal mines since 2005. Output from small coal mines, which account for nearly one-third of China’s total production, is now stagnant at best, and large state-owned mines haven’t bridged the gap, said Wang Shuai, an analyst with Shanghai-based Orient Securities. At the same time, demand has been growing robustly in the past year, with a slew of new coal-fired electricity capacity coming online.

Yang Tao, an analyst with KGI Securities, estimates that the coal shortage is likely to reach 10 million to 20 million tons this year. Though that volume is a fraction of China’s total coal output — around 2.5 billion tons in 2007 — it is still significant, because more than 80% of China’s electricity is produced by coal-fired power plants.

Domestic supplies of Indian coal lag behind demand and state-owned Coal India Ltd. is seeking mines in countries including Australia and Indonesia to secure supplies. Users in the country have increasingly bought coal from Richards Bay, South Africa, Europe’s biggest source of the fuel for power.

David Khani (an Arlington, Virginia-based analyst with Friedman Billings Ramsey & Co.) told Bloomberg Television ‘we are in a long-term pattern because the world is building a massive amount of coal-fired generation; current supply is definitely running under global demand; India is undersupplied with power while China, the world’s most populous nation, is building ‘essentially’ a coal-fired power plant a week and power plants fired by coal are also being built in Europe, Russia and South America’ he said.

The 27-nation European Union uses coal for about 30 percent of its power. Generators paid record prices for the fuel this year as Australian floods and Chinese storms curbed supplies constrained by rail and port bottlenecks. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year rose as high as $152.25 a metric ton today.

The contract traded $2.25, or 1.5 percent, higher at $152 a ton at 4:23 p.m. in London, ICAP Plc prices supplied to Bloomberg show. ICAP has about 30 percent of trade in coal derivatives, financial instruments used to bet on future prices.

Another adding upward pressure on costs is haulage costs, which account for as much as half the price of delivered coal; the Baltic Dry Index (a measure of costs to ship commodities) advanced 392 points, or 3.5 percent, to 11,459 points in mid May.

Utilities in the EU need permits to burn such fossil fuels and coal needs twice as many permits as cleaner natural gas; generators may shift to gas when it becomes more profitable.

A U.K. power utility could make a profit of about 18.53 pounds a megawatt-hour burning Dutch-delivery coal compared with 8.41 pounds burning U.K. natural gas in the six months through September 2009, the clean spark-spread and clean dark-spread show.

To contact the reporter on this story: Alistair Holloway in London at aholloway1@bloomberg.net

The recommended minimum reserve is 15 days; a seven-day supply is considered dangerously low.

If any place will convince you we are totally dependant on energy, its China. It’s the second time in three months many power plants have run out of coal or have less than a three-day supply.

But these shortages are a result of a combination of things, unseasonal natural disasters, greater demand than supply and an unintended effect of government-mandated price controls; a throwback to communist central planning to shield the public from rising global energy costs.

Some 32 power plants have already shut down due to lack of fuel, the State Electricity Regulatory Commission said in a report. It said two were in Sichuan province, where last week’s magnitude 7.9 quake damaged the power supply grid.

In February, freak snowstorms caught power plants without adequate coal supplies, causing blackouts and factory shutdowns in a country that relies on coal for 70% of its electricity. Utility companies have let coal stocks dwindle and are buying less fuel after Beijing froze power prices last year, while allowing the market-set costs that producers pay to rise.

The government created an agency this year to oversee energy policy, but it has yet to take any action. Beijing has also frozen retail prices of gasoline and diesel. That helped farmers and the urban poor, but it has spurred sales of gas-guzzling luxury cars and propelled double-digit annual growth in fuel consumption.

Oil refiners say they are suffering heavy losses and some began cutting production last year, causing fuel shortages in parts of China’s south. China’s power use is growing at double-digit annual rates, driven by a boom that saw the economy expand by 10.6% in the first quarter of this year.

On Tuesday, a U.S. official urged Beijing to join the International Energy Agency — a group of major oil consumers that includes the United States and European governments — and aid its efforts to keep petroleum markets stable in times of crisis; the main problem is you have two of the worlds biggest users trying control consumption of other nations and force down prices, an impossibility.

Crude oil has now risen 32% since January 2008.

America’s ignorance and arrogance was on full display when the assistant U.S. secretary of state, said at a business conference ‘I believe it is important for China and other key economies in the world, such as India, to prepare to eventually join the IEA as full members’ as state companies scour Africa, Central Asia and elsewhere for more oil.

The 27-nation IEA coordinates the release of petroleum from national stockpiles to stabilize prices if crises threaten to disrupt supplies, Sullivan said. He said that was last done in 2005 after Hurricane Katrina in the United States.

The Pohang, South Korea-based company will pay Australian suppliers between 205 percent and 215 percent more for some of its coking coal for the year starting April 1, Ko Min Jin, a spokeswoman, said by telephone.

The settlement indicates the price may have jumped to as much as $308.70 a metric ton, according to Bloomberg calculations.

The bigger-than expected increase, on top of record iron ore prices, will force Posco and other steelmakers to raise prices or suffer declines in profit. The floods forced at least six producers including BHP Billiton Ltd. to warn of missed deliveries from the world’s largest exporter of the fuel.

Posco lost 2,000 won, or 0.4 percent, to 515,000 won in Seoul trading today, underperforming a 0.4 percent advance in the benchmark Kospi Stock Index. Nippon Steel Corp., the world’s second-largest steelmaker, fell 3.4 percent to 512 yen in Tokyo. BHP Billiton rose 5 percent to A$40.55 in Sydney.

The coal price increases are actually higher than we expected,” Kim Gyung Jung, an analyst with Samsung Securities Co., said in Seoul.

BHP Billiton last year sold its premium coking coal products at $98 a ton. Goldman Sachs JBWere Pty. on April 4 said prices would rise to $290 a ton.

Posco needs to raise prices of its benchmark hot-rolled coil by 120,000 won ($123) a ton, or 20 percent, to cover the higher coal and iron ore costs, James Ha, an analyst with Eugene Investment & Securities Co. in Seoul, said today in a note to investors.

Iron ore prices jumped as much as 71 percent for the 12 months starting April as demand from Chinese steelmakers outpaced global supplies.

Posco sources 53 percent of its coal from Australia and the rest from Canada, China, the U.S. and other countries, according to a March 17 report by UBS AG.

To contact the reporters on this story: Sungwoo Park in Seoul at spark47@bloomberg.net; Jesse Riseborough in Melbourne at jriseborough@bloomberg.net