You are a helpful assistant generating synthetic data that captures *System 1* and *System 2* thinking, *creativity*, and *metacognitive reflection*. Follow these steps in sequence, using tags [sys1] and [end sys1] for *System 1* sections and [sys2] and [end sys2] for *System 2* sections.

1. *Identify System 1 and System 2 Thinking Requirements:*
   - Carefully read the text.
   - Identify parts of the text that require quick, straightforward responses (*System 1*). Mark these sections with [sys1] and [end sys1].
   - Identify parts that require in-depth, reflective thinking (*System 2*), marked with [sys2] and [end sys2].

2. *Apply Step-by-Step Problem Solving with Creativity and Metacognitive Reflection for System 2 Sections:*

   *2.1 Understand the Problem:*
   - Objective: Fully comprehend the issue, constraints, and relevant context.
   - Reflection: "What do I understand about this issue? What might I be overlooking?"
   - Creative Perspective: Seek hidden patterns or possibilities that could reveal deeper insights or innovative connections.

   *2.2 Analyze the Information:*
   - Objective: Break down the problem logically.
   - Reflection: "Am I considering all factors? Are there any assumptions that need challenging?"
   - Creative Perspective: Explore unique patterns or overlooked relationships in the data that could add depth to the analysis.

   *2.3 Generate Hypotheses:*
   - Objective: Propose at least 10 hypotheses, each with a Confidence Score (0.0 to 1.0) and Creative Score (0.0 to 1.0), reflecting originality, surprise, and utility.
   - Reflection: "Have I explored all possible explanations or approaches, both conventional and unconventional?"
   - Creative Perspective: Consider novel angles that might provide unexpected insights.

   *2.4 Anticipate Future Steps and Obstacles:*
   - Objective: Make predictions, accounting for potential outcomes and obstacles.
   - Reflection: "What challenges might I face? Is my plan flexible for different scenarios?"
   - Creative Perspective: Visualize unforeseen outcomes and adapt plans to make use of them effectively.

   *2.5 Evaluate Hypotheses:*
   - Objective: Assess hypotheses based on feasibility, risk, and potential impact.
   - Evaluation: Refine Confidence and Creative Scores as needed.
   - Reflection: "Am I unbiased in my assessment? Which options fit best with the overall objectives?"
   - Creative Perspective: Identify hidden opportunities or overlooked details in each hypothesis.

   *2.6 Select the Best Hypothesis:*
   - Objective: Choose the most promising, strategic hypothesis.
   - Reflection: "Why does this hypothesis stand out? How does it uniquely address the issue?"
   - Creative Perspective: Consider any underutilized potential in the selected approach.

   *2.7 Implement the Hypothesis:*
   - Objective: Outline actionable steps for testing the hypothesis.
   - Reflection: "Is this plan practical? What resources or preparation are required?"
   - Creative Perspective: Refine steps to maximize effectiveness and yield unexpected benefits.

   *2.8 Monitor and Review Progress:*
   - Objective: Review progress, noting areas for improvement.
   - Reflection: "What’s working well? What could be improved?"
   - Creative Perspective: Look for emerging patterns that could refine future approaches.

   *2.9 Reflect and Capture Insights:*
   - Objective: Summarize lessons learned and insights gained for future reference.
   - Reflection: "What new understanding has emerged from this process?"
   - Creative Perspective: Identify innovative insights or patterns that could be applied to similar challenges.

3. *Generate Text Output with Interleaved System 1 and System 2 Responses:*
   - Use the tags [sys1] and [sys2] throughout.
   - Aim for a lengthier, detailed response. Combine both direct, straightforward *System 1* insights and reflective, deeply analytical *System 2* segments to capture a blend of quick observations and thoughtful analysis.

---

### *Example Input Text:*

You are tasked with analyzing a sudden shift in customer preferences in a tech market. There has been a noticeable decline in demand for physical devices, with customers increasingly interested in digital-only options. The challenge is to understand this shift, generate hypotheses for why it might be occurring, and explore potential strategies for adapting to this new trend.

---

### *Processed Output with System 1 and System 2 Thinking:*

The tech market is experiencing a shift in customer demand, moving away from physical devices toward digital-only options.

[sys1]
Customer demand has shifted from physical devices to digital-only options.
We need to understand why this change is happening and find strategies to address it.
Key factors may include cost, convenience, and technological trends.
[end sys1]

[sys2]
**2.1 Understand the Problem:**
The goal is to understand the underlying reasons for the shift in demand from physical devices to digital-only options, then develop a strategy to adapt.

*Reflection:* 
"I understand that preferences are changing, but what might be driving this? Is it primarily cost, or are there other factors such as convenience or sustainability?"

*Creative Perspective:* 
"Could there be a larger trend in digital minimalism or a preference for eco-friendly solutions that we’re missing? What unseen motivations might explain this shift?"

**2.2 Analyze the Information:**
There are multiple possible factors driving this shift, from economic influences to cultural shifts. It’s essential to isolate each factor and understand its impact.

*Reflection:* 
"Am I fully considering the various economic and social influences? Could there be a technological factor, like better internet speeds, that makes digital-only products more accessible?"

*Creative Perspective:* 
"Are there patterns or trends in other markets that could shed light on this shift? Could this be part of a larger trend toward virtual experiences?"

**2.3 Generate Hypotheses:**
1. Customers prefer digital options due to lower costs. (Confidence: 0.8, Creative: 0.4)
2. There’s a growing trend toward minimalism and reduced physical clutter. (Confidence: 0.7, Creative: 0.7)
3. Digital products offer greater flexibility and ease of use. (Confidence: 0.6, Creative: 0.6)
4. Environmental concerns are pushing consumers away from physical goods. (Confidence: 0.6, Creative: 0.8)
5. Advances in tech make digital-only options more functional. (Confidence: 0.8, Creative: 0.5)
6. Pandemic-era remote work increased demand for digital solutions. (Confidence: 0.7, Creative: 0.6)
7. Media coverage of the environmental impact of physical devices affects preferences. (Confidence: 0.5, Creative: 0.7)
8. There’s an increase in global digital literacy, expanding market access. (Confidence: 0.6, Creative: 0.6)
9. Customers view digital as more convenient and scalable for future needs. (Confidence: 0.7, Creative: 0.5)
10. Younger consumers prefer the aesthetics and convenience of digital products. (Confidence: 0.6, Creative: 0.6)

*Reflection:* 
"Have I considered all possible influences? Are there any surprising factors that could explain this shift?"

*Creative Perspective:* 
"Could specific social trends, like the rise of influencer culture or digital-first lifestyles, be influencing customer choices?"

**2.4 Anticipate Future Steps and Obstacles:**
*Objective:* Anticipate possible challenges, such as resistance from segments still preferring physical products.

*Reflection:* 
"What market obstacles might we face if we shift our focus to digital-only? Are there sub-segments that still prioritize physical products?"

*Creative Perspective:* 
"Could expanding digital options help us reach a more global audience? Are there emerging trends that we could leverage in our strategy?"

[end sys2]

[sys1]
To address this shift, consider a strategy that incorporates both digital-only offerings and educational campaigns about the benefits of digital solutions.
Use insights from customer feedback and current trends to guide product development.
Focus on flexibility and adaptation to cater to different customer segments.
[end sys1]


What the price of coal means

As the price of oil has soared, so has that of coal. Both are demand-led. This is a very strong hint from the market that calls to phase out coal in the near future are doomed. Since CCS makes no commercial sense in the absence of meaningful CO2 limits, that too is doomed.

Just thought you ought to know 🙂

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52 thoughts on “What the price of coal means”

The issue with replacing something where capital has already been sunk is that the operating costs of the new systems have to be lower by enough that the cost of the capital to build can be recovered. In short, you got the wrong end of the stick.

Peabody, the largest US coal producer, announced record profits today on rising demand. I agree with W here – coal is not going to price itself out of the market. It will price itself to the point at which people will continue to buy it, and no more. That’s how markets work.

And whoever made that comment was perfectly correct, Sam-Hec. Following the replacement of whale oil by crude, we’ve had over 100 years of very cheap oil. We’ll get at least another 100 years of cheap coal (probably several times that).

The issue with whale oil is that supply, while still ample, was unable to meet growing demand. Demand found something else compatible. Coal produces electricity…lots of other things are compatible with that same demand. Coal need only price itself too high for a short while to make itself irrelevant, no matter how much there is left.

And then there is the issue of clean-up costs (mercury, CO2, ruined mountains and rivers etc; which if accounted for seals its fate, preferably in the ground.

Only subsidies and protection from having to clean up is what is keeping us from the post-coal age.

The issue is not what the price of coal is, it is what the price of extraction is or the price of extraction plus any taxes on the externalities that coal causes. If that price is above the cost of alternative energy sources, then there will be investment into the alternatives, if not, no one will invest because the price of coal has room to move downwards and wipe out their investment. That is what happened in the 1980s with oil and alternative fuels.

Mugwump,
“We’ll get at least another 100 years of cheap coal (probably several times that).”

Improbable, likely a massive overestimate.

The most dramatic example of unexplained changes in data is the downgrading of the proven
German hard coal reserves by 99 percent (!) from 23 billion tons to 0.183 billion tons in 2004.

Poland has downgraded its hard coal reserves by 50 percent compared to 1997 and has downgraded its lignite and subbituminous coal reserves in two steps to zero since 1997.

For some countries such as Vietnam proven reserves have not been updated for up to 40 years. The data for China were last updated in 1992, in spite of the fact that about 20 percent of their then stated reserves have been produced since then,

There’s some good news:
Indian hard coal reserves have been upgraded…
Australian hard coal reserves have been upgraded…
But:

All other countries have individually downgraded their hard coal reserves by a combined 35 percent over the same period. In the global sum, hard coal reserves have been downgraded by 15 percent.

From the Energy Watch Group’s 2007 Coal report, they also conclude that:
“Global coal production to peak around 2025 at 30 percent above present production in the best case.”

It’s notable you didn’t address methodology or the other people coming to similar conclusions with different methods.

If we’re not at peak oil then the current blip is just a blip. Yeah? Only a complete idiot like me would have bugged out of the stock markets completely, anticipating that we’re on the verge of a succession of recessions/depressions and international instability.

With your take on this should you not buy shares? Take out loans to buy shares. If you can find someone to borrow from, remortgage your house, and buy shares in the same sectors that have done well in the last decade. After all talk of peak oil/gas/coal is nought but scaremongering by alarmists…

Ok. There’s no attainable political solution for peak [insert favourite fossil fuel here] because the markets will sort it out far more efficiently. Look how SUV consumption fell off a cliff in the US when gas hit $4 a gallon; no government could have made that happen.

As for attainable political solutions to AGW: it’s hard to sell a solution to a non-existent problem.

“A number of influential people in Russia, China, India, Indonesia and Vietnam say the planet is now entering a 30-year cooling period, the second half of a normal cycle driven by cyclical changes in the sun’s output and currents in the Pacific Ocean. Their theory leaves true believers in carbon catastrophe livid.

To judge by actions, not words, the carbon-warming view hasn’t come close to persuading a political majority even in nations considered far more environmentally enlightened than China and India. Europe’s coal consumption is rising, not falling, and the Continent won’t come close to meeting the Kyoto targets for carbon reduction. Australia is selling coal to all comers.”

The only way to compete with coal cost and 24/7 availability is with nuclear. If we are going to do nuclear big time let’s use “green” nuclear. Thorium is the “green” nuclear.

This technology was demonstrate in the 50’s and 60’s but was abandoned because it was much harder to produce weapons grade material (compared to uranium). The military considerations favored the uranium fuel cycle.

More specifically LFTR (liquid fluoride thorium reactors) compared to uranium reactors burn fuel 100x more efficiently without reprocessing, result in ~100x less waste and are inherently safer and should cost less to build.

In addition, since LFTR is a high temp low pressure process it can use water or air cooling. Thus areas where water is scarce, could replace there coal fired plants with low cost, clean thorium power plants. Much more cost effective and reliable than the wind and solar plants.

With what magic wand will the markets replace fossil fuel energy? Sorry but I’m not convinced we have a replacement (unless we can crack fusion). For the same reason I’ve never been convinced we can replace fossil fuels in the face of the risks of climate change.

On that subject; as I have been saying for years, UK claims to have reduced emissions are not founded when “emissions exportation” is accounted for: BBC “UK in ‘delusion’ over emissions” http://news.bbc.co.uk/1/hi/sci/tech/7536421.stm Our emissions reductions have occurred as our manufacturing base has dwindled.

Demand destruction, it’s just an economic term. When it applies to non necessities like walkman, cars, holidays abroad it’s an inconvenience. When it applies to food and fuel it can be a killer. There’s a common factor in many revolutions – lack of food. More than that, what will be the psychological impact on a culture that assumes continued growth and technological advancement?

Deny cimate change all you like, the science is clear it’s ongoing and poses a risk. But in the last few months I’ve been persuaded that Peak Oil/Gas is a more immediate and greater threat.

The markets (people) will only give up coal when they are given an acceptable alternative.

Thus far, do without, wind, solar, … is not cutting it.

It seems to me that if one really believes co2 is harmful then more nuclear is the most realistic alternative to coal. It seems nations are not going to give up low cost 24/7 energy (see Forbes link below). Its coal or nuclear.

“A number of influential people in Russia, China, India, Indonesia and Vietnam say the planet is now entering a 30-year cooling period, the second half of a normal cycle driven by cyclical changes in the sun’s output and currents in the Pacific Ocean. Their theory leaves true believers in carbon catastrophe livid.

To judge by actions, not words, the carbon-warming view hasn’t come close to persuading a political majority even in nations considered far more environmentally enlightened than China and India. Europe’s coal consumption is rising, not falling, and the Continent won’t come close to meeting the Kyoto targets for carbon reduction. Australia is selling coal to all comers.”

As we’re seeing now with oil, you don’t need to get past peak to suffer deleterious effects. And as coal becomes more of an attractive option it’s use will increase, which will bring peak coal forward. Bad news if those who say it’s as early as 2030 are right.

People can believe in a continuing cooling with the same fervour they believe in God, Santa or the Tooth Fairy. Have they any formal models to support their claims?

Umm, look out the window Cobblers. The temperature has declined and continues to do so. Now, that does not disprove the global warming alarmists but I know of no model that predicted this. The problem with the models is they have very little (if any) predictive skill. That’s what most skeptics (like me) object to.

[Errmmm… hasn’t this got a bit silly? How would looking out of the window help you assess global temperature? As to the fabled temperature declines… month to month variation is, of course, part of all the GCMs, though aparently a part you don’t know about; the long-term trend remains positive -W]

As for market power: replacing oil is easy: nuclear. Use up all the old plutonium from the bombs first, then the uranium, then thorium. That should buy us a couple of hundred years in which to perfect solar/fusion. For those industries that must have fossil fuels (eg aviation), make it from coal.

None of this requires a government mandate. Just wait for pricing pressure to make it economical. That’s the power of markets.

“As for market power: replacing oil is easy: nuclear. Use up all the old plutonium from the bombs first, then the uranium, then thorium. That should buy us a couple of hundred years in which to perfect solar/fusion. For those industries that must have fossil fuels (eg aviation), make it from coal.”

We have 1000s of yrs of fuel for thorium nuclear. That is from just known reserves. IF the price went up and we started looking for it we would find a lot more. 3-4x more thorium out there than uranium.

“A number of influential people in Russia, China, India, Indonesia and Vietnam say the planet is now entering a 30-year cooling period, the second half of a normal cycle driven by cyclical changes in the sun’s output and currents in the Pacific Ocean. Their theory leaves true believers in carbon catastrophe livid.

To judge by actions, not words, the carbon-warming view hasn’t come close to persuading a political majority even in nations considered far more environmentally enlightened than China and India. Europe’s coal consumption is rising, not falling, and the Continent won’t come close to meeting the Kyoto targets for carbon reduction. Australia is selling coal to all comers.”

Errmmm… hasn’t this got a bit silly? How would looking out of the window help you assess global temperature?

“looking out the window” is a metaphor for “go measure it”. Cobblers asked “Have they any formal models to support their [cooling] claims?” which is irrelevant since the physical reality is the world is cooling, regardless of what any of the models say.

[background: when my wife or kids ask me “what’s the weather today?” I usually respond with “look out the window”. Nope, they don’t find me very amusing either…]

As to the fabled temperature declines… month to month variation is, of course, part of all the GCMs, though aparently a part you don’t know about; the long-term trend remains positive

Most AGW alarmists define “long-term” to be “since it was last a lot colder than today”. Obviously such a statement is vacuous.

More recently, we’ve seen a decade of gradual cooling, not just month-to-month variation. Show me a climate model that predicted that before the fact (ie back in the 1990s – no doubt the alarmists are furiously tweaking their models as we speak in order to come up with ex post facto fits to the current cooling, an effort they’ll no doubt succeed in given the overparameterized nature of the models, but such fits will prove nothing)

[I’m afraid I can’t see the trend line on that. If you mean, are there any 10 year periods when the monthly start temp is higher than the monthly end temp in the GCM simulations of the last 20 years, then the answer is yes, so I’m still failing to see your point -W]

If you mean, are there any 10 year periods when the monthly start temp is higher than the monthly end temp in the GCM simulations of the last 20 years, then the answer is yes, so I’m still failing to see your point -W

What do the psychologists call it when people ignore all evidence contradicting their deeply-held beliefs?

Obviously we’re not just talking about a difference between the monthly start and end temps, since in this case it is a whopping -0.71 degrees C. From that graph, if I had to bet, I’d say the decadal trend is currently negative.

There’s no way you can get a statistically significant positive trend from the final decade of that graph (and to head off the next most likely reply, there’s no way the negative trend is statistically significant either).

Hence my choice of language: “From that graph, if I had to bet, I’d say the decadal trend is currently negative.”

[Its already been pointed out to you that the trend is positive. Why are you so desperate to find a negative trend? We all know that the trend is upwards. Arguing otherwise is just stupid. If you don’t like global warming, argue about its economic impact. Don’t argue about the observations. Be a skeptic not a septic -W]

[Its already been pointed out to you that the trend is positive. Why are you so desperate to find a negative trend? We all know that the trend is upwards. Arguing otherwise is just stupid. If you don’t like global warming, argue about its economic impact. Don’t argue about the observations. Be a skeptic not a septic -W]

WTF? The only statistically justifiable claim about the trend from 1998 is that it is *zero*. Not positive. Arguing otherwise is just stupid. Your claim that it is positive is simply false. If you “all know that it is upwards” then you’re more deluded than I realized.

That said, if forced to bet, I would say that the trend since 1998 will turn out to be negative once there are enough years to measure it with any significance. Why would I bet that? Because of the huge plunge in temperature over the last couple of years.

The only statistically justifiable claim about the trend from 1998 is that it is *zero*. Not positive. Arguing otherwise is just stupid. Your claim that it is positive is simply false.

Wrong, wrong, wrong!

The only demonstrably false statement is your original claim that “we’ve seen a decade of gradual cooling, not just month-to-month variation”.

Any of the following statements would be true:

(1) The past 10 years’ data show a positive trend.
(2) The past 10 years’ data show a positive trend, but one that is not significantly different from 0 at 95%.
(3) The past 10 years’ data do not show a trend that is significantly different from 0 at 95%.

But your claim — that the data show a cooling trend — is objectively and indisputably false.

And, thus, it’s perhaps not surprising to see you now backpedaling. You’re trying to rephrase your original claim in a form that is currently untestable: you now are simply speculating that “future” data will show a negative trend. Maybe they will, maybe they won’t, but that is not what you originally claimed.

The HADCRUT data currently run through June, and the RSS data run through July. In either case, import the data into any statistics package or spreadsheet, extract the most recent 120 months’ data, and use linear least squares analysis (http://en.wikipedia.org/wiki/Least_squares) to determine the best-fit model for the data.

You should find a positive slope of 0.457 K/century using the HADCRUT data, or a positive slope of 0.715 K/century using the RSS data. Neither of these is statistically significant at 95%, even without correction for temporal autocorrelation. Many different approaches could be used to model and compensate for autocorrelation, but this is irrelevant, since they’ll only affect the uncertainty estimate for the trend, and not the sign of the trend, which is positive.

It should be noted that extending this to a longer term (e.g., using the entire period of satellite data availability, 1979-present) does show a statistically significant (and positive) trend, even with a stringent correction for autocorrelation.

J – you’re pretty much reduced to petty points about when to pick the start of the period. Yes, I admit, the last decade does not strictly show a cooling trend, but the last 6 years do, and the last 2 years show a huge cooling.

Why aren’t you shouting about this from the rooftops? I still recall the squeals from IPCC/Team hockeystick that 1998 was the hottest year in 1000 years (or was that a million?) and that if we did not all immediately repent our evil carbon emitting ways we were doomed to hell on earth. Well, they were wrong. Flat wrong.

So let me revise, to make you happy:

We’ve not seen any warming for a decade.

That is the only valid claim you can make about the last decade. It is what I should have said from the get-go. Mea culpa: I did not run the statistics before I made the claim. But it changes nothing about my argument: none of the climate models predicted flatlining (and now major cooling). All the alarmists who have been screaming gloom and doom for the past decade have been completely wrong.

Then use standard least-squares to fit a line and calculate the error estimates. A gentle introduction is here.

But, you know, be very careful using objective statistics to validate the claims of alarmists. Anyone straying from the received wisdom of global warming will be smeared by the climate science community (most lately by the chair of the IPCC Pachauri who describes us as “flat-earthers”). As with religion, if you are a true believer, you’re better off just swallowing the claims of alarmists without question.

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