11. Coal

Key data

(2018 provisional)

Production: 685 Mt/368 Mtoe, -35.5% since 2008 Net exports: 99.5 Mt/65.8 Mtoe

Share of coal: 14.2% of TPES and 28.4% of electricity generation

Consumption by sector (2017): 330.7 Mtoe (heat and power generation 92.0%, industry 4.9%, other energy 2.9%, commercial 0.1%)

Overview

The United States (US) is a major coal producer and consumer; in energy terms, it is the second-largest producer after the People’s Republic of China (hereafter “China”) and the third-largest consumer after China and India (IEA, 2018). Most coal produced in the United States is used in domestic power generation. In the last decade, a combination of factors – including the shale gas revolution, flat power demand growth, environmental regulations and an expansion in renewables – has led to a decline in coal demand. Coal went from supplying nearly 50% of US electricity generation in 2008 to just below 30% in 2018 (Figure 11.1). As a result, coal production has dropped in all coal-producing regions. Over half of total coal production in the United States comes from just two states: Wyoming and West Virginia.

Figure 11.1 Share of coal in different energy supplies, 1978-2018

IEA (2019). All rights reserved.

After long-term growth in coal production and supply, the use of coal has dropped dramatically in the last decade, in particular in electricity generation.

Note: Data are provisional for 2018.

Source: IEA (2019), World Energy Balances 2019, www.iea.org/statistics/.

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11. COAL

Coal power is associated with higher emissions of greenhouse gases (GHGs) as well as other pollutants such as mercury, sulphur dioxide (SO2) and nitrogen oxides (NOx) compared with other power generation sources. The United States has a strong platform for research, development and demonstration (RD&D), which can be used to support further improvements to reduce emissions from coal power. The country is also one of the leaders in carbon capture, utilisation and storage (CCUS) technology, which could enable coal power generation with much lower emissions and provide additional revenue streams for generators.

As domestic demand declines, the United States could start exporting more to maintain its coal sector. However, the US coal industry would need to be cost-competitive on the global market. Increased exports would also require investments in new infrastructure.

Supply and demand

Coal production in the United States covers both domestic demand and exports (Figure 11.2). In 2018, the United States produced 685 million tonnes (Mt) of coal, mostly sub-bituminous and non-coking bituminous coal. Around two-thirds of the coal is produced in surface mines, and one-third comes from deep underground mines (IEA, 2019b). The largest coal-producing area in the United States is the Powder River Basin (PRB) in the western states of Wyoming and Montana (Figure 11.3). In line with falling consumption, US coal production has also declined in recent years.

Figure 11.2 Coal supply by source, 1973-2018

IEA (2019). All rights reserved.

The vast majority of the coal produced in the United States is used domestically, and in the last decade, production dropped by a third as a result of falling demand in the power sector.

Note: Data are provisional for 2018.

Source: IEA (2019), World Energy Balances 2019, www.iea.org/statistics/.

The United States also trades coal on the global market, with net exports averaging 8% of domestic production in the last decade. Coal is imported from Colombia and exported to a large number of countries, mainly in Europe and increasingly in Asia (Figure 11.4). Regionally, Europe is the largest importer of US coal, though on a country basis, the biggest importers in 2018 were India, the Netherlands (mostly for re-export) and Brazil. In 2017, the United States was the world’s fourth-largest coal exporter overall, and the

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world’s second-largest metallurgical coal exporter. Metallurgical coal represented 57% of total 2017 US coal exports, while steam coal accounted for 43% (EIA, 2019a).

Figure 11.3 Weekly coal production by region, May 2018-April 2019

Tonnes/week

IEA (2019). All rights reserved.

Source: EIA (2019b), Weekly Coal Production, www.eia.gov/coal/production/weekly/.

Figure 11.4 Hard coal trade by country, 1978-2018

IEA (2019). All rights reserved.

US coal exports have increased as domestic demand has declined, but the export capacity is limited and cannot easily be increased to compensate for the drop in demand.

Source: IEA (2019), World Energy Balances 2019, www.iea.org/statistics/.

The power sector is the main coal consumer in the United States. In 2017, 92% of total US coal supply was used for heat and power generation, and the rest (both thermal and metallurgical) was mostly used in the industrial sector, e.g. non-metallic minerals (Figure 11.5). Due to competition from other sources, coal demand has fallen dramatically in the last decade. Total coal consumption peaked in 2005 at 558 million tonnes of oil equivalent (Mtoe), and has since fallen by over 40% to 331 Mtoe in 2017 (EIA, 2018c).

Over the past decade, a combination of factors has contributed to increased retirements of coal-fired power generation capacity in the United States (Figure 11.6). According to US Energy Information Administration (EIA) data, most of the coal retirements were of older, smaller and less efficient units; retired units between 2008 and 2017 had an

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average age of 52 years and a capacity of 105 megawatts (MW) (EIA, 2018a). In addition to environmental regulations – notably mercury limits that took effect in 2015-16

– the abundance of low-cost natural gas as well as falling costs and policy support for renewables have made coal generation less economical. Looking ahead, the same conditions are likely to put continued pressure on coal units, which will likely result in additional retirements in the coming years (EIA, 2018c).

Figure 11.5 Coal consumption by sector, 1973-2017

IEA (2019). All rights reserved.

The shale gas revolution has transformed the electricity sector and led to a sharp drop in demand for coal power, which accounts for over 90% of total coal consumption.

*Other energy includes gas works, coke ovens and blast furnaces, and coal used in coal mining. Source: IEA (2019), World Energy Balances 2019, www.iea.org/statistics/.

Figure 11.6 US coal plant retirements and planned retirements, 2007-20

IEA (2019). All rights reserved. Source: EIA (2018a), Preliminary Monthly Electric Generator Inventory, www.eia.gov/electricity/data/eia860m/.

In recent years, as demand for coal in the domestic power generation sector has fallen, high international trading prices have offered US coal producers export opportunities (E&E News, 2019). The EIA estimates that US coal exports accounted for 15% of total US production in 2018, driven by Asian and European demand (EIA, 2019b). While Appalachian coal can more easily access existing export infrastructure on the East Coast and Gulf of Mexico, higher costs and longer distances make it more challenging for eastern US coal to compete in Asian markets. Western coal exports are challenged by

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