Coal production expected to see short rebound in 2014

January 8, 2014

The U.S. Energy Information Administration (EIA) released a report on Jan. 7 that found that the United States coal mining industry will see a modest, although short-lived rebound in 2014.

According to the report the rebound will be driven by more production in the Western states after two successive years of declines.

The EIA projected a 36 million ton increase in coal production for the year, to 1.04 billion tons. That's up 3.6 percent from 2013 figures.

Coal has declined in recent years under a stringent regulatory environment as well lower prices for natural gas. Some of that pressure began to ease in the later part of 2013 as gas prices began to rise.

While the news of a rebound is good for the industry, it is not all good news. EIA also found that coal mining output is projected to resume its downward slide and fall by more than 25 million tons in 2015, when new rules for mercury pollution kick in. Agency analyst Elias Johnson said the mercury reduction rules already have prompted many utilities to announce they will shutter coal-burning power plants rather than sink money into costly upgrades.

Combined, the plant retirements will result in the loss of almost 18 gigawatts of coal power this year and next, Johnson said. That's the equivalent of three dozen 500-megawat power plants and includes only those retirements that have been reported to federal officials, Johnson said.

The short-term impacts on mining are expected to be heaviest in terms of volume in the Powder River Basin of Wyoming and Montana, which produces more than 40 percent of U.S. coal.

Western coal production is expected to grow by 24 million tons this year, before declining by almost 15 million tons in 2015. Coal production from the Appalachian region is forecast to rise by just 3.5 million tons in 2014, then drop by 10 million tons next year.

Shipping more coal to Asia has been held up as a potential savior for the industry. Those hopes have yet to pan out as several new coal ports on the West coast have stalled, and the government projects U.S. coal exports to drop to 105 million tons in both 2014 and 2015, after peaking at 123 million tons in 2012.

The government's projections do not factor in proposed EPA regulations to curtail the release of greenhouse gases that are blamed for global warming. Coal power plants are a major source of those gases, including carbon dioxide, and the mining industry already is digging in to oppose the EPA's proposal.

The National Mining Association released a statement warning that the EPA's proposal "effectively bans coal from America's power portfolio."

"This EPA regulation is a big step backwards for supplying America affordable and reliable power from the cleanest coal-based power systems commercially available. The proposal effectively bans coal from America's power portfolio by conditioning new power generation on the use of unproven technologies,” said NMA president and CEO Hal Quinn.

"Forcing America to abandon its largest and most reliable energy source is a reckless gamble with the nation's economy. A more expensive and less diverse electricity supply will only stand in the way of economic growth and job creation."


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