Last week, even as Peabody Energy, the world’s biggest coal company, declared bankruptcy, the U.S. government issued striking figures showing how much coal production in the United States has declined in the space of just a few years.
The U.S. Energy Information Administration, in its latest Short-Term Energy Outlook, stated that the U.S. production of coal last month totaled 52 million short tons — which was a 36 percent decrease from levels seen just one year earlier, in March of 2015.
Looking at annual production numbers over the past few years, combined with EIA’s prediction for total production in 2016, gives a similar message.
The U.S. produced 999.7 million short tons of coal in 2014, according to EIA, the large majority of which was consumed to generate electricity right here at home. However, in 2015 that dipped to 895.4 million short tons, a drop of more than 100 million tons in just one year. The drop, incidentally, was considerably more than EIA itself had forecast around this time a year ago, when the agency had expected a decline to 926 million tons.
So there was a big decline in U.S. coal production when comparing 2014 with 2015 — but looking at 2016, the drop is expected to be even bigger.
“Forecast coal production is expected to decrease by 143 [million short tons] (16%) in 2016, which would be the largest annual percentage decline since 1958,” says EIA. Total production is forecast to just be 752.5 million short tons, or an over 200 million ton decline from the level just 2 years ago.
This, too, was not what EIA was expecting. It thought a year ago that coal production would be at 941 million tons this year, a number that looks like it’s now set to be close to 200 million tons off.
The gist? Coal production in the United States is falling, faster than expected and long before the U.S. Clean Power Plan, which was stayed by the Supreme Court, has come into effect.
Asked about the reason for the considerably more negative coal forecast, Timothy Hess, an analyst with the EIA’s Short Term Energy Outlook (STEO), responded by email:
The major contributor of lower coal production in the most recent STEO compared with a year ago is the increase in natural gas used in the electric power sector, mainly because of lower natural gas prices. In the April 2015 STEO EIA forecast natural gas price at Henry Hub to average $3.45 / million British thermal units in 2016. In the April 2016 STEO EIA forecast the natural gas price at Henry Hub to average $2.18 / million British thermal units in 2016. This drop in forecast price makes it more economic to run gas-fired generating units and reduced generation at some coal-fired units. The reduction in coal used for electric generation contributes to lower coal production.
In March, in fact, natural gas prices were on average even lower than these numbers — $ 1.73 per million Btu, or British thermal units. In contrast, the cost of coal per million Btu is expected to be $ 2.16 in 2016 in the electric power sector, as an average.
The decline of coal burning has contributed to a reduction of U.S. carbon dioxide emissions — but there are arguments that the rise of gas has actually not been all to the good. Late Friday, the U.S. EPA greatly increased its estimates for how much methane has been leaking into the atmosphere from U.S. oil and gas operations, which have boomed lately thanks to technological innovations, including fracking.
Read more at Energy & Environment: