U.S. Coal Industry Decline in 2018: Dip in Coal Exports to Impact Production and Employment

U.S. Coal Industry Decline
iStock.com/GaryKavanagh

Coal production was in a boom last year as demand for coal export was high. But in 2018, the U.S coal industry is supposed to decline due to a dip in coal export. Other factors like cheap natural gas, coal plant retirements, and coal industry job losses are supporting the U.S. coal industry decline in 2018.

According to the U.S. Energy Information Administration (EIA), coal production increased by 45 million short tons (MMst) in 2017 to 773 MMst because of high demand for coal export; that’s an increase of approximately six percent. In 2018, total coal production is expected to drop by 14 MMst (two percent).

Production in the Western and Appalachia regions is forecasted to decrease by five and 25 MMst, respectively, the primary reason being the projected declines in coals exports.

Coal utilization in the electric power sector is estimated to drop by 12 MMst (two percent) in 2017, and it is forecasted to decrease by 10 MMst (one percent) in 2018. This is an effect of several coal plants shutting down.

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The coal price was $0.01/MMBtu in 2017, and it is forecasted to increase to $2.21/MMBtu in 2018. Washington Governor Jay Inslee has proposed a state carbon tax that rates $20.00 per ton of carbon emission.

Besides this, rising solar energy and the Federal Energy Regulatory Commission’s Clean Power Plan are also favoring a U.S. coal industry decline.

Coal Industry Expected to Witness Decline in 2018 as Natural Gas Price Slated to Decrease

In 2018, the pressure on coal is on because of the drop the prices of both renewable energy and natural gas. For with the decline in coal consumption comes a rise in the use of renewable energy and natural gas over the years to come.

In 2016, for the first time, gas-fired generation defeated coal-fired generation on an annual basis. As per the EIA data, the production of dry natural gas is expected to average 80.4 billion cubic feet per day (Bcf/d) in 2018, a 6.9 Bcf/d increase from 2017. With the growth in production of natural gas, the prices are expected to fall. It is forecasted that Henry Hub natural gas spot prices will drop from an average cost $2.99 per million metric British thermal units (MMBtu) in 2017 to an average $2.88/MMBtu in 2018.

Low gas prices will make gas power generation more economical compared to the coal power generation. According to the EIA’s most recent edition of the Short-Term Energy Outlook, the U.S share of utility-scale electricity generation from natural gas is expected to rise from 32% in 2017 to 33% in 2018. On the other hand, the EIA observes coal’s share of power generation market falling from 30% in 2017 to 29% in 2018.

Unemployment in Coal Industry Worsened Amid Plant Closures Announced in The U.S. In 2017

As the demand for coal is reducing and the U.S. coal industry is declining day by day,. This is expected to continue in the years to come, leading to coal industry job losses and coal plant closings.

In fact, many coal-fired power plants announced their closure in 2017. The timeline is below:

February 13, 2017: Navajo Generating Station in Arizona announced the closure of all three units (3×803 MW) in 2019 when its lease expires.

March 16, 2017: The 282-MW Unit, of the Elmer Smith power plant in Owensboro in Western Kentucky, is closed.

March 16, 2017: San Juan Generating Station in Waterflow, New Mexico prepares to close two units of 924 MW by 2022.

March 17, 2017: St. Johns River Power Park, a 1,252 MW coal-fired electric generating plant, is announced to close in early 2018.

March 20, 2017: All four units of the 2,440 MW J.M. Stuart Generating Station near Aberdeen, Ohio will retire.

March 20, 2017: The 666 MW Killen Generating Station near Manchester, Ohio announces its retirement.

May 2, 2017: The two-unit, 115-MW Edgecombe Genco coal-fired power plant, located in Rocky Mount, North Carolina, will close in 2020 as announced by its owner.

May 4, 2017: Idaho Power Company announced the closure of its two units of 521 MW, at Nevada’s North Valmy Generating Station. Unit 1 (254 MW) will close in 2019 and Unit 2 (267 MW) in 2025.

May 16, 2017: Detroit, Michigan based DTE Energy Co (NYSE:DTE) announced the closure its eight generating units at four plants with a combined capacity of 3,355 MW by 2050. These include:

  • All four units at Monroe (4x850MW),
  • Two units at Belle River (2×697.5MW),
  • One unit at Marysville (1x150MW), and
  • One unit at Harbor Beach (1x121MW).

May 28, 2017: James River Power Station shut down its five units. Unit 1 (22 MW), Unit 2 (22 MW), and Unit 3 (44 MW) permanently closed in December 2017, while Unit 4 (60 MW) and Unit 5 (105 MW) will shut down within two years.

June 2, 2017: Kansas City Power & Light Company announced the closure of its six generating units at the company’s Montrose, Lake Road, and Sibley Stations, with a combined capacity of 900 MW

July 5, 2017: Idaho Power decides to shut down Units 1 and 2 at the Jim Bridger in 2032 and 2028, respectively.

August 23, 2017: The Lansing Board of Water and Light will close its 155 MW coal-fired Erickson Generating Station by December 2025.

October 8, 2017: Luminant, a subsidiary of Vistra Energy Corp (NYSE:VST), announced closure of its 1,800 MW Monticello power plant on January 4. 2018.

October 13, 2017: Luminant announced the closure of its two-unit Sandow Power Plant in Milam County, Central Texas. Unit four with, a capacity of 591 MW, and Unit 5, with a capacity 581 MW, will close in early 2018.

October 13, 2017: Luminant announced the closure of its two-unit Big Brown Power Plant in Freestone County, Texas. Units 1 and 2, both with a capacity 595 MW, will close in early 2018.

November 14, 2017: Kentucky Utilities announced about the closure of Unit 1 (114 MW) and Unit 2 (180 MW) located at the E.W. Brown coal plant near Herrington Lake in Harrodsburg, Kentucky.

November 15, 2017: Rocky Mountain Power announces its decision to close the 116 MW Hardin Generating Station in early 2018.

November 28, 2017: Milwaukee-based WEC Energy Group Inc (NYSE:WEC) announced to close the Pleasant Prairie coal-fired power plant (2 units, 595 MW each) permanently in the second quarter of 2018.

November 28, 2017: Wisconsin Public Service decided to close the last two units–Unit 7 (81.6 MW) and Unit 8 (149.6 MW)–at its J.P. Pulliam plant in Green Bay, WI between late 2018 and early 2019.

December 1, 2017: Willmar Municipal Utilities announced the closure of its 22 MW coal-fired plant.

December 7, 2017: The owners of Colver Power Plant announced the closure of its only unit (Unit 1, 118 MW) in September of 2020.

The dramatic reduction in the prices of renewable energy resources and natural gas has led to the decline in coal consumption, resulting in the U.S. coal industry decline. This will continue in the future, too, as coal is not in demand anymore.

 

Sources

Short-Term Energy Outlook,”U.S. Energy Information Administration, January 9, 2018.

Report: U.S. coal production will continue to decline in 2018 and 2019,” Midwest Energy News, January 10, 2018.

Despite policy efforts, natural gas slowly replacing coal,” The Daily Wildcat, May 3, 2017.

EIA: Low gas prices set to drive decline in coal generation,” Utility Dive, January 11, 2018.

U.S. coal fired power plant closure announcements in 2017,” Numerical, December 9, 2017.

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