A dispatch from the kingdom of coal: The demise of King Coal, both here and in the rest of the world, is much exaggerated.
In a new report, Moody’s Investors Service says U.S. steam coal for power plants continues a general decline, but markets and prices for metallurgical coal used in making steel look stable. Overall, says Moody’s, the outlook for U.S. coal is stable. Moody’s says, “Thermal coal production will drop following significant coal retirements in 2018, but prices remain favorable for most coals. US demand for thermal coal remains in secular decline and the price of metallurgical (met) coal will remain volatile.”
“Our stable outlook for North American coal miners reflects our expectations for flat to marginally lower earnings over the next year or so,” says Benjamin Nelson, a Moody’s senior credit officer. “Ongoing secular decline in the demand for thermal coal remains the principal challenge facing the industry today.”
U.S. coal production for 2018 was down slightly, according to the Energy Information Agency’s quarterly coal report, released in April. “U.S. coal production during fourth-quarter 2018 totaled 192.4 million short tons (MMst), which was 1.1% lower than the previous quarter and 0.8% lower than fourth-quarter 2017,” EIA reported. “Production in the Western Region, which accounted for about 56.7% of total U.S. coal production in fourth-quarter 2018, totaled about 109 MMst (0.9% higher in fourth-quarter 2017).”
Total U.S. coal consumption for electricity generation in 2018 was 636,498 tons, compared to 664,993 tons for 2017, according to EIA. First quarter 2019 figures are due in July. U.S. coal exports, after experiencing a decline from 2012, have seen a significant general increase in recent years, although 2018 exports were down slightly from 2017. The average price of exported coal at the end of 2018 was a healthy $108/ton.
China and India, the most populous nations on earth, and both endowed with considerable coal resources, continue to rely on it for electric generation. They are putting substantial resources into coal technology, despite commitments to reduce fossil fuel use under the 2015 Paris climate agreement.
POWER magazine reports that India “is striving to conserve coal and slash its carbon emissions” through advanced ultrasupercritical combustion technology. “The country, which depended on coal for 56% of its total capacity of 356 GW as of May 2019, wants to reduce coal’s share to 45% of a planned capacity expansion to 480 GW by the end of 2022. During that period, it will also work to increase its share of renewables from the current 22% to 37%.
That’s also the case for the U.S., where POWER reported from the 9th International Conference on Clean Coal Technologies in Houston earlier this month. “The need for considerable dispatchable generation, critical ancillary services, and grid reliability creates opportunity for advanced coal-fired generation,” said Lou Hrkman, the Department of Energy’s coal technology guru. While coal has fallen from its days as king of the generating hill, with more than 50% of U.S. generating capacity, Hrkman noted that coal still has a 30% market share. “By 2040, it will supply nearly 20% of the power generation in the U.S.—as much as wind and solar combined,” he said.
China, the world’s leading coal consumer, may be leading the world in advances in coal technology, according to POWER. “In China,” the magazine reported, “though specific achievements are hard to pinpoint owing in part to a dearth of public or internationally available information, coal technology developments appear to be advancing more rapidly than anywhere in the world.”
Then there is the cautious tale of Germany, where anti-coal rhetoric appears to be meeting the realities of electric supply and the politics of increasing energy prices. In 2011, German Chancellor Angela Merkel announced that her country, to meet the Paris goals, would turn away from nuclear and coal and toward a massive build of renewables, primarily wind and solar. The term was “Energiewende” or energy transition. The aims included shuttering the country’s considerable nuclear fleet and the end of coal generation in Germany, which has substantial coal resources, by 2038.
Energiewende has been a failure. The German news magazine Der Spiegel last month headlined a story: “German Failure on the Road to a Renewable Future.” The article said, “Lawmakers have introduced laws, decrees and guidelines, but there is nobody to coordinate the Energiewende, much less speed it up. And all of them are terrified of resistance from the voters, whenever a wind turbine needs to be erected or a new high-voltage transmission line needs to be laid out.”
U.S. energy analyst Jude Clemente tweeted last week, “Germany has been paying nearly $30 billion for electricity that has a market value of about $4 billion and they have power rates more than triple those in the U.S….Please, please, please stop using Germany as any sort of model for other nations.” It’s unlikely Germany will come close to closing its coal-fired power plants by 2038.
Last rites for coal worldwide are entirely premature.
— Kennedy Maize