The views expressed by contributors are their own and not the view of The Hill

In 2018, coal continues to be a smoldering issue

Two years ago, the prospects for U.S. coal looked grim. And at one point in 2016, companies accounting for more than half of U.S. coal production were in bankruptcy protection. U.S. coal production over the year as whole was 17 percent down on the previous year, while by contrast, production of shale gas and tight oil boomed.

But the outlook for coal was changing. By the fourth quarter of 2016, steam coal prices had risen by more than half, compared with a year earlier, and coking coal prices had doubled. In March 2017 came a new executive order, welcomed by the industry: “Promoting Energy Independence and Economic Growth.” Five objectives for coal promised the easing of regulatory constraints on coal production and use.

{mosads}Coal prices continued to rise, supported by a rise in international coal prices and in the price of domestic natural gas, coal’s main fossil-fuel rival for power generation. For the first time since 2011, a new coal mine opened and other new projects were announced.


How do the prospects for coal look now, against the background of new global projections for the energy future, and for coal in particular? It depends where you stand. Though there is a global market in traded coal, regional prospects differ widely.

U.K. to end 140 years of coal power by 2025,” read the London Daily Telegraph headline on Jan. 5, 2018. Since power generation accounts for nearly two-thirds of global coal consumption, if this were true at the global level it would eviscerate the coal industry. But it related to the U.K. exclusively, where there was one 24-hour period already, in 2016, when no coal was consumed to provide electric power and where the commitment to tackle climate change is taken seriously.

To take another example, in Germany, which, together with Poland, consumes over half of European coal, coal consumption is predicted to fall, even though nuclear power is being totally phased out.

In the United States, although coal demand already dropped significantly in the years leading up to 2016, and fell slightly again in 2017, the prospects are relatively favorable. Further decline is expected over the next five years, but it will be slow. Nonetheless, viewed as a component of total U.S. energy supply, coal’s position continues to slide. Coal ceased to be the largest source of power generation in 2016 and growth in gas supply is ample, along with supply from renewables, while growth in overall power demand is sluggish. Relative stability of demand is some assurance for U.S. communities dependent on coal production but, even with federal intervention, U.S. coal has no prospect of growth.

Elsewhere in the world, the picture is very different. After several years of deliberately imposed demand reduction, coal demand rose slightly again in 2017 in China, the overwhelmingly dominant global producer and consumer of coal, accounting for nearly half of total global demand (and remaining dominant in future). Other regions are hungry for additional supply. Demand for coal in India will grow fast over the next five years and beyond, and India is already the world’s second-largest producer of coal globally, having increased its production as U.S. production fell.

Demand is growing, too, in many parts of Southeast Asia and, while their demand is as yet small, Pakistan and Bangladesh are emerging as sources of growing demand. By contrast, coal use in the countries of the Organization for Economic Cooperation and Development (OECD) makes up an increasingly minor part of world demand, forecast to fall from around a quarter in 2016 to under a sixth in 2040.

The United States is no more than a marginal supplier of coal to international markets. The fate of hard-pressed U.S. coal producers and coal-producing communities will be determined by the internal U.S. market.

The prospects no longer are as bleak as they looked two years ago. But this is a sector heavily dependent on the vagaries of government policy, and investors necessarily look well beyond a single term of an administration with environmental policies wholly out of step with those of the global community.

Robert Priddle was executive director of the International Energy Agency in Paris for eight years (to 2002). He guided the agency and its member governments to recognition that producing and consuming energy in a manner compatible with newly-acknowledged environmental priorities was essential to realizing long-term security of energy supply.

Tags Coal Coal mining Energy Energy economics Energy policy Fuels World energy consumption

Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

See all Hill.TV See all Video

Most Popular

Load more


See all Video