Bloomberg News

Coal Industry Eyes Comeback as Efficient Plants Encourage Use

October 21, 2013

Coal use in the U.S. is set to grow this year and next from a two-decade low as more efficient coal plants that can withstand new environmental regulations supplant old ones, an industry group predicted.

Hal Quinn, the president of the National Mining Association, said coal use is projected to be up 7.5 percent this year compared to 2012, and its use will continue unabated through 2020, despite the boost in production of natural gas and a deadline of 2015 for a new set of regulations from the U.S. Environmental Protection Agency. Because of those rules, a number of older, smaller power plants will close, Quinn said. That doesn’t mean overall coal use will fall.

“Larger, more efficient units will be running at a higher capacity,” Quinn said in a meeting with Bloomberg reporters and editors in Washington. “You will see a repositioning or resizing.”

The Washington-based association for producers such as Arch Coal Inc. (ACI:US) and Peabody Energy Corp. (BTU:US) called the EPA’s proposals to curb pollution from mercury, sulfur dioxide and now greenhouse gases economically unjustified and an overreach. Still, even as it worries about the impact of those rules, it’s predicting that coal production and use in the U.S. will continue.

Coal use in the U.S. has bounced back this year, rising more than 8 percent over the first six months of 2013 compared to the same period in 2012, according to the U.S. Energy Information Administration. Natural gas for next-month delivery on the New York Mercantile Exchange has gained 11 percent this year. Natural gas prices have more than doubled since hitting a recent low in April of 2012.

Relying on authority in the four-decade-old Clean Air Act and a 2007 Supreme Court decision applying the law to carbon-dioxide emissions, the EPA is set to finalize rules for greenhouse-gas emissions from power plants.

Investors aren’t betting on coal: The Stowe Global Coal Index of 32 production, transportation and mine-service companies has fallen 45 percent since the beginning of 2011.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net


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Companies Mentioned

  • ACI
    (Arch Coal Inc)
    • $1.83 USD
    • 0.05
    • 2.73%
  • BTU
    (Peabody Energy Corp)
    • $7.8 USD
    • 0.09
    • 1.15%
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