Bloomberg News

Peak Coal Passed as Costs of Mining Rise, Group Says (Correct)

October 30, 2013

Tennessee Coal

A bulldozer operates atop a mound of coal at the Tennessee Valley Authority Paradise Fossil Plant in Paradise, Kentucky. Photographer: Luke Sharrett/Bloomberg

(Corrects percent change in eighth paragraph to reflect an annual rate.)

Coal reserves in the U.S. are lower than government and industry estimates because the shallow deposits that are cheaper to access have been largely mined out, according to a study by a group urging the country to pursue renewable energy.

Clean Energy Action in Boulder, Colorado, said in a report today that the U.S. passed its peak coal production in 2008, and that production will become increasingly difficult and expensive across the country. Only one of the top 16 coal-producing states, Indiana, is likely to see record production in the future. Traditional producers such as Pennsylvania and West Virginia hit their peak decades ago, it said.

“Independent of arguments about climate change and clean coal, coal’s days are very likely numbered due to questions of economic supply,” Zane Selvans, the assistant director of research at Clean Energy Action, said in a statement. “We are rapidly approaching the end of accessible U.S. coal deposits that can be mined profitably.”

The group’s conclusions are at odds with forecasts from the U.S. Energy Information Administration and the National Mining Association. Coal production and use in the U.S. has bounced back this year, after production fell to a two-decade low in 2012, and coal use in power plants for power production was displaced by cheap natural gas.

This year, coal use rose more than 8 percent over the first six months of 2013 compared to the same period in 2012, according to the EIA.

Mining Association

Hal Quinn, the president of the National Mining Association, said Oct. 21 in a meeting with Bloomberg editors and reporters that coal use is projected to be up 7.5 percent this year compared to 2012, and its use will continue largely unabated through 2020, even in the face of a boost in production of natural gas and a 2015 deadline for new regulations from the U.S. Environmental Protection Agency.

Quinn’s group, which represents companies such as Arch Coal Inc. (ACI:US) and Peabody Energy Corp. (BTU:US), held a rally with coal miners on Capitol Hill yesterday at which supporters said the U.S. has a 200-year supply of coal, and that if the EPA backs off more regulation, the fuel represents the cheapest way to produce electricity.

The environmental group’s report today said the cost of delivering coal rose 7.72 percent a year from 2004 to 2012, and expenses are likely to continue to rise. Meanwhile, the EIA data used to estimate a 200-year supply of coal is faulty, because it doesn’t fully capture the economic viability of mining that coal, it said.

“Rising coal costs reflect the rising costs of production for coal as it becomes increasingly difficult to access the remaining coal,” the report said.

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)
    • $2.86 USD
    • -0.09
    • -3.15%
  • BTU
    (Peabody Energy Corp)
    • $14.12 USD
    • -0.32
    • -2.27%
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