U.S. Coal Industry Growth

By Andy May

U.S. coal production declined from 2011 through 2016 as it was displaced in U.S. power plants by cheaper and cleaner natural gas. Some of the reduction was also due to the Obama Clean Power Plan regulations. However, the shale gas revolution in the U.S. has not spread to other countries, perhaps due to the “fracking” scare, so worldwide use of coal increased rapidly until 2013. From 2000 until 2013 global coal use increased at a rate of over 4% per year. This led to an increase in U.S. coal exports (see Figure 1) because the U.S. is a low-cost producer of high quality coal. Coal consumption worldwide has flattened and is expected to stay flat through 2040, according to ExxonMobil’s 2018 Energy Outlook as well as the EIA. Currently coal provides 25% of the global energy supply and this is projected to decrease to 20% by 2040 according to ExxonMobil.

Figure 1. U.S. Coal exports, data source: EIA.

U.S. coal resources, as of January 2017, are roughly 476 billion short tons, of which 17 billion are proven reserves in producing mines according to the EIA. In 2017 the U.S. produced 773 million short tons (MMst) of coal according to the EIA, 45 MMst (6%) higher than in 2016. Currently, BP estimates that 22% of the world’s coal reserves are in the U.S. and the EIA estimates we have 260 billion short tons of coal reserves or 28% of the world’s total reserves. A short ton is a U.S. ton or 2,000 U.S. pounds, a tonne or metric tonne is 2,205 U.S. pounds. The coal reserves (however calculated) are cheap to produce and of high quality relative to most other worldwide reserves. The only real limit on U.S. export growth is the lack of port capacity on the west coast. Washington, Oregon and California have prevented construction or expansion of seven proposed new coal export terminals (see Figure 2) by passing laws or delaying permitting under pressure from environmental groups. The groups fighting these terminals include Native Americans and The Sierra Club,

Figure 2. U.S. coal export terminal construction locations blocked by environmentalist lobbying. Source: The Wall Street Journal.

The most noticeable court battle over a proposed new coal export facility in the U.S. has been fought since 2010 in Longview, Washington. The proposed 44 million tonne per year terminal was to be built by Lighthouse Resources Inc. Permits for the construction were denied by the state of Washington and the state decision is now being challenged by Wyoming, Montana, Kansas, Utah, South Dakota and Nebraska. They are claiming that the reasons given for the rejection are overly broad and that Washington does not have the right to deny interior states access to foreign trade. A coalition of industry groups has also filed a brief in support of the proposed coal export terminal. Even the American Farm Bureau Federation has joined the amicus brief because the legal issues raised by the Washington state decision are much broader than just coal or oil and gas exports. Environmental regulations obviously infringe on private property rights, but how far? This is the question that needs to be answered.

The largest coal-export facility in North America is in Vancouver, British Columbia and it is nearly full capacity (see Figure 3). It exports metallurgical coal from British Columbia and a little thermal coal from the western U.S., mainly Wyoming. Additional capacity is planned, but is being fought by numerous environmental groups as described by Brent Jang in The Globe and Mail. The irony that the Kinder-Morgan Trans-Mountain pipeline expansion has been approved by the Canadian government, but is being fought by the city that contains the largest coal export facility in North America is not lost on the Canadian press, as seen here in the National Post. Westshore Terminals (see Figure 3), in Vancouver, loaded 29 million (metric) tonnes of coal in 2017, which is triple the combined exports of the entire U.S. West Coast. All of Vancouver’s coal terminals loaded 37 million tonnes of coal, more than all the facilities in the Norfolk, Virginia, the largest coal export port in the U.S.

Figure 3. A Canadian Press photo of the Westshore Coal terminal in Vancouver, B.C. This is part of the largest coal export facility in North America.

If the political situation in either Canada or the U.S. “left” coast changes, the exports of coal from Wyoming’s huge mines will grow substantially, the cost and quality advantages of U.S. coal can be easily seen in Figure 4. The prices are shown for low-sulfur, high-quality bituminous coal for both Australia and the U.S. The price of the Wyoming coal, FOB at the mine (“Free-On-Board,” that is loaded onto a train at the cost of the mine) is $12-$13 per short (U.S. 2,000 lb.) ton. Shipping the coal by train to Vancouver costs about $17/ton for a total of nearly $30. But, even this price is much cheaper than the cost of comparable Australian coal FOB Newcastle, New South Wales, Australia. The shipping distance (and cost) from Seattle or Vancouver to Beijing is about the same as the distance from Newcastle to Beijing. Yet, currently the Chinese and Indians are forced to buy higher priced coal from Australia simply because the Wyoming mines can’t get their coal to China. This is also true for the Japanese that are using more coal due to the Fukushima-Daiichi disaster.

Figure 4. Coal cost from Australia versus Wyoming.

It is worth noting that from 2016 to 2017, U.S. exports of coal to Asia went up 209% and exports to Africa went up 443%. Exports increased to other parts of the world as well, but the real growth is in the developing world. According to the NY Times, 1,600 new coal plants are planned in 62 countries around the world. The Chinese will be building 700 of these in China and elsewhere. Even if all these plants are not built, demand for thermal coal worldwide will increase dramatically.

Since the cheapest high-quality coal in the U.S. is in the west and the biggest markets are in Asia, western ports are desperately needed. The growth of U.S. exports to Asia from 2016 to 2017 was from 15.7 million tons to 32.8 million tons according to the EIA, out of a total of 60 million tons shipped worldwide in 2016 (EIA). Because the largest potential customers are in Asia, shipping to them requires a West Coast shipping terminal because the largest bulk carrier ships, the Valemax ore carriers, cannot pass through the new 2016 Panama Canal and shipping Wyoming coal to the Texas coast for export is simply too expensive when the additional charges for the Canal or rounding South America are taken into account. Once a West Coast solution is found, the long-term prospects for U.S. coal dominance are good. The U.S. has a 381-year supply of cheap high-quality coal. If the U.S. could get the coal to market, it would dominate world coal exports.

U.S. coal production is coming back, and prices are going up.

Figure 5. from the EIA.

What about Coal Pollution?

It is true that CO2 emissions from burning coal are higher per unit of energy than emissions from natural gas, it still isn’t clear if this is a problem, as I have previously discussed here and here. Further, the additional CO2 is not a health hazard, regardless of the EPA’s “endangerment” finding, and it does promote plant growth. But, what about coal emissions that are truly hazardous? The main culprits are carbon monoxide, NOx compounds, sulfur dioxide, mercury, and particulate matter or ash. It turns out these are very well controlled with specialized pollution control equipment in modern coal-fired and wood-fired power plants. Figure 6 shows the main pollutants from coal combustion and the equipment used in modern power plants to remove them from the flue gases.

Figure 6. Coal combustion pollutants and the equipment used to eliminate or reduce them. Here we do not include CO2, steam or heat as pollutants. Source (Moretti and Jones 2012). SCR systems are selective catalytic reduction equipment that reduce NOx compounds to N2 and water. FGD systems use wet limestone to remove SO2 and produce gypsum. ESP’s or electrostatic precipitators and fabric baghouses are used to eliminate particulate matter created by the coal combustion and particulates created from mercury and SO3 treatments. More details are available in (Moretti and Jones 2012).

These toxic effluents remain a serious and deadly hazard when coal, wood and other biomass is burned in homes. Domestic burning of wood and coal generally has no flue treatment and is emitted from a short chimney, this greatly increases the amount of particulate matter and toxic compounds on the surface where we live. Besides the emissions listed for coal combustion, wood produces additional toxins, including polyaromatic hydrocarbons. If the bark is not removed from the wood, burning bark can produce even more air pollutants and bark is very ash rich (Ghafghazi, et al. 2011). But, besides increasing the ambient air pollution, domestic burning greatly increases indoor pollution. Indoor pollution, from burning biomass or kerosene in the home, is estimated to cause 3.8 million pre-mature deaths per year by the World Health Organization.

Coal-fired power plant emissions are controlled well enough that they are not a serious contributor to ambient air pollution, but domestic burning of biomass is a serious problem. According to the European Environment Agency (EEA) household, institutional and commercial burning of biomass produces 57% of PM2.5 (2.5-micron particulate matter) in the ambient air. WHO says residential burning alone accounts for 33% of total EU emissions and a separate study by the Netherlands Organization for Applied Scientific Research (TNO) suggests that over 40% of emissions are from residential biomass burning. In contrast, energy production and distribution of electricity supplies 5%. Domestic wood burning is also a serious problem in the U.S. and in the developing world. In Western Europe it has been estimated that 40,000 deaths per year are linked to domestic burning and the economic costs are more than 33 billion Euros. These figures are all from (Holland 2018).

The best way to avoid domestic coal, kerosene or biomass burning is to make electricity and/or natural gas available to residences so it isn’t necessary. Regulations that increase the cost of power plant electricity or increase the cost of natural gas are counterproductive since they increase domestic burning. The domestic burning creates a widely distributed and hard-to-control source of dangerous air pollutants. Coal-fired power plants are the least expensive source of reliable electricity for most of the world, yet they are maligned by conflating air pollution from domestic coal use (especially in China and India) with air pollution figures from coal-fired power plants. To make matters worse, it is widely believed that burning wood is cleaner, from an air pollution standpoint, than burning coal, this is the so-called “climate neutral” myth, debunked by the European Academies Advisory Council (EASAC). From their report (EASAC 2017):

“The validity of the carbon neutrality concept has been intensively studied and has been shown to be highly simplistic. The inherent lower energy density of biomass means that more has to be burnt (relative to fossil fuels) to generate the same amount of electricity or heat; thus, initial emissions are higher. Moreover, the length of time needed for those emissions to be compensated by the growth of new forests, called the carbon payback time …, can be substantial (Fargione et al., 2008).” EASAC, policy report 32, April 2017.

Advanced pollution control equipment and careful management can make either coal or wood very clean. However, the lack of pollution control equipment, especially in a residence with a low chimney, produces a great deal of air pollution from either source. Generally, wood creates more air pollution per unit of energy than coal simply because it has a lower energy density and a higher water content, but the quality of the wood and the quality of the coal can vary a lot. The sophistication of the stove or boiler also matters a great deal. Sadly, very few residences, even in the Western World, have cyclones, electrostatic cleaners, or fabric baghouse equipment on their fireplaces, the pollutants go straight into the air, barely above ground level and are a danger to the entire neighborhood and household. Besides the equipment needed to trap particulates, other equipment is used in power plants remove metals and toxic compounds, like CO, SO2, mercury, and NOx as listed in Figure 6 and in (Moretti and Jones 2012). In a commercial coal-burning or wood-burning power plant all this equipment is present, reducing the emitted toxic particulates, metals and other toxins by well over 90%. Further the emissions are released much higher in the air, far away from ground level (Ghafghazi, et al. 2011). Figure 7 plots the efficiency of the most common particulate pollution control equipment:

Figure 7. The efficiency of particulate removal by three different methods. Source: (Ghafghazi, et al. 2011).

The reality is that coal-fired power plants, as well as high-quality wood burning power plants can, and often do, reduce air pollution in places like China, India and many African nations by replacing domestic coal and wood burning with electricity. The problem is that land-use issues, clear-cutting trees, planting new trees, processing the timber into wood pellets, etc. can be a problem with using wood as a fuel. These issues are discussed in much more detail in Dr. Michael Holland’s excellent white paper Covered in Smoke (Holland 2018).

Andy May has just published his first book: “Climate Catastrophe! Science or Science Fiction?”  It is available from Amazon.com and barnesandnoble.com.

Works Cited

EASAC. 2017. Multi-functionality and sustainability in the European Union’s forests. German National Academy of Sciences Leopoldina. https://easac.eu/fileadmin/PDF_s/reports_statements/Forests/EASAC_Forests_web_complete.pdf.

Ghafghazi, S., T. Sowlati, S. Sokhansanj, S. Bi, and S. Melin. 2011. “Particulate matter emissions from combustion of wood in district heating applications.” Renewable and Sustainable Energy Reviews. https://www.sciencedirect.com/science/article/pii/S1364032111001365.

Holland, Mike. 2018. Covered in Smoke. Fern. http://fern.org/sites/default/files/news-pdf/Covered in smoke.pdf.

Moretti, A.L., and C.S. Jones. 2012. “Advance Emissions Control Technologies for Coal-Fired Power Plants.” Power-Gen Asia. Bangkok, Thailand. https://andymaypetrophysicist.files.wordpress.com/2017/01/advanced_emissions_control_coal_br-1886.pdf.