The Future of U.S. Coal

Transcription

1 The Future of U.S. Coal for NGI Workshop Global Competition Between Coal and Natural Gas Stanford University October 15, 2018 Palo Alto, California by Howard Gruenspecht Senior Energy Economist MIT Energy Initiative U.S. Energy Information Administration Howard Gruenspecht, Stanford University, October 15, 2018 Independent Statistics & Analysis 1

2 Domestic electricity generation is the dominant use of U.S. coal production year Coal Production met coal share of production* export share of production Coal Consumption, Total electric power sector share of consumption industrial sector as share of consumption (million short tons) (million short tons) , % 4.4% 1, % 7.4% , % 4.3% 1, % 7.4% , % 5.2% 1, % 7.0% , % 7.0% 1, % 6.8% , % 5.5% % 6.1% , % 7.5% 1, % 6.7% , % 9.8% 1, % 6.7% , % 12.4% % 7.2% % 11.9% % 7.0% , % 9.7% % 7.0% % 8.2% % 7.3% % 8.3% % 7.0% % 12.5% % 7.1% Note: * met coal production estimated as sum of exports and domestic use Sources: U.S. Energy Information Administration, Monthly Energy Review, Tables 6.1 and 6.2 U.S. EIA, Quaterly Coal Report, October-December 2017, April 2018 (export data) 2

3 U.S. coal consumption has seen three major up-and-down cycles over the last century however, a strong case can be made that this time is different with regard to prospects for yet another rebound in coal use Coal consumption in the United States ( ) quadrillion British thermal units

4 Is domestic coal demand dying, resting, or just very weak? 4

5 Competition between coal vs. gas in electric power sector was important over the last decade, but was/is not the sole driver for the future of U.S. coal Growth in renewable generation Electricity load growth: trends (past) and expectations, including extent of electrification Electricity demand was lerely flat over past decade Electrification of buildings: (positive for coal, negative for gas) Electrification of transport: generally a boon to all generation fuels, and could also be associated with greater load flexibility to the benefit of renewables Electricity storage advances also tend to help renewables Coal export markets Thermal coal, where market opportunity for U.S. producers reflects both global generation trends and competition from other suppliers Metallurgical coal, which has higher value than thermal coal, is important to BOF steelmaking globally but questions about global market growth and U.S. competitiveness 5

6 As coal has lost generation share to natural gas and non-hydro renewables, U.S. electricity sales have been stagnant for over a decade Generation share by fuel and total sales, (fuel shares in percent; total sales in terawatt-hours) Coal Natural Non-Hydro TOTAL Nuclear Hydro Other gas Renewable SALES % 18.8% 19.3% 6.7% 2.2% 3.5% 4, % 20.1% 19.4% 7.1% 2.4% 2.1% 4, % 21.6% 19.4% 6.0% 2.5% 2.0% 4, % 21.4% 19.6% 6.2% 3.1% 1.5% 4, % 23.3% 20.2% 6.9% 3.7% 1.4% 3, % 23.9% 19.6% 6.3% 4.1% 1.4% 4, % 24.7% 19.3% 7.8% 4.7% 1.2% 4, % 30.3% 19.0% 6.8% 5.4% 1.1% 4, % 27.7% 19.4% 6.6% 6.2% 1.2% 4, % 27.4% 19.5% 6.3% 6.9% 1.2% 4, % 32.7% 19.6% 6.1% 7.2% 1.2% 4, % 33.8% 19.8% 6.6% 8.4% 1.1% 4, % 31.7% 20.0% 7.5% 9.6% 1.0% 4,014 Source: EIA Electric Power Monthly April 2018, Table 1.1 Note: Utility scale only; small-scale solar PV generation raises non-hydro renewable share by 0.6% 2017 and by smaller amounts in earlier years. 6

7 Most outlooks for U.S. coal-fired generation suggest continued decline through 2040; natural gas prices and renewable generation growth are key drivers U.S coal-fired generation: actual and projections to DATA AEO18REF AEO18HOGR REFwCPP HOGRwCPP BNEF2018 WEO17NP WEO17CP Sources: USEIA Annual Energy Outlook 2018; IEA World Energy Outlook 2017; Bloomberg New Energy Outlook

8 The current coal fleet was largely built before 1990 and averages 39 years old; age as well as cost is likely to be a barrier to future CCS/CCUS retrofits U.S. utility-scale coal-fired electric generating capacity by initial operating year gigawatts other coal subbituminous coal bituminous coal and before

9 Coal generation virtually disappears by in most scenarios of economically-efficient deep decarbonization The MidCentury Strategy (MCS) base case shows coal or gas with carbon capture sequestration and/or use (CCS/CCUS) as a small contributor at best to the generation mix That may be a stretch, as new coal especially with CCS/CCUS, faces very significant cost challenges 9

10 A sharp decline in coal s global generation share in the BNEF outlook drives a 57% drop in power sector coal use over ; gas also loses share. Power sector coal use is flattish across 3 IEA scenarios Total and Coal Generation in 3 IEA cases: NPS Total NPS Coal CPS Total CPS coal SDS Total SDS Coal 2016e

11 Thank you. Comments or questions welcome at: 11

12 Coal generation virtually disappears over next 25 years in scenarios of economically-efficient deep decarbonization 12

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