by Cara Brosius
January 11, 2017
Coal has been declared a dying industry by articles in some publications like Forbes and The New York Times, but how bad has the outlook for US coal really gotten? As it turns out, large declines in US coal production are not expected to continue in the next few years, because the switch from coal to natural gas in electricity generation is largely complete.
US coal production is projected to total 892 million tons by 2020, representing marginal yearly declines from 2015 levels. Continued decreases in coal’s share of electricity generation, combined with the substitution of alternative fuels, will lead to slight drops in production. Furthermore, recent electricity industry investment in natural-gas-fired plants and high switching costs will prevent regulatory reforms proposed by the incoming Trump administration from having an appreciable effect on electricity generation from coal over the forecast period.
Renewable energy is projected to gain share in electricity generation, as it has become cheaper and often allows users to claim tax credits. Infrastructure changes in power markets will prevent coal from gaining back market share it has lost to other energy sources. However, increasing demand for power generation in coming years may help to soften blows dealt to US coal.
From 2005-2015, the coal industry was negatively affected by a number of factors such as warmer winters, which reduced demand for coal used to heat residential and commercial spaces, and the recession, which led to decreases in demand for coal due to lower levels of construction and steel production. As a result of downturns in coal production and demand, many big coal companies have accumulated substantial debt. Throughout 2015 and 2016, industry leaders including Peabody Energy, Arch Coal, and Alpha Natural Resources filed for bankruptcy.
For in-depth analysis of the industry and its markets, see Coal: United States, a report published by the Freedonia Focus Reports division of The Freedonia Group.
This report contains historical data and analysis of coal production and demand in short tons from 2005-2015, with projections to 2020. Total production is segmented by coal type in terms of:
Total demand is segmented by market as follows:
While you’re there, you can check out some related reports such as Energy: United States and Natural Gas: United States.
Cara Brosius is a Market Research Analyst with Freedonia Focus Reports. She holds a degree in economics, and her experience as an analyst covers multiple industries.
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