Monday, January 07, 2013

Decline in coal's popularity likely permanent in U.S., but rising world demand spurs American exports

The use of coal as an energy source is losing favor in America, a trend that is likely to continue, but just the opposite is happening elsewhere, The Economist reports.

In the U.S., cheaper, more abundant and cleaner-burning natural gas is currently leading the energy-source popularity contest, and more strict Environmental Protection Agency rules are decreasing the economic feasibility of mining and burning coal. Faced with these economic realities, mining companies are shifting U.S. operations. However, coal-fired power plants still provide two-thirds of the world's electricity, and though many coal-fired plants will be going offline in the U.S., such plants are increasingly being built in other nations.

China is driving the worldwide market for coal. In 2011, it overtook America as the world's largest electricity producer. In 10 years, the International Energy Agency estimated, Chinese coal demand had tripled. But in the U.S., coal provided only a third of America's energy in 2012, just over half of the 60 percent figure recorded in 1988.

The British publication lists two reasons why American coal's decline is likely permanent: Natural gas is becoming more abundant, and thus cheaper, and gas power plants meet environmental regulations more easily. But the world market for coal is shoring up the U.S. industry. The industry's infrastructure isn't designed for exporting, but if the problems of transporting coal from Wyoming's Powder River Basin to ports and onto ships bound for China were remedied, analysts say exports could reach 200 million tonnes a year, The Economist reports. "If America no longer dominates the business as it once did, what is happening to the industry there is still able to trigger changes far away." (Read more)

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