Friday, May 05, 2017

Competition from natural gas responsible for 49% of coal's decline, says Columbia University study

Herald-Leader graphics
Obama administration regulations are not solely to blame for coal's decline, says a study by Columbia University researchers. Researchers found that "competition from cheap natural gas is responsible for 49 percent of the decline in domestic U.S. coal consumption." They also say "changes in the global coal market have played a far greater role in the collapse of the U.S. coal industry than is generally understood," largely because of a slow down in demand from China, but also because "more than half of the decline in U.S. coal company revenue between 2011 and 2015 was due to international factors."

Researchers also said "lower demand for electricity and growing use of renewable energy such as solar power also took a bite out of coal’s market share," Bill Estep reports for the Lexington Herald-Leader. "Tougher federal environmental regulations also played a role in coal’s decline, but those rules were a significantly smaller factor than reductions in the cost of natural gas and renewable energy, the report said. That finding counters arguments that a regulatory 'war on coal' was the main reason for the industry’s problems."

Researchers said the best the coal industry can hope for is "a modest recovery to 2013 levels of just under 1 billion tons a year." They note, "under the worst case scenario, output falls to 600 million tons a year. A plausible range of U.S. coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030, lower than anything the U.S. experienced before 2015."

The study said in 2011 U.S. coal exports surpassed 100 million tons—up from 40 million in 2002—and employment was 133,000, Estep notes. From 2011 and 2016, domestic demand and exports slumped and employment plunged to 70,000.

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