Energy Highlight of the Week
Source: U.S. Energy Information Administration, Monthly Energy Review October 2018 and STEO November 2018
Annual coal consumption in the United States is expected to be at its lowest level since 1979 this year. The Energy Information Administration forecasts a 4% decline from 719 million short tons (MMst) of coal consumed in 2017 to 691 MMst in 2018, marking the lowest point in 39 years. U.S. coal consumption has been falling since it hit a peak in 2007, with the main cause being a decrease in coal use in the electric power sector. The electric power sector is by far the country’s largest consumer of coal, accounting for 93% of total U.S. coal consumption between 2007 and 2008. As coal-fired electricity plants have retired or seen decreases in utilization, their market share has taken a significant hit. This can be primarily attributed to increased competition from natural gas and renewable energy sources as drivers for the nation’s electricity plants. Natural gas prices have remained relatively low since domestic natural gas production began to increase in 2007, making natural gas a more appealing and cost-effective option for electricity generation. Environmental concerns have also played an important role in the retirement of coal-fired plants, as the Mercury and Air Toxics Standards rule that went into effect in 2015 implemented stricter emissions requirements for coal and natural gas-fired power plants. In 2007, coal-fired capacity in the U.S. totaled 313 gigawatts from 1,470 generators. Since then, 66 gigawatts of coal-fired generating capacity has retired with another 3 gigawatts expected to retire by the end of 2018. It is likely that this trend will continue, pushing overall coal consumption in the U.S. even lower.