US COAL FUTURE DIMS AHEAD
A massive shift in pricing for electricity and natural gas in the US may lie ahead. Short-term interests to bring back coal overlook the critical planning horizon for power generation has moved to five – 10 year terms. Electricity rate design is also undergoing renewed scrutiny by state commissions in conjunction with demand reductions and T&D modernization. Conservatives continue to foster regulatory rollbacks which offer little development relief for coal but could generate false market signals for the future as natural gas prices may shift upwards with increasing levels of LNG exports by 2019. That could foster an interim and short term market reinstating coal for future utility or industrial planning.
But history has shown over the past decade that any federal or state support for a new US coal economy in the interest of creating jobs is flawed. Any recovery for the coal industry is likely to be jobless if centered on power generation and metallurgical market opportunities. Carbon capture and sequestration has been shown for over a decade to be technically and economically flawed while escalating de-rating of existing facilities and undesirable increases in water utilization. Reinstitution of a coal economy may only just support coal extraction and production but with stranded US markets and business models. Moreover, most of the latest production practices are automated and reduce the labor supporting the extraction of coal. After several bankruptcies in the coal industry, it is focused on advancing more efficient, cost-effective extraction as we’ve also seen for oil and natural gas. This indicates that the coal markets in the US are seeing more robot technology, increased use of automated trucks, more open pit extraction and reliance on mountaintop removal rather than more expensive underground coal mines.
The future of US coal is in exports, or in other applications with steel and metals production, polymers, resins, asphalt for road infrastructure paving, and consumer products.