Despite Trump's big talk, US coal production falls to lowest levels since 1981 | RenewEconomy

Despite Trump’s big talk, US coal production falls to lowest levels since 1981

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US coal production through the first quarter of 2020 fell to its lowest level since 1981, with production estimates suggesting only 151 million tonnes of coal were produced.

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Generic pieces of Coal in Adelaide, Tuesday, September 17, 2019. (AAP Image/Kelly Barnes) NO ARCHIVING
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S&P Global Market Intelligence has revealed that US coal production through the first quarter of 2020 fell to its lowest level since 1981, with production estimates suggesting only 151 million tonnes of coal were produced.

S&P’s information is based on weekly production estimates and won’t be confirmed by the US Energy Information Administration (EIA) until early July.

However, S&P’s estimates make sense based on supporting evidence, including figures which show that coal shipments for the four weeks ending March 21 fell to an average of 10.5 million tonnes, 19.8% below that of March 2019.

While the EIA’s official figures for the first quarter of 2020 won’t be available for some months, the Quarterly Coal Report figures for the fourth quarter of 2019 were published last week, revealing that US coal production during the fourth quarter of 2019 fell to 165.2 million short tonnes, down 8.9% on the previous quarter, and down 14.3% on the same quarter a year earlier.

US coal exports also fell in the fourth quarter, down 6.9% from the third quarter, while US coal consumption only reached 131.8 million short tonnes, down 21.4% than the third quarter and down 22% year-over-year.

While the US shoulder seasons – the time between winter heating and summer cooling – are normally a slow period for coal demand, the combination of declining production, consumption, and export, when added to what S&P calls “plunging electricity demand due to the COVID-19 recession along with low natural gas prices” is likely to see America’s coal inventory skyrocket.

According to S&P, coal inventories rose 4.6% during January “at a time when they are normally drawn down against competitive pricing to natural gas and higher winter demand in the Mid-South and Southeast.”

With coal inventories high and overall demand down, coal demand will likely fall even further below its historical shoulder season levels.

Coal’s poor position – which comes despite the pledge by president Donald Trump to support the industry, is further confirmed by the EIA’s Short-Term Energy Outlook published on Tuesday.

Pointing to the United States’ “economic slowdown and stay-at-home orders”, the EIA expects US electricity consumption to decline over the next few months, leading to US electric power sector generation declining by 3% in 2020.

According to the EIA, renewable energy sources will “account for the largest proportion of new generating capacity in 2020” leading to renewable power generation increasing by 11% in 2020.

Like a knife to the back of coal, the EIA explains that “Renewable energy is typically dispatched whenever it is available because of its low operating cost” and that, in turn, “lower overall electricity demand leads to an expected decline in fossil-fuel generation, especially at coal-fired power plants.”

Specifically, the EIA expects that coal generation will fall by a whopping 20% in 2020, while natural gas generation is only expected to increase by 1%.

US coal production, according to the EIA, will only total 537 million short tonnes, down 22% from 2019, while total coal consumption will fall by 19%, driven primarily by electric power sector demand, which the IEA expects to see fall by 20% in 2020.

According to the Administration’s Outlook, “Lower production reflects declining demand for coal in the electric power sector, lower demand for U.S. exports, and a number of coal mines that have been idled for extended periods as a result of COVID-19.”

No matter which way you turn, then, be it independent analysts such as S&P or the US Government’s own Energy Information Administration, the outlook for US coal is bleak, to say the least.

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