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Don’t just blame the EPA – coal exports are down, too


A tug pushes a coal barge up the Seine in Paris, France. Source: Wikipedia

It’s important to understand that not all of the bad news for the coal industry is coming by way of the EPA. While the CO2 limits for new coal and gas plants complicates domestic power generation, the global market for U.S. coal is softening. Up until several months ago, many people (myself included) were expecting U.S. coal exports to increase based on strong international demand. I wrote last year that even though domestic coal production was declining, significant amounts of U.S. coal (and carbon) were being consumed by European and Asian markets.

However, instead of expecting a record year of coal exports, U.S. exports are expected to decline by 5 percent this year.

Perhaps the biggest indicator is China’s announcement that they will ban construction of coal-fired power plants in three key industrial regions around Beijing, Shanhai, and Guanghzou in an effort improve air quality. The action plan from the State Council, China's Cabinet, also aims to cut coal's share of the country's total primary energy use to below 65% in 2017 and increase the share of nuclear power, natural gas and renewable energy.

It’s unclear what will happen in the short-term in the international coal markets, but this is definitely part of the equation.

There is also the LNG export wildcard. U.S. natural gas could shake up international markets even more depending on how the Obama Administration handles LNG export terminal permitting. It’s conceivable that increased U.S. LNG exports will further depress the international coal market and further weaken demand for U.S. coal.

The views expressed are those of the author and are not necessarily those of Scientific American.

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