The U.S. coal mining sector will witness a modest, brief rebound this year, boosted by greater production in Western states following two years of declines, according to a report released this week by the Energy Information Administration (EIA).
Short-term impacts are expected heaviest in terms of volume in the Powder River Basin of Wyoming and Montana, which accounts for 40% of U.S.-produced coal. In all, the government agency predicts a 36-million-ton increase in production for 2014 to 1.04 billion tons, up 3.6% from 2013.
Low natural gas prices have hurt coal in recent years, along with stricter regulations from Washington. Last year, however, that pressure began easing as gas prices rose, while coal regained part of its once-dominant share in the electricity generation business, according to EIA statistics.
Coal output is expected to resume its downward slide and fall more than 25 million tons in 2015, however, when new mercury pollution rules kick in, added the EIA. EIA analysts said mercury reduction rules have already prompted many utilities to announce the shuttering of coal-fired power plants in lieu of costly upgrades.
Altogether, plant retirements will culminate in nearly almost 18 gigawatts (GW) of power this year and next, the EIA said. That represents some 30 500-MW power plants, and includes only retirements reported to federal officials, the survey added.
Western coal production is expected to grow by 24 million tons in 2014, before declining by 15 million tons next year. Appalachian region production, meanwhile, is anticipated to rise by 3.5 million tons in 2014, before dropping by 10 million tons in 2015, according to EIA officials.
The government predicts U.S. exports to drop to 105 million tons in 2014 and 2015, after peaking at 123 million tons in 2012.
But EIA predictions do not account for U.S. Environmental Protection Agency (EPA) proposals to restrict greenhouse gas emissions. To this end, the National Mining Association (NMA) released a statement warning that EPA actions “effectively ban coal from America’s power portfolio.”