Coal's Conundrum
Coal will likely continue to be an easy target for elimination from the global energy mix after years of the industry's structural decline. The COVID-19 pandemic is accelerating the energy transition, lenders continue to adopt policies to phase out fossil fuel funding, and low natural gas prices keep shaking the perception that coal is the cheapest source of dispatchable electricity. Renewables are on track to surpass coal-fired generation, which is currently the largest single source of global energy-related carbon emissions, as the largest electricity source in the world by 2025.
Outlook
After a challenging 2020, U.S. coal companies now generally face a lower probability of default but are still grappling with substantial obstacles to accessing capital.
EIA U.S. Coal Production, Export, Consumption Forecasts Rise for 2021
The U.S. Energy Information Administration forecast coal production of 585 million st in 2021, up 8.6% from 2020 output of almost 540 million st, the EIA said April 6.
In 2022, the EIA projected output of about 602 million st.
Read the Full ArticleCoal Stumbled Globally in 2020, but 'No Sign it Will Fade Away Quickly' – IEA
After an unprecedented decline in global coal demand, the International Energy Agency expects the fuel to rebound in 2021 before flattening out by 2025.
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Energy Transition
Fossil fuel financing fell by 9% in 2020 as the COVID-19 pandemic halted demand and production, but overall bank funding of the fossil fuel industry in 2020 remained higher than in 2016, the year after the 2015 Paris agreement on climate change was signed, according to a new report from a group of environmental advocacy organizations.
In 2020, 60 of the world’s largest commercial and investment banks financed $750.73 billion to the fossil fuel industry, down from $823.68 billion in 2019, but above $709.23 billion in 2016.
Investors and regulators have grown increasingly concerned about long-term climate risks, fearing that if industries like coal and gas become obsolete, financial institutions will be left with stranded assets.
As a result, lenders have been adopting policies to phase out fossil fuel funding and to bring their lending into line with the Paris agreement, which aims to limit warming at the end of this century to well below 2 degrees C measured against preindustrial levels, with signatories agreeing to strive for a 1.5-degree C goal.
Xcel Energy Accelerates Clean Energy Transition, Coal Exit in Colorado
Aiming to slash carbon-dioxide emissions 85% by 2030 from 2005 levels, Xcel Energy Inc. on March 31 pitched Colorado energy regulators a sweeping clean energy transition that would accelerate subsidiary Public Service Co. of Colorado's move away from coal-fired generation by leaning more heavily on new wind, solar and energy storage resources.
Read the Full ArticleWith U.S. Coal Jobs Decimated, Groups Look to Biden to Aid Regional Transition
The latest data again confirmed what many have long suspected: Former President Donald Trump's promise to put U.S. coal miners back to work was a bust.
Read the Full Article'2030 is the New 2050': Utilities Pressured to Hasten Decarbonization Goals
With an increasing number of electric utilities setting aspirational midcentury decarbonization goals that lack enforceable milestones, environmental groups are training their sights on a closer target: the year 2030.
Read the Full ArticleU.S. Sector Readies for Transition Away From Pro-Coal White House
The U.S. coal sector continued to struggle under the pro-coal Trump administration and will likely face new challenges on the political front under a Biden presidency and a U.S. Congress controlled by Democrats.
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Closures
Market forces, investor sentiment and existing policies have driven the decline of the U.S. coal fleet in recent years and will likely continue to prompt closures, but the last of the power plants may remain online well past the next decade without policy interventions.
Closures, More Volume Declines Hitting Powder River Basin Coal Region in U.S.
A sharp decline in coal demand from the U.S. power sector is wreaking havoc on the Powder River Basin as mine operators in the region scaled back production during 2020 with few indications of improved prospects for volumes.
Production in the country's largest coal-producing basin fell 21.8% year over year in 2020, and two of the largest producers in the region have indicated that 2021 may not be much better.
Trade
U.S. coal production and employment nosedived in the second quarter, and much of the lost tonnage would have come from the Powder River Basin that spans southeastern Montana and northeastern Wyoming.
The region is the largest producer of coal in the nation and heavily relies on demand from domestic power generators, which have reduced coal consumption as the COVID-19 pandemic squeezes electricity demand. Coal production from the region fell 21.5% quarter to quarter and was down 15.4% for the 12 months ended in the second quarter as the economic fallout from the virus added to a secular decline in demand for thermal coal.
U.S. Thermal Coal Exports May Tighten Despite Recent Price Rises
Downside potential for U.S. thermal coal exports remains for 2021 despite recent rises in prices.
Read the Full ArticleTexas Freeze Demonstrates Need for Both Gas and Renewables
Power outages in Texas this month caused by snow and freezing weather demonstrate the need to keep investing in gas as a complement to renewables, even as Total increases its renewables capacity, CEO Patrick Pouyanne said Feb. 23.
Read the Full ArticleChina's U.S. Coal Imports Jump 748% in Q4'20 Amid Australian Trade Dispute
China emerged as one of the top importers of U.S. coal in the fourth quarter of 2020 as the country banned Australian coal from entering its territories amid diplomatic tensions.
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2020 Activity
Most publicly traded U.S. coal companies fell short of analysts' earnings projections in the fourth quarter of 2020, with a majority recording losses during the period.
Expectations were low going into the fourth quarter, with analysts projecting that most U.S. coal producers would report a loss in earnings and that only three would record positive EPS.
Coal Production From Top Northern Appalachia Mines Drops 25% in FY'20
Production at the top coal mines in the Northern Appalachian basin of the U.S. during the last quarter of 2020 fell short of the full-year 2019 totals but increased quarter over quarter, according to an analysis by S&P Global Market Intelligence.
Read the Full ArticleCoal Output Declined 14.3% at Top 25 Central Appalachian Mines in 2020
Coal production at the top 25 mines in the Central Appalachian basin of the U.S. held steady during the fourth quarter of 2020 while output slumped for the full year, according to an analysis by S&P Global Market Intelligence.
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