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Improved export outlook seen boosting US coal production

The U.S. Energy Information Administration boosted its domestic coal production forecast on an improved export outlook.

According to the latest "Short-Term Energy Outlook" released June 6, the government agency revised its 2017 export projections significantly upward. Exports in 2016 totaled 60.3 million tons, and the government expects them to climb 18.9% to 71.6 million tons in 2017 before falling 14.4% in 2018. The 2017 and 2018 projections are a respective 13.2% and 3% increase versus the prior outlook.

On increased demand from exports, the EIA revised its projections for domestic coal production upward by 1.4% to 784 million tons in 2017 for a 7.7% year-over-year increase. At 787 million tons, the 2018 coal production outlook is up 0.2% versus the prior outlook for a 0.3% rate of annual growth.

The government agency expects power-sector coal demand to dip slightly in 2017 to 677 million tons before increasing in 2018 to 687 million tons, as U.S. generation averages 11.0 million MWh/d in 2017 before climbing 1.7% to 11.2 million MWh/d in 2018.

Versus the prior outlook, coal saw its projected generation 2017 increase slightly, while natural gas ceded some market share to renewable generation. The EIA expects natural gas will provide 31.4% of the nation's electricity in 2017 to coal's share of 30.9%. Meanwhile, the government agency projects that renewables, including hydroelectric power, will provide 16.9% of the nation's power. Coal's share climbed from the prior outlook's projection of 30.8%, while that of renewable generation climbed from 16.7%.

In 2018, the EIA expects U.S. generation will total 11.2 million MWh/d, down 0.3% versus the prior outlook. The government agency expects coal's market share will reach 31.0% while that of natural gas reaches 31.9%. Last month, the EIA had expected coal and natural gas would provide 31.0% and 32.0% of the nation's electricity in 2018, respectively. The EIA has renewables providing 16.4% of the nation's power during the year, unchanged from the prior outlook.

The government agency expects coal stockpiles to end 2017 lower than 2016 year-end levels. At 154 million tons the 2017 projection is 2.8% lower than the prior outlook, while the 2018 figure of 154.9 million tons is down 2.4% from last month's forecast.