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US coal demand decline to continue despite Clean Power Plan repeal, EIA says

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US coal demand decline to continue despite Clean Power Plan repeal, EIA says

Even without the U.S. Environmental Protection Agency's Clean Power Plan, the federal government still expects coal to play a declining role in meeting U.S. energy needs.

In its "Annual Energy Outlook 2018" released Feb. 6, the U.S. Energy Information Administration projects that domestic power-sector coal consumption will decline 8.3% from 2016 to 2050 but domestic production will decline at a much slower rate as the U.S. ships more coal overseas.

The latest projections reflect a slower rate of coal-fired capacity retirements compared to the outlook released in 2017.

EIA analyst Jeff Jones said the removal of the Clean Power Plan from the 2018 reference case was responsible for much of the difference between the current and prior outlooks.

The EPA on Oct. 10, 2017, announced that it would repeal the rule.

According to the report, U.S. coal-fired generating capacity declined by nearly 60 GW between 2011 and 2016 "partly as a result of compliance" with the EPA's Mercury and Air Toxics Standards.

In the 2018 outlook, the government predicted domestic coal-fired capacity will decline another 65 GW between 2017 and 2030 amid low natural gas prices and renewable generation growth and will ultimately fall to about 188 GW, for a 27.7% overall decline from 2016 to 2050.

From 2017 to 2030, the EIA predicts natural gas prices at Henry Hub will grow by an average of 2.6% per year to reach $4.262/MMBtu. Higher natural gas prices could slow the pace of coal power plant retirements by 20 GW by 2030, while lower natural gas prices could accelerate the pace of retirements by 19 GW over the same period, the report said.

The 2017 outlook's reference case has coal capacity falling 40.2% to 156.5 GW from 2016 to 2050.

In the current outlook, the EIA projects domestic power-sector coal consumption will decline an average 0.3% per year from 2016 through 2050 to reach 11.92 quadrillion Btu, with power-sector coal consumption accounting for more than 90% of domestic coal consumption over the entire outlook period.

The 2017 outlook's reference case has domestic power-sector coal consumption falling to 8.93 quadrillion Btu by 2050.

The EIA expects domestic coal production over the 2016-2050 outlook period to remain nearly flat as output declines by a total of 0.5% to reach 15.23 quadrillion Btu in 2050, up 27% versus the prior outlook.

At the same time, the agency expects that coal exports will climb an average of 0.8% per year from 2016 to 2050 to reach 2.11 quadrillion Btu, for total growth of 31.7% over the entire outlook period. Over the same period, the EIA had expected coal exports would grow 1.1% per year to 2.13 quadrillion Btu in its 2017 outlook.