1

Status of and Outlook for Coal Supply and Demand in the U.S.

Imagine West Virginia Spring 2010 Board of Governors Meeting

April 13, 2010

Scott SitzerU.S. Energy Information Administration

2

U.S. Coal Status: Electric Generation

• Currently 1445 coal-fired generators with a total capacity of over 310,000 megawatts (MW) nationally

• Coal is the source of approximately 45 percent of all generation in the U.S.

• Over last 5 years approximately 3800 MW of coal-fired capacity has come on line.

• This compares to 58,000 MW of natural gas, and 18,000 MW of wind that have started up during that period.

Existing U.S. Generating Capacity, 2008

3

Electricity Generation by Fuel Type - 2008

4

5

U.S. Coal Status: Supply and Demand

• Total consumption of 1 billion short tons in 2009, lowest in 14 years

• Consumption for both electricity and other industrial uses fell due to economic contraction, weather, and prices

• Coal production of1.07 billion short tons in 2009, lowest output since 2003

• Both Appalachia (13 percent) and the West (8 percent) showed significant declines between 2008 and 2009

• Exports, although down from 2008, were fairly robust at 59 million short tons

U.S. Energy Consumption by Source, 2008

6

U.S. Energy Production by Source, 2008

7

U.S. Coal in the World

• After China, U.S. is the world’s largest consumer and producer of coal

• U.S. recoverable reserves are the world’s largest

• While not on a par with Australia, Indonesia, or Russia, U.S. exports are significant share of world coal trade

8

Major Coal-Consuming Countries, 2007

9

Major Coal-Producing Countries, 2007

10

Recoverable Coal Reserves by Country

11

Factors Favoring Future Coal Expansion

• Coal continues to be one of the two low-cost sources of electricity generation, not including construction costs

• Need for additional baseload generation in the future

• Coal is available domestically

12

Barriers to Future Coal Expansion

• High capital costs for new electricity capacity

• Emissions

• Shrinking markets for non-electric use

13

Capital Cost Assumptions for New Generating Capacity

14

CO2 Emission Factors

15

Annual Energy Outlook 2010

• Total coal consumption increases to 1,319 million short tons in 2035 in the AEO2010 reference case.

• Coal consumption, mostly for electric power generation, grows gradually throughout the projection period, as existing plants are used more intensively, and new plants, which are already under construction, are completed and enter service.

• The moderate increase in coal consumption from 2008 to 2035 also reflects coal use at CTL plants, a new industry projected to start up over the coming years, stimulated by rising oil prices and assuming current policies.

16

Annual Energy Outlook 2010 (contd.)

• Total coal production increases at an average rate of 0.2 percent per year, from 1,172 million short tons in 2008 to 1,285 million short tons in 2035.

• Coal production east of the Mississippi River remains relatively constant from 2010 through 2035. 60 percent of domestic coal production originates from States west of the Mississippi River in 2035, up from 50 percent in 2008.

• Coal consumption in the electric power sector competes with increased generation from natural gas and renewable energy.

• Another emerging market for coal is CTL plants. In the AEO2010 reference case, coal use at CTL plants grows from 32 million short tons in 2020 to 68 million short tons in 2035.

17

Annual Energy Outlook 2010 (contd.)

• 24 gigawatts of coal-fired generating capacity are added from 2008 to 2030 in the AEO2010 reference case.

• Concerns about GHG emissions continue to slow the expansion of coal-fired capacity, even under current laws and policies. Lower projected fuel prices for new natural-gas-fired plants also affect the relative economics of coal-fired capacity.

• Total coal-fired generating capacity grows to 337 gigawatts in 2035.

• Given the high carbon content of coal and its use currently to generate nearly one-half of the U.S. electricity supply, prospects for CO2 emissions depend in part on growth in electricity demand.

18

19

Natural gas and renewables account for the majority of capacity additions from 2008 to 2035

Coal312 (31%)

Natural gas338 (33%)

Hydropower*99 (10%)

Nuclear101 (10%)

Other renewables

40 (4%)

Other119 (12%)

* Includes pumped storage

Coal31 (12%)

Natural gas116 (46%)

Hydropower*1 (0.4%)

Nuclear8 (3%)

Other renewables92 (37%)

Other2 (1%)

2008 capacity Capacity additions 2008 to 2035

1,008gigawatts

250gigawatts

Source: Annual Energy Outlook 2010

20

Renewables gain electricity market share; coal share declines

0

1,000

2,000

3,000

4,000

5,000

6,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

billion kilowatthours and percent shares

Natural gas

Renewable

ProjectionsHistory

Nuclear

Oil and other

Coal48.5 43.8

21.4

20.8

19.6 17.1

9.1

17.0

1.41.5

Source: Annual Energy Outlook 2010

Waxman-Markey Analysis

• EIA analyzed the American Clean Energy and Security Act of 2009 (ACESA), the Waxman-Markey bill

• Analysis shows significant impacts on coal capacity and generation through 2030

• Results are dependent on assumptions concerning banking, international offsets, and the costs of low-emission technologies

21

Waxman-Markey Analysis (contd.)

• Under the Basic ACESA case, coal generating capacity is 285 gigawatts (down 17 percent from the reference case), and generation is 1354 billion Kwh in 2030.

• Under this scenario, coal would account for 29 percent of total generation in 2030, compared to 46 percent in the reference case projection.

• Along with renewables, nuclear would be the primary source of replacement generation for coal (and natural gas).

22

Main cases in EIA’s analysis

Case Name Assumptions

BasicIntegrated analysis of all of the modeled provisions of ACESA.

Zero BankSame as Basic but no carryover of allowances beyond 2030. Proxy for major low- no-carbon energy technology breakthroughs with significant market impacts after 2030

High OffsetsSame as Basic but assumes increased use of international offsets.

High CostSame as Basic but assumes that nuclear, fossil with CCS and biomass gasification costs are 50 % higher

No InternationalSame as Basic but assumes international offsets are too expensive or unable to meet the requirements for use

No International / Limited

Same as Basic but limits additions of nuclear, fossil with CCS and biomass to reference case levels. Also no international offsets.

23

EIA’s Projected Capacity Additions by Fuel, 2007-2030: ACESA Analysis

(thousand megawatts)

6935 39

125 4255 53 82 46

112

96

44 45

13581

119

93 95116

219

250

60410

100

200

300

400

500

600

Reference Basic Zero Bank High Offsets High Cost NoInternational

No Int /Limited

Renewable

Nuclear

Natural Gas with CCS

Natural Gas

Coal with CCS

Coal

Source: EIA Analysis of the American Clean Energy and Security Act of 200924

EIA’s Projected Generation by Fuel in 2030:ACESA Analysis (billion Kilowatt-hours)

2021 2296

841

1650 1593 1281

100 285

015

513

262 304293

440 15

892976

636

708 713880

5921638

806

890

15481147 1151 923

1863890

352

798

1021979 987

9741399

1315

0

1,000

2,000

3,000

4,000

5,000

2007 Reference Basic Zero Bank HighOffsets

High Cost NoInterational

No Int /Limited

Coal Coal w /CCS Oil Natural Gas Natural Gas w /CCS Nuclear Renew able

Source: EIA Analysis of the American Clean Energy and Security Act of 200925

26

Thank You for your Attention!For more information:

Energy Information Administration home pageww.eia.doe.gov

Short-Term Energy Outlook www.eia.doe.gov/emeu/steo/pub/contents.html

Annual Energy Outlook www.eia.doe.gov/oiaf/aeo/index.html

International Energy Outlook www.eia.doe.gov/oiaf/ieo/index.html

Monthly Energy Review www.eia.doe.gov/emeu/mer/contents.html

U.S. Energy Information Administrationwww.eia.doe.gov