Coal

Rail cars are loaded with coal in January 2014 at Cloud Peak Energy's Antelope Mine north of Douglas. It's possible that yearly coal production in the Powder River Basin could return to 400 million tons by 2030, federal estimates say. 

File, Star-Tribune

Annual coal production in the Powder River Basin could return to a high of 400 million tons by 2030 if natural gas prices remain high and the Clean Power Plan is not implemented, according to the Energy Information Administration’s Annual Energy Outlook, released Friday.

Every year the federal agency makes a number of energy projections based on varying prices, regulations and market scenarios

Wyoming has depended on coal revenue for 30 years and watched in horror as the sector faced historic declines, bankruptcies and layoffs through 2015 and 2016. Though the hemorrhaging of employees has stopped and production has increased over the last six months, the outlook for coal’s future has remained grim.

The federal report offers the potential of an unexpected growth spurt for the dusty black rock, extending coal's reign as one of the most-used fuels for electricity generation for a little over a decade before it falters under pressure from competition with natural gas and renewable energy.

Coal will face declines after 2030 even if the Clean Power Plan goes away, experts say. However, they continue, in earlier projections the likelihood of Wyoming production reaching pre-bust highs was poor.

“This should be a bit of good news for coal miners in Wyoming, as the newest EIA projections suggest that under a Trump administration and Republican Congress that has threatened to repeal the CPP, [Powder River Basin] coal output would stabilize and actually grow,” said Rob Godby, director for the Center of Energy Economics and Public Policy at the University of Wyoming.

Much of coal’s future, unsurprisingly, hinges on natural gas prices.

“Without the Clean Power Plan, the PRB is expected to increase coal output by about an average 2.5 percent per year through 2030 under current natural gas price assumptions … meant to describe EIA’s best thinking on the trajectory of natural gas prices over that period,” Godby explained in an email.

For years, natural gas has threatened coal as new technologies in fracking made gas cheap and abundant. Now, gas prices may rebound, according to the EIA.

“We are starting to see the gas prices creep up a little bit,” said Travis Deti, director of the Wyoming Mining Association. “As anyone who has paid attention to the industry knows, [gas prices] couldn’t stay as low as they were. When gas prices go up, Powder River Basin coal is competitive.”

However, the fate of the Clean Power Plan is uncertain. If implemented it would favor natural gas and renewable growth, just as it would deal a knockout punch to coal.

Natural gas works well with renewable resources like wind and solar in a diverse, low-emissions energy portfolio, as seen in places like Texas, the most wind-friendly state in the country.

Those renewables are becoming more cost-competitive as technology advances, contributing to a more diverse mix of electricity fuels in the future.

But in the long run, technology could also help coal, said Deti, of the Mining Association.

“We are going to find ways to use coal more efficiently and more cleanly,” he said. “We are pursuing ways to mitigate the carbon dioxide issue, and coal is going to be there in the mix.”

Those advances are facing a ticking clock, as clean coal is not yet cheap enough to spell mercy for coal, experts say.

Meanwhile, federal subsidies implemented to help wind find a market while its technology was not cost-competitive are being rolled back over the next few years, as wind has finally become a cheaper way to provide electricity.

The energy projections do not offer easy answers for coal. There is no scenario in the federal projections where electricity demand significantly increases, broadening the market. Though favorable politics and higher gas prices offer unexpected potential for coal’s advancement in the next decade, other paths remain rocky.

If federal regulations on emissions are implemented or if natural gas prices are low, coal will face difficulty much sooner, according to the report.

“Under both those assumptions, coal production continues a slow and steady decline from current levels in the PRB, dropping 50 percent from today’s approximate production level to about 200 million tons (per) year by 2038,” Godby explained in an email. “This would be a little less than an annual 2 percent decline average in coal output under those assumptions.”

Follow energy reporter Heather Richards on Twitter @hroxaner

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