Over one-third of the coal produced in the US in 2022 went to power plants scheduled for retirement by 2042 or sooner, according to an analysis of S&P Global Market Intelligence data on fuel contracts and federal production figures.
It is a front-loaded trend, with about 62% of those coal deliveries going to power plants that will be closed or converted to another use as soon as 2030. Despite elevated prices in recent months, US producers face a quickly evaporating domestic market for the coal used to generate electricity.
While several coal producers have pivoted to export markets or begun exploring new uses and customers for coal, success may be limited.
"From a volumetric perspective, you're never going to get back to the kind of volumes of coal-fired generation," said Steve Piper, director of energy research for Commodity Insights. "You're pivoting to a world of smaller volume, higher value."
At least six US coal producers, mostly smaller companies, sold at least as much coal as they produced in 2022 to power plants that will not be around by 2042 or sooner. In addition, at least 20 coal mining companies sold more than two-thirds of their 2022 coal production to power plants set to retire during the same period. Due to inventorying practices, some coal miners can report more sales than production in a given year.
At least eight
The hardest hit region on a percentage basis will be southern Wyoming, which produced 6.5 million short tons (MMst) of the 594.9 MMst of coal mined in the US in 2022. More than 90% of the coal mined from the area went to power plants set for retirement. More than two-thirds of the coal mined in the Four Corners region, where Utah, Arizona, Colorado and New Mexico meet, went to power plants that are scheduled to close.
The Powder River Basin, the nation's largest coal mining region, is set to see 125.2 MMst of coal roll offline as power plants retire over the next two decades, the most of any region and 48.4% of the basin's total production. The Powder River Basin is centered in Wyoming and comprises 43.5% of US coal production. Producers in the region primarily sell coal for thermal power generation and have limited export opportunities.
"You've kind of seen the producers who own the Powder River Basin properties have prepared for that reality and have been stepping down productive capacity for the last five years or so," Piper said.
Conversely, Central Appalachia coal producers have primarily shifted to exports, particularly metallurgical-grade coal used to make steel. As a result, only about 2.4% of 2022 shipments from the region went to power plants set to retire by 2042.
"From the perspective of the Appalachian producers, a lot of the damage has already been done," Piper said. "If you want to look at it from a glass-half-full perspective, they've already sort of pivoted to export and metallurgical markets."
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