Report: Decline in Coal Use Expected to Continue

Coal production and use is slumping and expected to drop even further next year, a new report from the Institute for Energy Economics and Financial Analysis (IEEFA) predicts.

The report looks at U.S. Energy Information Administration (EIA) data and found that its use at U.S. power plants is down in 2023 and has fallen below 20% market share so far in 2023, with low levels of use expected into 2024. Coal’s market share for power plants had never been less than 20% in any month before 2020.

A “temporary reprieve” in declining production is over, the report states, as natural gas prices that were high in 2022 have fallen, leading operators to use that fuel rather than coal and leading to a reduction in domestic demand. U.S. coal use has fallen from about 2.8 million tons a day in 2008 to about 1.1 million tons a day this year, which represents a 62% decrease, according to IEEFA.

Consequently, coal stockpiles have risen to nearly 130 million tons in the middle of the year, which is enough to run existing coal-fired plants for 113 days, IEEFA found. The cut those stockpiles, coal plant operators are likely to buy less coal and use what is on hand, the report said.

That would affect U.S. coal mining, which is looking at a significant production downturn through 2024, according to the EIA. Coal output could fall to 466 million tons in 2024, a 25 percent decrease from 2023 levels, the EIA predicts. That would represent the smallest annual output since 1962.

Production at coal mines in the Appalachian region would fall about 22% to just 132 million tons. At its peak in 1990, Appalachian coal mines produced almost four times that amount, the report said.

The rise of solar generation and the focus on reducing greenhouse gas emissions to meet climate goals is likely to contribute to the further erosion of coal’s market share in the U.S., as are the economics of operating a coal-fired power plant.