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CPP hits future US coal production

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World Coal,

US coal production is projected to decline by about 26% – or 230 million short t – between 2015 and 2040, according to the US Energy Information Administration’s Annual Energy Outlook 2016 (AEO2016) Reference case, which assumes the implementation of the Clean Power Plan (CPP).

In a scenario that assumes the CPP is never implemented (No CPP case), US coal production remains close to 2015 levels through 2040. Although production in each major U.S. coal supply region is expected to decline when the CPP is implemented, the magnitude of the effects differs because of differences in coal quality, pricing, and the markets served by each region.

In 2015, the coal production shares of the West, Interior and Appalachian regions were 55%, 19%, and 26%, respectively. In the No-CPP scenario, these shares were expected to shift to 52%, 29%, and 20% by 2040, respectively, as coal production from the Interior region increases, while coal production in the West and Appalachian regions decreases.

In the Reference case, the decline in coal demand impedes growth for the Interior region and leads to even larger declines in the West and Appalachian regions. By 2040, market shares for the West, Interior and Appalachian regions are 51%, 26%, 22%, respectively.

Clean Power Plan reduced projected coal production in all major US supply basins.

West Region

Coal production in the West region falls by 155 million short t between 2015 and 2040 in the Reference case, compared to a reduction of 31 million short t in the No CPP case. Approximately two-thirds of Western coal production occurs in the Powder River Basin, where relatively low mining costs and low-sulfur coal have offset higher transportation costs and allowed western coal to remain economic in distant markets.

However, the addition of sulfur control equipment at existing coal-fired power plants to accommodate the Mercury and Air Toxics Standards (MATS) early in the projection period makes higher sulfur coals more competitive at units that had previously used low-sulfur coal to comply with prior limitations on sulfur dioxide emissions. In the Reference case, competition from natural gas and renewables combined with coal-fired power plant retirements also lowers coal demand in the states that are currently large consumers of Western coal.

Interior Region

Coal production in the Interior region increases by 86 million short t by 2040 in the No CPP case. In the Reference case, this increase is smaller, totaling 5 million short t by 2040. Over the projection period, coal producers in the region are projected to control costs using longwall mining, a technique that is well-suited for the region's coal reserves. Additionally, the installation of sulfur control equipment at existing coal-fired power plants will enable Interior coal to displace some use of lower-sulfur Western and Appalachian coals.


Coal production in Appalachia, which has declined steeply between 2000 and 2015, is projected to see the smallest reduction in production attributable to the CPP.

In the No CPP case, Appalachian coal declines by 50 million short t by 2040. In the Reference case, Appalachian coal declines 79 million short t.

Appalachian thermal coal production is relatively expensive relative to other coals and it is expected to experience decreasing labour productivity. This lower productivity further decreases its competitiveness with coal from other regions, as well as with other fuels used to generate electricity, such as natural gas.

However, production of metallurgical coal, which represented about 28% of the region's total coal production in 2014, is not affected directly by the CPP. Despite this, slower growth in international metallurgical coal demand and falling international thermal coal trade also limit projected export growth for Appalachian coal.

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