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 Sitzer U.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,

Electricity Generation by Fuel Type

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,

U.S. Energy Production by Source,

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,

Major Coal-Producing Countries,

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

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 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 Coal 312 (31%) Natural gas 338 (33%) Hydropower* 99 (10%) Nuclear 101 (10%) Other renewables 40 (4%) Other 119 (12%) * Includes pumped storage Coal 31 (12%) Natural gas 116 (46%) Hydropower* 1 (0.4%) Nuclear 8 (3%) Other renewables 92 (37%) Other 2 (1%) 2008 capacityCapacity additions 2008 to ,008 gigawatts 250 gigawatts Source: Annual Energy Outlook 2010

20 Renewables gain electricity market share; coal share declines billion kilowatthours and percent shares Natural gas Renewable ProjectionsHistory Nuclear Oil and other Coal 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 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 Basic Integrated analysis of all of the modeled provisions of ACESA. Zero Bank Same as Basic but no carryover of allowances beyond Proxy for major low- no-carbon energy technology breakthroughs with significant market impacts after 2030 High Offsets Same as Basic but assumes increased use of international offsets. High Cost Same as Basic but assumes that nuclear, fossil with CCS and biomass gasification costs are 50 % higher No International Same 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, : ACESA Analysis Source: EIA Analysis of the American Clean Energy and Security Act of

EIA’s Projected Generation by Fuel in 2030: ACESA Analysis (billion Kilowatt-hours) Source: EIA Analysis of the American Clean Energy and Security Act of

26 Thank You for your Attention! For more information: Energy Information Administration home pageww.eia.doe.gov Short-Term Energy Outlook Annual Energy Outlook International Energy Outlook Monthly Energy Review U.S. Energy Information Administration