Coal Demand Growing: GRI Study

Issue 6 and Volume 103.

U.S. coal demand is expected to grow from 960 million tons in 1997 to 1,063 million tons in 2002, before gradually declining to 910 million tons in 2015, according to the recently released Gas Research Institute study, Coal Demand and Price Projections. The decline in the latter years of the projection reflects the effects of expected new power plant emissions regulations.

The study also projects that the average delivered price of coal to the industrial sector will decline from $34.60 per ton in 1970 to $26.66 per ton in 2015, in 1998 dollars. Average delivered price of coal to the electric generation sector is projected to decline in real terms from $27.83 per ton in 1997 to $21.86 per ton in 2015.

“The outlook for coal is not entirely bleak,” said Kathy Nice, GRI principal energy analyst. “Despite changing markets, coal is projected to maintain its market share as a primary fuel source in the United

States over the next 20 years. This partially reflects the success of the coal industry in responding to increasing environmental regulations with improved productivity and lower transportation costs.”

Other key findings include:

  • Restructuring of the electric industry will promote fuel competitiveness among regions and increased capacity utilization.
  • Production of low-sulfur coal, primarily from the Powder River Basin, will continue to increase the Western U.S. share of the coal market.
  • Transportation rates will continue to decline as aluminum rail cars replace steel rail cars, and the use of barges increases.
  • Environmental regulations are expected to require the coal industry to further reduce SO2, NOX and fine particulate emissions.

The two-volume report is available from GRI at (703) 526-7832.