Can the US Significantly Increase its Export of Coal?

For the last 50 years the United States has continued to increase coal production. Despite the wide adoption of oil starting in the first half of the 20th C, and despite the attempt to add more natural gas fired power generation starting 40 years ago, US coal production has moved steadily higher from 434 million short tons in 1960, to 1,072 million short tons last year. But the question that interests me is US export capacity. After all, the United States is most often referred to as the Saudi Arabia of Coal. If that’s true, then the US would have to earn such a moniker in part for an ability to serve as a global swing producer of coal. So is that true? In the same way that Saudi Arabia (supposedly) sits on a big reserve of spare-capacity oil for export, does the US sit on such a pile of spare coal?

In the above chart: US Coal Production vs Percent Exported 1960-2009 we see that, with the exception of a brief upturn in the 2005-2008 period, the percentage of produced coal that the US has had available to export has been in a downtrend for 30 years. In some sense, we could very generally say that for several decades, the US was able to export around10% of its coal production until the start of the 90s’. But for the past 10 years, the US has only been exporting between 4-6% of its production. It doesn’t look to me like we’re much of a swing producer. That job still falls to countries like South Africa and Australia.

There are also, as you might guess, numerous back-stories in the above chart. That’s not a surprise given that it spans 50 years. For example, that export spike you see in the 1978-1982 period–alot of that coal was part of an enormous increase of exports to Europe, especially the UK. More broadly, it’s also notable that the spread between coal produced and the percent exported really opens up and never looks back starting after 1992. On that one, we’ll just have to ponder for now.

When we consider the current conditions that surround US coal production–difficult extraction in Appalachia as evidenced by the late-phase method of mountain-top-removal mining, and, the greater sourcing of lower BTU content coal in the West–the data in this chart confirms a couple of key truths. First, the US does indeed have vast coal reserves. But just as with oil production, the key variable is the rate of extraction at which this resource can be produced. Also, it’s pretty clear that the US remains hugely dependent on coal for domestic needs. For, no matter how much we increase production, it appears we cannot do the same with exports. In other words, the US is not getting off coal. Quite the contrary: we are serially re-adopting coal as the years go by, continually integrating increased production into US power generation.

A final thought: what if the US transitioned away from coal to other power sources, thus freeing up coal supply for export? The developing world’s growth rate of coal consumption is quite astonishing. Would a major reduction in US coal demand put downward pressure on the price of coal, thus making it even more affordable for the developing world?