Warning: Faulty Reporting on US Coal Supplies


Federal Estimates Overstate Reserves by Including Coal That Cannot Be Mined Profitably; Production Already Down in All Major Coal Mining States… And Utility Consumers Are Facing  Rising Energy Bill Prices.

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WASHINGTON, D.C. – October 30, 2013 – America does not have 200 years in coal “reserves” since  much of the coal that is now left in the ground cannot be mined profitably, according to a major new report  from the Boulder, CO-based nonprofit Clean Energy Action (CEA). The CEA analysis shows that the U.S. appears to have reached its “peak coal” point in 2008 and now faces a rocky future over the next 10-20 years of rising coal production costs, potentially more bankruptcies among coal mining companies, and higher fuel bills for utility consumers.

Available online at http://cleanenergyaction.org/faulty-reporting-us-coal-reserves, the CEA report titled “Warning: Faulty Reporting of U.S. Coal Reserves” concludes:

The belief that the U.S. has a ‘200 year’ supply of coal is based on the faulty reporting by the Energy Information Administration (EIA) of U.S. coal deposits as ‘reserves.’ Most U.S. coal is buried too deeply to be mined at a profit and should not be categorized as reserves, but rather as ‘resources.’ The report recommends that decision makers at all levels should begin taking a hard look at coal cost and supply issues considering both geology and finance and begin thinking about scenarios that require moving the US beyond coal in significantly less than 20 years… In short, the EIA’s reporting of over 200 billion tons of ‘Estimated Recoverable Reserves’ for US coal supplies has been like a ‘faulty fuel gauge’ for US coal estimates.

Key points in the CEA report include the following:

  • EIA’s claimed 200 billion tons of coal “reserves” are not likely to be extracted economically.
    In fact, significantly less than 20 percent of US coal formations will likely be economically recoverable for mining purposes. Given the current financial strains affecting US coal companies, it is unclear whether they will be able to support the increased capital and labor costs associated with mining coal that is more difficult to access.
  • Consumers are already paying the price for rising US coal costs – and likely soon will be paying even more.
    The cost of coal used by electric utilities has been—rising in almost all states at a rate of 6-10 percent per year or 2-3 times faster than inflation over the last decade. Since 2004, average US delivered coal costs have increased at a rate above 7 percent per year. At a rate of more than 7 percent per year, coal costs will double in less than a decade—as they have done in a number of states since 2004. The 12 states with the highest annual increases in the cost of delivered coal from 2004-2012 are (from highest to lowest): Mississippi (12.54%), Montana (11.64%), Nebraska (11.17 %), Indiana (10.03%), Michigan (9.92%), Louisiana (9.68%), Maryland (9.59%), South Carolina (9.58%), Wisconsin (9.34%), New York (9.22%), Missouri (9.2%), and Pennsylvania (9.05%).
  • The United States already appears to be past “peak coal” with coal production falling off significantly since the apparent peak in US production in 2008.
    In addition, almost all of the top 16 coal producing states appear to be past peak. Even the large coal-producing western states of Wyoming (14.2% drop) and Montana (18.1% drop) have seen significant production declines in recent years that aren’t likely to be recouped. The other 14 coal producing states seeing coal production drops are (from highest to lowest percentage declines): Pennsylvania (80.2%), Virginia (61.4%), Ohio (50.2%), Kentucky (47.7%), Illinois (46.4%), Arizona (44%), Utah (39.3%), Alabama (32.4%), West Virginia (31.8%), Colorado (28.3%), New Mexico (24.3%), Texas (20.8%), North Dakota (14.9%), and Indiana (2.4%).

Leslie Glustrom, director of research and policy, Clean Energy Action, and author of the study, said:

Economically viable coal is a nonrenewable resource, and after examining currently available geological and financial data, there is good reason to believe we are rapidly reaching the end of US coal deposits that can be mined at a profit. If coal can’t be mined at a profit, not much of it will be mined. It is unclear how long the US coal industry will produce large quantities of coal and at what price, but the current financial distress of US coal mining companies could lead to significant changes in US coal production in less than a decade.

Tom Sanzillo, director of finance, Institute for Energy Economics and Financial Analysis, said:

The rising cost of production is THE sleeper issue for those who follow coal and energy markets in the United States. It is a geological certainty and an economic fact that as mining activity matures in a region, production typically becomes more difficult and more expensive … (T)he country is going through a transition in its energy mix for electricity. What will emerge is a more diversified set of suppliers for the nation’s electricity consumers. Coal’s relative monopoly at fifty percent of market share is likely to be replaced by growth in renewable resources, efficiency, natural gas and in some regions of the country by hydro … The coal industry will be smaller with less producers, fewer mines and higher prices.

Dr. Zane Selvans, geologist and assistant director of research, CEA, said:

The point of this report is that the fundamental constraint on coal is not from natural gas prices or government regulations, but from the geology of coal. The fundamental fact is that most of the coal in the US is buried too deeply to be accessed easily and we are rapidly approaching the end of accessible US coal deposits that can be mined profitably. Independent of arguments about climate change and clean coal, coal’s days are very likely numbered due to questions of economic supply. Even if coal were perfectly clean—or could be made to be so—it would still be the wrong choice due to serious questions about long term US coal supplies.

Other key points in the CEA report include the following:

  • While it is unknown what the future holds for the US coal industry, there could be significant disruptions in the next five to 10 years as several top US coal companies have lost over 80 percent of their stock value and are facing debt payments in the next three-seven years that already have interest costs of 6 percent and above. For example, as of the end of 2012: Patriot Coal has already filed for bankruptcy and other companies, including Arch Coal and Alpha Natural Resources, have been put on bankruptcy watch.
  • As the cost to produce US coal increases, coal company profit margins have thinned and for some producers, profit margins have become negative — particularly from eastern mines. While production costs have risen and profit margins have thinned or become negative, mine productivity has fallen steadily from 6.99 tons per employee per hour in 2000 to 5.19 tons per employee per hour in 2012. Utilities that fail to understand US coal supply constraints can end up making large capital investments in coal plants that may not be economical to operate and the capital investment can then become stranded. Utilities and investors have already made investments of hundreds of millions of dollars or more in coal plants that have either been lost or are likely to become stranded, including: the legendary investor Warren Buffett, has written off over $1.3 billion in investment in the heavily coal-dependent Energy Future Holdings of Texas; AES Eastern lost several hundred million dollars when two New York coal plants went bankrupt and were sold to bond holders for $240 million while their original cost was approximately $550 million; the decision by First Energy to idle the huge Sammis coal plant in Ohio after investing over $1.8 billion in pollution upgrade; and the decision by Energy Capital Partners to close the 1500 MW Brayton Point coal plant in Massachusetts despite a recent investment of over $1 billion on upgrade.
  • Only time will tell whether the major US coal companies will survive the financial challenges they are facing in the next several years. To ensure proper economic planning, decision-makers from all sectors should begin examining the situation of US coal supplies carefully and consider scenarios that require the US to repower while retaining grid stability with coal supplies that could become seriously constrained in the not too distant future.


Clean Energy Action is based in Boulder, Colorado and works at the local, state and national level to accelerate the transition to the post-fossil fuel world based on clean energy. For more information, go to:


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MEDIA CONTACTS: Ailis Aaron Wolf, (703) 276-3265 or aawolf@hastingsgroup.com; and Will Harwood, (703) 276-3255 or wharwood@hastingsgroup.com.

EDITOR’S NOTE: A streaming audio replay of the news event will be available on the Web at http://www.cleanenergyaction.org/ as of 5 p.m. EDT/3 p.m. MDT on October 30, 2013.

Featured fuel-gauge image via Flickr user apranihita,Creative Commons BY-NC-SA.

Published by

Zane Selvans

A former space explorer, now marooned on a beautiful, dying world.

One thought on “Warning: Faulty Reporting on US Coal Supplies”

  1. Interesting article. But could have gone a bit deeper.
    I would have liked to see some discussion of exactly how some remaining coal reserves would be gotten at. Eg. more mountain top removal or strip mining?
    Also lacking is exactly to what extent natural gas (obtained by horizontal drilling and fracking) has displaced or is competing with coal. Re “peak coal” – numbers are more convincing than opinions. Also, worth pointing out that changes in oil recovery methods have seriously impacted previous “peak oil” estimates. Are any changes in the offing for coal?
    What specific coal production costs have risen?
    How many mining jobs will go down the tubes? What are the social and political ramifications? (Not trivial). What are the taxpayer costs of pension fund failures? (Not trivial either.)
    Carbon capture unfortunately doesn’t seem to be in the works for coal power plants, although it might obviate both the employment loss and the carbon pollution. It’s cheaper and cleaner to burn gas.

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