U.S. Coal Production Falls to 30-Year Low as Solar Powers Up

Stricter emissions requirements and competition from natural gas are crushing coal companies as a renewable energy boom gets under way.
A bulldozer operates atop a coal mound at the CCI Energy Slones Branch Terminal in Shelbiana, Kentucky. (Photo: Luke Sharrett/Getty Images)
Jan 12, 2016· 1 MIN READ
Taylor Hill is an associate editor at TakePart covering environment and wildlife.

One of the dirtiest energy sources saw production drop to a 30-year low in the United States last year, according to the U.S. Energy Information Administration. The news came as Arch Coal, the nation’s second-largest producer, filed for bankruptcy Monday in an effort to erase $4.5 billion in debt.

The move puts the company, which supplies 13 percent of the country’s coal, in a growing group of bankrupt coal miners facing strict emissions regulations and competition from cheap natural gas and renewable energy sources.

Coal production hit a peak of 1.2 billion short tons in 2008 and has declined to 900 million tons in 2015. Last year’s production was 10 percent lower than production in 2014, according to government data.

Fitch Ratings called Arch Coal’s default one more in a growing list of “serial filings” in 2015 by coal companies including Patriot Coal, Alpha Natural Resources, and Walter Energy.

Since reaching a high point in 2008, coal production in the United States has continued to decline. U.S. coal production in 2015 is expected to be about 900 million short tons (MMst), 10 percent lower than in 2014 and the lowest level since 1986. (Illustration: U.S. Energy Information Administration)

“An oversupply of steam coal, burdensome regulations and competition from low-priced natural gas for electric generation business drove low pricing and the resulting defaults,” the credit ratings agency said in a statement.

RELATED: The Koala in the Coal Mine

President Barack Obama’s Clean Power Plan aims to cut carbon dioxide emissions from power plants 32 percent by 2030. Coal-fired power plants spew more carbon emissions than any other source and are responsible for producing about 39 percent of the country’s electricity.

The Clean Power Plan does not identify specific emissions cuts, and it doesn’t take effect until 2022, but the Energy Information Administration projects coal will power only 25 percent of the country’s electric grid by 2030.

Natural gas emits about half as much carbon dioxide as coal, and its declining price—from $4.38 per million British thermal units (MMBtu) in 2014 to $2.61 per MMBtu in 2015—makes it a cost-effective replacement for coal. Analysts also expect a solar and wind power boom over the next five years.

In December, Congress extended for five years tax credits for solar and wind energy that were set to expire at the end of 2016.

“Just from that change in policy, we’re expecting 25 gigawatts of additional solar capacity over the next five years,” said MJ Shiao, GTM Research’s director of solar research. “That’s new capacity that otherwise wouldn’t have been installed on residential and commercial rooftops and at solar farms.”

With the tax breaks locked in, the Solar Energy Industries Association expects solar capacity to quadruple from just over 24 gigawatts to nearly 100 gigawatts by 2020, enough to power 20 million U.S. homes.