King Coal is Dethroned in the US – and That’s Good News for the Environment

This is the worst year in decades for U.S. coal. During the first six months of 2016, U.S. coal production was down a staggering 28 percent compared to 2015, and down 33 percent compared to 2014. For the first time ever, natural gas overtook coal as the top source of U.S. electricity generation last year and remains that way. Over the past five years, Appalachian coal production has been cut in half and many coal-burning power plants have been retired.

This is a remarkable decline. From its peak in 2008, U.S. coal production has declined by 500 million tons per year – that’s 3,000 fewer pounds of coal per year for each man, woman and child in the United States. A typical 60-foot train car holds 100 tons of coal, so the decline is the equivalent of five million fewer train cars each year, enough to go twice around the earth.

This dramatic change has meant tens of thousands of lost coal jobs, raising many difficult social and policy questions for coal communities. But it’s an unequivocal benefit for the local and global environment. The question now is whether the trend will continue in the U.S. and, more importantly, in fast-growing economies around the world.

Health benefits from coal’s decline

Coal is 50 percent carbon, so burning less coal means lower carbon dioxide emissions. More than 90 percent of U.S. coal is used in electricity generation, so as cheap natural gas and environmental regulations have pushed out coal, this has decreased the carbon intensity of U.S. electricity generation and is the main reason why U.S. carbon dioxide emissions are down 12 percent compared to 2005.

Perhaps even more important, burning less coal means less air pollution. Since 2010, U.S. sulfur dioxide emissions have decreased 57 percent, and nitrogen oxide emissions have decreased 19 percent. These steep declines reflect less coal being burned, as well as upgraded pollution control equipment at about one-quarter of existing coal plants in response to new rules from the U.S. Environmental Protection Agency.


Coal waits to be added to a train at the Hobet mine in Boone County, West Virginia. Jonathan Ernst/Reuters

These reductions are important because air pollution is a major health risk. Stroke, heart disease, lung cancer, respiratory disease and asthma are all associated with air pollution. Burning coal is about 18 times worse than burning natural gas in terms of local air pollution so substituting natural gas for coal lowers health risks substantially.

Economists have calculated that the environmental damages from coal are US$28 per megawatt-hour for air pollution and $36 per megawatt-hour for carbon dioxide. U.S. coal generation is down from its peak by at least 700 million megawatt-hours annually, so this is $45 billion annually in environmental benefits. The decline of coal is good for human health and good for the environment.

India and China

The global outlook for coal is more mixed. India, for example, has doubled coal consumption since 2005 and now exceeds U.S. consumption. Energy consumption in India and other developing countries has consistently exceeded forecasts, so don’t be surprised if coal consumption continues to surge upward in low-income countries.

In middle-income countries, however, there are signs that coal consumption may be slowing down. Low natural gas prices and environmental concerns are challenging coal not only in the U.S. but around the world, and forecasts from EIA and BP have global coal consumption slowing considerably over the next several years.

Particularly important is China, where coal consumption almost tripled between 2000 and 2012, but more recently has slowed considerably. Some are arguing that China’s coal consumption may have already peaked, as the Chinese economy shifts away from heavy industry and toward cleaner energy sources. If correct, this is an astonishing development, as China represents 50 percent of global coal consumption and because previous projections had put China’s peak at 2030 or beyond.


A smoggy morning in Delhi, India. Anindito Mukherjee/Reuters

The recent experience in India and China point to what environmental economists call the “Environmental Kuznet’s Curve.” This is the idea that as a country grows richer, pollution follows an inverse “U” pattern, first increasing at low-income levels, then eventually decreasing as a country grows richer. India is on the steep upward part of the curve, while China is, perhaps, reaching the peak.

Global health benefits of cutting coal

A global decrease in coal consumption would have enormous environmental benefits. Whereas most U.S. coal plants are equipped with scrubbers and other pollution control equipment, this is not the case in many other parts of the world. Thus, moving off coal could yield much larger reductions in sulfur dioxide, nitrogen oxides, and other pollutants than even the sizeable recent U.S. declines.

Of course, countries like China could also install scrubbers and keep using coal, thereby addressing local air pollution without lowering carbon dioxide emissions. But at some level of relative costs, it becomes cheaper to simply start with a cleaner generation source. Scrubbers and other pollution control equipment are expensive to install and expensive to run, which hurts the economics of coal-fired power plants relative to natural gas and renewables.

Broader declines in coal consumption would go a long way toward meeting the world’s climate goals. We still use globally more than 1.2 tons of coal annually per person. More than 40 percent of total global carbon dioxide emissions come from coal, so global climate change policy has correctly focused squarely on reducing coal consumption.

If the recent U.S. declines are indicative of what is to be expected elsewhere in the world, then this goal appears to be becoming more attainable, which is very good news for the global environment.
The Conversation
This blog post is available on The Conversation.

About Lucas Davis

Lucas Davis is an Associate Professor of Economic Analysis and Policy at the Haas School of Business at the University of California, Berkeley. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.
This entry was posted in Uncategorized and tagged , . Bookmark the permalink.

24 Responses to King Coal is Dethroned in the US – and That’s Good News for the Environment

  1. Pingback: King Coal is Dethroned in the US – and That’s Good News for the Environment - Berkeley-Haas Insights

  2. sidabma says:

    There are a number of methods where coal can be combusted with less CO2 emissions than natural gas, and technologies to really have Clean Coal. The problem is the Administration has devoted itself to killing the coal industry here in America. They give the coal utilities the option of Carbon Capture Sequestration or shut it down. We see at Kemper County how economical that method is. The produced electricity becomes so expensive, it’s not saleable.
    Carbon Capture Utilization transforms the CO2 into useable – saleable products. Jobs are created in a number of supporting industries. This technology has an ROI.

    • mcubedecon says:

      If there are cleaner coal-burning technologies, why haven’t the coal companies invested in those technologies to protect their market share? It looks to me like those technologies simply aren’t cost effective.

      • sidabma says:

        I believe these utilities used their lobbyists to fight the EPA’s CPP ruling, and are waiting to see the outcome. A lot of the coal power plants that have been or are being shut down are 45 years old plus, and maybe instead of fighting – the change over to natural gas could cost the same, without any EPA hassle.
        The CCS technology as we read costs Billions while CCU Systems cost millions, and as I stated these technologies transform the CO2 into saleable products. Nothing comes for free, but these technologies will create many jobs, remove 95% of the CO2, and turn that CO2 into money.
        The IEA rust produced a report that states that if 20% of the water in the combusted exhaust is recovered, the power plant would be self sustaining. If more than that is recovered the utility could become a water supplier to the community.
        There are other products in combusted coal exhaust that can also be recovered and turned into products – profit streams.

  3. JoeJoe says:

    This is gonna sound weird but I’ve been following coal’s tumble with a bowl of popcorn. Why is this happening? Robert Murray confliptuously blames all of coals’ problems on Obama’s War on Coal. More balanced reporting points out that regulations play a role but it’s cheap gas that’s driving the bulk of the cutbacks.

    These explanations don’t go far enough. You have to ask why… Why is gas cheap? It’s not a mystery. Gas is cheap because hydraulic fracturing has dramatically improved the gas extraction process.

    So I’m wondering… Why aren’t we celebrating fracking? Why is the EPA getting 150 pages of flack for their fracking report? Why did Clinton soften her support for fracking? Why does the Sierra Club have a Beyond Gas campaign?

    You point out that all the lost coal jobs present “many difficult social and policy questions for coal communities.” I constantly see West Virginia brought up as the poster child for this funky condition. But wait a second… Almost all of West Virginia sits on top of the Marcellus Shale. Why not move the miners out of the mines and over to gas/oil rigs? I mean…. It’s not snap-o-the-fingers easy but there are a ton of jobs to be had. Another option is for miners to finish off their careers doing remediation work.

    When Clinton was challenged by Sanders for her position on fracking she should have quoted Daniel Yergin:

    “I’m convinced–were it not for what’s happened these last few years– we’d be looking at an oil crisis,” he said. “We’d have panic in the public. We’d have angry motorists. We’d have inflamed congressional hearings and we’d have the U.S. economy falling back into a recession.”

    Would you like to do some math on how many billions fracking is saving consumers at the pump?

    She could have paraphrased Lucas Davis:

    “If not for fracking we’d be spending 45 billion more a year on healthcare thanks to the extra 500 million tons of coal we’d be burning. That’s enough train cars of coal to wrap around the planet…. twice.”

    It’s great that we reduced the use of coal by 2 loops but we’re still burning 4 loops. If we want to eliminate the remaining 1000+ TWh of coal we need to recognize what got us here – fracking, pollution regulations, renewables. If we don’t care about how quickly the transition happens we can use new renewables to displace the remaining coal over 10 to 20 years. I’m not a fan of this idea… I’d rather see us use renewables AND fracked gas to displace the remaining coal over a span of 8 years.

    I don’t think it’s wishful thinking. We have an opportunity before us to rebalance our power system and form a more perfect union and a more breathable atmosphere. It’s not about robbing from the coal states and handing the fracking states a blank check… Think grand compromise. What could you give to the Wind/Solar crew that would help them? Hmmm… A federally funded transmission overhaul that integrates the country better would be nice. Imagine the coasts having access to all that wind in the middle of the US. Just an idea.

  4. markeminer says:

    While official statistics show GHG’s down 12% since 2005 due to the transition from coal to natural gas, fugitive methane emissions from natural gas may likely be under counted. In the short run, CH4 is a much more potent GHG than CO2.

    Still, 3,000 fewer pounds of coal per year for each man, woman and child in the United States is impressive.

  5. Pingback: Revue des blogs : 1er au 23 août 2016 – Veille énergie climat

  6. There is no question the decline of coal use is good for human health and good for the environment. I do, however, believe that care should be taken in interpreting reduction in coal consumption in the US and in expecting a duplication in the reduction of coal consumption of the US experience to the rest of the world.

    Reduction in coal consumption in the US is a function of significant changes over the past thirty years involving its economy, power technologies progress, and changes in the electricity markets. The reduction in coal consumption is only in part the result of climate action. The drop in coal consumption is symptomatic of what baseload generation in the US in general is going through including but to a much lesser extent, baseload gas fired generation. The capacity factor of baseload generation in general has dropped significantly over the past several years in the US and the signs are for further difficulty in baseload generation meeting revenue requirements. The evolving key policy question(s) is as to whether baseload generation stranded assets are the result of lower plant utilization, and if so whether market failure is the reason, and then as to who is to be held responsible for the cost: the consumer, project owner, or the parties responsible for change in the load profile of baseload generation facilities. These questions are facing baseload generation in both the regulated as well as organized markets. I would refer the reader to a forthcoming September 2016 USAEE Dialogue article I wrote with a colleague that addresses the current dilemma of the US nuclear power industry and by extension that of baseload generation.

    http://dialogue.usaee.org/index.php/volume-24-number-3-2016/378-azzouni

    Not to be ignored is the stage of economic development a country is at. The US is an economically advanced country with established market, policy, and institutional frameworks. The US currently and for the foreseeable future will continue to experience low if not negative electricity demand growth. The situation of the developing world is completely different.

    High growth developing countries particularly China, Brazil, and India are registering high electricity demand growth significantly in excess of GDP growth. These are countries in the early stages of economic development. Almost every one of these countries lacks the required market, policy, and institutional frameworks. The major struggle for these countries is in the quick expansion of the power sector infrastructure. The system dynamics driving the power demand-capacity-price feedback mechanism is totally different from that driving power demand in the US. In the developing countries the push is for increased baseload generation and a higher capacity factor but with the challenge to build power plants faster with the best attainable conversion efficiencies available and the lowest cost. This and for the next 20 – 30 years is likely to mean further reliance on coal fired plants simple cycle plants. This is the basis for continued fore acts for significantly increased coal use in the developing world and the focus of industrial giants such as GE in improving coal plants conversion efficiencies and emission controls.

  7. Great post, Lucas! We just wrote a paper on the causal effect of fracking on air quality and we roughly confirm your estimated health benefits due to displaced coal.

    http://hendrikwolff.com/web/Fracking.pdf

    DETAIL: We find $17 billion/annually over the period 2007-2012. While your estimate is larger ($45 billion/year), this is likely because we excluded the years from 2013-2016 from our analysis, when coal declined even more dramatically.

    Wonna point out, however, that this $17 billion USD is not the overall benefit of fracking — For a full Cost/Benefit Analysis, we need to add/deduct other market costs/benefits (see Hausman/Kellogg, 2015) as well as other non-market effects such as increased earthquake risks, water pollution from fracking etc. which recently several great papers have been estimating (Muhlenbachs et al, Graham et al. Koster, Allcott/Keniston etc).

    Still, I agree with many here on the discussion board, that previous policy debates on banning fracking (i.e. NY bans fracking (http://www.syracuse.com/news/index.ssf/2015/06/new_york_officially_bans_hydrofracking.html) many European countries ban fracking etc.) may have overlooked the enormous air quality improvements, that could – or could not – outweigh the costs of fracking. More research to be done here.

  8. Pingback: Not Doomed Yet: Two New Worlds – Enjeux énergies et environnement

  9. pbradyus says:

    Lucas: very nice review – thank you!
    I have seen large uncertainties in carbon prices – even going to negative values from peer-reviewed work. For example, Canadian prairies and northern territories, and much of Russia have reached, or come close to, the IPCC climate-crisis temperatures of 2.0 C above preindustrial values. My relatives in Canada tell me the milder winters are much appreciated: billions saved in energy costs, and also the benefits of increased crop yields and arable land. [As we know, in general, CO2 makes cold dry places warmer, but not so much where there is more water vapor.] Of course, Canada is rich in hydro-power, as well as oil and gas [NG].
    Does the carbon price build-in a projected date or probability of a climate crisis? I ask because the recent global temperature measurements from [three independent] satellite analyses, balloon data and that from ocean buoys indicates that, at the present rate of increase of carbon emissions, a global temperature increase of 2.0 C is about a century away, and unlikely to be reached. The analyses show the atmosphere temperature is increasing about 0.09 C per decade, while the surface value at about 0.11 C per decade – thus the 100 years to reach 2.0 C. Please see Testimony cited: https://science.house.gov/sites/republicans.science.house.gov/files/documents/HHRG-114-SY-WState-JChristy-20160202.pdf The failure of model predictions is a clear indication of the increased effort needed to understand human-produced and natural climate change.
    The present rate-increase of 2.2%/yr of CO2 emissions requires oil and NG reserves more about 300 times present values in a century, which is very unlikely experts estimate. [Coal use is expected to decline.] In any case oil and NG will not be competitive with renewable energy sources in a few decades, and its use may possibly be limited to backup. So the temperature rise due to carbon emissions , will be moderated and eventually decline. The IPCC [Climate Change 2014] estimates about 60% of CO2 emissions are absorbed each year by the increasing greenery, forestation over deforestation and by the oceans.
    Regarding coal, the costs on the other side have also been huge: tens of thousands of jobs lost so rapidly, many in regions where coal production was dominant. The investment losses have also been large and steep with at least seven bankruptcies! I looked at Peabody which declared bankruptcy this year in April. Investment losses are estimated at close to $22 Billion in just a few years! One has to wonder if a program for a more gradual destruction, a phasing out, could not have been worked out. We have the time, but politics always wins over science!
    BTW: You are correct re China. It is indeed going to reduce coal-burning. Massive solar arrays, nuclear plants, LNG terminals and pipelines to bring in NG are being constructed to reduce the pollution which has Asians complaining in Singapore and beyond!

    • markeminer says:

      Hi pbradyus,

      I agree not every impact of climate change will be bad, but I don’t think we will have to wait 100 years to reach a crisis. In June, the U.S. Forest Service announced that it has identified an additional 26 million trees dead in California since October 2015, making 66 million dead trees so far. http://www.fs.fed.us/news/releases/forest-service-survey-finds-record-66-million-dead-trees-southern-sierra-nevada

      It doesn’t look like climate change is going to be good for California.

      Kind Regards,

      Mark

      • pbradyus says:

        Hi Mark,
        No, that is terrible!
        Thank you the interesting reference. What a shame to lose all those CO2 sinks and then have burning and decay produce more CO2. I did read an article – could it have been Nature Climate, or similar name [?] – where the authors asserted that for the last 13.5 years forestation has exceeded deforestation. This may have been associated with the recent tree-count: about 3 trillion vs the 400 billion expected.
        When one of my physics colleagues grumbles that GW [and climate change] are mostly natural I point them north. In my native Canada temperatures on the whole have risen twice as fast as global increases, and average precipitation has increased about 14% in the last ~50 years. And the Canadian NW territories – Yukon, etc, – have seen winter and spring temperature rises 4-5 times global averages! The cold, dry north, when there is little water vapor, is very susceptible to CO2 warming, and there seems to be no other explanation!

        Best wishes,

        Paul [Physics, UCD – retired]

    • mcubedecon says:

      You may be correct about your assessment, but then again you may be wrong. Whether or not you believe that climate change consequences are LIKELY to be beneficial or detrimental, the fact is that there is no way for you or anyone else to be CERTAIN. That means that we must consider the potential consequences of either outcome and assess which we need to address more vigorously. Just as we buy household insurance for the chance our home might burn down, we also need to buy climate change insurance. Only fools would believe otherwise. And aggressively phasing out coal is one of those insurance policies.

  10. John Proctor says:

    It seems narrow to me that the discussion is between fracking and coal. To really reduce our effect on global warming we need to leave both in the ground.

    • pbradyus says:

      Why not let the economics decide? We have many decades before GW approaches values that are of concern. Please look at the data: https://science.house.gov/sites/republicans.science.house.gov/files/documents/HHRG-114-SY-WState-JChristy-20160202.pdf
      Recent global temperature measurements from [three independent] satellite analyses, balloon data and that from ocean buoys indicate that, at the present rate of increase of carbon emissions, a global temperature increase of 2.0 C is about a century away, and unlikely to be reached. The analyses show the atmosphere temperature is increasing about 0.09 C per decade, while the surface value at about 0.11 C per decade – thus the 100 years to reach 2.0 C. Please see Testimony cited: https://science.house.gov/sites/republicans.science.house.gov/files/documents/HHRG-114-SY-WState-JChristy-20160202.pdf The failure of model predictions is a clear indication of the increased effort needed to understand human-produced and natural climate change.
      The present rate-increase of 2.2%/yr of CO2 emissions requires oil and NG reserves more than 300 times present values in a century, which is very unlikely experts estimate. [Coal use is expected to decline.] In any case oil and NG will not be competitive with renewable energy sources in a few decades, and its use may possibly be limited to backup. So the temperature rise due to carbon emissions , will be moderated and eventually decline. The IPCC [Climate Change 2014] estimates about 60% of CO2 emissions are absorbed each year by the increasing greenery, forestation over deforestation and by the oceans.
      Regarding coal the costs on the other side have been huge: tens of thousands of jobs lost so rapidly, many in regions where coal production was dominant. The investment losses have also been large and steep with at least seven bankruptcies! I looked at Peabody which declared bankruptcy this year in April. Investment losses are estimated at close to $22 Billion in just a few years! One has to wonder if a program for a more gradual destruction, a phasing out, could not have been worked out. We have the time, but politics always wins over science!

  11. Jim Roumasset says:

    Please see Gayer-Viscusi (June 2016 REEP) on how the Interagency Working Group’s SCC estimate was an exercise in executive overreach by ignoring long-standing OMB principles of benefit-cost analysis.

  12. Pingback: Proposals to Eliminate Natural Gas from the Fuel Mix Are Premature |

  13. Pingback: Proposals to Eliminate Natural Gas from the Fuel Mix Are Premature | Energy News Corporation

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s