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An alternative future for US coal?

The Coaltrans Conference Miami 22-24 January

Coaltrans conferences are held at several venues during the year in the USA and Asia to bring those involved in the industry together. I was fortunate to be invited to Miami to take part in a Panel on new carbon products during what is the UK winter season.

It is well known that it has been an arduous decade for those involved in the US coal industry. A period of M&A in the early years was followed by a firesale as coal prices collapsed with the closure of many USA power plants, mostly attributed to lack of compliance with MATS regulations. More recently the coal industry has stabilised although there are now fewer companies involved. The low value placed on coal assets by investors means that it is now more difficult to finance projects. However, the industry outlook is currently somewhat better and the export market for coal is likely to improve due to the revised trade agreement with China, the largest importer.

The coal power plant reduction programme in the USA is set to continue but at a slower rate with 25GW set to close in the next years. However, it is becoming clearer that simply replacing coal by gas is not necessarily the most economic or environmentally beneficial option. There are incentives for utilities to close coal plants but when these are replaced by gas plants the on-going closure payments raise electricity costs. The gas plants are set for a 35 year life which may delay the introduction of renewables compared to 10 year coal plants. There are ways identified to improve the efficiency of coal facilities which have been hampered by overnight wind farm operation that is really intended to conform with subsidy requirements. The DOE is now funding several FEED studies on CCS retrofits to avoid CO2 emission, as a viable option to switching to gas power which although enjoying cheap feedstock now, may pose a risk of rising costs if prices eventually become linked to new lng facilities.

Overall, the traditional outlets for coal are declining in the USA and that is where carbon products may offer new markets for coal. It takes time to develop new products and processes and the industry is anxious to maintain production of coal as many communities are dependent on the industry. Some new materials are very high value such as graphene but need low amounts of coal feedstock. However, there are potentially high volume products which are aimed at providing enhanced properties but are more sustainable than current materials and due to low coal value, can compete on price too. Early carbon products for the construction industry show promise and could be in the million tonne range; these include carbon structural and insulation products that have high combustion resistance compared to conventional materials. The discovery programme is producing carbon products and the next stage is to bring these to market and use coal to improve industry sustainability.

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