Coal production and generation are expected to drop again in 2020 before stabilizing for the near-term, the U.S. Energy Information Administration (EIA) projected in its latest monthly energy forecast.
The EIA expects coal’s share of electricity generation will fall from 24% in 2019 to 21% in 2020 and 2021. Meanwhile, the agency expects U.S. production of coal to stabilize in 2021 as export demand rises and U.S. power sector consumption of coal increases slightly due to a projected rise in natural gas.
The EIA forecasts Henry Hub natural gas spot prices will average $2.11/MMBtu in 2020 before increasing in 2021, to reach an annual average of $2.51/MMBtu.
The drop in coal generation is occurring as natural gas consumption is expected to remain relatively steady. However, electricity generation from renewable energy sources in the U.S. is expected to rise from a 17% share last year to 19% in 2020 and 21% in 2021.
Coal production in 2020 is expected to total 573 million tons in 2020, down 17% from 2019 coal production volumes. The EIA said the decline in production volume is a function of falling utility demand for coal. Electric sector demand for coal in the U.S. is expected to fall by 16%, or 86 million tons, in 2020.
Coal exports from the U.S. are expected to average about 78 million tons this year, about 9% lower than what the EIA forecast in its February short-term energy outlook. The revision is due to lower expected demand as global markets for coal have weakened. EIA expects metallurgical coal exports to fall from 55.1 million tons in 2019 to 47.2 million tons in 2020 before rebounding slightly to 49.5 million tons in 2021.