	The U.S. Coal Industry

		Introduction

The Trump Administration has taken several actions intended to help revive the U.S. coal industry. Within its first two months, the Administration rolled back or began reversing several coal-related regulations finalized under the Obama Administration. This effort was undertaken as three of the largest coal producers continued recovery from Chapter 11 bankruptcy, and occurred in the context of higher coal prices (making coal production possibly more profitable), lower inventories, and higher natural gas prices—factors that could lead to coal being more competitive as a fuel source for electricity generation. Coal will likely remain an essential component of the U.S. energy supply, but how big of a role will it play? Trends and Recent Developments in the U.S. Coal Industry

		Coal Production

U.S. coal production had been strong since the 1990s (above or near 1 Bst per year until 2014), and reached its highest level of production in 2008 (1.17 Bst) before it declined precipitously in 2015 (see Table 1 and Figure 2 ) and 2016. EIA current data and short-term projections show coal production remaining under 800 million tons in 2017 and 2018 (see Table A-1 ). Long-term EIA projections show that coal production would fall below 600 million short tons (mst) per year under the reference case that includes the implementation of the Obama Administration's Clean Power Plan (CPP). Without CPP, coal production would remain relatively flat, at between 800 million and 900 million short tons per year through 2050. Coal Mining Employment and the Number of Mines

The trend in coal mining has been to improve labor productivity, or to make production more efficient, with the use of technology. There were sharp increases in labor productivity (more coal per man-hour) in the 1980s and 1990s, as labor productivity more than doubled from 2.74 average production per employee hour in 1985 to 7.02 in 2000, particularly at coal mines in the West (see Table 2 ). There is no indication that the coal industry will see a reversal of these production trends, even if there are some short-term gains in employment. In either case (declining or flat demand), coal consumption would continue to be a smaller share of the total U.S. energy pie. Electric power generation is the primary market for coal, accounting for about 93% of total consumption. With the retirement of many coal-fired power plants and the building of new gas-fired plants, accompanied by relatively flat electricity demand, there has been a structural shift in demand for U.S. coal—one that will likely result in reduced capacity for coal-fired electricity generation over the long run. In 2016, natural gas overtook coal as the primary fuel for power generation. In short, coal would likely account for a smaller portion of total U.S. energy consumption for years to come, replaced by natural gas and renewable energy, particularly for power generation. Structure of the U.S. Coal Industry

			Background on the Industry

The coal industry is highly concentrated in the United States, with just a handful of major producers, operating primarily in four states (Wyoming, West Virginia, Kentucky, and Illinois). In 2015, the top five coal mining companies were responsible for about 57% of U.S. coal production, led by Peabody Energy Corp. with 19.6% and Arch Coal Inc. with 14.6% (see Table 5 and Figure 7 ). The major coal producers made numerous acquisitions in 2011 in anticipation of stronger global demand, although it was during a period of slowing domestic coal demand, weak coal prices, and more competitive natural gas supplies. The huge debt load and coal overproduction during this period was not sustainable and led to the bankruptcy of many coal firms. Three of the top five coal producers have filed for Chapter 11 bankruptcy protection (see Table 5 ) since August 2015 (ANR in August 2015, Arch Coal in February 2016, and Peabody Energy in April 2016). Other major producers such as Patriot Coal, Walter Energy, and James River Coal have filed as well. All told, over 50 coal producers have filed for bankruptcy in the past two years, with a total of $19.3 billion in debt being reorganized.
The Trump Administration has taken several actions intended to help revive the U.S. coal industry. Within its first two months, the Administration rolled back or began reversing several coal-related regulations finalized under the Obama Administration. This effort was undertaken as three of the largest coal producers continued recovery from Chapter 11 bankruptcy, and occurred in the context of higher coal prices (making coal production possibly more profitable), lower inventories, and higher natural gas prices—factors that could lead to coal being more competitive as a fuel source for electricity generation. Coal will likely remain an essential component of the U.S. energy supply, but how big will its footprint be?
U.S. coal production had been strong since the 1990s (above or near 1 billion short tons per year until 2014), and reached its highest level of production in 2008 (1.17 billion short tons). But it declined precipitously in 2015 and 2016. The Energy Information Administration's (EIA's) current data and short-term projections show coal production remaining under 800 million short tons in 2017 and 2018. Long-term EIA projections show that coal production is likely to fall below 600 million short tons per year, assuming implementation of the Obama Administration's Clean Power Plan (CPP). Without CPP, coal production is expected to remain relatively flat, at around 800-900 million short tons per year through 2050.
As a result of societal concerns, among them the desire for cleaner air, coal consumption may have peaked. But in either case (declining or flat demand), coal is a smaller share of the total U.S. energy pie. Power generation is the primary market for coal, accounting for about 93% of total consumption. With the retirement of many coal-fired power plants and the building of new gas-fired plants, accompanied by lower electricity demand, there has been a structural shift in demand for U.S. coal—one that may lead to reduced capacity over the long term for coal-fired electricity generation. In 2016, natural gas overtook coal as the top energy source for power generation. Also, the strength of renewables for electricity generation should not be discounted, as EIA projects annual growth at a rate of 2.6% through 2050. Thus, coal would very likely remain a smaller portion of total U.S. energy consumption for years to come, particularly as energy used for power generation.
The trend in coal mining has been to improve labor productivity, or to make production more efficient, with the use of technology. There were sharp increases in labor productivity (more coal per man-hour) in the 1980s and 1990s, as labor productivity more than doubled from 1985 to 2000, particularly at coal mines in the West. There is no indication that the coal industry will see a reversal of these production trends, even if there are some short-term gains in employment.
The coal industry is highly concentrated in the United States, with just a handful of major producers, operating primarily in four states (Wyoming, West Virginia, Kentucky, and Illinois). In 2015, the top five coal mining companies were responsible for about 57% of U.S. coal production, led by Peabody Energy Corp. with 19.6% and Arch Coal Inc. with 14.6%. The coal majors made numerous acquisitions in 2011 during a period of increasing global demand but of slowing domestic demand, weak coal prices, and more competitive natural gas supplies. The debt load and coal overproduction during this period was not sustainable and led to the bankruptcy of many coal firms.
Three of the top five coal producers filed for Chapter 11 bankruptcy protection beginning in August 2015 (Alpha in August 2015, Arch Coal in February 2016, and Peabody in April 2016). Other major producers such as Patriot Coal, Walter Energy, and James River Coal have filed for bankruptcy as well. All told, over 50 coal producers have filed for bankruptcy in the past two years, with a total of $19.3 billion in debt being reorganized.