US coal consumption in 2018 will be the lowest in 39 years

The EIA expects total U.S. coal consumption in 2018 to fall to 691 million tonnes (MMst), down 4% from 2017 and the lowest level since 1979. US coal consumption has been declining since its peak in 2007, and the EIA predicts that coal consumption in 2018 will be 44% lower than in 2007, mainly driven by a decline in coal use in the electricity sector.

The electricity sector is the largest consumer of coal in the country, accounting for 93% of total US coal consumption between 2007 and 2018. The decline in coal consumption since 2007 is a result of both the retirement of coal-fired power plants and reduced capacity factors or the use of coal-fired power plants, as increased competition from natural gas and renewables has resulted in a decline in the coal market share.

In 2007, coal capacity in the United States was 313 gigawatts (GW). So far in 2018, 11 GW of coal-fired generating capacity resigned in September, and another 3 GW is expected to retire in the last three months of the year, based on data reported by the EIA by the owners and operators of the plant. If these plants go on as planned, 2018 will be the second largest year for coal retirement. Another 4 GW of capacity is scheduled to retire by the end of 2019.

The decline in coal-fired capacity is expected to further reduce coal consumption: the latest short-term energy forecast expects coal consumption in the energy sector to fall 4% in 2018 and 8% in 2019.

One of the main factors behind coal retirement is the price of coal relative to natural gas. Natural gas prices remained relatively low as the country's natural gas production increased in 2007. This period of persistently low natural gas prices has kept the cost of generating electricity from natural gas competing with coal mining. Other factors such as the age of generators, changes in regional electricity demand and increased competition with renewable energy sources have led to a decline in coal capacity.