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The Death Spiral of Coal in the USA: Will New U.S.
Energy Policy Change the Tide?
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||Mendelevitch, Roman and Hauenstein, Christian and Holz,
Berlin Discussion Paper
administration has promised to stop the spiraling down of the U.S.
coal industry that has been going on for several years. We discuss the
origins of the decline of the U.S. coal industry and new policy
interventions by the Trump administration. We find that a further
decrease of coal consumption in the U.S. electricity sector must be
expected because of the old and inefficient U.S. coal-fired generation
fleet. By contrast, we adapt the EIA’s overly optimistic view and
analyze three potential support schemes to assess whether under such
assumptions they can turn the tide for the U.S. coal industry: i)
revoking the Clean Power Plan (CPP); ii) facilitating access to the
booming Asian market by developing West Coast coal export terminals;
and iii) enhanced support for the Carbon Capture, Transport and
Storage (CCTS) technology to provide a long-term perspective for
domestic coal use while mitigating climate change. We investigate the
short-term and long-term effects for U.S. coal production using a
comprehensive partial equilibrium model of the world steam coal
market, COALMOD-World (Holz et al. 2016). Revoking the CPP will stop
the downward trend of steam coal consumption in the U.S., but will not
lead to a return of U.S. coal production to the levels of the 2000s
with more than 900 Mtpa. Even when assuming a continuously strong
global coal demand and expanding U.S. coal export capacities, U.S.
coal production will not return to its previous production highs. When
global steam coal use, including U.S. consumption, is aligned with the
2°C climate target, U.S. steam coal production drops to around 100
Mtpa by 2030 and below 50 Mtpa by 2050, respectively, even if CCTS is
available and exports via the U.S. West Coast are possible.