US thermal coal consumption could dip 20% by 2025: Moody's
Washington (Platts)--3Jun2014/405 pm EDT/2005 GMT
The US Environmental Protection Agency's proposed carbon emissions
guidelines issued Monday would have the biggest impact on Appalachian
and Powder River Basin thermal coal producers, though the latter may be
able to soften the impact if port capacity becomes available on the US
West Coast, Moody's Investors Service said.
In a research note issued Tuesday, the ratings firm said Illinois Basin
producers will likely fare better, given that they tend to serve larger
baseload plants less affected by emissions regulations and which are
more likely to invest in emissions-control technology.
US power plants have cut carbon emissions by 15% since 2005, the base
year the EPA uses to target a 30% reduction in carbon emissions by 2030.
That leaves the US power sector halfway toward the goal, but the decline
is partly due to the drop in coal's share of US electricity generation.
That share could fall further as the number of coal-fired plant
retirements picks up in the next few years due to the mercury emissions
rules, a total that could be as much as 75 GW, Moody's said.
The EPA's new guidelines are aggressive, the report said, "but the
proposed implementation time frame leaves its impact on US coal
producers years away."
Based on Moody's initial analysis of the guidelines, the impact suggests
a 20% reduction in coal consumption from 2013 levels by 2025, and an
additional 50 GW of coal-fired plant retirements.
The US power industry consumed 856 million st of coal in 2013, according
to the US Energy Information Administration. A 20% reduction by 2025
would result in annual coal consumption of roughly 685 million st.
The Moody's report suggests developments in carbon capture and storage
technology could lessen the impact, though it notes that existing CCS
technology remains "economically unfeasible on a large commercial
scale."
--Andrew Moore,
andrew.moore@platts.com
--Edited by Jason Lindquist,
jason.lindquist@platts.com
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