World Energy Projection System (WEPS): 

Coal Supply Module

Independent Statistics & Analysis

www.eia.gov

U.S. Department of Energy

Washington, DC 20585

Last Updated 2021
U.S. Energy Information Administration | World Energy Projection System: Coal Supply Module i

This report was prepared by the U.S. Energy Information Administration (EIA), the statistical and 

analytical agency within the U.S. Department of Energy. By law, EIA’s data, analyses, and forecasts are 

independent of approval by any other officer or employee of the United States Government. The views 

in this report therefore should not be construed as representing those of the U.S. Department of Energy 

or other federal agencies.
U.S. Energy Information Administration | World Energy Projection System: Coal Supply Module 1

Contents

Introduction .................................................................................................................................................. 2

Data Sources ................................................................................................................................................. 3

Regional definitions................................................................................................................................. 3

Coal types ................................................................................................................................................ 4

Coal Demand............................................................................................................................................ 4

Heat content............................................................................................................................................ 4

Transportation costs................................................................................................................................ 4

AEO calibration ........................................................................................................................................ 4

Supply............................................................................................................................................................ 4

Logistics......................................................................................................................................................... 5

Objective function ................................................................................................................................... 5

Constraints............................................................................................................................................... 5

Supply-Logistics Iteration.............................................................................................................................. 5

Integration with WEPS .................................................................................................................................. 5

Table of Figures

Figure 1. Modules in the ICMM .................................................................................................................... 2

Table of Tables

Table 1. ICMM Regions and WEPS Regions .................................................................................................. 3

Table 2. Coal types........................................................................................................................................ 4
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Introduction

The WEPS International Coal Market Module (ICMM) projects coal production, imports, exports, and 

prices by region and coal commodity type for the WEPS.

Figure 1. Modules in the ICMM

Source: U.S. Energy Information Administration

1. The data pre-processor submodule reaggregates data from different sources that use different 

regional and coal commodity subdivisions.

2. The coal supply submodule estimates coal supply curves. 

3. The logistics submodule uses the supply curves to project coal prices. 

4. The data post-processor submodule communicates ICMM results to the rest of WEPS.

The coal supply submodule and the logistics submodule have an iterative relationship, where the 

logistics submodule results are compared with the results from the previous iteration of the coal supply 

submodule, which adjusts the coal supply curve parameters accordingly. This iterative process enables 

ICMM to simulate regional production decisions based on the previous year’s data. The iterative process 

stops when the change from the previous iteration is small enough to meet specified convergence 

criteria. 

The logistics submodule is a linear program, where the objective function represents profits from coal

shipments from the supply regions to the demand regions. This submodule projects the price of the 

different coal commodities in the demand regions, the trade quantities of each trade route, and coal

production, based on the supply curve response. Because the objective function represents profits, the 

submodule determines the trade routes with the lowest transportation rates and the supply regions 
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with the lowest supply prices to provide demand with the lowest delivered cost, thereby maximizing

profit. 

The production determined by the logistics submodule is fed back to the coal supply submodule to 

estimate new supply curves for the logistics submodule to use in the next iteration. 

Data Sources

The ICMM uses data from three major sources: EIA’s International Energy Statistics (IES) data, data from 

other WEPS modules, and data specifically input for the ICMM. 

Regional definitions

Because the ICMM regions differ from the WEPS regions, the ICMM uses IES country-level data to 

reaggregate regional data and compute region-level weights for use in further aggregation. The ICMM 

and WEPS regions are listed in Table 1.

Table 1. ICMM Regions and WEPS Regions

Source: U.S. Energy Information Administration

ICMM region WEPS region

Africa—North Africa

Africa—South Africa

Australia and New Zealand Australia and New Zealand

Brazil Brazil

Canada Canada

China China

Other non-OECD Americas Other non-OECD Americas

Eurasia—Asia Non-OECD Europe and Eurasia

Eurasia—Europe Non-OECD Europe and Eurasia

India India

Japan Japan

Middle East Middle East

Mexico and OECD Americas Mexica and other OECD Americas

Non-OECD Asia—land (Mongolia, North Korea) Non-OECD Asia

Non-OECD Asia—ocean Non-OECD Asia

Pakistan Non-OECD Asia

Russia Russia

South Korea South Korea

United States United States

OECD Europe OECD Europe
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Coal types

Coal types differ for the three main data sources. The IES, for example, provides data for anthracite, 

bituminous, sub-bituminous, lignite, and metallurgical coal The WEPS coal types are aggregated into

three categories: generalized coal (which includes both steam coal and metallurgical coal), steam coal, 

and metallurgical coal. The ICMM reaggregates the IES coal data using heat content data into the 

following categories: bituminous, sub-bituminous, lignite, and metallurgical. Table 2 shows the coal 

commodity categories for the three data sources.

Table 2. Coal types

Source: U.S. Energy Information Administration

Coal Demand

The WEPS demand modules project quantities of coal consumed in the demand sectors. The electric 

power and industrial sectors account for most coal consumption. Because the WEPS demand modules 

only project consumption of general coal (i.e., steam coal and metallurgical coal), steam coal, and 

metallurgical coal, the ICMM aggregates the IES data to project quantities of bituminous, 

subbituminous, and lignite coal. 

Heat content

ICMM coal results are presented both in quadrillion British thermal units (Btus) (heat content) and 

metric tons. ICMM uses a specific Btu per metric ton factor for each coal type and supply region.

Transportation costs

The transportation rate is the cost (dollars per ton) of moving coal from the supply region to the 

demand region. Although transportation can include both rail and ocean freight, the transportation rate 

is aggregated into one cost. ICMM projects transportation rates based on fuel cost, distance traveled, 

and loading/unloading costs.

AEO calibration

The ICMM calibrates projected United States coal production to the projections published in our most 

recent Annual Energy Outlook (AEO), with an allowed deviation of 15% for steam coal and 5% for 

metallurgical coal. The allowed deviations are different because U.S. steam coal production is more 

sensitive to world coal price changes than U.S. metallurgical coal production.

Supply

The supply submodule calculates regional supply curves that represent the relationships between each 

region’s coal production and coal prices. The supply curves rely on regional data and assumed 

IES coal type ICMM coal type WEPS coal type

Metallurgical Metallurgical Metallurgical

Anthracite Bituminous Steam

Bituminous Bituminous Steam

Sub-bituminous Sub-bituminous Steam

Lignite Lignite Steam
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elasticities. The submodule shifts the curves based on assumed production growth rates and results 

from the logistics submodule. The supply and logistics submodules iterate, constantly adjusting the 

production for all years for the regions when production exceeds or falls short of demand. 

Logistics

The logistic submodule is a linear program (LP) which seeks to maximize projected profits (revenues 

minus costs) subject to network balance constraints.

Objective function

The LP objective function represents sums of revenues obtained from selling coal at the destinations 

minus all associated production costs and transportation costs.

Constraints

The LP constraints are typical network balance constraints:

• Demand must be saitisfied for each demand region

• Production at a region cannot exceed the region’s maximum production capacity

• Flows along a transportation route cannot exceed the route’s capacity

Supply-Logistics Iteration

The supply and logistics compents of ICMM iterate via ICMM’s growth expansion algorithm. The growth 

expansion component of the supply submodule projects the supply curve over the projection period. 

The goal is to shift the supply curves over time based on coal production and trade flows determined by 

the logistics submodule. The submodule shifts each region’s production through a feedback loop that 

compares the logistics submodule’s coal production to the previously projected production and adjusts

the production if it’s too high or low, according to the following definitions:

• A region’s production is too high if production costs are higher than the selling price. In this 

case, the region’s producers must close down expensive mines and reduce their production.

• A region’s production is too low if it is not producing enough coal to meet the demand. In this 

case, the regions’ producers must increase their output by increasing mining efficiency or 

opening more mines.

Each time the supply submodule adjusts a region’s projected production in the iterative loop, it also 

adjusts the projected commodity prices (either up or down) by a percentage of the change in 

production. The iterative loop continues to adjust projected production and prices until no futher

adjustments are needed or until a maximum number of iterations have been performed..

Integration with WEPS

The ICMM is integrated with the WEPS database, through which it communicates with other WEPS 

modules by retrieving and providing data. The ICMM interacts mainly with the International Energy 

Market Module (IEMM) and the Industrial Module. It provides coal prices to these modules and receives 
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coal quantities demanded. The Industrial module is the only WEPS module that needs a metallurgical 

coal price. The other modules receive prices for steam coal.