WORKING GROUP MINUTES FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE.

September 14, 2017

MEMORANDUM FOR: Ian Mead

Assistant Administrator for Energy Analysis

FROM: Jim Diefenderfer

Director, Office of Electricity, Coal, Nuclear, and Renewables Analysis

SUBJECT: Summary of AEO2018 1st Coal Working Group held on August 10, 2017

The working group presentation provided a discussion of the data and modeling updates expected for 

the AEO2018 Reference case, along with potential side case scenarios. These updates are included in the 

presentation materials provided as a separate document. Participants were also encouraged to contact 

Greg Adams (Greg.Adams@eia.gov) if they had any follow up questions or comments.

Model Updates

The meeting was kicked off by mentioning staffing updates. This was followed by a discussion of what 

to look for in the AEO2018, which will be the first to highlight the extension of the projections to 2050. 

An explanation of how EPA and state-level policies affecting coal consumption for electricity generation 

are handled in the model was also provided, followed by a discussion of the regulatory uncertainty 

associated with future polices where EIA has traditionally assumed 3% additional cost of capital required 

for any investments at new or existing coal facilities not achieving 90% carbon capture and 

sequestration (CCS).

The second portion of the presentation focused on a review of the AEO2017 projections, emphasizing 

the results for national and regional coal production, employment, exports, and prices. This material 

included key trends affecting coal markets. EIA’s assumptions for labor productivity by coal supply 

region—an important factor in determining the price of coal over time—were also mentioned. Emphasis 

was placed on the range of outcomes with respect to the High and Low Oil and Gas Resource and 

Technology side cases relative to the Reference and the No Clean Power Plan cases.

The third portion of the presentation focused on AEO2018 development cycle. This portion of the

presentation highlighted the need to focus on updating the models to properly account for several years 

of new data with an emphasis on documenting and further automating these processes. The details 

associated with these updates include the following tasks:

• Developing additional reporting capabilities in light of the conversion of the Coal Market Module 

(CMM) to the AIMMS programming language the previous year

• Evaluating updates to the Coal Production Submodule in CMM that will extend into the 

AEO2019 cycle

• Integrating contractor recommendations for updating and enhancing the coal transportation 

rate, international coal supply curve, and international freight rate methodologies in the CMM

Afterwards, a preview of the IEO2017 U.S. coal export results was provided.
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Work towards the development of a design concept for an International Coal Market Module for 

integration into EIA’s international modeling system was also discussed. This model will be used to 

develop EIA’s International Energy Outlook projections based on recommendations from 2 independent 

Component Design Reports, which are now available on EIA’s Model Development web page. A highlevel overview of each contractor’s effort was also presented, and EIA indicated it plans to make the 

other contractor deliverables available for review on its web site.

Discussion

Questions and comments on the presentation from participants mainly revolved around the topics of 

regulations, trade, and coal plant technologies.

Regulations

A participant noted that EPA’s Effluent Limitation Guidelines were already subject to an administrative 

hold and that the schedule will be subject to an additional rule-making process. 

Trade

A few participants noted the recent increase in U.S. coal exports and inquired if the trend was likely to 

continue and where the majority of the exports originate. EIA staff indicated it would likely be a shortlived gain in the export market, and that the exports are predominantly from the Eastern U.S. One

participant also asked if EIA planned on modeling specific, proposed coal export terminals on the West 

coast. EIA staff responded that explicit terminal assumptions are not currently modeled; however, it 

may be considered going forward. EIA also indicated that exchange rates do not currently factor into our 

coal export projections in response to an inquiry from a participant.

Coal Plant Technologies

EIA confirmed that the value of enhanced oil recovery is not accounted for in its estimation of the 

levelized cost of capital for a new coal plant with CCS.

One participant mentioned that EIA used a 30% capture technology in the AEO2017 and asked if a 90% 

capture technology would be considered in AEO2018. Following the meeting, EIA staff verified that the 

AEO2017 included a 90% capture technology option, which will also be included in the AEO2018.

Additional Issues

During the meeting, a few participants noted that the current administration may support policies that 

contribute to a more economically attractive atmosphere for new coal plants. After the meeting, one 

participant followed up in an e-mail stating that utility generation decisions generally take a longer-term 

view and expressed the view that the current relaxation of carbon policy may not have a significant 

effect on new coal builds. They suggested that one potential solution to account for this policy 

uncertainty would be to incorporate a lower cost of new coal plants in the near term. However, this 

development could likely add a more significant risk factor premium to capital costs than is the case in 

the Electricity Market Module, where technologies below 90% carbon capture are subject to an 

additional 3% risk penalty applied to the cost of capital.
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Attendees

Guests (in person) Affiliation

José Benitez Energy Ventures Analysis

Francis Wood OnLocation, Inc.

Guests (WebEx/phone) Affiliation

Amy Gibson U.S. Department of Labor

Boddu Venkatesh ICF International

Brian Fisher U.S. EPA

Carl Lundgren U.S. Department of Labor, MSHA

Carmen Bettis U.S. Department of Labor

Carol Campbell U.S. Department of Labor

Chris Nichols National Energy Technology Laboratory (NETL)

Cynthia Simpson U.S. Department of Labor

Delma Bratvold Leidos

Emily Hunter U.S. Department of Labor , OWCP

Emily Medine Energy Ventures Analysis

Gang He Stony Brook University

Gavin Pickenpaugh National Energy Technology Laboratory (NETL)

Greg Moxness U.S. Department of Labor, MSHA

Gregory Marmon Wood Makenzie

James Sutton GE

Jamie Heller HELLERWORX, INC

Jamie Peters Union Pacific

Jerry Eyster GE Energy Financial Services

John Dean JD Energy

Paul Sullivan National Defense University, Georgetown

Kevin Steinberger National Resources Defense Council

Kim Kasmeier U.S. Department of Labor

Leslie Coleman National Mining Association

Mark Gehlhar U.S. Department of Interior, OSMRE

Michael Weiner Carbon Utilization Research Council

Mike Caravaggio Electric Power Research Institute

Nicolaos Kydes OnLocation, Inc.

Ron Oster Peabody Energy

Ryan Jansen Saskatchewan Research Council (SRC)

Song Zhao Leidos

Thomas Wos Tri-State G&T

Trygve Gaalaas Hawk Consulting Services, Inc

Brian Schaffer U.S. Geological Survey (USGS)
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DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE.

EIA attendees (in person)

Bonnie West EIA

Carolyn Mullen EIA Contractor

David Daniels EIA

David Fritsch EIA

Elias Johnson EIA

Greg Adams EIA

Jim Diefenderfer EIA

Laura Martin EIA

Lori Aniti EIA

Mike Cole EIA

Rosalyn Berry EIA

Samir Nandy EIA Contractor

Scott Jell EIA

Thad Huetteman EIA