U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

AEO2018 1st Coal Working Group Meeting

Coal and Uranium Analysis Team

August 10, 2017 | Washington, DC

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. 

DO NOT QUOTE OR CITE MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE.
Roll Call

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 2

Guests (in person) Affiliation EIA Staff

Jose’ Benitez Energy Ventures Analysis David Fritsch, Greg Adams, Bonnie West,

Brian Fisher U.S. EPA Elias Johnson, Jim Diefenderfer, David Daniels,

Frances Wood On Location Mike Cole, Scott Jell, Rosalyn Berry, Lori Aniti,

Nilay Manzagol, Laura Martin 

Guests (WebEx/phone) Affiliation Guests (WebEx/phone) Affiliation

Justin Wormmeester BNSF Railway Jamie Peters Union Pacific

Gaven Pikenpaugh NETL Jennifer DiGiantommaso U.S. Dept. of Labor

Delma Bratvold Leidos Jamie Heller Hellerworx

Emily Hunter (+6 Others) U.S. Dept. of Labor / OWCP Gregory Marmon Wood Makenzie

Stephen Gigliotti MSHA William Meroney U.S. EPA

Gang He Stony Brook University Ron Oster Peabody Energy

Jerry Eyster GE Energy Financial Services Whitney Herndon Rhodium Group

Brian Shaffer USGS James Sutton GE Power

Sean Nesselt CSX Transportation Samir Nandy EIA Contractor

Russ Epting CSX Transportation Cynthia Simpson U.S. Dept. of Labor

Shannon Angielski Carbon Utilization Research Council Song Zhao Leidos

Thomas Wos Tri-State Generation Tesfaye Wyes U.S. Dept. of Labor

Ayaka Jones U.S. Dept. of Energy Stephen Gardner ECSI

Aaron Szabo EOP/OMB Erich Eschmann U.S. EPA

Leslie Coleman National Mining Association Lee Gresham Brattle Group

Ann Satsangi U.S. Dept. of Energy Mark Gehlhar OSMRE U.S. DOI

Nicolaos Kydes On Location William Wolf Boyd Company

Jonathan Sullivan Norfolk Southern Kevin Steinberger NRDC

Carolyn Evans Norfolk Southern John Dean JD Energy

Thomas Hewson Energy Ventures Analysis
Agenda

• Introduce new EIA staff working on AEO coal projections 

• Review AEO2017 results

• Discuss EIA staff priorities during AEO2018 cycle

• Provide status update on coal research efforts by contractors and next steps

• Open floor to other issues affecting the outlook for U.S. coal production

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 3

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
EIA coal team in process of “rebooting”

• David Fritsch, who joined EIA in November 2016, will have oversight over 

Coal Market Module (CMM) operations and development, and coordinating 

AEO2018 projections and analysis

• Bonnie West, who joined EIA in January 2017, will oversee updates to 

econometric elements of the CMM, namely the Coal Production Submodule 

and assist with CMM updates and analysis of AEO2018 results

• Elias Johnson will coordinate with David on benchmarking AEO results to 

the Short-Term Energy Outlook (STEO) and provide coal market expertise 

based on his over 25 years of experience with EIA 

• Looking to fill vacant coal position in FY2018

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 4

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
What to look for in the AEO2018

• AEO2017 extended results through 2050 in the AEO data browser to help 

solicit feedback from stakeholders

– AEO2018 will be the first year time the 2040-2050 results will be highlighted in the presentation 

of AEO results

– Please pay particular attention to the trends during that period and let us know if you have any 

feedback you would like us to consider

• AEO2018 will be presented in the same flip-book format as used for AEO2017

– Regular cycle that will feature several Issues in Focus articles, an expanded set of side cases, 

and write ups of key legislation and regulations

– Whether or not the EPA’s Clean Power Plan (CPP) is included in the Reference case is still 

under consideration, but side cases with and without the CPP will be developed as for AEO2017 

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 5

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
EPA policies with significant impacts on coal use included in AEO2017 

Reference case

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 6

Regulation AEO2017 Assumption Comment

Clean Power Plan (CPP)

(Clean Air Act. S. 111(d))

Modeled following mass-based approach in all regions with

emission budgets applied to both new and existing units

Side cases without the CPP (No CPP) 

are also available

New Source Performance Standards 

limiting CO2 emissions from new plants 

(Clean Air Act S. 111(b))

All new coal units must install USC with partial CCS to achieve 

max. rate of 1,400 lb CO2/MWh; technology option meeting this 

standard included, but subject to the 3% rate of return adder

Also assumed in side cases without 

the CPP (No CPP)

Cross State Air Pollution Rule- CSAPR 

(SO2/NOx)

Includes required emissions limits 

Mercury Air Toxics Standard (MATS) Detailed accounting of retirements and environmental retrofits 

completed by EIA staff

Deadline for compliance was April 2016 

Regional Haze

(Best Available Retrofit Technology)

Assumes compliance is reflected in EIA-860 filings on plants as 

settlement agreements reached between EPA and individual

states and utilities

State Implementation Plans (SIP) due 

by July 31, 2021 with implementation 

by 2028

Coal Combustion Residuals (Coal ash) Not specifically modeled in the Reference case; assumes 

compliance is reflected in EIA-860 filings as each plant takes 

specific actions to comply with the regulation

Not expecting significant impact 

(approx. 0.8 GW)

Cooling Water Intakes 

(Clean Water Act S. 316b)

Not specifically modeled in the Reference case; assumes 

compliance is reflected in EIA-860 filings as each plant takes 

specific actions to comply with the regulation

Not expecting significant impact 

(approx. 1 GW); compliance between 

2018 – 2023 depending on CWA permit

Effluent Limitation Guidelines Not specifically modeled in the Reference case; assumes 

compliance is reflected in EIA-860 filings as each plant takes 

specific actions to comply with the regulation

Not expecting significant impact 

(approx. 1 GW); compliance between 

2018 – 2023 depending on CWA permit

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
State-level CO2 initiatives included in AEO2017 

Reference case

• California

– Recently signed state law under AB 398 Global Warming Solutions Act requires statewide greenhouse gas 

emissions to return to the 1990 level by 2020 and be 40% below the 1990 level by 2030

– Cap-and-trade program under AB 32

– State law under SB-1368 that prohibits CA utilities from entering into long-term financial commitments for 

base load generation, unless in compliance with the CO2 emissions performance standard of 1,100 lbs/MWh

• Reduce firm imports to represent expiration of contracts with the Four Corners, Navajo, Reid Gardner, 

San Juan, and Boardman plants and retire Intermountain in 2025

• Adjust carbon emission rate for firm imports in accordance with the expiration of contracts

• The Northeast’s Regional Greenhouse Gas Initiative (RGGI) program

• Renewable Portfolio Standard (RPS) programs

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 7

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Uncertainty on CO2 policy addressed in the AEO2017 

Reference case through cost of capital

• The 3% adder on the cost of capital for upgrades to coal units without 

maximum sequestration options (90% removal) included to account for risk 

of future tightening of CO2 emissions standards and other policies affecting 

coal

• Regulatory uncertainty associated with future policies

– Clean Power Plan (CPP) under review; other EPA rules may also be reviewed further

– Office of Surface Mining’s Stream Protection Rule was nullified and formal programmatic 

consultation reinitiated

– Federal coal leasing moratorium lifted, ONRR’s Consolidated Federal Oil and Gas and 

Federal Indian Coal Valuation Rule (Valuation Rule) repealed, and BLM’s review of federal 

coal royalty rates suspended; Dept. of Interior formed a Royalty Policy Committee to 

evaluate valuation and royalty policies

– Waters of the U.S. (WOTUS) stayed; EPA proposing rule to change definition

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 8

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Same basic story continues to hold with respect to the trends 

affecting coal consumption even without the CPP

• Nationally

– Slow electricity demand growth

– Competition with relatively low-cost natural gas

– Increasing competition with renewable energy

– High plant construction costs relative to natural gas and renewables

• Regionally

– Declining coal mining labor productivity for most regions

• Central Appalachia encountering thinning seams and reserve depletion

• Higher stripping ratios for WY PRB as mining moves westward

– Illinois Basin coals competing more effectively

– Stagnant coal export markets

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 9

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Electricity use continues to increase but the rate of growth remains lower than 

historic averages in the AEO2017 Reference case

10 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

199020162050199020162050199020162050199020162050

Electricity use by end-use demand sector 

billion kilowatthours

direct use

electricity 

sales

residential industrial

commercial transportation

-2

0

2

4

6

8

10

1960 1980 2000 2020 2040

Electricity use growth rate 

percent growth (three-year rolling average)

2016

history projections

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
AEO2017 Reference case natural gas prices remain relatively low but price 

paths in the side cases are very different from those in the Reference case

11 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

0

2

4

6

8

10

12

1990 2000 2010 2020 2030 2040 2050

Natural gas spot price at Henry Hub 

2016 dollars per million British thermal units

2016

history projections

Low Oil and Gas Resource and 

Technology

Reference

High Oil and Gas Resource and 

Technology
Relatively high levelized cost of energy for coal prohibits the 

addition of coal in any case evaluated in AEO2017

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Source: “Levelized Cost and Levelized Avoided Cost of New Generation Resources in the AEO2017”, April 2017, Excerpted from Table 1b (2022) and Table B1b (2040)

12

0 2 4 6 8 10 12

Natural Gas CC

Wind

Solar PV

Nuclear AP1000

Coal 90% CCS

Natural Gas CC

Wind

Solar PV

Nuclear AP1000

Coal 90% CCS

2040

new power plant costs, 2016 cents per kilowatt-hour

Incremental

transmission

costs

Fixed

costs

Variable costs,

including fuel 2022 Capital costs

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Fuel prices and current laws and regulations drive growing shares of renewables and natural gas in 

the electricity generation mix as coal’s share declines over time in the AEO2017 Reference case

13 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

0

500

1,000

1,500

2,000

2,500

1980 1990 2000 2010 2020 2030 2040 2050

U.S. net electricity generation from select fuels

billion kilowatthours

natural gas

2016

history projections

petroleum

coal

renewable

energy

nuclear 

Reference case

2020 2030 2040 2050

No Clean 

Power Plan

2016

projections
Lower capital costs and the availability of tax credits boost near-term wind additions and 

sustain solar additions whereas coal-fired unit retirements in the AEO2017 Reference case 

are driven by low natural gas prices and the Clean Power Plan

14 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

-30

-20

-10

0

10

20

30

40

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Annual electricity generating capacity additions and retirements (Reference case) 

gigawatts 2016

history projections

solar

wind

oil and gas

nuclear

other

coal

additions

retirements
Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Net summer coal-fired generating capacity in the electric power sector declines 

disproportionately by region in the AEO2017 Reference case

Source: AEO2017 Reference case (ref2017.d120816a); *2016 capacity numbers are projected numbers from the AEO2017

15

0 10 20 30 40 50 60 70

ERCOT

FRCC

MRO (MROE/MROW)

Northeast (RFCE,NPCC)

North Central (RFCW,RFCM)

SERC Gateway (SRGW)

SERC SE (SRSE)

SERC Central (SRCE)

SERC VACAR (SRVC)

South (SPNO,SPSO,SRDA)

WECC

(AZNM,CAMX,NWPP,RMPA)

2016* 2050 Retirements

U.S. Total 

2016*: 265 MW

AEO2017 2050: 160 MW

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Coal production decreases primarily in the Western region due primarily 

to differences in state-level emissions reductions required under the CPP

16 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

Source: AEO2017 Reference case (ref2017.d120816a)

0

200

400

600

800

1,000

1,200

1,400

2000 2010 2020 2030 2040 2050

Coal consumption in electric power sector 

million short tons

2016

history projections

No Clean Power Plan

STEO 

Reference case

0

200

400

600

800

1,000

1,200

1,400

2000 2010 2020 2030 2040 2050

U.S. coal production by region, 2000-2050 

million short tons

total

West

Appalachia

Interior

2016

history projections

No Clean Power Plan

Reference case

(includes Clean

Power Plan)
Future coal production depends on resources and technology, not just 

policy choices

17 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Source: EIA Today in Energy, June 26 2017.

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

0

200

400

600

800

1,000

1,200

1,400

2000 2010 2020 2030 2040 2050

U.S. coal production, 2000-2050 

million short tons

2016

history projections

Low Oil and Gas Resource and 

Technology case

Reference case

High Oil and Gas Resource and 

Technology case

with Clean Power Plan

without Clean Power Plan
Coal mining productivity projected to decline in all regions except Eastern Interior in AEO2017

18 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Supply Region 2014 2020 2025 2030 2035 2040

Average Annual 

Growth

2014-2040

Northern Appalachia 3.43 3.26 3.06 2.82 2.72 2.59 -1.1%

Central Appalachia 2.20 1.77 1.62 1.38 1.26 1.29 -2.0%

Southern Appalachia 1.88 1.61 1.46 1.33 1.24 1.17 -1.8%

Eastern Interior 4.64 4.98 5.11 5.26 5.40 5.54 0.7%

Western Interior 2.73 2.38 2.24 2.11 2.04 1.99 -1.2%

Gulf Lignite 6.94 6.40 6.09 5.79 5.57 5.38 -1.0%

Dakota Lignite 11.53 11.53 10.96 10.42 10.03 9.69 -0.7%

Western Montana 16.58 14.76 16.39 15.85 14.69 13.55 -0.8%

Wyoming, Northern Powder River 

Basin

29.35 28.20 26.85 26.65 24.27 22.23 -1.1%

Wyoming, Southern Powder River 

Basin

34.32 26.87 24.78 23.73 23.31 22.99 -1.5%

Western Wyoming 6.36 7.37 7.01 6.67 6.44 6.25 -0.1%

Rocky Mountain 6.12 5.01 4.42 3.89 3.56 3.32 -2.3%

Arizona/New Mexico 8.01 7.57 7.24 6.90 6.67 6.47 -0.8%

Alaska/Washington 5.42 5.84 5.96 6.08 6.15 6.22 0.5%

U.S. Average 5.64 6.22 6.22 6.16 5.55 5.45 -0.1%

Source: U.S. Energy Information Administration, AEO2017 National Energy Modeling System run REF2017.D120816A.

Coal mining productivity by region

Short tons per miner hour

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

PRB assumptions were 

updated for AEO2017
Coal mine employment trends reflect impact of declining 

labor productivity against backdrop of declining production

19 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

0

10

20

30

40

50

60

70

80

90

100

2000 2010 2014 2020 2030 2040

Thousands

Coal Mine Employment

Number of Miners

2014

history projections

total

Appalachia

West

Interior

No Clean Power Plan

Reference case

0

10

20

30

40

50

60

70

80

90

100

2000 2010 2014 2020 2030 2040

Thousands

Coal Mine Employment

Number of Miners

2014

history projections

total

Underground

Mines

Surface

Mines

No Clean Power Plan

Reference case

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

Source: AEO2017 Reference case (ref2017.d120816a)
0

50

100

150

200

250

300

350

400

450

500

1970 1980 1990 2000 2010 2020 2030 2040 2050

Northern Appalachia

Central Appalachia

Southern Appalachia

Total Appalachia

Appalachian coal production declines gradually as productivity 

declines, but is buffered by relatively steady met coal demand 

million short tons

• Source: AEO2017 Reference case (ref2017.d120816a), 

• Except for Appalachian total, data for 1978-1985 exclude production from small (<10,000 short tons) coal mines 

2016

History Projections

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 20

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Interior coal production remains declines only slightly from 2016 levels under the 

CPP due to increasing productivity and competitiveness with low-sulfur coals

million short tons

Total Interior

0

50

100

150

200

250

300

1970 1980 1990 2000 2010 2020 2030 2040 2050

Eastern Interior

Gulf Lignite

2016

History Projections

Source: AEO2017 Reference case (ref2017.d120816a)

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 21

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Western coal production sees the greatest rate of decline under the CPP

million short tons

0

100

200

300

400

500

600

700

1970 1980 1990 2000 2010 2020 2030 2040 2050

Other West

2016

History Projections

Wyoming PRB

Total West

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 22

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

Source: AEO2017 Reference case (ref2017.d120816a)
Average minemouth coal prices increase gradually as productivity 

decreases over time

2016 dollars per short ton

Appalachia

Interior

West

0

10

20

30

40

50

60

70

80

90

1980 1990 2000 2010 2020 2030 2040 2050

AEO2017

U.S. Average

2016

History Projections

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 23

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 

Source: AEO2017 Reference case (ref2017.d120816a)
U.S. coal exports are expected to recover only gradually through 2050

million short tons

0

20

40

60

80

100

120

140

1995 2000 2005 2010 2012 2015 2020 2025 2030 2035 2040

Coking

Steam

History Projections

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 24

Source: AEO2017 Reference case (ref2017.d120816a)

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
AEO2018 Development Cycle Efforts

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 25

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Staff focused primarily on data updating processes for AEO2018 

development cycle

• Primary focus is on updating historical data for 2014 and 2015 and automating and documenting 

these processes to the extent possible to accommodate staff departures

• Develop reporting capabilities in the AIMMS code to enhance assessment of model results and 

analysis of trends

– Supply curve viewer

– Regional data views

– NEMS reporting requirements

• Evaluating updates to the Coal Production Submodule (CPS) regression equation parameters in 

the Coal Market Module (CMM) in NEMS; effort will extend into AEO2019 development cycle

• Coordinating integration of contractor recommendations for updating and enhancing the coal 

transportation rate, international coal supply curve, and international freight rate methodologies in 

the Coal Market Module (CMM) in NEMS

• Developing a design concept for an International Coal Market Module (ICMM) for integration into 

EIA’s WEPS+ modeling system used to develop IEO projections

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 26

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
gigawatts

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Reported changes in electric generating capacity: planned coal 

retirements/ coal-to-gas conversions (actuals as of 8/10/2017)

27

History Planned

Source: Form EIA-860 and supplemental sources

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
AEO2018 will incorporate international trade forecast from 

EIA’s International Energy Outlook 2017 (IEO2017) 

28

• EIA’s IEO2017 is almost complete – results are still preliminary

• Projections include our most recent estimates of world coal demand and modeled 

solution of how world coal supply will satisfy demand through international trade

• Similar to IEO2016/AEO2016, U.S. coal exports are projected to return to about 80 

Million Short Tons by 2040 through 2050 in the IEO2017, almost evenly split 

between metallurgical and steam coal

• Coal trade of 1.5 Billion tons by 2050 account for less than 20% of 9.5 Billion tons 

produced world wide

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
IEO2017 (PRELIMINARY) U.S. coal export projections

million short tons

0

20

40

60

80

100

120

140

1995 2000 2005 2010 2012 2015 2020 2025 2030 2035 2040 2045 2050

Coking

Steam

Source: Projections - Preliminary IEO2017 Projection; History – U.S. Energy Information Administration (EIA), Quarterly Coal Report;.

History Projections

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 29

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
International Coal Supply Curve Methodology study resulted in recommendations to 

improve the existing, static supply curve specifications

• The goals of the project were three-fold

– Develop an approach to modeling international supply curves more consistent with the current, 

econometric-based methodology for modeling U.S. coal supply and mine prices in the CMM

– Research and utilize a set of publicly-available data sources that can be utilized for periodic 

updating of the supply curve equations

– Develop a methodology and related data sources to better forecast ocean freight rates for 

international coal shipments

• Hellerworx recently delivered their study results, which recommended an 

instrumental variable (2SLS) regression format for key exporting regions by 

coal type, provided a set of publicly-available data sources, and an updated 

approach to modeling freight rates that accounts for vessel rates and fuel 

prices

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 30

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Coal Transportation Rate Analysis study resulted in recommendations to 

address challenges from declining coal shipments

• The goals of the project were to assess the current coal transportation rate methodology used in the Coal 

Distribution Submodule (CDS) of the CMM and suggest enhancements to the methods used to estimate base 

transportation rates and escalate prices over time

– Assess the impact of slowing coal demand on coal transportation rates and railroad fuel surcharge programs

– Evaluate the two-tier rate structure in CMM 

– Suggest a new methodology for escalating base year transportation rates

• Hellerworx evaluated recent data on coal transportation rates against and applied their industry 

experience with coal transportation to arrive at a suggested methodology for EIA to consider

– Only apply Tier 2 transportation rates in the event coal production exceeds the peak 2008 volume

– Use a single, national cost-based escalation index based on labor, fuel, equipment and other costs and 

productivity, rather than separate factors for east and west based on a set of indicative variables for each 

region

– Pass through half of railroad productivity gains to shippers and treat fuel costs directly in the in the cost 

escalation index rather than making separate adjustment to reflect fuel adjustment clauses

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 31

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
International Coal Market Module (ICMM) being pursued to improve 

international coal production and trade projections in the IEO

• Energy Ventures Analysis and OnLocation each completed independent 

Component Design Reports (CDR) to recommend possible methodologies

• The goal was to create a new coal module with the capability to project 

regional coal prices and coal supply as well as distribution of coal to 

industrial and electric consumers for the IEO, and model coal production and 

inter-regional trade in response to changing patterns of consumption

• The CDRs delivered in April 2017 presented two distinct designs featuring 

LP and NLP methodologies respectively, and included suggestions for model 

design as well as implementation and integration with the International 

Electricity Market Model (IEMM) currently in development

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 32

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Changes in modeling- enhancements to EMM: 

characterizing generation at risk

• Issues to be analyzed

– Going forward costs: can we represent a distribution of costs?

– Fixed O&M costs: represented by a greater range of values than 

modeled in past cycles?

– Electricity price volatility: is it greater (e.g. in regions with high 

renewables growth) than has been represented? 

• Or is it some combination of all of the above factors causing greater generation-at-risk?

– Retirements: how many units ultimately retire of those at-risk?

• What factors are particular to certain types of generation that make them more or less 

likely to retire? 

• How do these factors vary by region?

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 33

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
AEO2018 Outlook Schedule

• Model development: Aug-Oct 2017

• 2nd Working Group Session: mid-Sep 2017

• Expected AEO release: Jan 2018

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 34

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
For more information

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017 35

greg.adams@eia.gov, (202) 586-7343 (Team Lead)

david.fritsch@eia.gov, (202) 586-2415 (AEO)

bonnie.west@eia.gov, (202) 586-0998 (IEO)

elias.johnson@eia.gov, (202) 586-7277 (STEO)

Short-Term Energy Outlook | www.eia.gov/steo

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Coal Data Browser | https://www.eia.gov/beta/coal/data/browser/

EIA Information Center

InfoCtr@eia.gov

Our average response time is within 3 business days.

(202) 586-8800

24-hour automated information line about EIA and frequently 

asked questions.

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
What is the Reference case?

36 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

• The Reference case projection assumes trend improvement in known technologies, along with a view of 

economic and demographic trends reflecting the current central views of leading economic forecasters and 

demographers. 

• It generally assumes that current laws and regulations affecting the energy sector, including sunset dates for 

laws that have them, are unchanged throughout the projection period. 

• The potential impacts of proposed legislation, regulations, or standards are not reflected in the Reference 

case. 

• EIA addresses the uncertainty inherent in energy projections by developing side cases with different 

assumptions of macroeconomic growth, world oil prices, technological progress, and energy policies.

• Projections in the AEO should be interpreted with a clear understanding of the assumptions that inform them 

and the limitations inherent in any modeling effort.

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
What are the side cases included in the AEO2017?

37

• Oil prices are driven by global market balances that are mainly influenced by factors external to the NEMS model. 

In the High Oil Price case, the price of Brent crude in 2016 dollars reaches $226 per barrel (b) by 2040, compared 

to $109/b in the Reference case and $43/b in the Low Oil Price case.

• In the High Oil and Gas Resource and Technology case, lower costs and higher resource availability than in the 

Reference case allow for higher production at lower prices. In the Low Oil and Gas Resource and Technology 

case, more pessimistic assumptions about resources and costs are applied , the price of natural gas at Henry Hub 

in 2016 dollars falls to $3.40 per MMBtu by 2040 in the High Resource case, compared to $5.07/MMBtu in the 

Reference case and $9.76/MMBtu in the Low Resource case.

• The effects of economic assumptions on energy consumption are addressed in the High and Low Economic 

Growth cases, which assume compound annual growth rates for U.S. gross domestic product of 2.6% and 1.6%, 

respectively, from 2016–40, compared with 2.2% annual growth in the Reference case. 

• A case assuming that the Clean Power Plan (CPP) is not implemented can be compared with the Reference case 

to show how the absence of that policy could affect energy markets and emissions.

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Coal-Fired Capacity Omitted from AEO2017 

38 Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

Source: U.S. Energy Information Administration, Form EIA-860 “Annual Electric Generator Report”

• While the Two Elk is reported as ‘under construction’ on the Form EIA-860, other references 

suggest that the project is, minimally, delayed as the developer has recently cancelled an appeal 

hearing. The hearing would have appealed the denial of its request for a permit extension.

• DOE has suspended funding for the Texas Clean Energy Project. This project is not reported on 

the Form EIA-860.

http://wyomingpublicmedia.org/post/two-elk-power-plant-hearing-cancelled

https://insideclimatenews.org/news/12052016/department-energy-moniz-carbon-capture-ccs-climate-change-texasclean-energy-project

FACILITY CODE PLANT NAME

GENERATOR 

ID STATE

PLANT 

TYPE

ENERGY 

SOURCE

REPORTED

START 

YEAR

SUMMER 

CAPABILITY

55360Two Elk Generating Station GEN1 WY PC waste coal 2020 275 MW

Texas Clean Energy Project TX IGCC WY PRB 2017 400 MW

Total Capacity 675 MW

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE. 
Average annual growth in coal mining labor 

productivity for selected supply regions (percent)

39

1980 - 2014 Recent year-over-year

changes

AEO2017

projections

Coal Supply Region 1980-

1990

1990-

2000

2000-

2014

2011-

2012

2012-

2013

2013-

2014 2014-2040

Northern 

Appalachia 5.4 5.5 -2.0 -4.9 3.7 1.0 -1.1

Central Appalachia 7.3 4.4 -4.8 -3.8 3.1 0.7 -2.0

Eastern Interior 4.8 3.7 -0.2 6.1 7.1 -0.5 0.7

Gulf Lignite 2.6 2.4 -2.6 -4.2 -1.2 -0.5 -1.0

Dakota Lignite 6.0 1.0 -3.0 -4.8 -1.7 1.7 -0.7

Western Montana 4.6 2.0 -1.4 -11.7 15.4 11.8 -0.8

WY, Northern 

Powder River Basin 7.5 3.2 -2.9 -5.7 -2.6 0.0 -1.1

WY, Southern 

Powder River Basin 7.2 4.9 -2.3 -6.4 4.9 0.0 -1.5

Rocky Mountain 7.8 5.5 -2.3 3.5 1.3 -0.2 -2.3

U.S. Average 7.1 6.2 -1.6 -0.2 6.7 0.7 -0.1

Source: History: U.S. Energy Information Administration (EIA), Annual Coal Report; and Mine Safety and Health Administration, Form 7000-2, “Quarterly Mine and 

Employment and Coal Production Report;” Projections: Preliminary AEO2016 (ref2016.d020616a)

Coal and Uranium Analysis Team 

Washington, DC, August 10, 2017

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES. DO NOT QUOTE 

OR CITE AS MODELING ASSUMPTIONS AND INPUTS ARE SUBJECT TO CHANGE.