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Nearly 27% of US coal mined in 2021 went to plants set to retire this decade

U.S. coal producers are running out of customers and the situation is likely to get worse.

Coal plants intending to close by 2030 received 26.9% of U.S. coal production in 2021, an S&P Global Commodity Insights analysis of production and fuel contract data found. The figure climbs to 37.4% when looking at plants with plans to shut down before 2042.

Public health and environmental groups have put coal power under relentless pressure to clean up its high levels of air pollution, while the falling cost of renewables and low price of natural gas has undercut the economic case for the product. There are no clear plans for the construction of a new U.S. coal plant in the near term and announcements of more retirements are still trickling in.

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Coal retirements shrink customer base

A previous analysis showed that 2028 would be a record year for the amount of retiring coal plant power capacity, but 2025 will be the single roughest year in U.S. coal’s near future based on 2021 destinations. The coal plants scheduled to retire in 2025 alone account for about 3.8% of the amount of coal mined in the U.S. in 2021.

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Regional variations in impact

The Powder River Basin, the largest coal mining region in the nation by volume, delivered 50.5% of its 2021 coal to plants with retirements scheduled in the next 20 years, while Central Appalachia fared better. The region only delivered 2.0% of the coal it mined to power plants with plans to retire thanks to its focus on metallurgical coal used in steelmaking. The Illinois Basin and Northern Appalachia regions each delivered approximately one-third of their mined coal to U.S. power plants with plans to retire by 2042.

In the relatively small Four Corners mining region, 2021 deliveries to plants retiring in the next two decades were equivalent to 96.1% of coal production from the region for the year.

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Large mine-level impacts

In 2021, several coal mines delivered an amount of coal to plants set to retire that exceeded the amount of coal produced by the mine. This is possible due to inventory practices and other factors including the winding down of operations at the mine.

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Smaller companies highly exposed to retirements

In 2021, 10 companies delivered an amount of coal that exceeded total annual production to plants set to retire by the end of 2042. The largest by overall production was Westmoreland Mining Holdings LLC, which in 2021 shipped 10.2 million tons of coal to plants retiring by 2042 while producing just 9.5 million tons.

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The overall market for domestic demand and export coal is projected to decline by 131 million tons between 2021 and 2027, Steve Piper, director of energy research at Commodity Insights, wrote in an early March analysis. Declining natural gas prices are expected to continue to push coal generation demand lower through 2030, Piper added.
Source: Platts

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