September2012

Issue

Inafutureworldof8.5billionpeoplein2035,theEnergyInformationAdministrations(EIA)projected50%increasein
energyconsumptionwillrequiretruealloftheaboveenergyresourceusefromoil,gas,renewables,nuclear,andcoal.
Inparticular,coalwillcontinuetobetheworldsenergycornerstone,providingmoreincrementalenergyoverthatsame
timeperiodthananyothersinglefuel.

Coalhaslongbeenacenterpieceofalowcost,highreliabilityelectricitygrid.Todaythereare1.3billionpeopleacross
theglobewithoutaccesstoelectricityand2.7billionpeoplewhodonothavecleancookingfacilities.Theproblemis
spreadacrossthedevelopingworld,butitisparticularlysevereinsubSaharanAfricaanddevelopingAsia,which
togetheraccountfor95%ofpeopleinenergypoverty.Withoutacommitmenttoachieveuniversalenergyaccessithas
beenestimatedthatby2030,therewillbeanadditional1.5millionprematuredeathsperyearcausedbyhousehold
pollutionfromburningwoodanddungandthroughalackofaccesstocleanwater,basicsanitationandhealthcare.
Modernenergysourcesareessentialtomeetingthesechallenges.1
Figure1.GlobalEnergyPoverty

Source: EIA, World Energy Outlook, 2011

Coalcurrentlysuppliesaround30%ofprimaryenergyand41%ofglobalelectricitygeneration.From2001to2011,
globalconsumptionofcoalrose56%,asoilconsumptionslowed.Coaluseisforecasttocontinuetoriseover50%by
2030,withdevelopingcountriesresponsiblefor97%ofthisincrease,primarilytomeetimprovedelectrificationrates.2

Coalisthemostwidelyavailablefossilfuelenergyresource.Unlikegasandoil,itiswidelydistributed,both
geographicallyandintermsofresourceownership.Itsabundanceprovidesenergysecuritytomanycountriesbecause
itssupplywilllastsignificantlylongerthangasoroil.
1
2

Coal: Energy for Sustainable Development, 2012, World Coal Association

World Coal Association, 2012
Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250

Figure2.GlobalElectricalPowerGenerationbySource

Source: EIA, 2011

Almosthalfoftheworldsenergydemandoverthepasttenyearswasprovidedbycoal(Figure3).Allotherfuels
combined,includingoil,naturalgas,renewablesandnuclearenergy,accountedfortheotherhalf.Infact,everyyear
overthelastdecadecoalhasbeentheworldsfastestgrowingenergysource,drivenbyAsiandemandandregional
abundanceofthefuel.

China'smarketforthecommodityisprojectedtodoubleinthenextfewyears.MorethanthreefourthsofChina's
energyproductioncomesfromcoal,makingittheworld'sNo.1coalconsumer.Chinaimportedonlyabout5.5million
tonsofcoalfromtheUnitedStatesin2011,whichaccountedfor3percentofits182milliontonsofimports,according
toareportbytheCarnegieEndowment.

Morethananyothernation,Americacancontrolitsownelectricalenergydestiny.Coalcanbethefoundationofthat
control.Almost30%oftheworldscoalreservesareintheUnitedStates.Theabilitytoutilizedomesticcoalreservesto
addressproblemsofenergyaccessreducesrelianceonimportedenergy,particularlyoilandgas,whichareoften
sourcedfromunreliableandunstablemarkets.Utilizationofcoaltocomplementrenewableenergysources,particularly
wind,reducestheriskofanintermittentsupply.

TheNationalCoalCouncil3hasidentifieditsvisionforU.S.coal.First,coalsabundanceandwidespreaddistribution
presentthemeanstoproduceelectricityreliablyandaffordably.Second,coalsversatilityallowsconversiontoliquid
transportationfuels,naturalgas,andchemicals.Third,improvingcoalsenvironmentalperformancethroughadvanced
coaltechnologiescoupledwithCO2captureandstorage,includingenhancedoilrecovery(EOR),willnotonlymakeit
possibletomeetclimatepolicygoals,butalsoopenmoredoorstothebeneficialuseofCO2.Finally,thedynamicactivity
associatedwithdeployingadvancedcoal,carboncaptureandEORtechnologieswillstimulatetheeconomy,provide
jobs,reviveestablishedindustries,andcreatenewones.

Harnessing Coals Carbon Content to Advance the Economy, Environment, and Energy Security, National Coal Council, June 2012.
Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250

Figure3.IncrementalWorldPrimaryEnergyDemandbyFuel,20002010(Mtoe)

Source: IEA World Energy Outlook 2011

Background
Coalisastrategicresourcethatiswidelyrecognizedasessentialforamodernqualityoflife,isakeycontributorto
sustainabledevelopment,andanessentialelementinenhancedenergysecurity.TheInternationalEnergyAgency(IEA)
estimatesthatglobalelectricitydemandcoulddoubleby2035,asmorepeoplegetbasicaccesstoelectricityaroundthe
worldandhouseholdenergyconsumptiongrowsinthedevelopingworld.Thepercentagesofnationalelectrical
productionfueledbycoalpresentedinFigure4supportthisestimate.Globalcoaldemandwillincreasesubstantially
overthecomingdecades.Globalcoalproductionincreasedforthe12thstraightyearin2011,bymorethan6percent,
accordingtoEIA.Morethan90gigawattsofnewcoalfueledpowercapacitywillcomeonlinein2012,largelyinthe
developingworld.

Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250

Figure4.CoalinGlobalElectricityGenerationbyCountry

France
Canada
Russia
Vietnam
Netherlands
Japan
Turkey
United Kingdom
Germany
Korea
USA
Zimbabwe
Denmark
Morocco
Czech Republic
India
Kazakhstan
Australia
China
Poland
South Africa
Mongolia
Botswana

Coal in Global Electricity

Generation

0%

20%

40%

60%

80% 100% 120%

Source: IEA Electricity Information, 2011

Provencoaldepositsexistoneverycontinent.TheUnitedStateshastheworldslargestsupplyofknownrecoverable
reserves,orabout24percent.Coalisfoundin38U.S.states,andnearlyoneeighthofthecountryliesovercoalbeds.
Topcoalminingstatesbytonnageinclude:Wyoming,WestVirginia,Kentucky,Pennsylvania,Montana,Texas,Indiana,
Illinois,NorthDakota,Ohio,andColorado.

Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250

Figure5.CoalReservesintheU.S.(Source:USGS2012)

CoalsuppliesintheU.S.arefarmoreplentifulthandomesticoilornaturalgas;theyaccountfor95percentofthe
countrysfossilfuelreservesandmorethan60percentoftheworldsfuelreserves.TheU.S.hasabout240billiontons
ofrecoverablecoal,whichcouldlastabout235yearsifconsumedatthesamerateastoday.Tomeetenergyand
metallurgicalneeds,theU.S.minesaboutonebilliontonsofcoalperyear.In2011,worldproductionofcoalwas7.7
billionmetrictons.

Figure6.CoalReservebyCountry
Source: BP 2008

Ithasbeenestimatedthatthereareover860billion
tonsofprovencoalreservesworldwide(Fig6).Some
depositsareestimatedtohaveasmuchas400yearsof
productionremainingandnewtechnologiesforutilizing
coalresources,suchasundergroundcoalgasification,
arelikelytoboostcoalsfutureroleinenergysupply
evenfurther.Coalreservesareavailableinalmostevery
countryworldwide,withrecoverablereservesinaround
70countries.ThelargestreservesareintheU.S.,Russia,
China,AustraliaandIndia,respectively.Importantly,
manycountrieswithsignificantenergypoverty
challengesalsohavesignificantcoalreserves.

Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250

SME Statement of Technical Position

EMPLOYMENT&PRODUCTION

NearlyhalfofU.S.electricityand40%ofglobalelectricityisgeneratedfromcoal.
9outofevery10tonsofcoalminedeachyearintheU.S.isusedfordomesticelectricitygeneration(steamcoal).
Thereisagrowingexportmarketforbothmetallurgicalcoal(formakingsteel)andsteamcoal.
EachpersonintheU.S.uses3.4tonsofcoalannually.Theglobalaverageislessthan1tonperyear.
CoalisoneofthemostaffordablesourcesofpowerfuelpermillionBtu,historicallyaveraginglessthanonequarter
thepriceofpetroleum.
TheU.S.producesabout1billiontonsofcoalannually,whereasglobalproductionofcoalisabout7.7billiontons
peryear.
Approximatelytwothirdsoftoday'sdomesticcoalproduction,bytonnage,resultsfromsurface,ratherthan
undergroundmining.MountaintopmininginAppalachiacontributesapproximately10percentofallcoalminedin
theU.S.andisroughly40percentofthecoalminedinWestVirginiaandKentucky.
Foreachcoalminingjob,anadditional3.5jobsarecreatedelsewhereintheU.S.economy.
U.S.coalminingdirectlyemploysabout142,000peoplewithanaveragewageof$73,000peryear.
Coaldirectlyprovidesmorethansevenmillionjobsworldwideandindirectlysupportsmanymoremillions.
In2010,thecoalindustryinvestedmorethanUS$7billionincapitalexpendituresindevelopingcountries.

ECONOMIC,ENVIRONMENTAL&SOCIALCHALLENGES
ChallengestotheU.S.coalindustryincludestrivingforzerominefatalities,maintainingcompliancewithstrictermine
safetyrules,reductionsinU.S.thermalcoaldemandduetocompetitionfromlowpricednaturalgas,stricter
environmentalregulationsaffectingthecostofproducingandusingcoal,andweakerinternationalanddomestic
economies.

Minesafetyandworkerprotectionmustremainatoppriority.
Thecoalindustrymustdevelopandimplementnewtechnologiestomitigateconcernsrelatedtosubsidence,
acidrockdrainage,properlyengineeredcoalashretentionstructures,andAppalachiancoalminingtechniques.
TheU.S.EPAhasissuedregulationsgreatlyreducingthenumberofnewcoalfiredpowerplantsthatwillbebuilt
inthecomingdecadeswithoutcarboncaptureandstorage.However,fullscale,commercialcarboncaptureand
storageisstillintheresearchanddevelopmentstage.
IntheU.S.,theshareofelectricpowergenerationfueledbynaturalgasisprojectedtoincreasefrom24%in
2010to27%by2035,whiletheshareofrenewableenergywillgrowfrom10%to16%overthatsameperiod.
Coalfiredpowergenerationwillfallto39%ofpowergeneration,butremaintheleader.
DuetotheescalatingcostofimportedliquefiednaturalgasinEuropeandotherregionscoupledwiththe
declineofdomesticcoalusageinbasepowergeneration,majorcoalandenergycompaniesintheU.S.are
investingintheexportsupplychain.TheNetherlands,UnitedKingdom,SouthKorea,Japan,China,India,Brazil,
Canada,MexicoandMoroccoaretopexportdestinationsforU.S.metallurgical(steelmaking)andsteamcoal
(electricalpowergeneration).
Currently,U.S.coalcompaniesareinvestingmorethan$500milliontoincreasethecoalexportsupplychain
capacitytomeetrisingoverseasdemand.
Westerncoal,includinglowsulfurcoalfromthePowderRiverBasinofWyomingandMontana,isexpectedto
becomeanincreasinglyimportantpartoftheU.S.exportmarketasportfacilitiesontheWestCoastare
permittedandbuilt.

Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250


SUMMARY

Allenergysources,includingnuclear,hydro,wind,solarandotherrenewables,havesomeroletoplayincontributingto
theelectricalpowergrid.However,fortheforeseeablefuture,baseloadpowergenerationthroughtheuseoffossil
fuels,andespeciallywithcoal,isthemostcosteffectivewaytoprovideaffordable,safeandreliableelectricityatthe
scalethatisneededtoachievegenuineaccesstomodernelectricityservicesworldwide.Coalis,andwillcontinuetobe,
thebackboneofglobalelectricitygeneration.ExportofU.S.coaltoenergyresourcepoorcountrieswillcontribute
significantlytoreducingglobalenergypoverty.Further,intheU.S.,distinctenvironmental,economicandsocial
challengestothecontinueduseofcoalmustbebalancedwithanacknowledgmentbypolicymakersthatcoalisstilla
viableenergysource,isessentialtonationalsecurity,andshouldbeincludedinanydiscussionofalongtermallofthe
aboveenergypolicy.

Society for Mining, Metallurgy and Exploration, Inc. | 12999 East Adam Aircraft Circle, Denver, CO 80112 303 948 4250