Powder River Basin coal

A large large mining truck filled with coal passes by another truck heading into the pit at the Eagle Butte mine north of Gillette.

A federal report shows annual U.S. energy consumption from renewable sources ahead of coal for the first time since before 1885.

Nearly as significant is what’s expected to come next year.

Rob Godby, a University of Wyoming energy industry economist, said the devil is in the details of the U.S. Energy Information Administration report released Thursday that says Americans consumed more energy from renewable sources combined than coal in 2019.

The report includes all types of consumption, like the ethanol biofuel additive in gasoline and green technologies used in batteries, he said. Consumption from coal energy, on the other hand, is strictly from electricity generation.

“The report is really kind of a strange one,” Godby said. “Nobody has coal-fired cars or things like that that, so the way this report came out is sort of a curiosity and it’s interesting.

“But when people realize it includes the ethanol that’s in every gallon of gasoline and the renewable energy that’s all around us, it’s not just solar panels and our wind farms.”

The more telling report could come next year, Godby said. That’s when the EIA is predicting that the United States will produce more electricity through renewables than through coal.

Natural gas passed coal as the dominant source of fuel for power plans in 2015, and now the mineral is close to dropping to No. 3 on the list of the fuels for electricity generation.

Coal’s market share has been shrinking for some time, which makes this week’s report and the EIA’s projections for next year nothing new, Godby said.

“Coal has not been No. 1 for quite awhile now,” he said. “Gas surpassed coal awhile ago, and no nuclear and renewables are close.”

Although not an apples-to-apples comparison, this week’s report about energy consumption from renewable sources is still noteworthy, he said.

“These are basically first-time happenings,” Godby said. “It was only a few years ago that natural gas surpassed coal, now it’s renewables.”

He also said that renewables passing coal for producing electricity this year is being pushed by the coronavirus pandemic.

“For the first time ever, that is now expected to happen this year, and a lot of that is due to COVID-19 and the reduced power associated there.”

Compared to 2018, last year’s consumption of coal in the U.S. was down nearly 15%, the EIA reports. At the same time, total consumption from renewable sources grew by 1%.

Last year, coal accounted for 11.3 quadrillion British thermal units of power consumption (quads) while renewables combined for 11.5 quads, according to the report. Renewables include solar, wind, geothermal, biofuels, waste, wood and hydro.

“Historically, wood was the main source of U.S. energy until the mid-1800s and was the only commercial-scale renewable source of energy in the United States until the first hydropower plants began producing electricity in the 1880s,” the report says. “Coal was used in the 1800s as a fuel for steam-powered boats and trains and making steel, and it was later used to generate electricity in the 1880s.”

The market still rules

While the pandemic and social climate against fossil fuels continues to pressure thermal coal, its main obstacle continues to be cheap natural gas, Godby said.

As plants burn gas instead of coal, long with decreased production during the pandemic, the outlook for the rest of 2020 continues to be bleak for Powder River Basin coal, he said.

Last year’s decline was the sixth consecutive for coal as a fuel source to make electricity in the United States. Electricity generation from coal also dropped to its lowest level overall in 42 years.

“Natural gas consumption in the electric power sector has significantly increased in recent years and has displaced much of the electricity generation from retired coal plants,” the EIA report says.

Along with coal’s decline, the growth in U.S. renewable energy is “almost entirely attributable to the use of wind and solar in the power sector,” according to the report.

For the first time in 2019, wind also surpassed hydro and is the now the largest source of renewable electricity.

The Powder River Basin, which makes up much of Campbell County, produces about 40% of the thermal coal used in U.S. power generation, the EIA reports.

However, that statistic doesn’t tell a complete picture. That’s because while the PRB continues to be a significant source of the coal that’s consumed by power plants, overall there has been a big drop in coal consumption.

About a dozen years ago, the PRB accounted for 50% of all electricity produced in the nation. That has dropped to about 19%, according to the EIA.

The PRB produced 266.8 million tons of coal in 2019, about 9% less than the 293.5 million tons produced the year before. And it’s 40% less than the region’s high point in 2008 when 446.5 million tons of coal came out of the basin.

Projections for 2020 before the COVID-19 pandemic were for the basin’s production to be just over 200 million tons.

The coronavirus has had a significant impact on the energy sector with consumption down nearly 20% as people stay home and economies are shut down.

That’s only fueling an already poor outlook for thermal coal, said Benjamin Nelson, lead coal analyst for Moody’s Investors Services.

“Coal-fired power generation has fallen below renewable energy for the first time in more than 130 years — when wood was the primary source of energy in the United States,” he said in a statement reacting to the EIA report. “We expect ongoing secular decline in the demand for coal, accelerated by the economic fallout from the global outbreaks of COVID-19 will persist in the early 2020s.”

This is a developing story and will be updated.

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