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Is EIA guilty of reporting incorrect coal reserves?

The Boulder, Colorado-based nonprofit Clean Energy Action (CEA) has released a bombshell new report which contends that U.S. coal reserves have been inaccurately reported. The CEA says that America does not have 200 years in coal "reserves" since much of the coal that is now left in the ground cannot be mined profitably.  

he CEA analysis shows that, in 2008, the U.S. appears to have reached its "peak coal" point and faces a rocky future over the next 10-20 years of rising coal production costs, potentially more bankruptcies among coal mining companies, and higher fuel bills for utility consumers.

"The belief that the U.S. has a '200 year' supply of coal is based on the faulty reporting by the Energy Information Administration (EIA) of U.S. coal deposits as 'reserves.' Most U.S. coal is buried too deeply to be mined at a profit and should not be categorized as reserves, but rather as 'resources,'" the report says. "…decision makers at all levels should begin taking a hard look at coal cost and supply issues considering both geology and finance and begin thinking about scenarios that require moving the U.S. beyond coal in significantly less than 20 years. In short, the EIA's reporting of over 200 billion tons of 'Estimated Recoverable Reserves' for U.S .coal supplies has been like a 'faulty fuel gauge' for US coal estimates."

The cost of coal used by electric utilities has been rising in almost all states at a rate of 6 to 10 percent per year -- or two to three times faster than inflation -- over the last decade, according to the report.

"Economically viable coal is a nonrenewable resource, and after examining currently available geological and financial data, there is good reason to believe we are rapidly reaching the end of US coal deposits that can be mined at a profit," Leslie Glustrom, director of research and policy, Clean Energy Action said.   "If coal can't be mined at a profit, not much of it will be mined. It is unclear how long the U.S. coal industry will produce large quantities of coal and at what price, but the current financial distress of U.S. coal mining companies could lead to significant changes in US coal production in less than a decade."

Ultimately, as the country goes through a transition in its electric energy mix, a more diversified set of suppliers for the nation's electricity will emerge with coal's relative monopoly (at fifty percent of market share) likely being replaced by growth in renewable resources, efficiency, natural gas and, in some regions of the country, hydro. As a result, the coal industry will be smaller with less producers, fewer mines and higher prices.

The future of the U.S. coal industry is unclear, but there could be significant disruptions in the next five to 10 years as several top U.S .coal companies have lost over 80 percent of their stock value and are facing debt payments in the next three to seven years that already have interest costs of 6 percent and above.


Source: www.fierceenergy.com