Marc Humphries, Coordinator Specialist in Energy Policy
Molly F. Sherlock Specialist in Public Finance
Even though U.S. coal production remained strong over the past decade, reaching
record levels of production, coal is losing its share of overall U.S.
energy production primarily to natural gas. One of the big questions for
the industry is how to penetrate the overseas market, particularly in steam coal,
to compensate for declining domestic demand. As U.S. energy policy and
environmental regulations are constantly debated, there is ongoing
congressional interest in the role of coal in meeting U.S. and global
energy needs. The question may not be whether the domestic production of
coal is here to stay but, rather, how much U.S. coal will be mined, what type,
and under what regulatory framework.
Energy Information Administration (EIA) statistics show that more than half
(55%) of U.S. coal reserves are located in the West, dominated by Montana
and Wyoming, which account for 43%. When including the top five producing
states (three of which are in the East), 70% of U.S. coal reserves are
accounted for. The United States government owns about one third, or 87 billion short
tons (BST), of U.S. domestic reserves.
Coal production in the United States reached an all-time high of 1,174.8
million short tons in 2008, before declining to slightly under 1,100
million short tons from 2009 to 2011. Coal production on federal lands
accounts for about 43% of U.S. production, according to the Bureau of Land
Management (BLM). World coal production has increased by nearly 60% since 2002, most
of the increase coming from China—up 130%.
Overall, U.S. coal production has been very strong over the past decade and if
the industry is successful in penetrating the global market, primarily for
steam coal, U.S. production may continue to grow faster than consumption.
If recent trends continue, the U.S. coal industry will likely become more
concentrated and produce more on federal lands. Businesses in the coal industry
are subject to federal income taxes, but coal producers benefit from a number
of federal tax provisions, commonly referred to as tax expenditures.
There are several congressional concerns related to coal production on federal
lands. One concern is the potential for under-market-value coal auctions
(sales), e.g., lease offers being accepted by the BLM with few competitive
bids. In these cases, the federal government may not receive fair market
value for the lease sale.
Date of Report: March 14, 2013
Number of Pages: 25 Order Number: R43011 Price: $29.95
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