Future Impacts of Coal Distribution Constraints on Coal Cost

After years of relatively slow growth, coal is undergoing a renaissance. Some 140 coal power plants are planned, and the Energy Information Administration (EIA) projects that the U.S. will consume almost 1,800 million tons of coal in 2030, up from about 1,150 million tons this year. In addition, while EIA’s estimates do not take coal-to-hydrogen production into consideration, several recent studies suggest that if the hydrogen economy ever comes to fruition coal could be a feedstock of choice, at least in the U.S. which has huge reserves of coal (~250 years’ worth at current consumption rates), which are relatively cheap and easy to mine.An increase in future coal demand fuels legitimate concerns about the impacts on global climate and regional air pollution. While carbon capture and storage is often mentioned as a solution to these two problems, another impact, often overlooked, is the possibility that the current coal distribution infrastructure may not be able to reliably deliver the additional demand. Railroads deliver about two-thirds of U.S. coal at present, but certain coal-carrying rail corridors are already up against their capacity limits. Any future demand increases will probably necessitate significant capital investment by rail companies.This study seeks to identify existing capacity and potential constraints within the coal distribution infrastructure and to identify the costs of alleviating these constraints under several growth scenarios for coal demand. The scenarios differ based on whether or not pulverized coal (PC) or integrated gasification combined cycle (IGCC) power plants are built, as well as the amount of coal that is used to produce hydrogen for fuel cell vehicles.Coal transportation along the nation’s vast rail network is modeled with a freight routing model that uses the Surface Transportation Board’s confidential Carload Waybill Sample data as an input. For each coal demand growth scenario, I identify the rail corridors that could potentially reach their capacity limits in the future due to increasing coal traffic, and I quantify the investment that might be needed to boost the coal-carrying capacity along these lines.Some of important questions that I have attempted to answer through this analysis include the following: (1) Will the nation’s rail-coal distribution system be able to handle the future increases in coal demand that could result from traditional uses, as well as from coal-to-hydrogen production; and (2) What is the trade-off between building more efficient, albeit more expensive, IGCC power plants versus modern PC plants, if costly investments in coal transportation infrastructure can be avoided