iii iv v CONTENTS ACKNOWLEDGEMENTS ........................................................................................................... iv ACRONYMS ...................................................................................................................................v 1. INTRODUCTION .....................................................................................................................1 2. COAL PRODUCTION VOLUMES AND TRENDS ...............................................................1 2.1 Major Sources ...................................................................................................................1 2.2 Production Volumes .........................................................................................................4 2.3 End-Use ............................................................................................................................4 2.4 Exports ..............................................................................................................................7 3. COAL TRANSPORT ................................................................................................................8 3.1 Tonnage Moved by Rail and Water Modes ......................................................................9 3.2 Major Flows ....................................................................................................................11 4. RAIL REVENUE AND INVESTMENT TRENDS ................................................................12 4.1 Revenue from Coal and Other Traffic ............................................................................12 4.2 Factors Affecting Rail Tariffs .........................................................................................14 4.2.1 Asset Ownership ..................................................................................................15 4.2.2 Length of Haul .....................................................................................................15 4.2.3 Storage .................................................................................................................16 4.3 Investment .......................................................................................................................17 4.4 Future Volume and Distribution of Coal Traffic ............................................................18 5. ADDITIONAL ISSUES AND CONCERNS ..........................................................................19 5.1 Competing Demands for Locomotives and Crews .........................................................19 5.2 Uncertainty of Demand Forecasts...................................................................................19 5.3 Safety and Environmental Issues ....................................................................................20 5.4 Regulatory Issues ............................................................................................................21 6. SUMMARY .............................................................................................................................22 7. REFERENCES ........................................................................................................................23 i FIGURES 1 Major U.S. Coal-Producing Regions ......................................................................................2 2 Coal Production by State, 2004–2013, million tons ...............................................................3 3 Coal Production by Region, 1970–2040 .................................................................................3 4 U.S. Coal Production by Grade, 1990–2040...........................................................................4 5 U.S. Coal Consumption by End-Use Sector, 1990–2040 .......................................................5 6 U.S. Coal-Fired Generating Units by Age ..............................................................................5 7 Projected Cumulative Retirements of Coal-Fired Capacity, 2012–2014 ................................6 8 Average Delivered Price of Fuel to the U.S. Electric Power Industry, January 2008– March 2014 .............................................................................................................................7 9 U.S. Coal Exports by Destination, 2002–2013 .......................................................................7 10 U.S. Coal Exports by Customs District, 2002–2013 ..............................................................8 11 Coal Production vs. Consumption by State, 2013 ..................................................................9 12 Coal Transport by Mode, 2001–2012 ...................................................................................10 13 Tons Originated by Class 1 Railroads by Commodity, 2013 ...............................................11 14 Carloads Originated by Class 1 Railroads by Commodity, 2013 .........................................11 15 Existing Rail Networks, Large Coal-Fired Power Plants and Major Coal Mines ................12 16 Gross Revenue of Class 1 Railroads by Commodity, 2013 ..................................................13 17 Average Rail Revenue per Ton-Mile for Coal and Rail Cost Adjustment Factor, 1990–2012.............................................................................................................................13 18 Class 1 Railroad Revenue per Ton for Select Commodities.................................................14 19 Class 1 Railroad Revenue per Ton for Coal and Grain Shipments on Private vs. Railroad-Supplied Cars, 1985–2007 .....................................................................................15 20 Average Rates (Nominal $) for Coal Shipments by Distance, 1985–2007 ..........................16 21 Capital and Maintenance Expenditures by U.S. Class 1 Railroads, 2004–2013 ..................17 22 Average Annual Mine-mouth Coal Prices by Region, 1990–2040 ......................................18 ii FIGURES (CONT.) 23 Conceptual Illustration of Present and Projected Coal-by-Rail Flow Vectors .....................19 TABLES 1 Retirements at Existing Coal-Fired Generating Units, 2010–2012 ........................................6 2 Reserves, Production, and Storage Capacity of Major Coal Mines ......................................17 iii ACKNOWLEDGEMENTS The following individuals provided insightful and constructive review and comment on earlier drafts of this document: • Greg Adams, Energy Information Administration, U.S. Department of Energy • Nicholas Chase, Energy Information Administration, U.S. Department of Energy • Stanton Hadley, Electrical & Electronics Systems Research Division, Oak Ridge National Laboratory • Michael Mellish, Energy Information Administration, U.S. Department of Energy • Steven Plotkin, Energy Systems Division, Argonne National Laboratory Their reviews provided a valuable check on data and materially improved the accuracy of the final document. We thank them for their assistance. iv ACRONYMS AAR Association of American Railroads AEO Annual Energy Outlook (yearly DOE-EIA publication) AER Annual Energy Review BNSF Burlington Northern Santa Fe Railroad CFR Code of Federal Regulations CN Canadian National Railroad CSX Chessie System Railroad (called CSX since the 1990s) DOE United States Department of Energy EIA Energy Information Administration, DOE GW gigawatts (109 watts) MCHD Multnomah (OR) County Health Department NDC Navigation Data Center (USACOE) NO Oxides of Nitrogen x NS Norfolk Southern Railroad PL Public Law PM10 Particulate matter of 10 microns or more QCR Quarterly Coal Report RCAF Rail Cost Adjustment Factor STB Surface Transportation Board (U.S. Department of Transportation) UCS Union of Concerned Scientists USACOE United States Army Corps of Engineers v This page intentionally left blank. vi