Regulatory and political pressures, as well as staffing problems at US western mines, challenge coal companies and bring more uncertainty in future, market participants told an American Coal Council conference.

Coal producer Wolverine Fuels sees a high demand for coal in western parts of the country from California to Colorado. This includes many smaller, shorter-term contractual opportunities for the company, executives said.

But a number of challenges have western coal producers thinking about what the demand footprint will look like in 3-10 years from now. This includes new and proposed rules from the US Environmental Protection Agency (EPA) that will affect power plant operations, including new limits on NOx emissions from power plants in some states.

“Obviously, the ‘good neighbor rule’ is going to impact us on the utility side of the business very much,” Wolverine Fuels senior vice president of commercial operations Patrick Barrett said at American Coal Council Coal Market Strategies conference in Park City, Utah, on Wednesday.

Other EPA regulations that will affect coal-fired generation include standards on wastewater effluent limitations and coal ash management. EPA’s proposed new standards for CO2 emissions from coal-, oil- and natural gas-fired power plants also would affect coal demand.

Wolverine is also contending with pressure from policies in California. The company will have to explore options to continue a sizable portion of its exports beyond 2026, when the Levin-Richmond Terminal has agreed to stop handling and storing coal in the city.

Barrett said that Wolverine could “fairly easily” export up to 2mn metric tonnes a year out of the terminal in Richmond, California, by expanding storage there, but regulations restrict the terminal’s coal exports to a little under 1.03mn t/yr.

In 2022, about 1.66mn short tons (1.51mn t) of Wolverine’s shipments were designated for export through terminals in northern California and elsewhere in the US. Exports represented about 20pc of the company’s overall sales last year.

Another big challenge is under-staffing at US coal mines and railroads. This issue is also an important one for other US coal producers. At least two of them confirmed it to Argus on the sidelines of the conference.

Western US railroad Union Pacific is also continuing to try to add workers.

“We continue with robust hiring plans at Union Pacific, not just for 2023, but in our outlook into 2024,” the railroad’s US marketing and sales director Kelli Sweet said. She noted that the railroad has the challenges “as everyone else” does as far as getting qualified candidates and then having them make it through their training programs.

Regulatory pressure will continue, and a number of coal plants are set on their paths to retirement, National Coal Transportation Association executive director John Ward said. Both factors will be “minuses” for the US coal industry in the longer term. But on the other hand, grid reliability concerns are increasing, and the interest in carbon capture is recovering, which will support coal-fired generation in the country.

According to slides accompanying presentation of Elyse Steiner, principal analyst for thermal coal at Wood Mackenzie, for the first time ever, wind and solar generated more power than coal during the first five months of this year. In 2023, coal-fired generation accounted for 17pc of the total generation mix.

By Elena Vasilyeva