Coal Transportation Costs for U.S. Power Sector See Slight Decline in 2023: EIA

The average transportation cost for U.S. coal declined from $19.29/ton during 2022 to $18.77/ton in 2023, according to a Feb. 12 report published by the U.S. Energy Information Administration. The decrease in transportation costs aligns with the decline in the volume of U.S. coal transported in 2023. U.S. coal deliveries have declined over the last two decades, due to coal’s declining share of power in the generation mix.

The amount of coal transported in the U.S. declined eight percent during 2023, continuing a trend in which coal shipments have generally decreased over the past two decades, in line with a reduction in coal’s share of power generation in the U.S.

The quantity of coal transported to power stations declined by more than 50 percent, dropping from 957 million tons in 2010 to 422 million tons during 2023. A number of factors have led to reductions in coal-fired generation. Coal capacity has diminished because operators have retired about 37 gigawatts, or 17 percent of the coal-fired generation fleet, since the beginning of 2021. Moreover, natural gas-fired and solar production capacity has increased. Furthermore, grid operators mostly utilize the lowest cost power available at a given point, which in recent years has regularly been solar, wind and natural gas rather than coal.

There are four main forms of transportation that transfer coal from the mines to power stations. Around 75 percent of U.S. coal during 2023 was transported by railroads, since a large number of coal fired power stations are distant from the coal fields and mines and railroads have demonstrated to be the most effective transportation method, given the vast railway network across the U.S.

The nominal average cost of transporting coal by railroad and waterway rose marginally during 2023, while the average cost of transporting coal by truck declined. Despite the overall average cost of transporting coal to the U.S. electric power sector, on a regional basis, a combination of marginal increases and decreases in nominal prices occurred across modes of transport and across states and coal supply basins. Overall, the average cost of rail transport rose in the Illinois Basin and in Appalachia. The cost declined in the Western region. By truck and waterway, average costs were lower in Appalachia but rose in the Illinois Basin. Overall, the average cost of rail transport rose in the Illinois Basin and in Appalachia and the cost declined in the Western region. Average costs were lower in Appalachia by truck and waterway but rose in the Illinois Basin.