United States thermal coal exports hit their highest levels since 2018 during the first eight months of 2023, climbing 20% from the same period in 2022 thanks to strong demand from key consumers including China, India and South Korea.

Total U.S. exports of coal used for power generation hit 22.5 million tonnes through August, up from 18.3 million in the same period in 2022, according to ship tracking data from Kpler.

In percentage terms, the increase in U.S. exports was the largest among all major thermal coal exporters, surpassing even the 15.7% expansion seen from top coal exporter Indonesia.

The strong gains in U.S. coal exports contrast with the declines seen in domestic coal use for power generation, with U.S. coal-fired power production down over 50% since 2010 as part of efforts to reduce national fossil-fuel emissions.

The diverging trends in coal use and exports leave the United States vulnerable to accusations that it contributes to harmful global emissions trends by sustaining high exports of coal even as it reduces coal consumption at home.

But the strong exports pace also highlights the enduring demand for U.S. coal even as domestic power producers steadily reduce coal's share of the power generation mix.

TOP MARKETS

Asia accounted for 48% of total U.S. exports, or around 10.6 million tonnes, with 7 million tonnes going to India, 1.3 million tonnes to Japan, 1.1 million tonnes to China and 600,000 tonnes to South Korea.

Europe accounted for 26.6% of U.S. exports, with the Netherlands the second-largest buyer overall with 3.2 million tonnes of imports. Germany, Spain and Poland were other notable European buyers, bringing in 1 million, 712,000 and 217,000 tonnes, respectively.

Elsewhere, Egypt (1.9 million tonnes), Morocco (1.0 million tonnes) and the Dominican Republic (662,000 tonnes) were other large buyers, underscoring a wide geographic span of markets for U.S. coal so far in 2023.

POLLUTION IMPACT

While China and India, the world's two largest coal consumers, secure a majority of their coal needs from domestic production, imported coal contributes to total emissions from power plants.

In 2022, those two countries accounted for just over 70% of total global power emissions from coal use, discharging over 5.4 billion tonnes of carbon dioxide and equivalent gases, data from think tank Ember shows.

Japan, South Korea, the Philippines, Germany and Poland accounted for a further 8%.

Over the near term, the wide range of coal importing markets bodes well for U.S. coal exporters, and outbound shipments should climb again over the winter months as long as U.S. prices remain competitive to other suppliers.

But over the longer term, U.S. coal exporters may start to struggle to profitably find willing buyers for their production, as a growing number of power generation companies have pledged to boost renewable energy supplies and will cut back on coal imports.

In addition, some major coal producers, including China, may increase coal exports over time even as power producers there follow the U.S. lead and reduce coal use in their own generation mixes.

That may lead to greater competition with the U.S. for coal export market share, and lead to steady declines in U.S. export potential over time.

The opinions expressed here are those of the author, a columnist for Reuters.