National Mining Association CEO Hal Quinn admitted he was wrong.

Before a packed meeting hosted by the U.S. Energy Association at the National Press Club in Washington, D.C., yesterday, he said his prediction last year that coal would surpass oil as the word's top fuel by 2020 was incorrect. New forecasts indicate that it could happen sooner (Greenwire, Dec. 18, 2012).

"But let's not focus upon the slight difference between these forecasts," Quinn said, "and instead appreciate the central point of both -- the importance of coal in the global energy mix is the highest since 1971."

Despite being bullish about the growth of coal worldwide, particularly because of demand in the developing world, Quinn recognized the ongoing troubles with American coal companies.

"The coal industry will clearly be adjusting and restructuring and realigning over the next several years," Quinn told the audience. He predicted that more layoffs may be in the future at U.S. mines.

Mining companies are hoping that increased international trade may help turn things around through expanded port capacity in the Pacific Northwest and elsewhere. Coal exports may reach 125 million short tons this year.

"What a lot of people aren't noticing is that there is quite a bit of Illinois basin coal going out of the Gulf of Mexico," Quinn said.

Public health and environmental groups and many Oregon and Washington state residents are opposing the new coal terminals because of health, safety and climate change concerns. Coal critics also question the bullish estimates of Asian demand and coal's long-term international viability.

Quinn recalled previous doubts about increased port capacity. "Guess what, everybody is glad now we have them," Quinn said in a gathering with reporters after his speech. "Because nobody could foresee what's going on today. It's a BTU-hungry world."

Despite the rush to export, Quinn tried to dispel the notion that overseas demand was the only future for U.S. coal. He said economic recovery and natural gas prices coming up from what he called "unsustainably" low levels would improve the landscape for coal.

Quinn, like most other analysts, predicted continued power plant retirements. But he said the U.S. fleet would be newer, larger and more efficient once the dust settles. Citing new plants like the John W. Turk Jr. "ultra-supercritical" facility in Arkansas, he said higher power needs would help increase demand from mines.

Looking into the future, analysts expect few, if any, new coal power plants to be built in the country, especially because of tougher Obama administration emissions guidelines. Carbon capture and storage, Quinn said, is still years away from widespread commercial viability, even with ongoing development projects.

Calling EPA rules bad public policy built on shaky legal ground, Quinn said government should encourage the construction of new coal plants to replace old ones as a means of promoting diverse energy sources and innovation.

In an attempt to counter critics of coal who see natural gas as a bridge to more renewable sources of energy, Quinn warned against discounting coal.

"After rolling up potential gas demand for a manufacturing renaissance, a transportation fleet transformation and electric power," Quinn said in prepared remarks, "one might reasonably ask whether so many saddlebags will buckle the knees of the natural gas mule."

Federal coal royalties

After his speech, Quinn criticized reports that U.S. taxpayers are missing out on millions, perhaps billions, of dollars from federal coal royalties, especially with increased exports.

A Reuters news service investigation found that companies may be using affiliates to take advantage of low royalties and sell the coal at higher overseas prices. Senate Energy and Natural Resources Chairman Ron Wyden (D-Ore.) and ranking member Lisa Murkowski (R-Alaska) asked Interior Secretary Ken Salazar for more information (Greenwire, Jan. 4).

The Government Accountability Office and Interior's inspector general are probing the issue. And the Office of Natural Resources Revenue is studying whether to change coal valuation from federal and American Indian tracts.

But in a letter last year the trade group said, "NMA disagrees with the primary contention that changes to the regulations are merited by 'significant' changes in the domestic coal market over the last 20 years."

Quinn said yesterday, "Most of that price has nothing to do with what the coal is sold for at the mine. There's a lot of risk shipping coal overseas and once it's over there someone saying at the port, 'Hey, we don't need it.'"