Future impacts of coal distribution constraints on coal costs

Coal consumption in the United States is projected to rise significantly over the next few decades. About two-thirds of all coal in the U.S. is transported via rail, but certain coal-carrying rail coffidors are already up against their capacity limits. Any future increase in coal demand will probably necessitate significant capital investment by rail companies. This study seeks to identify existing capacity and potential constraints within the U.S. coal distribution network and to estimate the costs of alleviating those constraints under several scenarios of coal demand growth. We consider coal demand both for electricity generation and production of hydrogen fuel for transportation applications. Using a model of the U.S. rail network, we estimate the costs of adding new rail capacity to meet growing coal demand. Total railroad capital investments could be on the order of $1.5 - $11.0 billion over the 2004 - 2050 timeframe, depending on the particular scenario we model. While these infrastructure investments are substantial, it does not seem likely that the delivered cost of coal will necessarily increase throughout the country as a result. Hence, on a cost basis our analysis shows that investment in coal distribution infrastructure should not be a baffler to a coal-based "Hydrogen Economy".