Competitive costs of foreign and U.S. coal in North Atlantic markets

Abstract

Costs of using coal from the eastern United States, Australia, Colombia and South Africa by electric utilities in the coastal areas of eastern United States and Europe are determined on a comparative cost basis and analyzed. Costs considered include coal production and transportation costs and cost to the electric utilities, determined by differences in coal quality (i.e., heat, ash and sulfur content). Estimated costs and shadow prices are determined and compared with actual prices.

Differences in determined costs indicate that United States high sulfur coal will be uncompetitive in all scenarios investigated, United States low sulfur coal will be competitive under certain circumstances, and that potential economic rents may accrue to coal producers in Colombia, Australia and South Africa.