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Viewpoint: US utilities worry over railcar supply

  • : Coal, Coking coal, Electricity
  • 25/01/02

US utilities are concerned that they may not have enough railcars to haul coal in the future as multiple power plants are seeking to remain in operation longer than expected.

Power demand is forecast to rise in the coming years because of planned data centers in multiple parts of the country. Many data centers are expected to open before new generation, including natural gas, wind and solar-power units, go into service.

A number of utilities want to avert the temporary power shortage by extending the life of coal-fired power plants beyond planned retirement dates.

In response, demand is "poised to shift to a slight growth in the need for coal cars", according to railcar expert Richard Kloster, president of Integrity Rail Partners. Longer power plant lives as well as expectations of increased metallurgical coal exports are likely to provide demand for equipment.

But the supply of railcars for coal has been slowly shrinking. No new railcars for the coal industry — primarily gondolas or open-top hoppers — have been built in nearly a decade. Utilities and leasing companies have had little interest in ordering new railcars for a shrinking sector.

Many existing cars have also been scrapped, particularly during periods of low coal demand and high scrap prices during the last few years.

There also are thousands of coal railcars in storage, but those do not really count towards demand, Kloster said. The cost of pulling those cars out of storage and making them service-ready is not necessarily cost effective, he said.

About 21pc of North American coal cars were in storage at the beginning of August, up from 15pc in November 2022, according to Association of American Railroads data. In comparison, about 35pc of the coal car fleet was in storage at the start of July 2020, near the height of the Covid-19 pandemic.

Possibilities of new construction

There is a chance that "in the next 10 years, there will be coal cars built again", because many coal cars in the fleet are nearing 50 years of age, Kloster said.

The retirement of many cars means that equipment must be pulled from storage or new units built, driving potential construction.

Under Association of American Railroads (AAR) rules, railcars built after June 1974 can only be interchanged with other railroads for 50 years. After that, those cars are generally limited to operating on only one carrier.

Some of those older cars may be retired early if they need repairs. Maintenance expenses could cause car owners to take units out of service.

Utilities strategize

Some utilities are already implementing plans to secure railcars, but others think taking additional steps will be unnecessary, according to railcar expert Darell Luther, chief executive of rail transportation firm Tealinc.

The differing views are tied in part to whether utilities are regulated by states or merchant-owned, Luther said. Public utilities need to prove to regulators they can meet generating needs, including having enough coal and railcars. Privately owned operators have more flexibility in terms of contracting for coal and railcars.

Several utility rail managers told Argus they do not see the need to take extra steps to secure railcars, confident that they already have plenty or can lease whatever they need in the future.

But other utilities said they have taken steps to ensure they have coal cars in the future.

Some utilities have purchased single or multiple cars as other generators sell them off. Others are increasingly leasing cars, with one utility saying that having more cars than needed is a cheap way of ensuring future supply.


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25/05/06

US EIA will not release international outlook in 2025

US EIA will not release international outlook in 2025

Washington, 6 May (Argus) — The US Energy Information Administration (EIA) no longer expects to publish one of its major energy reports this year after losing some of its staff through President Donald Trump's efforts to downsize the federal workforce. The EIA does not plan to publish its International Energy Outlook (IEA) — which models long-term global trends in energy supply and demand — this year because of a loss of staff responsible for producing the report, according to an internal email initially reported by the news outlet ProPublica . The EIA confirmed the authenticity of the email. "At this point, you can assume that we will not be releasing the IEO this year," the EIA's Office of Energy Analysis assistant administrator Angelina LaRose wrote in the 16 April email. "This was a difficult decision based on the loss of key resources." Oil and gas producers, traders, utility companies, federal regulators and foreign governments have come to rely on the data and models from the EIA, an independent agency within the US Department of Energy. The 2025 version of the IEO might still be published early next year, the EIA said. The agency for now is focusing on trying to "preserve as much institutional knowledge as possible" with an "all hands-on deck" effort under which remaining staff will document models and procedures on long-term modeling, LaRose wrote in the email. Trump and his administration have worked to cut the size of the government's workforce through voluntary buyouts and a process known as a reduction in force. The EIA has yet to say how many personnel it has lost, but about a third of the agency's 350 staffers have accepted voluntary buyouts, according to a person familiar with the situation. The White House last week proposed an 18pc budget cut for the non-nuclear portions of the Department of Energy, but has yet to say if it is seeking to cut spending at the EIA. Last month, the EIA released its premier report, the Annual Energy Outlook , but omitted its traditional in-depth analysis. A technical issue on 1 May delayed the release of a key natural gas storage report by more than three hours, the EIA said. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's AGL to expand Kwinana power station


25/05/06
25/05/06

Australia's AGL to expand Kwinana power station

Sydney, 6 May (Argus) — Australian utility AGL will expand the capacity of its gas-fired Kwinana swift power station (KSPS) in Western Australia (WA) by 250 MW by 2029, according to plans submitted to WA's Environmental Protection Authority (EPA) on 2 May. AGL plans to construct a second stage of KSPS called K2. K2 will increase capacity to 370 MW from 120 MW currently, with up to four new gas-powered turbine units at the Kwinana site 40km south of Perth. Construction of the gas peaker is set to begin in 2026, and the power station will be operational from 2029. The new generators will run until 2058, according to AGL's project report. K2 will connect to the Southwest Interconnected System (SWIS) south of Perth and aims to support AGL and WA's transition to renewable energy. AGL aims to deliver 5.4 GW of renewable capacity by the end of 2030 and 12 GW by 2036, 300 MW of which has been completed through the Torrens Island battery and Broken Hill battery. Upper estimates of fuel supply are around 50 TJ/d (1.3mn m³/d), depending on operating hours, according to AGL. AGL did not disclose gas and diesel supply. AGL expects scope 1 CO2 emissions to be 5.8mn t over the project's life, while scope 3 emissions will reach 688,000t by 2058, according to the project application. Yearly emissions will decrease to meet WA's 2050 net zero target. AGL's submission came just days before Australia's Labor party was re-elected , reinforcing a focus on renewable energy. The WA government in 2023 announced further investment of A$2.8bn ($1.8bn) for its transition to renewable energy, which includes funding for large scale battery storage systems in Collie and Kwinana. WA's gas consumption is predicted to overtake supply from 2028, according to the Australian Energy Market Operator's (Aemo) 2024 outlook. New gas projects including the Scarborough energy project , the West Erregulla project , the Lockyer Gas project and the Waitsia stage two project will meet demand in 2027 but there is long-term uncertainty as the state transitions to renewable energy. Aemo introduced a WA reform program in 2023 including an energy transition strategy. This transition includes closing down state-owned coal-fired power stations by 2030, which currently account for 30pc of the grid supply in southwest WA. By Susannah Cornford Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Labor win may aid low-carbon Fe, Al sectors


25/05/05
25/05/05

Australia's Labor win may aid low-carbon Fe, Al sectors

Sydney, 5 May (Argus) — The Australian Labor party's victory in the country's 3 May parliamentary election could support low-carbon iron and aluminium developers, providing policy clarity and public capital to the sectors. Labor's victory provides more certainty around Australia's A$14bn ($9.06bn) green hydrogen subsidy scheme, which will help steel producers transition towards hydrogen-powered steel furnaces. The opposition Coalition during the election pledged to scrap the programme, which will allow producers to claim A$2/t of green hydrogen produced from 2027. Australian steelmaker NeoSmelt and South Korean steelmaker Posco are developing electric iron smelters in Western Australia (WA) that produce hot-briquetted iron, which is used in the green steel process. Both projects will initially rely on natural gas but may transition to hydrogen-based processing as hydrogen production rises. Australia's hydrogen tax credits may prove crucial given ongoing hydrogen production challenges. South Australia's state government closed its Office of Hydrogen Power SA on 2 May, following a funding cut earlier this year. Labor can now also move forward with plans for A$2bn in low-emissions aluminium production credits, beginning in 2028-29. Smelters will be able to claim credits per tonne of low-carbon aluminium produced, based on their Scope 2 emission reductions. The party's proposal does not include any blanket credit for producers. Labor's aluminium production credits are aimed at supporting the Australian government's goal of doubling the country's share of renewable power from about 40pc to 82pc by 2030. Australian producers export about 1.5mn t/yr of aluminium, according to industry body Australian Aluminium Council, from four smelters located around the country. Green iron funding Labor's election win also secures its A$1bn lower-emission iron support pledge , first announced in late February. Half of the fund will go towards restarting and transitioning the 1.2mn t/yr Whyalla steelworks in South Australia into a green steel plant. The other half will support new and existing green iron and steel projects to overcome initial funding barriers. Labor has not allocated any funding through the programme yet. By Avinash Govind Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Coalition eyes power, resource funding cuts


25/05/02
25/05/02

Australia's Coalition eyes power, resource funding cuts

Sydney, 2 May (Argus) — Australia's federal Coalition opposition has announced it will cut key energy rebates and resource sector subsidies, if elected on 3 May, to reduce forecast future budget deficits. The Peter Dutton-led opposition will cut programs, including the Labor government's A$20bn ($12.8bn) Rewiring the Nation transmission plan, and the A$15bn National Reconstruction Fund aimed at underwriting green manufacturing using domestic minerals. It will also unwind electric vehicle tax concessions to save A$3.2bn, and cancel planned production tax credits for critical minerals processing and green hydrogen estimated to cost A$14.7bn. Combined savings measures will improve the budget's position by A$13.9bn over the four years to 2028-29, the Coalition said on 1 May, cutting debt by A$40bn during the same timeframe. The announcement comes as opinion polls show Australia's next federal government is likely to force one of the two major parties into minority, after a campaign where cost-of-living relief promises have trumped economic reform policy. The centre-left Labor party is more likely than the conservative Coalition to form government at the 3 May poll. It holds a thin majority of just three seats in parliament's main chamber, the House of Representatives, meaning a swing against it would force it to deal with minor parties such as the Greens and independent groupings. Promising a stable government, as Australia emerged from Covid-19, Labor had benefited from a resources boom as Russia's invasion of Ukraine led LNG and coal receipts to skyrocket and China's emergence from lockdowns revitalised its demand for iron ore, which jointly form the nation's main commodity exports. But as markets adjust to a period of protectionist trade policy and predictions of a slowdown in global growth abound, economists have criticised the major parties' reluctance to embrace major reform on areas such as taxation, while continuing to spend at elevated levels post-pandemic. Australia's resource and energy commodity exports are forecast to fall to A$387bn in the fiscal year to 30 June 2025 from A$415bn in 2023–24. The Office of the Chief Economist is predicting further falls over the next five years, reaching A$343bn in 2029-30, lowering expected government revenue from company tax and royalties. Gas The Coalition has pledged a domestic reservation scheme for the east coast, forcing 50-100PJ (1.34bn-2.68bn m³/yr) into the grid by penalising spot LNG cargoes. Australia's upstream lobby has opposed this, but rapidly declining reserves offshore Victoria state mean gas may need to be imported to the nation's south, depending on the success of electrification efforts and an uncertain timeline for coal-fired power retirements. Labor has resisted such further gas interventions , but it is unclear how it will reverse a trend of rising gas prices and diminishing domestic supply, despite releasing a future gas plan last year. The party is promising 82pc renewables nationally by 2030, meaning it will have to nearly double the 2025 year-to-date figure of 42pc. This could require 15GW of gas-fired capacity by 2050 to firm the grid. On environmental policy, narrowing polls mean Labor's likely partners in government could be the anti-fossil fuel Greens and climate-focused independents — just some of the present crossbench of 16 out of a parliament of 151. The crossbench may drive a climate trigger requirement in any changes to environmental assessments, which could rule out new or brownfield coal and gas projects. Coal has been conspicuously absent from policy debates, but Labor has criticised the Coalition's nuclear energy policy as expensive and unproven, while the Coalition has said Labor's renewables-led grid would be unstable and costly because of new transmission requirements. The impact of the US tariff shock that dominated opening days of the month-long election campaign remains unclear. Unlike Canada, Australia is yet to be directly targeted by US president Trump's rhetoric on trade balances and barriers. But the global unease that has set in could assist Labor's prime minister Anthony Albanese, as he presents an image of continuity in an uncertain world economy. Australia's main exposure to Trump tariffs is via China, its largest trading partner and destination for about 35pc of exports, including metal concentrates, ores, coal and LNG. A downturn in the world's largest manufacturer would spell difficult times ahead for Australia, as it grapples with balancing its budget in a normalising commodity market. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

India extends directive to lift coal-fired generation


25/05/02
25/05/02

India extends directive to lift coal-fired generation

Singapore, 2 May (Argus) — India's power ministry has extended its directive requiring imported coal-fired utilities to boost generation by two months until 30 June, a move that could support demand for seaborne coal over the peak summer period. The directive covers imported coal-fired plants with a combined capacity of 17.5GW and was previously set to expire on 30 April. The decision could support India's coal imports, which have remained lacklustre so far in 2025. India imported 38.29mn t of thermal coal in January-March, down from 41.87mn t a year earlier, according to data from shipbroker Interocean. Imports may have remained under pressure in April, with India's seaborne thermal coal receipts estimated at 15.77mn t for the month, down from 15.84mn t a year earlier, according to trade analytics platform Kpler. India's coal-fired generation remained above the historical average in April in line with the uptick in power demand, although actual coal burn was down on the month and year. India's coal-fired generation — which meets most of its power requirements — stood at 113.48 TWh in April, down from 116.58 TWh a year earlier and 117.95 TWh a month earlier, according to data from the Central Electricity Authority (CEA). The extension of the order appears to be a pre-emptive measure by the authorities to ensure imported coal-fired utilities are well stocked to meet any uptick in power demand. The country is currently sitting on a surplus of domestic coal, with elevated inventory at its utilities. Delhi has been proactively directing utilities to boost output since mid-2022 to cater for seasonal surges in power demand. Combined coal inventories at Indian power plants stood at 56.69mn t as of 30 April, up from 47.92mn t a year earlier, but down from 58.11mn t as of 31 March, CEA data show. Inventories at state-controlled Coal India (CIL) also remained high, according to market participants. By Saurabh Chaturvedi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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