US coal production is set for a bounce-back year in 2021. Rising electricity demand associated with an improving economy and an uptick in natural gas prices are likely to push coal generation higher.
Coal plant retirements are likely to slump to their lowest level since 2014 in President Biden’s first year in office, according to federal data.
The U.S. Energy Information Administration projects more than 4 gigawatts of coal retirements this year, down from 9.4 GW in 2020. Some 22 GW is slated for shutdown through 2024, compared with 41 GW during the Trump administration. The U.S. coal fleet total is roughly 220 GW.
The slowdown may be an anomaly. Many analysts expect coal to resume its long-term decline after a brief rebound this year.
But the dynamic hints at a potential risk to Biden’s climate ambitions.
U.S. emissions reductions have largely depended upon declining coal consumption in recent years. Those reductions, prompted by a combination of low natural gas prices, weak power demand and increased renewable deployment, overwhelmed the Trump administration’s attempts to prop up the industry.
Yet those same forces are unlikely to be strong enough to deliver the level of emissions reductions Biden is seeking. The president is aiming to eliminate power plant emissions by 2035.
“If you want to get 50% below 2005 by 2030, you have to squeeze out all the coal,” said Robbie Orvis, director of energy policy design at Energy Innovation, referring to the emissions reduction target many climate hawks think is needed.
Most modeling shows a significant amount of coal in 2030 even with the adoption of a clean electricity standard, he said.
“Increasingly, there is going to have to be some sort of mechanism to squeeze out those last plants, because it gets harder based on those market forces alone,” he said.
Coal is set for a bounce-back year in 2021 after a dismal 2020. Rising electricity demand associated with an improving economy and an uptick in natural gas prices are likely to push coal generation higher.