Mixed Signals For Coal’s Future in Electricity Generation

Coal’s share of U.S. electricity generation is steadily shrinking, a recent analysis by the the Institute for Energy Economics and Financial Analysis (IEEFA) argues, but other reports indicate that the fuel will maintain a place in the energy mix for the foreseeable future.

IEEFA, a global organization that works to accelerate the transition to a sustainable and profitable energy economy through market-based research, attributes this decline to rising renewable energy adoption, stricter regulations, and shifting economics.

Energy production firms across the country are projected to retire or transition around 70,000 megawatts (MW) of coal generation capacity by 2030. The decision is being primarily driven by environmental regulations that will sharply limit carbon emissions, an increase in use in lower-emission natural gas, and the rise of affordable renewable options, making green energy not only economically viable, but preferable. The report suggests that coal's share in the power sector has dropped significantly over the past decade, a trend expected to continue as utility companies seek to align with carbon reduction targets.

West Virginia Public Broadcasting observes that this trend is not just contained within traditional coal-producing states but instead reflects a nationwide transition. By 2030, more than half of coal’s peak capacity could be offline. Some plants are converting to natural gas, while others are making way for renewable resources.

Currently, coal ranks third in U.S. energy production by percentage, while renewables occupy the fourth spot. However, renewable energy production is growing rapidly and is expected to surpass coal in the coming years. The Energy Information Administration (EIA) predicts that solar energy will continue to lead all energy sources in capacity growth through 2025.

Despite coal's shrinking U.S. share, it likely still has a future, especially in overseas markets. Reports from S&P Global Commodity Insights illustrate coal’s importance for maintaining grid reliability, particularly during peak demand, which has been steadily increasing and is expected to continue, or extreme weather events.

Delays in replacing coal facilities with reliable, 24/7 alternatives have prompted some utilities to slow plant retirements. S&P Global argues that coal provides stability during the transition to renewables, which can be intermittent and depend on grid improvements to ensure consistent energy supply. A report by the Massachusetts Institute of Technology also suggests that coal will continue to have a significant role in power generation as demand for electricity continues to increase, especially if coupled with carbon capture and sequestration technology.

The differing views highlight the complexity of the energy transition problem as a whole, as government, industry, environmental, and academic leaders wrestle with the many interrelated technical, economic, environmental and political challenges facing a world demanding reliable power generation but also trying to lower carbon emissions.