Everybody knows that coal has struggled over the past decade or so here in the U.S. Since 2010 alone, coal electricity generation capacity has sunk nearly 30%. Retirements have even hit PJM, a 13-state, 65 million people region that encompasses the heart of coal country. Since 2014, the Interconnection has shuttered almost 20,000 MW of coal capacity.

Last year, coal generated just 975 terawatt hours of U.S. electricity, its lowest output since the mid-1970s. This equated to just 24% of total generation, a far cry from the 50% coal supplied in George W. Bush’s last year as president. This is trending toward 15% over the next decade. Despite promises from President Trump, the industry has continued to struggle. Last year, coal production was under 700 million tons, the lowest level since President Carter was in office. Output could be at just 630 million tons or less this year.

Everybody also knows the reasons for coal’s decline. Historically low natural gas prices continue to push coal out of the market. Environmental regulations and declining costs continue to encourage the wind and solar power build-out. Policy matters: 2015 remains the peak year for coal plant retirements so far, the same year the U.S. Environmental Protection Agency put mercury emissions standards into effect. Polices nationally and/or in key states to limit CO2 emissions could surge coal retirements even more.

In short, the domestic coal industry would be quite content with a flatlining of the industry, a “stabilization” as is being termed. Looking forward, coal generation capacity retirements are set to slow. And this makes sense since most of the capacity that has been being pulled offline has been the more costly and inefficient units, so the still remaining fleet is better equipped to weather the storm. To illustrate, many of the plants going offline have been operating for 60 years or more.

Yet, the pressure on coal will remain strong. For starters, the U.S. Department of Energy just forecast that domestic natural gas prices will stay below the ridiculously low $3.70 per MMBtu through 2050. The reality is that such low commodity prices for gas will be hard for any other source to compete with. The April 2020 gas futures contract, for instance, is today trading at a crazy low $1.75.

But still, the “deep electrification” process that we are encouraging, to basically electrify “all sectors of the economy,” will obviously do just that: help all sources of electricity, including coal. Flat for the past 12 years, our electrification goal could surge our power needs by over 50%. Further, environmental groups for some reason continue to ignore the mandatory need for massive investments in carbon capture and storage (CCS) technologies. CCS is as every bit as viable as offshore wind and will help the prospects for coal in particular.

You should know that the International Energy Agency realizes widespread CCS as a requirement to lower greenhouse gas emissions enough to meet environmental objectives. Thus, environmental groups against CCS are simply against full progress on climate change. I must mention here that they have also become illogically anti-natural gas, the energy source cited by the International Energy Agency as to why the U.S. is cutting CO2 emissions faster than any country in “energy history.” Indeed, the “only wind, only solar” mantra is dangerously naive.

At the very least, we can help develop critical CCS technologies for those countries that will still rely heavily on coal for decades to come, like China, India, and apparently even the fully developed: “Japan Races to Build New Coal-Burning Power Plants.” After all, renewables and batteries could struggle to make the Herculean gains that are now just being assumed for them. Rapidly falling costs for still maturing technologies obviously do not last forever, especially as major tax breaks fade. And you never know, still low costs, reliability concerns, unanticipated policy support (e.g., FERC’s MOPR), higher gas prices, and the goal of enhanced resiliency could also all help keep coal in the game more than its haters care to admit:

We could not have served customers without coal,” Andrew Ott, CEO, PJM Interconnection, January 2018



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