Trump's Coal Crusade: A Futile Bid to Boost a Fading Industry

Strategic Insights -

President Donald Trump has launched an AI Action Plan while simultaneously instructing his Energy Secretary Chris Wright to promote coal as "clean, beautiful" and compete with China's construction of new coal-fired plants. However, coal's decline in the US power generation market is well-established, having lost 31 percentage points of market share between 2005 and 2024, with natural gas picking up four-fifths of that loss. The industry's woes are straightforward: coal-power is an old technology outmatched by newer ones, with the average coal-plant running today beginning operation when Jimmy Carter was president.

Key Takeaways:

  • Coal lost 31 percentage points of market share in US power generation between 2005 and 2024, with natural gas picking up four-fifths of that loss.
  • The average coal-plant running today began operating when Jimmy Carter was president.
  • The youngest coal-plant, Sandy Creek in Texas, came online in 2014 and its owners were reportedly in debt restructuring talks by 2020.
  • Utilization of coal-plants has slumped, with even the cheapest existing coal-plants remaining competitive only with implicit subsidies for unpriced carbon emission.
  • Rising forecasts of power demand are stoking fears of dark datacenters or blackouts, but this won't catalyze new coal-plants, even with the rising cost of new gas-plants.
  • Utility NextEra Energy Inc. cited a levelized cost for new gas-power of $90-$115 per megawatt-hour.
  • Gas plants are more efficient than coal, especially in ramping up and down to match shifting demand and output from renewables, and also emit about half as much carbon.
  • The Trump administration is using federal powers to keep coal-plants running and has pulled an agreed $4.9 billion federal loan-guarantee for the Grain Belt Express transmission line.
  • The Grain Belt Express project, bringing wind and solar power from the Great Plains to states further east, had secured approval from four states and court victories over opponents.

Statistics:

  • Coal lost 31 percentage points of market share in US power generation between 2005 and 2024.
  • Natural gas picked up four-fifths of coal's loss in market share.
  • The average coal-plant running today began operating when Jimmy Carter was president.
  • 80% of coal's market loss between 2005 and 2024 is attributed to natural gas becoming cheaper, with the gap between the two narrowing from 5 times the cost of coal in 2005 to essentially level by 2024.
  • The cost of building new coal plants went up even as it went down for gas (and renewables).
  • The youngest coal-plant, Sandy Creek in Texas, came online in 2014.
  • By 2020, its owners were reportedly in debt restructuring talks.
  • Utilization of coal-plants has slumped.
  • The cheapest existing coal-plants remain competitive, according to Lazard Inc.'s latest analysis of levelized costs.
  • Gas plants are more efficient than coal, especially in ramping up and down to match shifting demand and output from renewables, and also emit about half as much carbon.

Sources:

  • Trump's 'national energy emergency'
  • Lazard Inc.'s latest analysis of levelized costs
  • Utility NextEra Energy Inc.'s levelized cost for new gas-power
  • The Grain Belt Express project's approval from four states and court victories over opponents
  • The Department of Energy's forecast of wind and solar to account for virtually all additions to generating capacity this year
  • China's clean-tech effort driven by economics, security, and geopolitics (ESG)