Dive Brief:

• Electricity generated by coal-fired plants is expected to rise by 22% in 2021, according to the U.S. Energy Information Administration (EIA), a bounce back that comes amid what has been a long and steep decline.
• The rise in coal-fired power is being driven by "significantly higher natural gas prices" combined with stable coal costs, the EIA reports.
• However, the EIA does not expect the trend to last, forecasting a 5% percent drop in coal-fired power generation in 2022 following 2021's increase, and an easing in natural gas prices.

Dive Insight:

The projected rebound in coal-fired electricity in 2021 is the first increase since 2014, when a brief and more modest rise that had begun in 2012 came to an end, EIA statistics show.

Still, the rise in coal-fired power follows a steep decline in 2020 that has left current levels of coal-fired power generation below that of 2018 and 2019.

And the trend over the last decade is far less sanguine, with the power generated by coal-fired plants having dropped by more than half since 2010, falling below 1 billion MWh, down from 2 billion MWh in 2010, according to the EIA report. 

Behind the spike has been a big jump in the price of natural gas. Power companies prefer natural gas, which is easier to convert to fuel than coal, and will opt to use it even if the price of coal is slightly higher, the report notes.

But the "delivered cost" to power plants in the U.S. having more than doubled in 2021 from last year, rising to $4.93 per million British thermal units, creating a large gap with coal prices, which remained stable, the report states.

Rich Nolan, president and CEO of the National Mining Association, said he is encouraged by the rise in demand for coal by the power sector.

"It's an incredible resurgence story, contrary to what most people think," Nolan said. "I think the jury is still out for the long-term."

However, while emissions from coal-fired plants are significantly higher than natural gas, environmental advocates aren't hitting the panic button yet.

"The EIA projections show nothing more than a last gasp for coal — a fuel source that is continuing to lose the competition with renewables and other cleaner energy sources," said Shannon Fisk, managing attorney for Earthjustice's coal program.

"The purported "rebound" projected by the EIA would leave 2021 coal generation below 2019 levels, and is expected to be very short-lived," he said.

Cara Bottorff, electric sector analyst for the Sierra Club, also expects the rebound in coal to be more of a blip than a trend.

Mines have closed, reducing the capacity to produce coal, she said.

In addition, no new coal plants have opened in the U.S. since 2013, while the industry has shuttered 30% of its coal-fired generating capacity since 2010, the EIA report states.

"Coal can only go so high now," Bottorff said. "It's a short-term market blip."