Dive Brief:

• The Energy Information Administration (EIA) released its latest Short Term Energy Outlook (STEO) on Tuesday, forecasting that coal's share of U.S. electric generation will rise to 24% in 2021, after falling to 20% in 2020 amid ongoing plant closures. In its prior STEO report, released in September, EIA forecast a smaller rebound for coal, to 22% in 2021.
• The increase in forecasted coal generation for 2021 comes with an increase in forecasted energy-related carbon dioxide emissions. EIA previously expected those emissions to rise 4.8% in 2021, after projecting a 10% drop in 2020, due to decreased energy use in the commercial and industrial sectors amid the coronavirus pandemic. Now, EIA expects energy-related carbon emissions to increase 5.4% in 2021.
• EIA sees higher CO2 emissions in 2021 "as the economy recovers and energy use increases." It also expects a 19% increase in coal production in 2021 compared to 2020, "reflecting rising demand for coal from U.S. electricity generators because of higher natural gas prices compared with 2020."

Dive Insight:

Coal-fired generation is on a long-term downward trend in the U.S., with plant closures announced on a regular basis and more and more electric utilities announcing net zero carbon targets.

But EIA expects the resource will get a bit of a reprieve in 2021, driven by an overall increase in energy use as the economy recovers from the coronavirus pandemic, and by high natural gas prices.

The Trump administration has been engaged in a long-term campaign to prop up the coal sector, easing environmental regulations and weighing potential ways to support baseload generation. It is also investing significant amounts of money into clean coal research, along with other coal-relevant technology.

In New Mexico on Monday, Deputy Energy Secretary Mark Menezes supported the idea of keeping the coal-fired San Juan Generating Station open past its planned 2022 closure date by retrofitting it with carbon capture use and storage (CCUS) technology.

"CCUS is an an incredible example of innovation, one that has the potential to drive emissions down to zero, making fossil fuels as emission-free as renewables," he said, according to The Associated Press.

But failed efforts to stop the closure of plants in Arizona and Kentucky show the limits of the administration's ability to counter the forces driving coal's decline, the New York Times reported this week.

"The market window for coal-fired electricity in the U.S. is closing faster than ever in a shift that is especially clear as autumn sets in," said Seth Feaster and Dennis Wamsted, analysts at the Institute for Energy Economics and Financial Analysis, in an Oct. 6 release.

"Renewables have now generated more electricity than coal on 131 days in 2020 — more than three times the 2019 results and with some 80 days left in the year," they continued.

Despite the bump in coal generation forecasted for 2021, Feaster and Wamsted see coal "becoming the marginal generation resource in the U.S. — a trend that is likely to accelerate over the next several years, given the significant amounts of new wind and solar capacity expected online," they said.

And they cite the increasing number of power companies with major carbon reduction commitments, including announcements from Vistra, Ameren and Duke Energy over the past few weeks, as recognition that "utilities and independent power producers are fully aware of these trends."