US coal production is back on the rise

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Eklavya Gupte:

Welcome to the Energy Evolution Podcast by S&P Global Commodity Insights, where we dig deep into the trends shaping the vast energy landscape. I am your co-host, Eklavya Gupte, and today we're flipping the script a bit to welcome my co-host Taylor Kuykendall to the hot seat. Taylor is a senior metals and mining reporter here at S&P Global Commodity Insights, and he's been covering the industry for well over a decade. With the current U.S presidential administration taking a markedly different stance on energy policies compared to its predecessor, there's renewed speculation about what lies ahead for coal in the United States.

President Donald Trump, who has famously described this highly carbon-intensive fuel as beautiful clean coal, has signaled a potential pivot away from the previous administration's aggressive clean energy transition timeline. But here's the reality check. While political rhetoric around coal has shifted, the industry continues to grapple with fundamental market forces that have been reshaping the energy landscape. Natural gas prices remain competitive, renewable energy costs have continued to decline, and utilities have already made significant infrastructure investments in cleaner alternatives.

So in today's episode, we'll explore the potential resurgence of coal, the implications of policy changes, and what this means for the broader energy market. We'll also discuss the challenges the coal industry faces, including competition from renewables. So Taylor, are you ready for an interrogation?

Taylor Kuykendall:

As long as you're not too tough for me, Eklavya.

Eklavya Gupte:

Well, I'll try to take it easy on you and I will hold off some of those curveballs.

Taylor Kuykendall:

It sounds good. Let's dive in.

Eklavya Gupte:

So Taylor, let's start with the fundamentals. Can you please paint a picture of where the U.S coal industry stands today and what are the latest trends and statistics that stand out?

Taylor Kuykendall:

Oh, absolutely. Anybody that's been watching this, the coal industry in the United States has undergone a significant transformation over the past few decades, and the story is really sharp, decline in production and demand. This is once a dominant force in the energy landscape. Coal shares of electric generation has just plummeted and the industry's been grappling with the challenge that's imposed by a number of things. You mentioned some of the market dynamics, but also environmental regulation and this rise of alternative energy resources. You go back and look at the historical context, if you go back to 1990, coal was about 52% of total electricity generation in the United States. Now, this black rock was the back road of the power grid that provides reliable energy for homes and all this other things since about that time period, and people kind of got accustomed to it just being this major part of the grid.

But the news for Howard, by 2023, we'd gone from 52% to just 15%. Right now we're looking at that going well below 10% by 2035, mostly from the production side. Coal peaked in the U.S around 2008, is at 1.17 billion short tons. Since then, it's been on a downward trajectory. We saw production hitting 60-year lows last year, and now the decline is not just, like I said, market forces, but also these environmental regulations that have been aimed at curbing greenhouse gas emissions. It's largely been increased this competitive natural gas and renewable energy resources, and we're just seeing that story continue to play out. It's facing a ton of these problems. You might remember hydraulic fraction unlocking these vast natural gas reserves and it kind of upended everybody's idea of what it meant to make energy in America. Now the Trump administration has started to roll back these like Obama era policies and even older policies than greenhouse gas emissions.

During the first term, we didn't really see a whole lot of change. Production continue to decline, emissions continue to decline, but as this industry has started to get smaller, we've also seen the political landscape around it change. I'm from West Virginia and I've always kind of been around this behemoth political force that is coal, but we've been seeing donations from the industry, drop off [inaudible 00:04:16] because they're not nearly the biggest force they were, despite the fact that we're now seeing lots about coal. You might remember if you were watching U.S elections, we just didn't hear much about it in this cycle. During the first term of Donald Trump, it's [inaudible 00:04:27] first campaign for the first term of Donald Trump.

We heard about coal constantly, then we barely heard it all. But now that he's in an office, we're actually seeing quite a bit, and it's an important story because it's not just a market story, it's also a social story. You look at these coal-dependent regions, how that has dramatically changed what's going on there. That loss of economic diversification and jobs is a big reason why it been such a hot button political issue, probably why we're hearing Trump talk about it so much, but this time around though we're seeing these policies, we're seeing these proposals. And unlike the last time, it's starting to look like maybe we have a chance that we might see actually an increase in coal generation and coal production during the second term of Donald Trump.

Eklavya Gupte:

Thank you, Taylor. It really is such a fascinating subject. Now, the Trump administration has made several early moves that signal support for fossil fuels, but could you walk us through the specific policies or regulatory changes that could actually move the needle for coal?

Taylor Kuykendall:

Yeah, absolutely. And his approach to energy policy, it's definitely caught the ear of the coal industry. As I'm listening to earnings calls this year, we've got people thanking the administration on their earnings calls, talking about the potential, what these are going to do. There's been a couple of things that are going to happen that are going to be beneficial to coal. One, the bigger broadening switch for the executive order. It was just telling all the agencies to go out there and reduce regulatory burdens and promote coal as a viable energy source. As a result, we're seeing things like a lot more approvals of coal mining on federal land. We're seeing mining permits move a lot faster. Another interesting thing we saw was that the metallurgical coal was designated as a critical mineral.

When we think critical minerals, a lot of times we're talking about things that are used in say, batteries or defense, for the first time, metallurgical coal is defined as a critical mineral. And that's designed to give access to some of the special government programs and to move things along faster and permitting and also possibly stimulate investment interest in metallurgical coal, and that's probably one of the more promising parts of that market for our listeners who aren't clear what that means. Metallurgical coal is used to make steel, whereas lower heat content coal is used to generate power. Metallurgical coal is a pretty volatile market. The price changes a lot. Anybody that watches any of our Platts assessments on metallurgical coal knows that moves a whole bunch where thermo coal is more stable, but it's also more lucrative. The margins are much higher.

Then again, if you do look at those assessed prices right now that are all substantially down in the recent months. So it's going to be interesting to see if that's going to have an effect that the administration's intended it to have. Another big thing that we're seeing is whenever the administration talks about artificial intelligence and data centers, they're saying coal is a good fuel for that. That was one of the early days of the administration. We saw Trump promoting coal to power artificial intelligence data centers at Davos, that those facilities require a ton of electricity, coal. The thought is that it could be a steady base load power for those facilities.

We're also starting to see the administration roll back just some of those environmental regulations that could potentially have some profound impacts, although in a lot of cases, those decisions that were made about the coal-fired power plants that are their customers, they're kind of already on track. I think it might be a little tough even if those regulations are rolled back to see decisions that were made around capital putting those plants change. But nonetheless, that might make a difference for some of these power plants that maybe could run a few more years than they would have if they weren't subject to some of these environmental regulations.

Eklavya Gupte:

Thanks, Taylor. And you did allude to the fact that the market fundamentals do tell a different story with prices quite low. So what does the future of coal look like now?

Taylor Kuykendall:

Yeah, so we're still looking at a long-term outlook for coal. It's a continued decline in domestic demand. As of 2023, coal counted for about, I think it was a 15% of US electricity generation. That's, as I mentioned earlier, a very big difference from 52% in 1990. Here I'm looking, our projection says that it could fall to 7.9% by 2035, and that continues to be the same story. It's happening because of natural gas. It's happening because rapid expansion of renewable energy sources for all the kind of things we hear from the administration and the attempts to slow down some of those forces, particularly in terms of maybe expansion of renewable energy resources. We're still seeing those projects go forward. But that said, we have seen some things that looked a little better for the industry.

In August, for example, it was a bit of a mixed bag with the industry. Domestic coal prices got a boost. We're seeing people who are wanting to burn coal again and stronger natural gas prices, more stable natural gas prices seem to be helping that through, and right now our projections say that that could go on until about '27. However, after that, it looks like things get a little bit tougher, that push for zero carbon electricity continues and it just keeps going. Now, our forecast, the S&P Global Market Indicator Power Forecast, it looks at about 44.3 gigawatts of coal plants shutting down by 2035. And while we're looking at... Many, many times more gigawatts of renewable energy coming online at the exact same time, and as a result, we're going to see electricity generation drop significantly.

Again looking back at coal becoming only about 7.0% total generation. Now, interestingly enough, our analysis said without green energy tax credits, it would sell from the Biden administration. If you get rid of all of them, the forecast still says 7.9% by 2035. That's the versus 7.0%, so better than maybe previously expected. But I think those numbers aren't too far apart. Now, I do think that legislation's policies could provide this temporary boost. We might see some things, especially here in the summer, whenever we really need a lot of power, there's going to be a use to go back to coal again. Those were use case for coal, but it just still, that same story really seems to be continuing to push on the industry. A lot of people forget, it's really easy to sit here and look at one administration and say, "Look, the coal's turning around."

But also, we saw periods of time when the spike, the Biden administration pushing for renewable energy, we saw these time periods where the industry saw production rise. We saw coal jobs go up. It's not really necessarily the start of a new trend. It is kind of convenient timing. It seems like we're seeing all this kind of interesting changes around policy and things for coal, and it probably will kind of help on the margins. But I think the general consensus among most of the market and experts is that the story continues, even some of these coal companies. We're not necessarily hearing about a lot of new investment from the public coal miners so much as like, "Hey, maybe we can sell a little bit more coal here, or maybe we can extend the contract here," but we're not hearing about, well, let's go out there and build a ton of new mines.

Eklavya Gupte:

Thanks, Taylor. And you've mentioned some of the positive developments that have arised because of the new administration, but what are some of the policies that have caused problems for the sector since Donald Trump's second term?

Taylor Kuykendall:

That's a great point. Most significant complications in the industry has been this escalation of trade tensions that we've seen with tariffs, particularly China. China, one of the first things they did when they went with retaliatory measures against our tariffs were an announcement of a 15% tariff on coal imports. That introduced a lot of uncertainty to the market. Now, that said, the coal industry is fairly nimble when it comes to how it can move around exports. So you saw a lot of just market shifting around. There wasn't a huge price disruption, but these tariffs are also causing a lot of uncertainty in the economy. That means that we're going to see less construction, less industrial activity. That means less demand for coal for both steelmaking and to some extent, power production. Some of these reactions have cost use control [inaudible 00:11:39] to scramble around a little bit, find new markets.

But like I said, they've been able to do that. That uncertainty there does draw some maybe longer-term concerns over, "Hey, if we're going to see these tariffs pop up and down, are we better looking to suppliers in Australia or Indonesia or Russia?" Although I know a lot of people aren't trying to do a lot of trade with that country now, some are, and that was giving a window for those buyers to look to those markets specifically while they're thinking, oh, maybe with all these tariffs, the U.S isn't the most stable place to make some of these contracts. But it makes a little bit harder to plan. Although we have seen that smooth out a little bit as compared to say when we first started hearing some of these announcements. But one of the things that I think about is early this year, the administration proposed these really steep fees on Chinese-built vessels entering U.S ports.

It could be up to a million and a half per instance. The idea was, let's address concerns that China has this huge influence over the maritime sector and the U.S wants to be in charge of its own shipping interests. However, the inflation of those fees would've been a huge threat to the coal export market. I was talking to an executive when we were at CERAWeek in Houston earlier this year, and he told me that it would shut down the U.S coal export industry, would be devastating because it would be economically unfeasible for U.S coal producers to ship their products abroad, and there just aren't really U.S ships to be used. Now, these coal companies kind of made a lot of noise about how this is going to be terrible for their industry. A lot of other sectors stepped up and kind of sit similar, and that proposal was significantly walked back.

It was softened so much that they're not even discussing this anymore. It alleviated a lot of their fears. But in the meantime, we saw comments from the industry to the tune of saying, "Hey, we're not only worried about this rule and what it might do. We're having a hard time getting contracts now because people were afraid." They didn't even know when this rule was going to be implemented. So they were taking preemptive action to be like, well, I'm going to go buy coal from somewhere that's not going to get hit with this humongous fee. So in some ways, that was not an intentional action, but we are seeing things like that pop up here and there. Now the administration seems eager to change course whenever they do realize that something might impact the industry like that, but it's all causing a lot of uncertainty in the market. So for what you get out of having a friend in the administration, you also have a little bit of a challenge in some of the chaos that we've seen in the past couple months.

Eklavya Gupte:

Thanks, Taylor. And what role do coal exports play in the U.S coal industry, and are there any particular overseas markets that are driving demand for U.S coal?

Taylor Kuykendall:

Yeah, so coal exports become a really important business for coal producers, and that's because their domestic. Consumer base is shrinking, but they still have a lot of customers abroad who want to take this coal. It's become some companies more than others, some have really leaned into the export markets, and some can sometimes find it difficult to come back from those. When you start putting a lot of coal abroad, your U.S customers might find other spots. So now that we're seeing coal production increase, some producers are back there trying to recapture old customers, but I think everybody kind of also realizes that almost about one-fifth of our coal is going to be exported. So it's a huge part of the market. It has a lot of competitive advantages that make it appealing to customers abroad, especially metallurgical coal essential for steel production. It can command these premium prices in the international markets, but also there's a lot of high-heat thermal coal that is going to a lot of places abroad as well.

I say India has become a leading destination for U.S coal. That's been a growing market for U.S producers. In the first quarter of 2025, they took six and a half million metric tons of coal. That was a 27.1% increase compared to the prior quarter. China historically had been a large buyer of U.S coal off and on. We'd seen actually a couple quarters ago, lots and lots of coal moving to China, and then the tariff situation popped out, and now we're sitting on almost no coal to China, and that can swing drastically as well. Now, I would also just add that European countries, also significant in importers of U.S coal, a lot of the countries there are trying to reduce reliance on Russian energy imports, and the U.S became a big part of that, but the kind of situation there is changing as well. The steel producers, for example, might be looking for greener options to boost their steel, but long-term, or at least medium-short-term, I think we're still seeing pretty strong potential for export markets and the coal industry's ability to tap into those.

Eklavya Gupte:

Thanks, Taylor. Very fascinating. And beyond what we've discussed, what other developments or trends in the coal sector have you been tracking?

Taylor Kuykendall:

Yeah, so one of the things I've been writing about that I've just found kind of interesting, fascinating, we're looking at Ramaco Resources announced a couple months ago, or they've been working on this for a while, that there are rare earth elements in the coal deposits. And interestingly enough, the Trump Administration's Department of Energy helped them find those rare earth elements that are in those coal deposits, and that's an opportunity for them to go out and say, "Hey, we are mining this coal, but we're also pulling out the rare earth materials from this," and that's just another revenue stream. And of course, those go into things like batteries, again, these defense applications, and I think that's been a really interesting development. You think about some mining companies, a lot of people refer to them as diversified miners. They mine a lot of different things.

Historically in the U.S, coal miners are coal miners. They don't mine a lot of other things. So this diversification of rare earth has been really fascinating. We've also seen other companies start to talk about, well, hey, if there's rare earths in the Brook Mine that Ramaco owns, maybe we have some too. And that Brook Mine is in Wyoming. So especially a lot of the neighboring producers are starting to check and say, "Hey, what else? Do we have any valuable materials in here?" So definitely an interesting thing, and that would be just an interesting way to see if the industry goes that direction, particularly if we have another change in administration that shifts us back to this idea that the U.S is trying to get away from coal. So rare earth extraction could be a very important thing.

I would say, I'm kind of curious to see this year if we see any developments in... we're obviously going to see growth in carbon capture and storage technologies for other industries, but I think for a long time a lot of people thought it's too late for the coal industry in the United States for carbon capture storage. By the time that it's cheap enough to put it on there and not make it more expensive than other energy resources, coal would already be largely phased out. But if this administration wants to try to revitalize coal and put a lot of money into carbon capture and storage, that could really transform how people might think about building coal plants. We haven't built a coal plant in the United States in a very, very long time. I'm not saying that we're going to see that, but it would be interesting to see if maybe the Trump administration tries to revive that or goes back in that direction.

But of course, while that might be beneficial for the coal industry long term, there are some complications around that, right? Why are you capturing carbon if you don't think climate change is a priority, is a whole kind of philosophical political argument that someone might have to solve. But again, that might even become a thing, but it's something that I've always thought was kind of fascinating that technology dropped off, and it'd be interesting to see if it talks about that or revived again.

Eklavya Gupte:

When you look at energy companies, they're pretty much the integrated energy companies. They're these oil and gas companies. Is it worth asking about if coal companies are diversifying to other parts of the energy mix or going more into oil or gas, or are they predominantly always sort of seen as big coal companies rather than energy companies?

Taylor Kuykendall:

Yeah, no, that's a great question and we see a little bit of it is the answer. I think a company like Alliance Resources, they have gotten into oil and gas. They've went into minerals. If you look at Natural Resource Partners, they aren't a miner. They lease minerals to other companies, but for a long time, they were primarily, I believe, focused on coal. They've diversified into other materials, but there's also diversification within coal. We had a lot of companies that used to primarily, if not maybe exclusively or like half and half, do thermal coal mining for steam to produce power and metallurgical coal. Well, a couple of years ago, we saw a whole lot of them start to shift to metallurgical coal. But yeah, the diversification thing always seemed to be a tough thing to pull off.

One of the things I think about is we have CONSOL or CONSOL Energy before, they had gas, they had coal. They split that into two companies, so they could both focus on those individual parts of their business. CONSOL since, they mostly produced thermal coal, but they have some metallurgical coal, and a couple months ago, they were merged with Arch Resources. They became core natural resources. And so now Arch Resources, which is mostly really leads with this metallurgical coal platform. And now you have this kind of a merger of two companies that really, even though they're still doing coal, they have exposure to both metallurgical coal and thermal coal markets, but also a pretty strong domestic base and a pretty strong export base. And so they can kind of switch back and forth. It'll be kind of interesting to see if more companies try to do that.

And because of the other example that's different is we get Alpha, Alpha Natural Resources had a lot of metallurgical coal. They had a lot of thermal coal that pretty much pared down to being just a metallurgical coal company, which means they're unexposed to these coal point retirements that are happening. But it also means that when we see pressures on the metallurgical coal market, like we're seeing right now, the prices are just not very high at all, they don't have really other markets to turn to. So rather than being able to pivot to another market, they might have to look at something more like being a bit more disciplined with capital or biding their time or reducing costs so that they can get through these kind of troughs in the market.

Eklavya Gupte:

Thanks, Taylor. That was really insightful. And coal is still very much a significant player in the energy markets, and I know you and S&P Global Commodity Insights news team and the pricing teams will be keeping a close eye on the recent developments and trends in this sector. Okay, listeners, that's all for this episode. I hope you enjoyed it. Thank you very much for tuning in. Now, I would also like to encourage all of our listeners to get exclusive insights into India's hydrogen economy by attending the inaugural World Hydrogen India Summit, taking place from September 25th to the 26th. Register yourself using the link in the show notes, and we'll see you there.

And I would also like to give a special shout-out to the rest of our Energy Evolution podcast team, including my co-host, Taylor Kuykendall, Camilla Naschert, Karen Willenbrecht, and Dan Testa. And a big thank you to our agency partner, the 199, and the Commodity Insights Digital Content team. Lastly, please subscribe to Energy Evolution on your favorite platform so you don't miss the next episode. And hey, if you have some ideas for podcast themes or guests, please email us at energyevolution@spglobal.com. Until next time, thanks for tuning in.