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Coal sees diminished role in US presidential race with odds slim for new plants

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Coal sees diminished role in US presidential race with odds slim for new plants

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U.S. President Donald Trump holds a 'Trump Digs Coal' sign during a campaign rally at the Big Sandy Superstore Arena on Aug. 3, 2017, in Huntington, W. Va.
Source: Justin Merriman/Getty Images News via Getty Images

While coal has taken a backseat to other fossil fuels in the 2020 presidential campaign, the first debate raised a big question: Will another coal plant ever be built in the United States?

"Nobody's going to build another coal-fired power plant in America," Democratic presidential candidate Joe Biden said during the first debate Sept. 29. "They're going to move to renewable energy."

President Donald Trump, who has eased off mentions of a coal sector he promised to put back to work in 2016, did not directly rebuke Biden's statement at the debate. While the future is difficult to predict, there is little evidence to be found against Biden's claim and plenty to suggest power generators will continue to push coal out of their generation fleets while keeping new plans off the drafting board.

S&P Global Market Intelligence contacted utilities and experts on coal and electricity generation to assess whether the U.S. will build another coal plant. The broad consensus suggests the U.S. will not see a new coal plant for a long time outside of smaller niche applications or a change in the prospects for advanced coal technology.

"We're a little cautious around getting into election scenarios, but I think in this instance, we can address it anyway because the outcome would be similar," said Moody's Investors Service lead coal analyst Benjamin Nelson. "As we look forward, we see a near-zero probability of a new coal-fired power plant in the U.S."

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Coal has played a far less prominent role in the 2020 election than it did in 2016, when Trump promised to put miners back to work and political observers flagged Hillary Clinton's comments on putting coal miners and companies out of business as a major gaffe. In part, that may be because many are increasingly accepting that coal's fate is largely sealed.

The lack of focus on coal in the 2020 campaign reflects the "highly unlikely" prospects of a revival in coal-fired generation, which would only occur if the federal government subsidized coal production, said Ethan Zindler, head of Americas for BloombergNEF. Such an effort would require unified Republican Party control of the U.S. Congress and the White House come January 2021, the chances of which are "next to none" based on pre-Election Day polling.

"I think there's a reason why the conversation has shifted and we don't see the president putting on a hard hat and pretending to dig coal out of the ground this time around," Zindler said.

New US coal plants 'unlikely,' experts agree

Market Intelligence contacted multiple experts, including the 15 largest multi-utilities and the 15 largest electric utilities by market capitalization as of Oct. 16, to ask them about plans or considerations for coal-fired generation. More than half of the companies responded, saying they had no plans to build a new coal plant.

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Market Intelligence data, which tracks power projects over 1 MW, shows no coal plants under construction in the U.S. The U.S. Energy Information Administration, in its 2020 annual energy outlook, has modeled zero new coal capacity generation through 2050.

"I don't think it's likely that we see another utility-scale coal-fired power plant built within the next 10 years," said Brian Lego, an economic forecaster at West Virginia University's Bureau of Business and Economic Research.

While technology that would reduce or capture emissions could become scalable beyond that time frame, it is unlikely that a company would build a coal plant in the longer term as well, Lego said.

"Other technologies are just too much cheaper now," said Robert Godby, an energy economist at the University of Wyoming.

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Building a coal-fired power plant comes with regulatory and policy risks managed over multiyear permitting and construction timelines for plants where it may take decades to recoup the investment. Meanwhile, banks and other capital sources are limiting exposure to coal, and any project would likely face legal challenges.

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Democratic presidential candidate Joe Biden delivers remarks on his clean energy plan at the Chase Center on July 14, 2020, in Wilmington, Del.
Source: Chip Somodevilla/Getty Images News via Getty Images

"I think it's unlikely any utility will build a large-scale coal plant in the next five years and possibly ever," said Travis Miller, an energy and utility strategist for Morningstar.

Emily Medine, a principal at Energy Ventures Analysis who also sits on the board of coal producer Contura Energy Inc., agreed that no new coal plant is likely to emerge in the U.S. in the next five years. Medine said the future of coal would depend on the success of retrofitted and new installations of carbon capture technology.

Medine said that while she sees no new coal units coming online under Trump, a Biden presidency could lead to increased electric vehicle deployment. The spur in electricity demand that move would create, combined with a push for carbon capture technology as planned by Biden, could open opportunities for new coal-fired power plants.

However, attempts to pair carbon capture technology with coal have proven costly so far. Southern Co. abandoned its plans to build the Kemper coal-fired power plant after it spent $7.5 billion through April 2017 on a project expected to demonstrate carbon capture's viability.

Vanishing US coal fleet

One of the last potential new U.S. coal plants still technically being considered was the 358.8-MW Holcomb coal-fired plant. In January, Tri-State Generation and Transmission Association Inc. confirmed the Holcomb development would not go forward as Tri-State planned to pivot to renewables.

One of the last coal plants completed in the U.S. was the supercritical Longview Power plant in West Virginia that came online in late 2011. Elected officials in the region and leaders of the U.S. Energy Department touted the plant's efficiency and environmental performance. In the last few months, the plant operators filed for a second bankruptcy reorganization and are working to build a small renewable energy and natural gas unit alongside the coal plant.

Coal plant retirements have also continued at a rapid clip under the Trump administration. Across the U.S., there is roughly 220.5 GW of operating coal-fired capacity. By 2030, that figure will fall by another 35.3% from retirements planned or announced as of Oct. 21.

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Trump has tried to directly intervene in various ways. In 2019, he tweeted a call for the Tennessee Valley Authority to reconsider coal plant retirements. The authority did not reverse its plans. As a result of the lost customers, coal miner production declined nationwide and in each of the five top-producing coal states in the U.S. over the last several quarters, Market Intelligence data shows.

Under Trump, the Energy Department also began a program to design coal plants that would have zero or even negative emissions, but officials have said those would not be ready for commercial deployment until 2040.

While the EIA and others expect coal burn to increase in 2021 after rebounding from lows brought on by the COVID-19 pandemic, utilities will do so without new coal plants. Due to pressure from other energy resources, the average coal-fired power plant had a capacity utilization factor of 47.8% in 2019.

Much of that capacity may only be around for a few more years. The average capacity-weighted age of the entire U.S. coal fleet is 41.2 years. According to the EIA, coal plants retiring in 2018 were an average of 46 years old.

Coal not on the drawing board

Even power generators that historically operated large coal-fired power fleets usually talk about the fuel in terms of retirements and exit strategy.

American Electric Power Co. Inc. spokesperson Melissa McHenry said AEP has no plans to build new coal-fueled generation and is committed to "a low- to no-carbon energy future." AEP, one of the largest power producers in the U.S. with operations spread throughout the heart of coal country, aims for an 80% reduction in emissions by 2050 with an "aspirational goal of zero emissions," McHenry added.

While formulating its current generation plans, NiSource Inc. ran hundreds of scenarios and models that included the potential effects of varying degrees of future environmental regulations, advancements in technology, energy market prices and more, NiSource spokesperson Ken Stammen said. After evaluating its options, the company concluded that shifting its mix to predominantly renewable energy resources was the best fit.

"While we consider all available resources when evaluating future electric generating options for our customers, market data and results from several recent rounds of public bidding demonstrate coal's inability to be competitive with other lower cost and more sustainable energy resource options," Stammen said. "Our plan and future energy mix does not include coal following the retirement of our existing, remaining units."

Michigan-based CMS Energy Corp. plans to retire its five coal-fired plants by 2040 and will not build another coal plant, spokesperson Brian Wheeler said. When asked if any policy ideas from the Biden or Trump campaigns could change these plans, Wheeler said the company was "not aware of any proposals that have caused us to adjust" the retirement schedule.

"I would say that the election is the difference between coal eventually dropping to about 5% of our generation, and 0% of our generation, by 2050," Zindler of BloombergNEF said. "Either way, the trajectory is the same."