Coal’s Rebound May Not Last, and Here’s Why
With higher natural gas prices and rising demand for electricity, coal is on the rebound.
Coal production is up nearly 20% in West Virginia over last year, according to the U.S. Energy Information Administration, and nearly 16% in Appalachia.
The West Virginia Public Service Commission extended the lives of three coal-burning power plants in the state, helping them operate into the next decade.
Natural gas prices are higher this year, making coal more competitive to generate electricity.
But next year, there are signs coal will continue to decline.
Though West Virginia has saved three power plants from near-term closure, others in Ohio, Pennsylvania and Maryland are scheduled to shut down in 2022.
According to PJM, the regional transmission organization that coordinates power movements across 13 states and the District of Columbia, the Cheswick plant near Pittsburgh will close on April 1, followed by the Morgantown plant in southern Maryland and the Zimmer plant in southern Ohio at the end of May.
All three plants burn coal from West Virginia.
Michael Webber, a professor of energy resources at the University of Texas at Austin, said the power plant retirements will continue.
“You’ll probably see retirements of coal plants on schedule, or ahead of schedule,” he said. “You won’t see many lifetime extensions for the assets.”
Plans by the Biden administration that favor renewable energy to cut carbon dioxide emissions could accelerate coal plant retirements.
That could take the form of a carbon tax. The Environmental Protection Agency might also issue more stringent wastewater rules for power plants.
In 2022, the Energy Information Administration forecasts coal generation will fall again as more plants shut down and natural gas prices come down from their winter highs.
“This probably lasts months, maybe a year and a half or so,” Webber said. “It doesn’t look like it’s going to last decades.”
Webber sees one bright spot for coal: the metallurgical kind that’s used to make steel. A $1 trillion infrastructure bill just signed into law could boost demand for steel, and the coal used to make it.
Webber noted that the price of metallurgical coal is higher than thermal, or steam coal, the kind used to make electricity. It is a more profitable business for coal producers.
“Coal still has a lot of value for metallurgical purposes,” he said, “for making metals, and also for making cement.”
For electric power generation, though, there are cleaner, cheaper alternatives in wind and solar.
Utilities once reliant on fossil fuels are embracing renewables, including West Virginia’s dominant utilities, American Electric Power and FirstEnergy.
Coal will have a good winter, Webber said, but the better times may last months, not years.