The long-term decline of coal use in the United States is slowing, as policy support, higher electricity demand and fuel price dynamics strengthen coal’s near-term role in the power sector, according to the International Energy Agency (IEA). While coal demand is still expected to fall over the rest of the decade, recent developments point to a more resilient outlook than previously anticipated.
US coal demand to reach 410 million tonnes in 2025
The IEA projects US Coal demand at about 410 million tonnes in 2025, with power generation accounting for the bulk of consumption. Coal-fired plants are expected to generate around 800 terawatt-hours of electricity, supplying roughly 17 percent of the US power mix. This represents a stronger outcome than earlier forecasts, driven by federal interventions, higher natural gas prices and weather-related factors.
Emergency measures extend coal plant operations
To protect grid reliability, the US Department of Energy has invoked emergency powers to keep coal-fired units operating beyond their scheduled retirement dates. These actions reflect growing concerns over system reliability during periods of rapid electricity demand growth and increasing stress on power infrastructure.
Policy environment shifts in favour of coal
Recent executive actions have reinforced coal’s role in national energy security. Federal agencies have been directed to accelerate permitting processes and reduce regulatory barriers, while the Department of the Interior has expanded coal leasing on federal lands. These measures are designed to ensure adequate coal supply during a period of rising power demand.
Federal funding supports coal plant modernisation
A joint USD 625 million programme involving the Department of Energy, the Environmental Protection Agency and the Department of the Interior aims to modernise existing coal plants and reopen some shuttered capacity. In addition, Basin Electric Power Cooperative has received funding to assess the feasibility of building a new coal-fired power plant, which would be the first new coal plant in the United States in more than a decade.
Coal plant retirements slow sharply
Planned coal capacity retirements in 2025 have dropped significantly to about 6.2 GW, well below earlier expectations of 15 GW. As of September 2025, less than 2.5 GW had actually been retired, suggesting the final total could be even lower. Several utilities, including Duke Energy and Santee Cooper, have extended the operational life of major coal units into the 2030s, citing reliability concerns and rising electricity demand from industrial facilities and data centres.
Utilities signal confidence through long-term contracts
Multi-year coal procurement contracts, such as those announced by American Electric Power and Louisville Gas and Electric, extending through to 2030, highlight utilities’ confidence in coal’s medium-term role. Despite this, total US coal-fired capacity is still expected to decline from about 172 GW in mid-2025 to around 153 GW by 2030.
Weather and fuel prices drive short-term coal dispatch
Short-term coal generation remains highly sensitive to weather conditions and relative fuel prices. In the PJM transmission region, coal output rose by nearly 18 percent year on year in September, while in the MISO region coal supplied around 30 percent of electricity in August, reflecting elevated gas prices and weaker wind generation.
Gradual decline expected after 2026
Looking ahead, the IEA expects coal demand for power generation to resume a gradual decline after 2026, falling to around 277 million tonnes by 2030 as renewable energy capacity continues to expand. However, the pace of decline remains uncertain.
Gas prices and LNG exports add uncertainty
Coal prices are projected to remain broadly stable through 2030, while natural gas prices are expected to rise modestly, driven by sustained US liquefied natural gas exports. Seasonal winter peaks in gas demand could widen the coal-gas price spread, encouraging higher coal use during colder periods.
Non-power coal demand remains limited
Non-power coal consumption represents about 7 percent of total US coal demand and is mainly metallurgical coal used in steelmaking. This share is not expected to change materially through 2030, as the shift toward lower-carbon steel production faces economic challenges. Technology pilots and limited industrial uses, such as fertiliser production, are likely to have only a marginal impact on overall coal demand.
Baburajan Kizhakedath