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Energy crunch causes US coal use to surge under Biden

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Coal
Coal

The US is ramping up its use of coal to generate electricity as high global gas prices deal a blow to Joe Biden’s ambitions to eliminate carbon emissions from America’s power grid.

The country’s power plants are set to burn 23pc more coal this year, according to Bloomberg analysis of official data, even as Mr Biden pledges to clean up the power sector.

It marks a sharp reversal after coal consumption by utilities plunged by more than a third under Donald Trump, despite his attempts to boost usage of the fuel by cutting environmental regulations.

A global gas supply crunch is pushing up natural gas prices around the world, making coal more attractive for electricity generation compared to gas.

Electricity demand has also grown faster than renewables, leaving coal-fired power plants to pick up the slack in Asia.

Rich Nolan, chief executive officer of the National Mining Association, the US mining trade group, said: “The markets have spoken.

“We’re seeing the essential nature of coal come roaring back.”

According to forecasts from the US Energy Information Administration, US power stations are set to burn 536.9m short tons of coal this year, compared to 436.5m in 2020.

The Biden administration wants to decarbonise its power sector by 2035, and has re-committed the US to the Paris Agreement on climate change after Mr Trump pulled out.

Analysts have questioned the feasibility of the decarbonisation goal, however, given the time it takes to develop technologies such as hydrogen, carbon capture and build out more electricity infrastructure.

Increased use of coal threatens years of progress on replacing coal-fired power with relatively cleaner natural gas.

In Europe, coal crossed over to become more attractive than gas for power stations in about July, according to Reuters analysis, as surging natural gas prices outpaced increases in coal and carbon prices.

Analysts at Bank of America said: "While European coal generation was handcuffed by record carbon prices in the early parts of the summer, soaring gas prices have now unlocked the gas-to-coal switching lever.”

In China, officials have ordered domestic miners to ramp up coal production to try and prevent power cuts, after factories have been forced to close due to power shortages.

The coal reliance comes as world leaders are set to gather in Glasgow at the start of November to try and agree firmer commitments to tackling climate change, at the Cop26 UN conference.

China has said it will stop financing coal-fired power plants abroad, likely to affect about $50bn worth of projects. It does not plan to cut its own coal consumption until 2026, however.