AI Electricity Powers Huge Coal Comeback

In 2013, coal accounted for 16% of electricity generation in America and was falling. It was the first year renewables provided a larger percentage of the total. Coal’s contribution in 2001 was 50%, and the assumption was that its market share would keep falling. Instead, it will be moving higher as electricity demand is expected to soar due to AI data centers, crypto mining, and air conditioning use. 

The Trump Administration recently opened 13 million acres of federal land to the coal mining industry. Coal plants in operation today are no longer scheduled to close eventually. Plants that have been shuttered will, where possible, be opened again. 

For now, it is expected that the use of coal will rise. In a decade, the use of renewables and nuclear could begin a new decline in coal’s market share. That, however, depends on how large the electricity demand becomes. There is a school of thought that AI data centers will use a third of all electricity generated in the US in less than a decade. 

Coal Prices Rise

Coal prices are expected to increase due to the new demand. This will put further pressure on utility electricity pricing. Some residential electricity rates have already doubled in the last five years. 

The price of coal per ton is about $130. That went down from $250 in early 2023. The higher prices were driven by demand in Asia, and the worry about supply interruption due to the Ukraine war.

The new US demand means that the price could retrace back toward $200.

Coal remains the most polluting of all fossil fuels. It releases more carbon dioxide CO2 per unit of energy than any other in the category. That means fossil fuels will add to what is already a deteriorating, cleaner country.

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