After two decades of more-or-less continuous decline, coal-fired power is making some gains in the US. But that has little to do with President Donald Trump’s efforts to revive the beleaguered sector.

In fact, the key factor behind the commodity’s demise in the first place — its cost compared with natural gas — is what’s now helping it regain market share.

After years of being the costlier fuel, coal is currently a cheaper power source in parts of the US, prompting some plants to switch.

Coal-fired generation in the first quarter jumped 23% from a year earlier, according to Al Salazar, head of macro oil and gas research at consulting firm Enverus.

BloombergNEF expects coal power in America to see its biggest increase since the 2020-2021 period, when countries emerging from the worst of the pandemic experienced an upswing in electricity demand.

Output from gas-fired plants will fall by about 7.3 gigawatts this year, while coal generation will rise by 4.6 gigawatts, BNEF estimates. Solar — aided by Biden-era tax credits and falling costs — is set to climb by 6.7 gigawatts.

Coal has also benefited from a colder-than-expected winter, which boosted overall energy demand. Meanwhile, the proliferation of data centers for AI and the increasing electrification of industries are underpinning the first meaningful growth in power consumption in years.

In the gas market, the addition of new liquefied natural gas export facilities may keep US prices elevated.

Still, coal’s long-term outlook isn’t especially rosy. Even though Trump last week signed off measures intended to expand domestic mining and use of the dirtiest fossil fuel, there’s little expectation it will regain former glories.

For one thing, the commodity remains far more polluting than gas, which will continue to deter many power companies.

In the longer term, gas may become the cheaper option once more. But even if it doesn’t, coal will struggle to compete with solar on price. There are limits to how far Trump can turn back the clock in the US power sector.

--Shoko Oda, Bloomberg News