Coal sees renewed global interest as US announces $700m to boost the industry
Coal, long regarded as a fuel in decline amid the global energy transition, is seeing an unexpected revival in some regions worldwide, as governments address energy security, rising electricity demand, and affordability.
On Thursday, US President Donald Trump said that his government will spend nearly $700 million to finance coal plants in the country and increase exports.
To support his decision, President Trump invoked the Defense Production Act, which allows the president to expand production in industries crucial to the country’s national security.
The announcement coincides with the effective blockage of the Strait of Hormuz since early March and rising energy prices in the US as a result of the war with Iran.
Growing coal exports
In his announcement, President Trump said the US will set aside $500 million to establish a new export centre in California and save 14 existing coal plants across Kentucky, North Carolina, Indiana, Tennessee, Arkansas, Arizona, Oklahoma, North Dakota, Wisconsin and West Virginia.
The first new coal plants in the US since 2013 will be constructed in Alaska and West Virginia using the remaining $200 million.
Earlier this year, the US also ordered coal plants to keep operating past their retirement age, a significant development for the North American industry.
Europe’s coal plants to remain open
Across the pond in Europe, Italy said it will postpone the permanent shutdown of its coal-fired power plants until 2038, 13 years later than the original deadline.
German Chancellor Friedrich Merz has also said that the country may have to delay coal plant closures: “We may even have to keep existing coal-fired power stations connected to the grid for longer, should the energy crisis continue, and a shortage actually arise.”
While the Middle East conflict has accelerated the redeployment of coal, its resurgence can also be partly attributed to the COVID-19 pandemic and the heightened Russia-Ukraine conflict in 2022.
These events exposed Europe and the rest of the world to supply chain vulnerabilities and prompted countries to reassess their energy strategies. Data from the IEA shows that global coal consumption only grew after 2020, after declining in previous years.
India and China: the coal giants
Any analysis of the coal demand cannot be complete without discussing both India and China. According to the IEA's Global Energy Review 2024, China's coal demand increased by 1.2%, setting a new record.
The nation now uses around 40% more coal than the rest of the world, mostly for electricity generation. China's power plants use more than one-third of the world's coal.
Meanwhile, demand in India, the second-biggest coal user in the world, reached an all-time high of 5.5% in 2024. In 2024, the production of coal power increased by 5% in tandem with the rise in the demand for electricity.
In 2023, Southeast Asia emerged as the world's third-largest coal-consuming region. In 2024, coal consumption increased by over 8%, thanks to Indonesia, Vietnam, and the Philippines.
The primary development driver in Indonesia was its use in the metallurgical industry. Coal power generation was the primary engine in Vietnam and the Philippines.
Coal in the world of AI
A key factor in the resurgence of coal has been the spiralling demand for electricity, with AI and data centres being major contributing factors. Research from Lawrence Berkeley National Laboratory shows that by 2028, more than half of the electricity used by data centres will be for AI.
According to the IEA, data centre electricity use reached 415 terawatt-hours (TWh) in 2024, or almost 1.5% of the world's total power consumption, marking a trend where usage has grown at 12% per year over the last five years.
