May 9, 2025 - A new report from the U.S. Energy Information Administration says high natural gas prices are likely to encourage more coal-fired electrical generation this year despite recently announced coal retirements. 

According to the latest short-term energy outlook published by the EIA, U.S. electrical demand is growing, especially in the commercial and industrial sectors. Natural gas remains the largest source of electrical generation in the country; however, prices are steadily increasing from historic lows seen in 2024. 

High natural gas prices encourage more coal generation. This, combined with relaxed emission regulations for some coal-fired plants, could drive generation up by 6% in 2025. 

According to the report, U.S. coal production is expected to increase to 506 million short tons this year, an increase over previous predictions driven mainly by recent inventory drawdowns and an increase in coal consumption at the start of 2025. 

Despite a forecast increase in production, coal-fired power plant operators are moving forward with plans to retire about 5% of their generating capacity in 2025. The retirements, however, are expected to happen at the end of the year, which is predicted to drive down coal generation by 9% and production by 6% in 2026.

Recent executive action from President Donald Trump supporting the coal industry could affect retirement decisions in the coming months, the EIA says, adding that the action has created an area of uncertainty in its forecast. 

Additionally, despite higher consumption, coal production remained unchanged from a year earlier as coal-fired power plants withdrew from their stockpiles. Coal stocks throughout the sector fell from 128 MMst in December 2024 to 107 MMst in February, rising to 117 MMst in March at the start of the shoulder season, according to the EIA. 

Production is likely to catch up during the second quarter of 2025, with the EIA predicting a 4% rise compared to 2024 and lower stockpiles.