In the coming days, US authorities will conduct the nation’s largest coal auctions in over a decade, offering 600 million tonnes from state-owned reserves adjacent to strip mines in Montana and Wyoming. The leases, located in the Powder River Basin—the country’s most productive coal region—were expedited following a January executive order by President Donald Trump.While the auctions align with Trump’s goal of increasing coal extraction from federal lands for power generation, an Associated Press analysis shows that many power stations served by these mines plan to stop using coal within a decade.The forthcoming sales will go ahead despite the government shutdown, as workers handling fossil fuel permits and leases are exempt from furlough. Then-President Biden had attempted to block future coal leases in the region last year, citing climate change concerns. According to the Department of Energy, burning coal from these leases could generate over 1 billion tonnes of carbon dioxide.Interior Secretary Doug Burgum announced that more than 20,000 square miles of federal lands would be opened for mining—an area larger than New Hampshire and Vermont combined. The administration has also reduced federal coal royalty rates, extended a Michigan coal plant’s operation, and allocated $625 million for plant modernisation, citing rising electricity demand from AI and data centres. “We’re putting American miners back to work,” Burgum said. “We’ve got a demand curve coming at us in terms of the demand for electricity that is literally going through the roof.”
Who will buy the coal?
The key question remains: who will actually purchase this coal? Data from the US Energy Information Administration and Global Energy Monitor indicate declining demand for the mines slated for expansion or new leases, as power stations reduce coal consumption or plan to cease operations entirely.Montana and Wyoming sales were requested by Navajo Transitional Energy Co. (NTEC), which acquired several Powder River Basin mines in a 2019 bankruptcy auction. These mines supply 34 power stations across 19 states, but 21 of these stations plan to stop using coal within a decade, including all five served by NTEC’s Spring Creek mine in Montana.In government filings, NTEC valued 167 million tonnes of federal coal near Spring Creek at around $126,000—less than one-tenth of a penny per tonne, far below historical prices. NTEC justified the low valuation, citing forecasts of declining coal demand:“The market for coal will decline significantly over the next two decades. There are fewer coal mines expanding their reserves, there are fewer buyers of thermal coal and there are more regulatory constraints.”The government will auction 440 million tonnes near NTEC’s Antelope Mine in central Wyoming on Wednesday. Over half of the 29 power stations served by this mine plan to cease coal use by 2035, including Colorado’s Rawhide plant, which is scheduled to switch from coal to natural gas and 30 megawatts of solar power by 2029.Peabody Energy, the largest US coal company, offers a more optimistic outlook. They estimate coal demand could increase by 250 million tonnes annually, nearly 50 per cent above current levels, citing delays in new nuclear and gas facilities. “US coal is clearly in comeback mode,” said Peabody president James Grech. “The US has more energy in its coal reserves than any nation has in any one energy source.”Energy specialists remain sceptical. Umed Paliwal, an electricity market specialist at Lawrence Berkeley National Laboratory, said:“Eventually coal will get pushed out of the market. The economics will just eat the coal generation over time.”No major coal power stations have opened in the US since 2013, and most existing facilities are over 40 years old. Experts suggest the administration’s $625 million modernisation fund may be insufficient, with a single boiler component costing up to $25 million, according to GridLab energy consultant Nikhil Kumar.
