US coal prices rose to their highest in more than 12 years as higher natural gas prices boosted demand for the heavily polluting fossil fuel.
Follow data released on Monday from S&P Global.
Coal has recovered in recent months as high natural gas prices spurred power generators to switch to coal-fired power, which releases more carbon dioxide into the atmosphere.
In the US, coal-fired power is on the rise This year, for the first time since 2014, according to the Energy Information Administration, an increase of 22% compared to 2020. As a result, emissions from the energy sector will increase by 7%.
Henry Hub, the U.S. natural gas benchmark, is trading at just under $5/mmbtu, more than double what it was at the start of the year.
Coal demand has skyrocketed despite efforts to transition away from fossil fuels to stem the rise in global temperatures caused by greenhouse gas emissions. But these efforts have been met with resistance from some countries.
At the COP26 climate summit last week, countries agreed to “down phase“Coal power, a weaker commitment than the commitment to “eliminate” fossil fuels that many countries have advocated. Last month, G20 leaders agreed Stop funding coal abroad, but not to remove it at home.
In the US, President Joe Biden has vowed to remove carbon from the grid by 2035 as part of a broader effort to achieve net-zero emissions across the economy by 2050.
Coal prices in other parts of the US also increased sharply. In the Powder River Basin, they more than doubled last week to more than $30/short ton, or $1.74/mmbtu.
However, the need for revival may be temporary. About 30% of US coal-fired power generation capacity has been shut down since 2010, and no new plants have come online since 2013.
According to the EIA, coal-fired production in the country will decline again from next year, falling by about 5% in 2022 due to continued retirement and slightly lower natural gas prices.