Market forces, investor sentiment and existing policies have driven the decline of the U.S. coal fleet in recent years and will likely continue to prompt closures, but the last of the power plants may remain online well past the next decade without policy interventions.

Many utilities have pledged to hit net-zero emissions targets at some point, but details are lacking in the public sphere. U.S. President Joe Biden aims to decarbonize the power sector by 2035 and will likely need to deploy restrictions and incentives for power generators to achieve the goal. Coal will probably continue to be an easy target for elimination, as companies look at options ranging from battery storage to carbon capture to lower emissions.

"America's coal fleet is on the road to extinction," said Michael Gerrard, director of Columbia University's Sabin Center for Climate Change Law. "The plants are old, expensive to maintain, and increasingly unable to compete with natural gas and renewables."

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The economic calculations of coal plant owners will likely increasingly favor closure due to stronger environmental regulations from the Biden administration, Gerrard told S&P Global Market Intelligence. Coal plants produce multiple types of pollution and are therefore particularly susceptible to certain legal tools, he added.

Coal-fired power generation totaling 64,685 MW was retired between the start of 2015 and the end of 2020, and power generators have plans to retire another 61,986 MW through 2030, according to a Market Intelligence analysis.

Many U.S. coal producers are bracing for change, with some undertaking branding efforts to associate more closely with steelmaking than power generation. This includes Alliance Resource Partners LP, which is considering emerging opportunities in batteries and other energy segments, and Natural Resource Partners LP, which is exploring options including carbon capture sequestration.

The Sierra Club recently released a study of companies accounting for 68% of the United States' remaining coal generation. The companies have committed to retiring just 25% of the remaining fleet despite many touting decarbonization plans. The Sierra Club urged utilities to shut down existing coal plants by 2030 and terminate plans to build new gas plants while increasing renewable energy deployment.

"Many of [the utilities] are trying to greenwash by making climate pledges for 30 years from now, without outlining what they're going to do in the next decade, which is critical," John Romankiewicz, senior analyst for Sierra Club's Beyond Coal campaign, said during a call about the report.

Analysts with Morgan Stanley expect coal generation will drop to 0% in the early 2030s, according to a Feb. 1 research update. The analysts modeled a power grid that is 55% renewables, 15% gas and 0% coal by 2035.

The U.S. electricity fleet has already undergone a major transition away from coal in only a few years. However, the shift has been a "good example of a very chaotic transition," said Emily Grubert, an engineer and assistant professor at the Georgia Institute of Technology. Retirement decisions are often reversed, come with short notice, or otherwise give employees and communities little time to plan for a transition.

Grubert suggested a national clean electricity standard that sets interim enforceable targets on the way to zero emissions by 2035. "So, not just, 'Oh, yeah, don't worry, in 2034, we'll just switch over the entire system,'" Grubert said.

America's Power, an organization that advocates on behalf of coal-fired power generation, recently said Biden's goal to make the grid carbon-free by 2035 was overly ambitious. "Ensuring that a decarbonized grid, electric reliability, and affordable electricity prices can all co-exist could take longer than 15 years," the organization stated Jan. 26.

Utility executives have also been wary of a 2035 decarbonization timeline. American Electric Power Co. Inc. Chairman, President and CEO Nicholas Akins recently told Market Intelligence that the goal was "particularly aggressive."

Much of the remaining U.S. coal fleet is more efficient or recently received upgrades, which could make them more durable against the recent retirement trend without outside pressure, Grubert noted.

Still, the fleet is unlikely to overcome negative sentiment from a large swath of the public, financial service providers and investors who are increasingly washing their hands of the fuel.

While the Biden administration has not yet detailed how it plans to decarbonize the power sector by 2035, Michael Webber, a professor in energy resources at the University of Texas at Austin, said the goal implies "almost no coal plants" with some room for highly efficient plants paired with carbon capture.

Companies built most U.S. coal plants decades ago and now essentially have "cash printing machines," Webber said. However, those plants are steadily coming to the point where a utility must decide to retire the operation or invest in upgrades.

"There are a couple of policies to ensure that, when there's a fork in the road to retire or retrofit, that people choose to retire," Webber said.

This includes higher air quality standards, permitting requirements and policies that offer cash incentives for closing plants. Biden could also choose something like a carbon price to nudge retirements along more quickly, Webber said.

"It wouldn't be a total shock to the system to retire all the coal plants by 2030" based on the current trajectory, said Mike O'Boyle, director of electricity policy at Energy Innovation, a group that researches clean energy. The relative economics increasingly favor new renewable energy compared to continuing to run coal plants, he noted.

"Despite these trends, the electricity market is sort of not always super responsive to price and competition," O'Boyle said. "There are so many different policies that could sort of address this either head-on or from the side."