February 26, 2026 - The energy sector has been on a tear to start the year. The Energy Select Sector Index (IXE) is up over 20% year-to-date through February 23 as oil prices have gained on geopolitical tensions. However, the more pronounced strength in the energy complex over the last year has come from nuclear and coal. Over the last 12 months, the VettaFi Nuclear Renaissance Index (NUKZX) is up 61%, and the VettaFi Global Coal Index (COALX) is up 43%, while the IXE is up just 21% on a price-return basis. 

Nuclear and coal stand to benefit from rising global electricity demand as key power sources, even as they sit on opposite ends of the emissions spectrum. Both have also seen strong support from the Trump Administration (more on nuclear policy support). This note takes a closer look at the resilience of coal demand and the tailwinds that have supported coal equities.  

Coal Remains Resilient

Coal demand has proven resilient through various climate initiatives, divestment campaigns, and targeted phase-outs. Global coal demand was expected to have reached a new record high last year. In February 2026, coal prices were trading near one-year highs.

Thermal coal is primarily used for power generation, while metallurgical coal is used in steelmaking. Around two-thirds of global coal demand is driven by power generation. The fate of coal is closely tied to China, which consumes more coal than all other countries combined.

While many may have expected coal demand to peak by now, it could continue to grow as electricity demand rises worldwide. For context, the International Energy Agency is forecasting annual global electricity demand growth of 3.6% for 2026-2030. This is 50% greater than the average growth seen for the prior decade. It may be difficult to transition away from coal with power demand rising meaningfully.

U.S. Delaying Coal Plant Retirements

This year, 6.4 gigawatts (GW) of coal plant capacity in the U.S. is slated to retire, accounting for ~4% of the nation’s coal fleet. However, policy actions may delay plant retirements, as seen in 2025. Last year, 8 GW of coal capacity was expected to be retired but only 2.6 GW was actually shut down. Emergency orders from the Department of Energy (DOE) extended the lives of multiple coal plants to help ensure grid reliability and affordable power prices.

Specifically, six plants in the midwest and Colorado saw their retirements delayed from 2025 to 2026. 

With growing power demand and the rise of data centers, power bills have faced greater political scrutiny in parts of the U.S., particularly the northeast. Keeping power reliable and affordable is especially important as electricity demand rises. Utilities are pushing out select coal plant retirements in response. 

For example, Talen Energy (TLN) reached a reliability agreement with grid operator PJM Interconnection and multiple other parties in January 2025 to extend the operations of two of its coal plants. Originally slated to retire in May 2025, the Brandon Shores and H.A. Wagner power plants will now operate until May 2029. Earlier this month, the Tennessee Valley Authority decided to keep two coal plants in Tennessee running indefinitely, abandoning plans to close the facilities in 2026 and 2028.

Federal Support for Coal in the U.S.

The Trump Administration has been very supportive of coal. In September 2025, the DOE announced up to $625 million to support the U.S. coal industry. This followed two executive orders from April, with one focused on reinvigorating the U.S. coal industry and another on strengthening the grid. As part of that initiative, earlier this month, the DOE announced $175 million in funding to upgrade six coal facilities serving rural communities. Also this month, the Trump Administration released an executive order instructing the Department of Defense to prioritize long-term power purchase agreements for coal power. 

Bottom Line

Reliable, affordable power remains important for energy security and national security. For many countries, including the U.S., coal power generation remains an important part of the energy mix. Amid rising power demand globally, coal demand can likely continue to grow.