A surge in electricity demand in the US being driven by artificial intelligence (AI) data centres is reshaping the outlook for coal-fired generation and could spark a ripple effect for Australian coal producers.
In the US, developer 8 Rivers is advancing plans for what could become the first large coal-fired plant built in more than two decades. Its model centres on the Allam-Fetvedt Cycle, gasifying coal and burning syngas in pure oxygen to yield partly water and a high-concentration stream of carbon dioxide that can be sequestered.
This has been facilitated by major tech companies seeking firm capacity and rapidly decarbonised supply. Microsoft said carbon capture and storage (CCS) is “among the most promising technologies that paves the way towards CO2 neutrality”.
Australian coal producers are watching closely. If the US model – coal plus CCS – can be demonstrated commercially, Australian producers could leverage their existing resources and infrastructure to participate in new low-carbon markets.
Glencore in particular has the scale and the regulatory backing to move fast; Whitehaven has the export orientation and production strength to pivot if needed.
However, challenges remain.
CCS projects carry technology, regulatory and cost risks, and the Australian market has shown mixed policy signals. For example, the Queensland Government in May 2024 declined Glencore’s CTSCo carbon capture and storage project in the Surat Basin.
In the US context, Wood Mackenzie’s director of CCUS economics Peter Findlay said if 8 Rivers can find a turbine manufacturer to develop an affordable turbine to perform reliably, over the lifecycle of the plant with affordable maintenance and overhaul cycles, then the proposed technology could be game-changing.
For Australian coal producers such as Glencore and Whitehaven, the question is whether they can align production, export markets and low-emission technology deployment in time to capture the upside of what could be a new chapter for coal.
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