The U.S. coal sector, already driven to the brink by persistently low-priced natural gas and the growing wind and solar industries, is facing a tough 2020 and beyond, a new report concludes.

The percentage of electricity generated by coal in the U.S. fell from 38.6% in 2014 to just 23.4% in 2019. That figure could dip into the single digits as early as 2025, predicts a new report from the Institute for Energy Economics and Financial Analysis, or IEEFA. In their new coal outlook released March 30, the sustainable finance think tank concludes that while the coronavirus pandemic and an oil price war creates uncertainty about the sector and the broader economy, many of the headwinds facing coal will continue in 2020 and beyond.

"Short-term economic uncertainty caused by the coronavirus pandemic and the recent collapse in oil prices may slow this transition slightly, but the trend is clear," the report concludes. "Coal is being driven to the brink by continued low gas prices and steady additions of wind and solar."

The authors of the new report point to five problems that persist for the sector: competition from gas, solar and wind; unsustainable levels of coal production; limited access to financial products such as loans or insurance; a shift away from coal at investor-owned utilities; cooperative and municipalities are reconsidering previous steadfast support for coal and export opportunities are diminishing.

The report acknowledges some lawmakers are pushing state legislative efforts in parts of the U.S. to "prop up coal-fired power plants" in places like Wyoming, Indiana, Ohio and elsewhere where coal still holds significant political power.

"None of these initiatives make economic sense, all are out of step with market forces, and none will have more than a stopgap effect," the report states. "The U.S. coal sector has been in decline for a long time — year upon year — and 2020 will be no different. Indeed, this may be the year in which an array of market forces in combination may simply overwhelm the industry."

IEEFA's findings are consistent with recent commentary from Moody's Investors Service noting that shareholders' increasing attention to environmental, social and governance issues will limit coal's ability to resist economic fallout from COVID-19. The rating agency predicts an "unprecedented shock to the global economy" from the pandemic and sees electricity demand weakening as a result.

"The combination of weak power fundamentals, challenging capital market conditions, and increasing concern about ESG will likely push a significant amount of coal capacity into bankruptcies and lead to new closure announcements over the next year or two," the March 26 note from Moody's noted.

The IEEFA report notes that in February, renewable generation produced more electricity for the month than coal. While coal being outpaced by renewables in a winter month was unprecedented, the trend is likely to continue and could happen on an annual basis by 2021, IEEFA projects.

IEEFA points to several quotes from executives in the power generation and mining sectors to bolster arguments of a shift from coal and oversupplied markets. Foresight Energy LP President and CEO Robert Moore wrote in his company's recent bankruptcy filing that coal market conditions created a "sort of race to the bottom for the coal industry" as suppliers compete for a contracting customer base.

Alliance Resource Partners LP President and CEO Joseph Craft predicted on a Jan. 27 earnings call that 2020 would be an "inflection point for domestic thermal coal producers" due to the current market conditions.

"We continue to believe that current market conditions are unsustainable for most of [Alliance's] competitors," Craft said. "Accordingly, additional supply rationalization is necessary to correct the continuing oversupply situation."