The market has been phasing out coal over the last ten years in favor of more affordable energy sources. The downturn of coal remains consistent regardless of the administration in power. When President Trump assumed office in 2016, coal comprised 30% of total Generation in the US. By the conclusion of his first term, despite initiatives to back the sector, its share dropped to 20%.
A series of recent executive directives Deploying federal measures to boost this energy sector sees sales regarded as economically unviable and declared Energy Emergency. However, the White House cannot alter the realities of the energy market through executive fiat.
Executive Orders cannot modify the essential economics of coal-fired power stations, nor can they alter state powers regarding Congressional electricity generation infrastructure. Federal law outlines this authority. Additionally, such orders will not result in new coal facilities operational within the next four years, due to the protracted timeline from investment through to construction, connection, and operation.
Orders (and Related statements) aimed at increasing electricity prices will worsen investment unpredictability, elevate pollution levels, and decrease royalty revenues that benefit local communities and taxpayers. They will also fundamentally destabilize the energy market. Regrettably, these detrimental effects may outlast the duration of the administration.
These actions consist of three specific measures that are particularly concerning from an economic perspective.
“Beautiful coal” The order instructs the Interior Department to lower the “royalty rate” coal mining companies owe to the federal government when mining coal from public lands. Diminishing royalties will largely benefit mining companies at the sacrifice of American taxpayers.
Mining operations presently pay U.S. federal royalty fees of 8% and 12.5% for coal extraction. The federal government allocates about half of this revenue to local coal mining areas, which supports vital services like schools and infrastructure. In contrast, oil and gas extractors face higher royalty rates of 12.5% and 18.75%. Additionally, the land leasing for offshore wind projects has been entirely halted.
The executive order aims to further lower the royalties for coal while masquerading as a booster for “America’s economic prosperity and national security.” It is questionable how shifting taxpayer revenue to coal companies can foster America’s growth. Additionally, prioritizing coal over natural gas or renewable sources undermines energy autonomy and economic advancement, while favoring companies unable to thrive in competitive markets.
Secondly, “Regulatory Relief” The order exempts certain (currently unspecified) coal power plants from adhering to emission standards using the President’s authority under Section 112(I)(4) of the Clean Air Act. The relaxation of mercury and toxic emission limits from coal plants presents several problematic ramifications.
These exemptions are granted solely at the president’s discretion, hindering pollution reduction efforts and endangering American health and safety. Mercury exposure can result in Brain damage in fetuses and newborns. Particulate matter pollution emitted by these facilities contributes to various health issues including cardiovascular diseases and respiratory conditions like asthma. This action will also complicate fairness within the energy sector for those operators who have already dedicated significant resources to meet emission compliance.
Thirdly, the order Enhancing reliability mandates that non-economically competitive coal plants continue to operate even as the market seeks to phase them out.
This proposed misuse of federal law employs vague provisions to assist coal plants (Section 202(c)) stipulating that if “an emergency exists due to sudden increases in demand for electrical energy,” the Energy Secretary may temporarily order these plants to remain operational and reimburse them. The Energy Department regulations and previous statements depict “emergency” as “unexpected,” explicitly excluding shortages tied to “economic factors” unless a power outage is “immediate.”
Nevertheless, the Trump administration seeks to mischaracterize the increase in AI-driven electricity demand as a “sudden” emergency, warranting interference with grid operators and disrupting market dynamics, thereby requiring uncompetitive coal plants to benefit from inexpensive electricity. This distortion will inadvertently inflate electricity rates and complicate the Federal Energy Regulatory Commission’s jurisdiction over the energy sector, which is tasked with ensuring equitable and reasonable pricing free of excessively discriminatory charges.
These presidential directives introduce a series of giveaways, exemptions, and market manipulations aimed at propping up the coal industry at the cost of competitive energy markets. This challenge will ultimately require judicial scrutiny to address this attempt to undermine grid operators, utilities, and market integrity. As this unfolds, Americans are set to experience diminished royalty revenues, elevated pollution levels, increased investment unpredictability, and higher electricity bills.
Jennifer Danis serves as the federal energy policy director at the Institute of Policy Integrity at NYU School of Law, where Pero Aspur is an economic fellow.
