Coal's Uncertain Future: Trump's Intervention and AI Demand

Heading into President Donald Trump's second term, the coal industry appeared to be in its final stages. Utilities had planned to retire more than half of the nation's coal-fired power plants by 2028, production had been flat for years, and no new facilities were coming online. The industry seemed to be nearing the end of its life.

However, the first year of the new administration has provided an unexpected lifeline. Through a combination of federal intervention and a surge in energy demand driven by the artificial intelligence boom, coal's decline has been stalled—at least for the moment. The industry has been given an opportunity to retrench, reversing a trend that started nearly two decades ago.

The Trump administration has made its support for coal a central pillar of its "Unleashing American Energy" agenda. The Department of Energy, led by former fracking executive Chris Wright, has become an industry lifeline, repeatedly intervening to prevent plants from shutting down. Wright has issued emergency orders delaying the retirement of at least five of the 11 plants slated for closure, with renewals issued every 90 days.

This intervention has had a tangible impact. Last year, coal consumption increased by 13 percent, reversing a long downward slide and contributing to a rise in domestic carbon emissions. Of the 11 coal-fired plants scheduled for retirement, just two were shuttered. One of those, a facility in Utah, may even return after the state's Legislature sought to find a new buyer for the closed plant.

When you have to get the government to step in to put its thumb on the scale in order to help your industry, it's a sign that you're not particularly competitive, right?

Despite these efforts, the administration has also rolled back rules governing pollution and miner safety, actions central to its pro-coal agenda. However, these measures have drawn scrutiny from regulators and sparked legal challenges from environmental groups.

Simultaneously, a different kind of boom is reshaping the energy landscape. A Trump-supported surge in the construction of artificial intelligence data centers has created a massive new demand for electricity. These energy-hungry facilities require vast amounts of power, prompting many utilities to postpone planned coal facility closures to meet projected demand.

This trend is most extreme in Virginia, which is home to more than 600 data centers and handles 70 percent of the world's internet traffic. In the Southeast, at least half a dozen investor-owned utilities have delayed retirements, pushing planned closures into the 2030s. Trump and Wright have endorsed this shift, arguing that coal should play a key role in powering these new facilities.

The administration's April executive order explicitly highlighted this connection, declaring that the nation's coal resources will be "critical to meeting the rise in electricity demand due to the resurgence of domestic manufacturing and the construction of artificial intelligence data processing centers."

While these interventions may keep plants online, they come at a significant financial cost. Experts warn that the emergency orders could impose millions in added expenses on utilities and their customers. Michael Goggin, an analyst with Grid Strategies, estimates that keeping all fossil fuel plants slated for retirement through 2028 open could cost ratepayers as much as $6 billion—on top of a separate $6 billion increase in coal-fired generation costs from 2021 to 2024.

Goggin describes this extra expense as an "involuntary subsidy" paid by ratepayers to utilities that neither needed nor requested it. Many of these aging plants are unprofitable due to high maintenance costs, which is why utilities have been replacing them with cheaper natural gas or renewable alternatives.

Under the Department of Energy's orders, plant operators can seek approval from the Federal Energy Regulatory Commission to recover these costs from customers. For example, the owner of the J.H. Campbell plant in Michigan will spread the expense across millions of ratepayers in the Midwest. However, some utilities are struggling to find a path forward. A representative of Colorado's Tri-State Generation and Transmission Association stated they have "no clear path" for cost recovery regarding a federal order to keep their coal plant running.

Despite the short-term reprieve, long-term challenges remain formidable. The nation's aging coal plants—more than 200 in total—are increasingly expensive to operate, even as natural gas and solar energy become cheaper and more abundant. The industry's fundamental economics have not changed, and the need for government intervention is seen by many as a sign of underlying weakness.

They're grasping at what they can.

Furthermore, the administration's promise to boost employment has not fully materialized, with layoffs continuing amid the industry's ongoing contraction. While the combination of federal support and rising demand from AI has created a temporary pause in coal's decline, experts see little hope for a lasting revival. The industry may be on life support, but the question of how long it can last remains unanswered.