Trump is propping up the coal industry, despite what markets say

To be sure, some regulatory barriers, including federal air quality standards and state-level bans, have made coal less competitive. However, “it is the market that explains coal’s decline better than regulations,” Philip Rossetti, an energy policy analyst at the R Street Institute, tells Reason. 

Perhaps the most concerning provision of the order is the one that designates coal as a critical mineral, which would give the federal government emergency powers to increase its production. In March, Trump signed an executive order invoking the Defense Production Act (DPA) to secure the supply of critical minerals, which, at the time, didn’t include coal. 

The DPA was passed during the Cold War and gives the executive branch broad power to influence whatever industries it deems necessary for national defense. Its use has time and again led to wasteful spending and cronyism. Under this executive order, the federal government will have unilateral authority to offer loans, create stockpiles, and facilitate offtake agreements to bolster the supply of coal, even though the market doesn’t want it. 

“The abuse of the Defense Production Act should be concerning to everyone,” says Rossetti. “It was bad when [President Joe] Biden did it, and it’s still bad when Trump does it. Americans should be making their own choices about consumption, not having bureaucrats in Washington make decisions on their behalf behind a fig leaf of national security.”

Forcing a coal resurgence will be costly for consumers, and it may “force some retention or restarting of coal plants,” according to Rossetti. However, it is unlikely to have a large impact on energy markets since most investors don’t see a future for the energy source.