The Trump administration is set to channel nearly $700 million in federal funds into the U.S. coal industry Thursday, invoking a Korean War-era statute to prop up existing power plants, finance new construction, and push open a California export terminal that has been blocked for nearly two decades.
The centerpiece is $425 million distributed under the Defense Production Act to 13 existing coal plants across West Virginia, Kentucky, North Carolina, Indiana, Tennessee, Arkansas, Arizona, Oklahoma, North Dakota, and Wisconsin. Another $75 million in DPA funds would go toward the Oakland Bulk and Oversized Terminal in California, potentially opening a new export route for up to 12 million tons of coal from Wyoming and Montana annually. Beneficiaries of the planned funding include utilities Duke Energy, Hallador Energy, Oklahoma Gas & Electric, and at least one subsidiary of American Electric Power.
Separate from the DPA allocation, the Energy Department will award $185 million in grants to support the construction of two new coal plants — one in Alaska, one in West Virginia — as well as the restart of the AES Warrior Run station near Cumberland, Maryland. The companies involved, Terra Energy Center Corp. in Alaska and TerraPurus Inc. in Mount Storm, West Virginia, would contribute matching funds, bringing the combined project spend to $386 million. If completed, the new builds would be the first coal plants constructed in the United States since 2013.
A Law Built for Wartime, Repurposed for Coal
The Defense Production Act was originally drafted to mobilize steel production during the Korean War. It has since been invoked for face masks during the pandemic, solar panel deployment, and baby formula shortages. Trump has been its most aggressive user in the energy space, having already used it to attempt to restart oil production off California’s coast and, in April 2026, issuing a Presidential Determination formally declaring coal supply chains and baseload power generation essential to national defense.
That April move followed a February executive order directing the Department of War to enter power purchase agreements with coal plants to service military installations, and a January push from the Energy Department to reinstate the National Coal Council, which the Biden administration had disbanded in 2021. Peabody Energy CEO Jim Grech now chairs the council.
The administration’s argument for all of this rests heavily on the AI grid demand thesis. Interior Secretary Doug Burgum has framed winning the AI race as a national security imperative, with coal as essential baseload power to support it. Trump himself has repeatedly called coal “clean” and “beautiful,” and the White House schedule for Thursday lists the announcement as a 3 p.m. Oval Office event on “Beautiful, Clean Coal.”
There is a grain of grid reality in the argument. U.S. electricity demand is heading for record highs — the EIA projected consumption would hit 4,283 billion kilowatt-hours in 2026, up from 4,097 billion in 2024 — driven largely by data centers. Coal generation nationally was up roughly 13% in 2025, according to federal data, as utilities fired up idled capacity to meet summer and winter peak demand.
The Oakland Terminal Problem
The $75 million DPA allocation for the Oakland terminal is the most politically loaded element of the package. Conservation groups have fought the project for nearly 20 years, arguing that open coal cars supplying the terminal would pollute surrounding communities and that the facility would sustain global coal demand well past any reasonable climate timeline. The terminal’s backers have repeatedly sought permits; regulators and courts have repeatedly blocked or delayed them.
"Propping up coal billionaires with taxpayer money is one more way for the Trump administration to put polluters first," said Kit Kennedy, managing director for power at the Natural Resources Defense Council. "The best thing for the air, the climate and our utility bills is to let these plants retire peacefully."
Whether federal DPA funds can override California’s permitting apparatus is an open legal question.
Coal’s Real Position
The administration’s push runs against a structural trend that federal dollars alone are unlikely to reverse. Coal accounted for more than half of U.S. electricity generation at its 2007 peak. That share has collapsed to around 16%-17%, as cheap natural gas and falling renewables costs made coal economically uncompetitive on most grids. The EIA projected coal’s share would ease further to around 15% in 2026 as renewable output rises.
Peabody Energy (NYSE: BTU), the largest U.S. coal producer and chair of the reconstituted National Coal Council, reported a 2025 rebound in U.S. thermal coal demand and noted coal-fired generation was up significantly year-over-year. But the company’s own earnings data and the broader industry rankings tell a more qualified story: the Zacks coal industry sits in the bottom 3% of all tracked sectors, with 2026 earnings estimates revised down nearly 55%.
The $700 million commitment is the largest single federal infusion into the coal sector since Trump’s return to the White House, but it lands in a market that has spent nearly two decades shrinking. Whether it delays that trajectory or bends it is a question the grid, not the DPA, will ultimately answer.
By Charles Kennedy for Oilprice.com
