EPA Reversal Sets Stage For Permitting Of New U.S. Coal Power Plants

EPA Reversal Details

For well over a decade, the federal government did not simply regulate coal plants so much as it overtly attempted to force them out of existence. The Obama-era Clean Power Plan was a paradigm-shifting scheme dressed up as a Section 111 pollution standard under the Clean Air Act.

The U.S. Supreme Court started the process of halting that approach in June 2024 with its decision in the Loper Bright V. Raimondo Enterprises case. That was the case which reversed so-called Chevron Deference doctrine that had given almost free reign to EPA and other federal agencies to re-define the language of federal laws to fit their regulatory agendas. The Trump EPA followed early this year with the reversal of the Obama-era greenhouse gas endangerment finding, thus removing the foundation for the Obama and Biden efforts to prevent the building of new coal plants in America.

In an interview with CBS News on the day of that endangerment reversal, EPA Administrator Lee Zeldin called the pre-existing suite of heavy regulations a war on coal conducted through the Code of Federal Regulations. He had a point. More than 100 coal plants which provided crucial baseload power generation to America’s power grid had been shut down since the implementation of the Clean Power Plan, many of them prematurely due to overwhelming costs of compliance.

Coal’s share of generation had collapsed from roughly half the mix in 2001 to the mid-teens. In the meantime, storms like Winter Storm Uri keep reminding grid operators of the need for more dispatchable generation. When the wind goes still and the sun goes dark, coal and natural gas still show up to keep the lights on.

Timing Of The EPA Reversal Is No Accident

The timing of Monday’s repeal announcement is not accidental. Electricity demand is no longer bound by the gentle upward slop it had followed over the first 20 years of this century. Data centers, AI training clusters, heavy industry onshoring, and electrification projects are rapidly adding many gigawatts onto regional grids that spent years focusing on capturing renewable subsidies as they planned for flat or declining loads.

In the near term, natural gas seems destined to fill most of that growth where the infrastructure and turbine availability allow. But it cannot take all of it, and it cannot take it everywhere. Parts of the Interior West, Appalachia, and Alaska have coal, mine-mouth economics, and thin natural gas infrastructure. Those and other areas are places where a new coal unit looks less like an ideological pursuit and more like a vital reliability project.

The market has already begun to respond in recent months. The Sandy Creek plant in Texas as the last utility-scale coal plant to enter service in the Lower 48 states. But this year, developers and the Energy Department have put real money behind greenfield and recommissioning proposals, including a large Alaska project designed to meet the needs of mines and future compute load.

Federal grants and low interest loans are useful tools to spur development, but capital markets, insurers, and equipment manufacturers still must evaluate the risks involved. Regulatory certainty and confidence in the continuity of the legal environment across a coal plant’s 30-year lifespan are vital.

The EPA Reversal Comes With Caveats

This is where the caveats come in.

The package announced Monday is a partial repeal accompanied with a proposal. Some Obama-era new-source requirements remain effective until the supplemental rule is finalized. Opposition groups, working in conjunction with eager, well-heeled law firms will file lawsuits before the ink dries. State siting boards, local air permits, and opposition campaigns do not just go away. Ultra-supercritical technologies and modern controls can make a new coal plant far cleaner than the 1970s units now being asked to remain online to meet rising demands. But “cleaner than 1978” is not the same as “uncontroversial.”

But even with all of that, there is no denying that the legal and policy landscape has flipped. For years, the assumption in every integrated resource plan was that coal was a wasting asset with a federal death date attached to its nameplate. That assumption is now the speculative one with the burden of proof if it hopes to restore its agenda.

If EPA finalizes its position that power-sector greenhouse gases are not “pollution” as defined in the text of the Clean Air Act, then future administrations of either political party will have to go to Congress for the authority prior presidents pretended they already possessed. That is how statutory government with a functioning separation of powers is supposed to work.

None of this means America is about to experience a massive coal renaissance that returns the fuel to 50 percent of the generation mix. Natural gas, nuclear, and other sources will remain the grid’s backbone in most regions. But what it does mean is we must be honest about tradeoffs that are present in any decision related to energy. A country that wants to reindustrialize, to be the leader in AI technology, and demands grid reliability amid the most severe winter storms and summer heat waves cannot treat its most abundant dispatchable power fuel as an afterthought.

The EPA reversal doesn’t pour the foundation for the next coal plant, but it does remove the de facto federal prohibition which for years said the foundation could never be poured. Thus, the stage is set: Whether developers walk into it will be decided by market and physical factors, along with state and federal regulators bound by the courts to interpret the governing laws as they were actually written, not as the agencies wish they had been.