The United States energy landscape is facing a profound shift as the federal government prepares to dismantle federal carbon emissions rules for the electricity sector. Coal, long recognized as the dirtiest of the world’s major energy sources, is experiencing an unexpected reprieve driven by a combination of regulatory rollbacks and an explosive surge in power demand from artificial intelligence data centers.
Coal accounts for almost half of the cumulative global carbon emissions since the industrial era began—matching oil and natural gas combined while generating significantly more carbon dioxide per unit of energy. Because of its disproportionate impact on global temperatures, most climate experts agree that phasing out coal power is the single most consequential change the world could enact to slow down global warming. Yet for nearly two decades, the United States has experienced severe policy whipsaw over whether the federal government should intervene to accelerate that phaseout.
Following the legislative gridlock that blocked Barack Obama from pushing a carbon tax through Congress, his administration drafted the "Clean Power Plan." That regulation would have forced electric utilities to slash their emissions by aggressively shifting away from coal. However, President Donald Trump repealed the rule during his first term, and the Supreme Court subsequently ruled that the executive branch could not unilaterally compel utilities to abandon the fuel.
Seeking a path around the Supreme Court’s limitations, the Biden administration issued a 2024 rule designed to give utilities operational flexibility. Instead of forcing an immediate ban, the regulation required companies to choose between retiring their coal plants sometime in the 2030s or equipping them with advanced carbon capture machinery capable of trapping almost all the carbon dioxide exiting their smokestacks. Either compliance pathway was projected to yield a significant drop in carbon emissions from the nation’s power sector.
Now, the Trump administration is officially erasing that framework. The Environmental Protection Agency announced on Monday that it plans to eliminate all federal regulations concerning carbon emissions from the electricity sector, effectively allowing utilities to release greenhouse gases without federal carbon limits. The agency utilized the same legal justification it deployed earlier this year when rolling back climate regulations on motor vehicles, arguing that the science of climate change remains uncertain and contending that the repeal will save consumers money on their monthly power bills.
Lee Zeldin, Trump’s EPA chief, framed the decision during an international energy summit in Texas as a correction of past federal overreach.
"For over 15 years, the Obama and Biden administrations implemented a war on coal to destroy reliable and affordable energy," Zeldin said. "We are working to go even further so that American energy can be fully unleashed. Realizing the full potential of American energy means more jobs, lower prices, and a more prosperous America."
The repeal deals a substantial blow to federal efforts to compel the power sector away from coal. Historically, the political whiplash between successive Democratic and Republican administrations has occurred so frequently and intensely that neither the Obama nor the Biden regulations managed to significantly accelerate the decarbonization of the power sector. In contrast, legislative measures such as the Inflation Reduction Act’s financial subsidies for solar and wind power have proven far more effective at driving renewable energy adoption.
Kenneth Gillingham, a professor of environmental economics at Yale University and a former economic adviser to the Obama administration who helped draft the original Clean Power Plan, emphasized the importance of consistent regulatory signals.
"The reason to have a target is that it sends a clear signal to decision-makers in companies," Gillingham said. "If you’re on the fence between choosing two things, you might as well choose the one that’s in line with the target. That’s been undermined. There has to be some teeth behind it."
Despite the fact that neither the Obama nor the Biden rules ultimately took full effect, coal power has still plummeted across the United States over the past twenty years. This dramatic decline was largely propelled by the shale fracking boom, which drastically lowered the cost of natural gas and incentivized utilities to replace their coal-fired generators with cleaner-burning gas plants. Although burning natural gas still warms the Earth, it does so at a slower rate than coal, and the nationwide transition has successfully caused power sector emissions to drop by nearly half.
Nevertheless, the repeal of the Biden rule is expected to delay the ongoing phaseout of coal, carrying profound implications for public health. Coal-fired power plants release hazardous toxins, including mercury and fine particulate matter, which are linked to thousands of premature deaths globally. The Biden administration’s projections indicated that its rule would have prevented approximately $370 billion in cumulative health damages resulting from climate change and air pollution. Specifically, federal estimates predicted that by 2035, the standard would have prevented hundreds of thousands of asthma flare-ups, hundreds of emergency room visits, and more than 1,200 premature deaths.
At the same time, the artificial intelligence boom has introduced a powerful countercurrent that is slowing the natural retirement of coal infrastructure. When the Biden administration drafted its 2024 rule, federal regulators anticipated that coal would continue its steady contraction driven by eroding economic opportunities. The rule’s official text projected a "continued decline in projected coal-fired steam generating unit capacity as well as a steady decline in annual operation of those [plants] that remain online."
Instead, the rapid escalation in electricity demand from data centers has sparked an unexpected resurgence in demand for reliable baseline power, prompting many utilities to push back the retirement dates for their legacy coal assets. For coal-fired plants that sell power into wholesale markets spanning regions like the Midwest and the mid-Atlantic, high market prices have made continued operation highly lucrative. While the Trump administration has previously ordered certain coal plants to stay online past their scheduled retirements—actions that a federal court recently ruled to be unlawful—market pressures alone are driving many of these extensions.
A clear example of this trend is Southern Company, a major utility supplying electricity to states including Georgia and Mississippi. Under the previous administration’s trajectory, the company had scheduled the retirement of a major Mississippi coal plant by 2028. However, Southern announced last year that surging data center demand would require keeping the facility operational well into the 2030s. Previous attempts by the utility to install commercial-scale carbon capture technology at its coal units ended in failure. While environmental groups have strongly criticized these decisions and questioned whether AI energy demand is overinflated, the current administration has welcomed the flexibility granted to utilities to keep coal plants running.
Future executive administrations seeking to implement climate policies will likely confront the same enduring challenge regarding coal: how to accelerate the phaseout of an energy source that is declining, yet stubbornly persistent. Gillingham suggests that the short-term boost provided by the Trump administration and the data center expansion may not permanently rescue the aging national coal fleet. Because the nation’s coal plants are growing older, many utility companies may ultimately decide to replace them with natural gas or alternative fuels rather than invest heavily in costly repairs. Consequently, while future climate strategies may still require regulatory enforcement mechanisms, the sector itself may already be approaching structural obsolescence.
"We have more electricity demand than we did before, which is, on the margins, going to make it easier for a coal plant to stay on," Gillingham noted. "But the trend is pretty clear, and you can only fight markets so much."