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Thanks to the Supreme Court, it is a very difficult proposal to talk about.
The Environmental Protection Agency just shoved power plants towards the renewable energy transition. But don’t expect supporters to crow about it.
On Thursday, the EPA took the long-awaited step of proposing greenhouse gas limits for new and existing power plants. If finalized and implemented, the rules would vastly reduce carbon pollution from the power sector by 2040 and mark the first time ever that the nation’s electricity system is subject to federal climate restrictions.
But first the rules must survive the sharply conservative Supreme Court, which has blocked previous attempts at regulating power-plant pollution. And so environmentalists and Biden officials will be forced to walk a rhetorical and legal tightrope: In order to keep the all-important rules alive, they will have to describe them as not very significant at all. And even though the rules will likely increase renewables’ share of U.S. power generation, few green groups will brag about it.
Why? Because they are dancing around a major Supreme Court ruling, West Virginia v. EPA, that came out last year.
In the case, the Court struck down the Clean Power Plan, President Barack Obama’s 2015 attempt at regulating climate pollution from power plants. Obama’s plan treated each state’s power plants as a single system, then let each state choose how to cut carbon pollution from that system. States could shut down plants or create a carbon-trading scheme. They could even link multiple carbon markets together to establish a de facto national cap-and-trade market.
That went too far beyond the EPA’s authority under the Clean Air Act, the Court ruled. Although the Court said that the agency could, in theory, issue rules to cut greenhouse gases from the electricity sector, those rules had to keep “within the fenceline” of each power plant.
The EPA could no longer get fancy when it wanted to regulate climate pollution. It could only use blunter, command-and-control technological mandates to reduce carbon pollution from each type of power plant, the Court said. And any technologies that it required had to be both “cost-reasonable” and “adequately demonstrated,” that is, affordable and feasible to install at scale.
The EPA’s new proposal tries to hew within those guidelines. The agency has determined that the best available technology to reduce emissions directly from fossil-fuel-burning power plants is to install carbon-capture equipment. Carbon-capture-and-storage technology, or CCS, is now affordable and feasible, the agency asserts.
“There’s a 100% chance that this will be challenged in court,” Michael Gerrard, a Columbia Law professor and the director of the Sabin Center for Climate Change Law, told us. “The debate will largely be about if CCS is ‘adequately demonstrated.’”
At stake, too, is the question of whether the rules represent a Trojan horse — that although the proposal appears to comply with the Court’s guidelines, the expense and hassle of installing carbon-capture equipment is meant to force utilities to shift to renewables anyway.
That could in fact be the rules’ practical effect. (Some environmentalists will admit — although not on the record — that they like the rules for this reason.) States and utilities can achieve the new standards any way they want, and in many cases they will find that shutting down a power plant and replacing it with wind, solar, and batteries is cheaper than installing new carbon scrubbers. Even with the Inflation Reduction Act’s new subsidies, carbon capture could prove to be more expensive or complicated than other options. CCS requires a network of pipelines and wells to inject carbon underground; wind, solar, and batteries mostly require open land.
Power plant regulations by the EPA could add 17 to 170 gigawatts of solar and wind to the grid by 2035, compared to the growth that is expected from the Inflation Reduction Act alone, according to Ben King, an analyst at the Rhodium Group, an energy-research firm.
At the absolute high end, renewables would command 5% more market share in the United States than they would otherwise, he said. (These estimates were based on an analysis of a similar, though not identical, version of the EPA’s proposal.)
Any legal challenges will leave the EPA’s lawyers in a difficult position. The agency must show that carbon capture is viable and not cost-prohibitive; and make it clear that the regulations are flexible for states and utilities, giving them a number of ways to meet the standard; and downplay the fact that in many cases the cheapest way to comply will in fact be to transition to renewables and batteries.
The industry, ever-desperate to evade regulations, has already begun to insinuate that carbon capture technology is not yet commercially available — a shift in tone from its typical enthusiasm for the technology — and therefore cannot be the basis for any standard. As we previously reported, Southern Company, a utility that has championed CCS, told EPA that the technology was “many years away” from becoming a reality.
“The irony here is that for many years, the industry talked about clean coal, and clean coal meant coal with CCS. And they were claiming that it worked, that it was available. And now they’ve switched. They say that now, years later, after a lot of technological development and billions of dollars of research, it’s not available,” Gerrard told us.
Supporters argue that the EPA’s new regulations are backed by precedent. The agency has long mandated that coal plants install technology that “scrubs” sulfur-dioxide emissions out of their exhaust streams, Eric Gimon, a senior fellow at the think tank Energy Innovation, told us.
As those rules have started to bite, some companies found that it was cheaper simply to shut coal plants down than install the scrubbers. Two years ago, a power company called Amaren determined it made more sense to shut down its Rush Island coal plant in Missouri 15 years earlier than planned rather than pay for upgrades to comply with the standard.
“Was it illegal for the EPA to build a standard that way? No, it’s perfectly reasonable,” Gimon said. “It’s like, ‘We put in a standard. We know you can comply with this standard at a cost. It's not astronomical, but if you think you can do better by retiring the unit and doing something else, knock yourself out.’ That's how it’s worked.”
Whether the EPA’s rules are upheld or not, the long-term future of the most carbon-intensive power plants on the grid — coal plants — is not in doubt.
“The grid is undergoing its own transformation of increasing renewables and decreasing fossil fuels,” Jay Duffy, litigation director at Clean Air Task Force, told us. In March, the Energy Information Administration projected that coal-fired generation would drop to about 50% of its current levels within eight years.
“No regulation,” he said, “is going to change that transition.”
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A new subsidy for metallurgical coal won’t help Trump’s energy dominance agenda, but it would help India and China.
Crammed into the Senate’s reconciliation bill alongside more attention-grabbing measures that could cripple the renewables industry in the U.S. is a new provision to amend the Inflation Reduction Act to support metallurgical coal, allowing producers to claim the advanced manufacturing tax credit through 2029. That extension alone could be worth up to $150 million a year for the “beautiful clean coal” industry (as President Trump likes to call it), according to one lobbyist following the bill.
Putting aside the perversity of using a tax credit from a climate change bill to support coal, the provision is a strange one. The Trump administration has made support for coal one of the centerpieces of its “energy dominance” strategy, ordering coal-fired power plants to stay open and issuing a raft of executive orders to bolster the industry. President Trump at one point even suggested that the elite law firms that have signed settlements with the White House over alleged political favoritism could take on coal clients pro bono.
But metallurgical coal is not used for electricity generation, it’s used for steel-making. Moreover, most of the metallurgical coal the U.S. produces gets exported overseas. In other words, cheaper metallurgical coal would do nothing for American energy dominance, but it would help other countries pump up their production of steel, which would then compete with American producers.
The new provision “has American taxpayers pay to send metallurgical coal to China so they can make more dirty steel and dump it on the global market,” Jane Flegal, the former senior director for industrial emissions in the Biden White House, told me.
The U.S. produced 67 million short tons of metallurgical coal in 2023, according to data from the U.S. Energy Information Administration, more than three-quarters of which was shipped abroad. Looking at more recent EIA data, the U.S. exported 57 million tons of metallurgical coal through the first nine months of 2024. The largest recipient was India, the final destination for over 10 million short tons of U.S. metallurgical coal, with almost 9 million going to China. Almost 7 million short tons were exported to Brazil, and over 5 million to the Netherlands.
“Metallurgical coal accounts for approximately 10% of U.S. coal output, and nearly all of it is exported. Thermal coal produced in the United States, by contrast, mostly is consumed domestically,”according to the EIA.
The tax credit comes at a trying time for the metallurgical coal sector. After export prices spiked at $344 per short ton in the second quarter of 2022 following Russia’s invasion of Ukraine (much of Ukraine’s metallurgical coal production occurs in one of its most hotly contested regions), prices fell to $145 at the end of 2024, according to EIA data.
In their most recent quarterly reports, a number of major metallurgical coal producers told investors they wanted to reduce costs “as the industry awaits a reversal of the currently weak metallurgical coal market,” according to S&P Global Commodities Insights, citing low global demand for steel and economic uncertainty.
There was “not a whisper” of the provision before the Senate’s bill was released, according to the lobbyist, who was not authorized to speak publicly. “No one had any inkling this was coming,” they told me.
But it’s been a pleasant surprise to the metallurgical coal industry and its investors.
Alabama-based Warrior Met Coal, which exports nearly all the coal it produces, reported a loss in the first quarter of 2025,blaming “the combination of broad economic uncertainty around global trade, seasonal demand weakness, and ample spot supply is expected to result in continued pressure on steelmaking coal prices.” Its shares were up almost 6% in afternoon trading Monday.
Tennessee-based Alpha Metallurgical Resources reported a $34 million first quarter loss in May, citing “poor market conditions and economic uncertainty caused by shifting tariff and trade policies,” and said it planned to reduce capital expenditures from its previous forecast. Its shares were up almost 7%.
While environmentalists have kept a hawk’s eye on the hefty donations from the oil and gas industry to Trump and other Republicans’ campaign coffers, it appears that the coal industry is the fossil fuel sector getting specific special treatment, despite being far, far smaller. The largest coal companies are worth a few billion dollars; the largest oil and gas companies are worth a few hundred billion.
But coal is very important to a few states — and very important to Donald Trump.
The bituminous coal that has metallurgical properties tends to be mined in Appalachia, with some of the major producers and exporters based in Tennessee and Alabama, or larger companies with mining operations in West Virginia.
One of those, Alliance Resource Partners, shipped almost 6 million tons of coal overseas. Its chief executive, Joseph Craft, andhis wife, Kelly, the former ambassador to the United Nations, are generous Republican donors. Craft was a guest at the White House during the signing ceremony for the coal executive orders.
Representatives of Warrior, Alpha Metallurgical, and Alliance Resources did not respond to a requests for comment.
While coal companies and their employees tend to be loyal Republican donors, the relative small size of the industry puts its financial clout well south of the oil and gas industry, where a single donor like Continental Resources’s Harold Hamm can give over $4 million and the sector as a whole can donate $75 million. This suggests that Trump and the Senate’s attachment to coal has more to do with coal’s specific regional clout, or even the aesthetics of coal mining and burning compared to solar panels and wind turbines.
After all, anyone can donate money, but in Trump’s Washington, only one resource can be beautiful and clean.
Two former Department of Energy staffers argue from experience that severe foreign entity restrictions aren’t the way to reshore America’s clean energy supply chain.
The latest version of Congress’s “One Big, Beautiful Bill” claims to be tough on China. Instead, it penalizes American energy developers and hands China the keys to dominate 21st century energy supply chains and energy-intensive industries like AI.
Republicans are on the verge of enacting a convoluted maze of “foreign entity” restrictions and penalties on U.S. manufacturers and energy companies in the name of excising China from U.S. energy supply chains. We share this goal to end U.S. reliance on Chinese minerals and manufacturing. While at the U.S. Department of Energy and the White House, we worked on numerous efforts to combat China’s grip on energy supply chains. That included developing tough, nuanced and, importantly, workable rules to restrict tax credit eligibility for electric vehicles made using materials from China or Chinese entities — rules that quickly began to shift supply chains away from China and toward the U.S. and our allies.
That experience tells us that the rules in the Republican bill will have the opposite effect. In reality, they will make it much more difficult for U.S. companies to move supply chains away from Chinese control. The GOP’s proposed restrictions require every developer of a critical minerals project, advanced manufacturing facility, or clean energy power plant to sift through their supply chains and contracts for any relationship with a Chinese (or Russian, Iranian, or North Korean) entity. Using a Chinese technology license, or too many subcomponents, or materials produced in China — even if there are few or no alternatives — would be enough to render a company ineligible for the very incentives they need to finance and build new U.S. energy production or manufacturing facilities.
This would put companies in the position of having to prove the absence of Chinese entanglements (and guarantee that there will be none in the future) to qualify for tax credits, an all but impossible task, particularly given the untested set of new rules. Huge portions of the supply chain have flowed through China for decades, including 65% of global lithium processing and 97% of solar wafer manufacturing. American companies are already working to distance themselves from Chinese expertise and components, but the complex, commingled nature of global supply chains and corporate business structures make it infeasible to flip the switch overnight.
On top of that, the latest version of the bill would impose a brand new tax on any new solar and wind projects that have too much foreign entity “assistance,” while providing the Treasury Secretary carte blanche for determining what that might be. The result: An impossible bind, whereby the very sectors that need the most support to disentangle from China are now the ones most penalized by the new Republican “foreign entity” restrictions.
The fact is that China is ahead, not behind, in many energy sectors, and America desperately needs help playing catch-up. Ford’s CEO has called Chinese battery and electric vehicle technologies “an existential threat” to U.S. automaking. In energy supply chains for nuclear, solar, batteries, and critical minerals, China is not merely producing cheap knockoffs of American inventions, it is churning outcutting-edge battery chemistries, advancedmanufacturing processes, and high-speedcharging systems, all at lower cost. And at least until the Inflation Reduction Act enacted incentives for U.S. manufacturing and deployment, the gap between the U.S. and China waswidening.
These untested foreign entity rules will widen that gap once more. Since the start of the year, developers have abandoned more than $14 billion in domestic clean energy deployment and manufacturing projects, citing the uncertain tariff and tax policy environment, and that was before the new tax on solar and wind. New analysis from Energy Innovation finds that the latest version of the bill would reduce U.S. generation capacity by 300 gigawatts over the next decade — multiple times what we will need to power new data centers for artificial intelligence. Stopping clean energy projects in their tracks is also likely to trigger an energy price shock by constraining the very energy technologies that can be built most quickly. In the end we will cede not only our supply chains to China, but also our competitive edge in the race for AI and manufacturing dominance.
Fortunately, we have all the ingredients in this country already to achieve energy leadership. The U.S. boasts deep capital markets, a highly skilled manufacturing and construction workforce, a strong consumer economy driving demand, and, in spite of recent attacks, the world’s greatest universities and national labs. We simply need policy to provide a workable path for companies to invest with certainty, bring factories back to the United States, hire American workers, and learn to produce these technologies at scale.
With the Inflation Reduction Act’s domestic production incentives and supply chain restrictions, hundreds of companies stepped up over the past few years and made that bet, pouring billions of dollars into American supply chains. Should they be enacted, the reconciliation bill’s foreign entity rules would slam the brakes on all that activity, playing right into China’s hands.
There is a way to apply a set of carefully crafted restrictions to wean us off Chinese supply chains, but we cannot afford to saddle American energy with new taxes and red tape. If we scatter rakes across the floor for companies to step on, they will just throw up their hands and send their investments overseas, leaving us more reliant on China than before.
On taxing renewables, climate finance, and Europe’s heat wave
Current conditions: Parts of Northern California are under red flag warnings as warm air meets whipping winds • China’s southwestern Guizhou province is flooded for the second time in a week • A potential bomb cyclone is taking aim at Australia’s east coast.
Late on Friday Senate Republicans added a new tax on solar and wind projects to the budget reconciliation megabill that sent many in the industry into full-blown crisis mode. The proposal would levy a first-of-its-kind penalty on all solar and wind projects tied to the quantity of materials they source from companies with ties to China or other countries designated as adversaries by the U.S. government. “Taken together with other factors both in the bill and not, including permitting timelines and Trump’s tariffs, this tax could indefinitely undermine renewables development in America,” wrote Heatmap’s Jael Holzman. Here are a few reactions from politicians and industry insiders:
The Senate began debating the GOP’s megabill yesterday. Republican Senator Thom Tillis of North Carolina was one of two from the majority party who voted on Saturday against debating the bill. Shortly thereafter, he announced he wouldn’t run for re-election next year after President Trump threatened to back his primary challenger. On Sunday evening, Tillis took to the Senate floor to give an impassioned speech denouncing the bill’s Medicaid cuts and defending wind and solar tax credits. The Senate will resume work on the bill today with what’s known as a “vote-a-rama,” during which senators will offer and vote on amendments that could yet introduce significant changes. A final vote from the Senate on the bill is expected sometime today.
The fourth International Conference on Financing for Development kicks off today in Spain, offering world leaders an opportunity to reform the world’s financial aid systems. The conference happens once per decade. This year’s delegates have already adopted the “Sevilla Commitment,” which commits to closing the $4 trillion financing gap for global goals such as ensuring everyone has affordable and reliable energy, making cities sustainable, and mobilizing $100 billion in climate mitigation funding each year toward developing countries. As Reuters explained, the text focuses on helping poor nations pay for adaptation through debt swaps, potential pollution taxes, and other creative funding mechanisms. More than 70 world leaders will be there, as will World Bank President Ajay Banga and representatives from the Gates Foundation. The U.S. government will not have a representative at the talks. The Trump administration withdrew after trying and failing to remove any mention of “climate” and “sustainability” from the conference’s draft text. Some sources told Reuters the event could be more successful without the U.S. there to “water down objectives.”
The European Union is considering changing its climate law to allow countries to lean on international carbon credits to reach emissions targets. The original goal was to cut direct emissions by 90% by 2040 compared to 1990 levels, but some countries have pushed back on that ambition, citing costs. A draft of the proposed change shows that the European Commission would allow high-quality carbon credits to account for 3% of the emissions cut starting in 2036. As Politico explains: “Such credits will allow the EU to pay for emissions-slashing projects in other, usually poorer countries, and count the resulting greenhouse gas reductions toward its own 2040 target, rather than the climate goals of the country hosting the project.” Accounting for 6% of global greenhouse gas emissions, the EU ranks fourth on the list of highest polluters, behind China, the U.S., and India.
Meanwhile, Europe is facing a punishing early-summer heat wave that is already smashing records and triggering weather alerts. A few numbers:
Nearly a third of the citizens of the Pacific island nation of Tuvalu have applied for the world’s first climate visa, which would allow them to permanently migrate to Australia.