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Politics

The Megabill’s Most Bizarre Fossil Fuel Handout

A new subsidy for metallurgical coal won’t help Trump’s energy dominance agenda, but it would help India and China.

The Capitol.
Heatmap Illustration/Getty Images

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, and his 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.

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