MW How Trump has managed to postpone coal's 'inevitable' demise

By Myra P. Saefong

The president's influence creates a 'valuable trading opportunity and extends the runway for coal investments,' portfolio managers say

On Sept. 29, the U.S. Energy Department announced a $625 million investment to "expand and reinvigorate" America's coal industry.

President Donald Trump has managed to bring new life to coal - with his administration designating it as a critical mineral in April, and the U.S. Energy Department recently announcing a big investment to expand and "reinvigorate" the industry in the U.S.

That can present an opportunity for investors at a time of significant growth in the nation's power needs.

The Trump administration's coal-revival strategy is "fundamentally about energy security and meeting unprecedented power demand," according to portfolio managers Michael Gayed, Hal Lambert, Todd Stankiewicz and Joe Castiglie at the Free Markets ETF FMKT.

Trump issued an executive order in April with the goal of encouraging and supporting the nation's coal industry, in part to increase U.S. energy supply, lower electricity costs and stabilize the domestic power grid. Then, in late September, the Energy Department said it would provide $625 million to help keep the nation's coal plants operating.

The government's rationale for the revival strategy centers on artificial intelligence and data-center demand, energy security through domestic resources, and reshoring manufacturing to the U.S., said the portfolio-manager team at the Free Markets ETF, who collectively answered questions from MarketWatch in an email interview.

"This represents a policy tailwind that could extend the operational life of existing coal assets and potentially justify new infrastructure investments," they said.

A dying market?

To some, Trump's actions may rescue coal from what would be an eventual demise.

The coal market was "absolutely dying," said Omar Sheikh, chief executive at energy-solutions provider New York Energy LLC.

U.S. prices for coal have dropped significantly following a rally in 2022, which was partly driven by the Russia-Ukraine war's disruption to Europe's energy markets. The average weekly spot price for Central Appalachia coal, for example, was at $79 per short ton for the week ended Oct. 10, according the Energy Department. Roughly three years earlier, it was trading at $176.65.

Coal prices for the U.S. Central Appalachian coal region spiked in 2022, in part due to European energy disruptions caused by the Russia-Ukraine war.

Coal has two main markets that support it Sheikh noted: Steel production and thermal applications for energy consumption. The steel industry has been diversifying away from coal in recent decades and using more modern technologies than the blast furnaces dating back to the 1800s, while thermal can be derived from other elements - fossil or otherwise - more efficiently, he said.

Read: Steel, not energy, is key to coal's future growth. Here's why.

"Coal is an old and tired technology for its two main applications," said Sheikh. Trump's plan for government-backed loans for the sector is "definitely an area where he is influencing and ... prolonging the inevitable, at least for the next four to six years."

But John Kartsonas, founder and managing partner at Breakwave Advisors, which offers management and advisory services to the shipping and commodities industries, said he did not believe the coal industry was "dying" to begin with.

As a cyclical industry, it has its ups and downs based on supply and demand, Kartsonas told MarketWatch. In the Western Hemisphere generally in recent years, "coal has become the last choice in terms of power generation, and especially in Europe where significant political pressure has pushed coal out of the energy mix."

That was also the case in the U.S, although the Trump administration is now trying to revive coal, and closures of coal power plants have slowed down considerably, said Kartsonas. "This year, coal demand in the U.S. will be up given the strong growth in power generation. So the coal industry is still alive and well in the U.S., growing albeit from a lower overall base."

The coal market has shifted and continues to shift from the west to the east, with China responsible for the "great majority of any increase in coal power-capacity additions," he said. The country is expected to add almost 100 gigawatts of additional power in the foreseeable future - and it uses coal as a "safety source for electricity generation to increase the flexibility of its broad and complicated electrical grid," Kartsonas added.

'Repricing opportunity'

Meanwhile, the team of portfolio managers at the Free Markets ETF said that coal was "clearly in structural decline in developed markets." Overall, it was "dying slowly enough that infrastructure retained economic value, but quickly enough that markets priced assets for liquidating."

Now, Trump's policies and AI power demand have created a "repricing opportunity," in which assets previously valued for shutdown are now generating cash flows potentially for another few years, they noted.

"Trump's influence creates a valuable trading opportunity and extends the runway for coal investments, but it doesn't fundamentally alter the long-term trajectory," the Free Markets team said. "Smart investors are using this policy window to generate returns."

There's 'money to be made in coal, but only with the right strategy and time horizon.'Portfolio managers at the Free Markets ETF

The Free Markets team added that there's "money to be made in coal, but only with the right strategy and time horizon."

Potential opportunities can be found in low-cost coal producers with strong balances sheets - and the best-positioned companies have diversified customers, metallurgical-coal exposure, and rare-earths extraction as secondary revenue, they said. Warrior Met Coal Inc. $(HCC)$ is one such low-cost U.S. coal producer.

Power transmission and distribution (T&D) companies may also offer attractive risk-reward profiles, the Free Markets team said: "They benefit from increased electricity demand regardless of generation source, providing coal exposure without direct commodity risk."

U.S. T&D companies include NextEra Energy Inc. $(NEE)$ and American Electric Power Co. Inc. $(AEP)$

Keep in mind, however, that the "time horizon matters," the portfolio managers noted. In terms of the probability of returns, it's high in one to three years given policy support, and moderate in three to seven years depending on artificial-intelligence demand.

Beyond seven years, they added, the probability of returns is low as coal's "structural decline resumes."

-Myra P. Saefong

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October 15, 2025 13:36 ET (17:36 GMT)

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