Policymakers shaping America’s coal policy can learn something important from the 2025 economics Nobel Prize winners about creative destruction, the process by which new technologies replace older ones through innovation. Just as smartphones overtook flip phones and cars displaced horses, such progress has improved our daily lives.

Instead of government subsidizing or transitioning away from coal, America should let companies develop new energy technologies that can freely compete with—and potentially replace—coal energy to power homes and businesses.

This obvious concept should be universally welcomed. If coal is reliable and affordable, it will continue to power our grid. But if it is more expensive than cleaner alternatives, its share of the electricity mix will decline on its own.

This approach will end the volatile pendulum that has characterized coal policy (and energy policy as a whole) over the past decades. The same government levers used to wage war on coal, along with other fossil fuel energy sources, are then used to subsidize them when political leadership changes.

While allocating trillion-dollar subsidies to preferred green energy industries, the Biden administration tried to eliminate coal through punitive regulations such as the requirement for coal plants to capture 90 percent of their carbon emissions by 2032. This impossible standard would have forced nearly all coal plants into retirement.

The Trump administration was correct to propose repealing these burdensome rules and open 13 million acres of federal land for coal development. But it went further by providing $625 million in subsidies for coal plants, and the One Big Beautiful Bill Act provided a tax subsidy for metallurgical coal.

Though the subsidies are not long-term solutions, Trump’s actions were understandable responses to New Green Deal proponents who attempted to phase out fossil fuel while subsidizing wind and solar, destabilizing the grid. Many U.S. regions are at “elevated risk,” which means that electricity shortfall can occur in extreme conditions, according to the North American Electric Reliability Corporation.

Washington can put an end to this partisan battle over coal by embracing this approach rooted in creative destruction, free of subsidies and excessive regulations.

While punitive rules on coal should be repealed, reasonable regulations can still play an important role in coal policy. For instance, the Environmental Protection Agency’s 2012 Mercury and Air Toxics Standards (MATS) rule protects the environment. By 2021, coal plants’ mercury emissions were about 90% lower than pre-MATS level along with significant reductions from other hazardous air pollutants.

Policymakers could also remove government barriers that hinder other energy sources from competing freely with coal. For example, rather than blocking permits for natural gas pipelines that deliver cleaner fuel, states could approve such projects. New York can cooperate with the Trump administration to advance the 125-mile Constitutional and 37-mile Northeast Supply Enhancement pipelines that were previously rejected. Other projects such as transmission line expansions and power plants should be able to advance under an efficient permitting process.

The One Big Beautiful Bill Act rolled back many green energy tax credits, but the legislation failed to repeal completely the clean electricity credits that drive renewable deployment. Congress should complete the task of repealing all energy subsidies.

Meanwhile, competition between energy producers will determine coal’s role in the power mix. If emerging technologies like large-scale battery systems outperform coal, its decline simply means that America has found better ways to power homes and businesses. This possible scenario may lead to job losses in the coal industry, but it also creates new opportunities in innovative energy sectors.

Coal continues to have an important place in our energy mix domestically and globally. It provides 15% of total American electricity generation. Globally, coal has been the leading source of electricity production for over 50 years. Its instrumental role in energy supply and economic progress in the past and present may not continue, but its future should be determined not by government but by competition.

____

Austin Gae is a research associate in the Center for Energy, Climate, and Environment at The Heritage Foundation.

_____

©2025 Tribune Content Agency, LLC.