US coal industry bailout

What happened: President Trump invoked the Defense Production Act of 1950 to provide $700 million in federal support for the US coal industry. This includes funding for coal power plant restarts, modernizations, and new projects like the TerraSpark Energy Campus in West Virginia. The Trump administration has approved 76 coal-related permits in the past year, aiming to revive the sector and achieve "energy dominance."

Market impact: The coal industry, particularly coal power plant operators and coal miners, stands to benefit from this government support. Companies like Babcock & Wilcox, involved in the TerraSpark project, may see increased activity and valuation. However, environmental concerns and competition from cheaper renewables could limit the industry's resurgence. Residents in areas like West Oakland, California, have voiced opposition to new coal projects.

What to watch next: The DOE's final decision on the TerraSpark project's funding, scheduled for late 2021, will indicate the administration's commitment to new coal projects. Additionally, the outcome of the 2022 midterm elections could influence the future of coal industry support, as the political climate may shift. Lastly, observe the evolving regulatory landscape, as environmental regulations could impact coal's competitiveness.