Merifund Capital: Trump’s Coal Comeback Sparks Protest

Pentagon power purchase direction and fresh federal funding extend coal plant lifelines, while lawsuits and safety concerns tighten scrutiny; investors weigh contract duration, tariff inflation risk and the long-run squeeze from gas and renewables.

Merifund Capital Management is tracking a sharpened federal turn towards coal-fired power that is set to influence US utility planning and institutional risk models over the coming quarters, as the White House steers military installations towards long-term coal electricity contracts.

Coal extraction across the United States continues to shrink despite renewed political backing. In Eastern Kentucky, operators remove more than 15% of positions over the past year, leaving fewer than one-third of roles compared with levels a decade earlier. In the current support package, the Department of Energy commits about $216 million to extend coal plant operations across West Virginia, Ohio, North Carolina and Kentucky, while the Tennessee Valley Authority pushes two Tennessee facilities beyond previously signalled closure schedules.

An executive order dated 11 February directs Defence Secretary Pete Hegseth to secure long-term power purchase agreements with coal-fired generators for military sites nationwide, with the White House linking baseload power to blackout prevention and mission assurance. Alongside the order, the Department of Energy allocates $175 million for upgrades at six coal plants across Kentucky, North Carolina, Ohio, Virginia and West Virginia, drawing on infrastructure-law funding designed to support rural capacity and energy affordability.

The White House reinforces the message at a Champion of Coal event, yet the sector’s baseline remains diminished. Coal’s share of US electricity generation stands at 16% in the latest full-year figures, compared with 51% at the start of the century. Even a full switch of military demand to coal-generated power equates to about 3% of national coal-power capacity.

In a client briefing issued this week, Merifund Capital Management frames the policy mix as a live stress test for long-dated assets and private capital exposure to regulated utilities. Anthony Saunders, Director of Private Equity at Merifund Capital Management Pte. Ltd., characterises the Pentagon direction as “a material policy intervention that can support cashflow visibility in the near term, while widening the spectrum of legal and regulatory outcomes that investors must price in over the life of the asset”.

Rate filings show how quickly policy decisions reach household bills. In plans that run to the end of the decade, DTE Electric and Consumers Energy seek increases that, on their projections, add about $159 per Michigan household each year, with tariff-linked equipment costs cited as a source of inflation and financing pressure. Saunders describes this as “politics expressing itself through bills and balance sheets, with the next rate cycle becoming the true arbiter of who carries the cost”.

Coal pricing tightens slightly in the latest published assessments, with FOB Baltimore 6,900 kcal/kg NAR averaging about $79 per metric tonne and Central Appalachia 12,500 Btu/lb trading near $73 per short tonne. In the most recently reported ten-month window, India’s seaborne intake reaches 10.4 million metric tonnes. Saunders views the price response as “helpful at the margin, but not decisive, because contracts and compliance costs drive the long-run economics”. Some utilities now explore agreements that run beyond a typical budgeting cycle, pushing retirement schedules into the late 2030s; S&P Global Market Intelligence projects coal’s generation share easing to about 7.5% from 18.7% over the period to the mid-2030s.

Opposition groups focus on worker health, regulatory capacity and the use of federal money. In the current round of agency reductions, the National Institute for Occupational Safety and Health dismisses close to 900 staff, while the Mine Safety and Health Administration shutters 34 regional offices across 19 states and pauses new silica dust rules. Seven advocacy organisations file suit against Department of Energy directions that keep some plants operating beyond expected retirement, and lawmakers question funding choices that steer $596 million towards reviving shuttered coal plants, with a formal explanation deadline set for 25 February.

Cost competition remains the longer-run constraint. Over the shale expansion years, analysis attributes roughly 49% of coal’s lost generation share to cheaper natural gas. In the latest year of global commissioning data, utility-scale renewables undercut fossil alternatives in 91% of new projects, with solar 41% cheaper and onshore wind 53% cheaper than fossil benchmarks, while battery storage costs sit 93% lower than in 2010. Saunders summarises the investment task as “separating short-term stabilisation from durable competitiveness, because policy can delay closure but it cannot repeal the cost curve”.

For institutional allocators, the immediate focus is on what becomes enforceable contract, what becomes contested funding, and what remains headline. Merifund Capital Management continues to track federal directives, litigation timetables, fuel-price signals and utility rate cases as these developments shape valuation risk across forthcoming regulatory cycles.

About Merifund Capital Management

Merifund Capital Management Pte. Ltd. (UEN: 201024554E) is a Singapore-headquartered hedge fund manager established in 2010. The firm runs long-only portfolio management alongside long/short equity, global macro, event-driven and systematic strategies, using derivatives selectively while prioritising capital preservation, liquidity and disciplined risk management. ESG considerations are integrated to align with rigorous global sustainability standards. Merifund serves accredited investors, family offices, foundations and endowments, and it is extending access for retail investors. Insights: https://merifund.com/insights. Media enquiries: Tao Yang, media@merifund.com. Information: https://merifund.com.