Trump to Roll Back Biden-Era Climate Mandates for Power Plants

US President Donald Trump plans to propose dropping Biden-era climate mandates requiring power plants to curb greenhouse gas emissions. The EPA will also unwind limits on mercury and other toxic air pollution. The move could impact publicly traded companies in the coal and energy utility spaces.

US President Donald Trump plans to propose the removal of Biden-era climate mandates requiring power plants to curb greenhouse gas emissions. The Environmental Protection Agency (EPA) will also unwind limits on mercury and other toxic air pollution [1]. This move, set to be announced as early as Wednesday, June 10, 2025, has significant implications for publicly traded companies in the coal and energy utility sectors.

The Biden administration's climate mandates were designed to reduce greenhouse gas emissions by limiting pollutants from fossil fuel combustion. The EPA's rollback targets these rules, which were projected to prevent 30,000 deaths and save $275 billion annually [2]. Health experts warn that weakening these regulations will increase exposure to deadly fine particulate matter, smog, mercury, and other toxic pollutants. The EPA's decision to downplay or omit the health benefits of these rules, while highlighting compliance costs, has been criticized by health experts.

The rollback of these regulations could have significant financial implications for energy companies. The EPA's rollback of mercury and greenhouse gas (GHG) emission limits for power plants is a tactical win for coal and gas interests. By temporarily suspending the Biden-era Mercury and Air Toxics Standards (MATS) rule and scrapping carbon capture mandates, the administration aims to prop up aging coal plants, which supply 16% of U.S. electricity [3]. However, this move is likely to be short-lived. The repeal faces inevitable legal challenges from states and environmental groups, given its departure from the Clean Air Act's mandate to regulate hazardous pollutants. Even if upheld, the policy ignores two critical realities: global ESG pressures and stranded asset risk.

Global ESG pressures are increasing, with over $40 trillion in assets now adhering to net-zero commitments. This creates a liquidity crisis for coal-dependent firms. Stranded asset risk is also a concern, as coal plants are already economically uncompetitive against renewables and gas. The EPA's own data shows that Biden-era rules would have cut 1.38 billion metric tons of GHGs by 2047—a target now jeopardized but one that could resurface under future administrations or market-driven shifts.

Renewable energy, by contrast, benefits from a multi-year megatrend: the global transition to low-carbon energy. The EPA's rollbacks inadvertently highlight the fragility of fossil fuel policies, reinforcing renewables' appeal as a hedge against regulatory uncertainty. Policy arbitrage opportunities exist for utilities and developers with decarbonization mandates, such as NextEra Energy (NEE) and Ørsted (ORSTED.CO), which are well-positioned to capitalize on state-level and corporate renewable targets.

Legal challenges to the EPA's rollbacks could indirectly bolster renewables. If courts reinstate GHG regulations, utilities would accelerate retirements of coal plants, favoring renewable integrators like Enel Green Power (ENEL.MI). Investors should also focus on regulated utilities with decarbonization roadmaps, such as NextEra and Xcel Energy (XEL), which are building grid-scale renewables and storage while maintaining stable cash flows from existing operations.

In conclusion, while the EPA's rollback of climate mandates may offer a short-term boost to coal and gas companies, investors should be wary of the long-term risks and opportunities presented by the shift in environmental policy. The global trend towards decarbonization and the increasing pressure from ESG-focused investors make renewable energy a more attractive investment option.

References:
[1] https://www.marketscreener.com/news/latest/Trump-Looks-to-Remove-Biden-s-Climate-Mandates-on-Power-Plants-50206213/
[2] https://www.dailyclimate.org/epa-rollback-plan-threatens-billions-in-savings-and-thousands-of-lives-analysis-shows-2672333966.html
[3] https://www.ainvest.com/news/regulatory-reversal-navigating-investment-risks-energy-climate-crossroads-2506/