The paper describes the results of a study of the impact of the National Energy on the trend towards increased utilization of coal and lignite in Texas with forecasts of increased coal and lignite utilization for the electric utility and industrial sectors. Environmental impacts of this increased coal and lignite use are projected in terms of increased air pollutant emissions and air quality impacts. Economic costs of compliance with alternative source emission regulations are also projected for the electric utility industry. Lignite consumption in Texas under the National Energy Plan is projected to increase from the present 13 million metric tons in 1976 to 57 million metric tons annually by 1985. Sub-bituminous coal consumption in Texas is projected to increase from 1 million metric per year in 1976 to 49 million metric tons per year in 1985. Bituminous coal consumption in Texas is expected to increase from less than one million metric tons per year in 1976 to about 3 million metric tons per year in 1985. Major increases in sulfur oxides emissions from coal and lignite combustion in Texas can be expected by 1985 of up to 1.5 × 10 9 kg per year without controls and 0.2 × 10 9 kg per year with controls. Increases in acid precipitation formation will result in north-east Texas from extensive lignite usage for electric power generation as a detriment to agriculture. The photochemical air pollution problem in the Houston area will probably worsen primarily because of increased nitrogen oxides and sulfur oxides emissions because of industrial coal combustion. Capital costs of air pollution controls in Texas for coal-fired utility boilers are estimated as up to U.S. $3.9 billion by 1985, with total operating costs of up to U.S. $1.2 billion per year.