Preheat the oven to 350°F (180°C). Line 2 baking sheets with parchment paper.
In a large bowl, cream together the sugar and coconut oil with an electric hand mixer until fluffy.
Add the vanilla and salt, and stir with a rubber spatula to combine. Set aside.
Sift the flour and baking powder into a medium bowl.
Gradually add the flour mixture to the coconut oil mixture and stir to combine.
Gradually add the non-dairy milk and stir until a crumbly dough forms. Using your hands, knead the dough into a ball.
On a lightly floured surface, roll out the dough to about ¼-inch (½ cm) thick.
Use snowflake cookie cutters to cut out shapes and transfer to the prepared baking sheets about 2 inches (5 cm) apart. Re-roll excess dough to cut out more shapes.
Bake for 10-12 minutes, until slightly golden around the edges .
Make the royal icing: Sift the powdered sugar into a large bowl. Add the vanilla and some of the water. Whisk until smooth, adding more water as needed to reach your desired consistency.
Transfer half of the icing to another bowl and add blue gel food coloring to one. Immediately transfer the icing to piping bags, or cover with plastic wrap. Do not leave the icing uncovered, as it will develop a film. If this happens, add a small amount of water and whisk to incorporate until the icing returns to your desired consistency.
Decorate the cookies with the royal icing and sprinkles. Let dry completely, at least 3-4 hours or overnight.