Energy Landscape Shift
The US is building more fossil fuel infrastructure than it has in a decade while renewable energy growth slows down, a new report shows.
The fossil fuel comeback is here
Data centers are demanding more energy, and the administration is ensuring fossil fuels meet the moment.
Electricity demand is climbing faster than it has in more than a decade with more data centers, factories, and electric vehicles plugging into the grid. Despite those growing demands, federal policies have sought to hobble the wind and solar industries in favor of fossil fuels.
Environmental and Economic Impacts
America’s energy landscape is already shifting as a result, according to the report published by the nonprofit Environmental Defense Fund and research firm Atlas Public Policy. If all the gas projects in the development pipeline complete construction, they could lock in more pollution and higher electricity prices for decades, the authors warn.
The U.S. power sector is at a new inflection point.
The U.S. power sector is at a new inflection point, with decisions made today shaping the cost, reliability, and emissions profile of the grid for decades to come, the report says.
Renewable Momentum and Policy Changes
While the US still generates 60 percent of its electricity from fossil fuels, renewables have quickly gained ground. Wind and solar produced more electricity together than coal for the first time in 2024. Solar was the fastest-growing source of new electricity generation that year, accounting for 81 percent of added capacity. Globally, solar has become the cheapest power source in most of the world.
Policy shifts have promoted fossil fuels as a preferred power source for energy-hungry data centers. Administrations have sought to alter renewable energy trajectories by issuing stop-work orders, blocking permits, and removing tax incentives. A rush of new solar and wind farms driven by relatively low costs continues, though many make up the last wave of projects that benefited from prior incentives.
Gas-Fired Power Expansion
Plans for new fossil fuel infrastructure climbed from just 5 percent of all new capacity in 2024 to 30 percent by the second quarter of 2026, according to the report, which analyzes data from the US Energy Information Administration. If the trend continues, fossil fuels could make up 70 percent of the development pipeline by the end of the decade. Planned fossil capacity would reach 68 gigawatts by 2030, reflecting a 45 percent jump from construction plans just six months ago.
Many of those plans could still fall through, particularly if forecasts for AI data center energy demand are overblown. But for now, renewable energy projects are being canceled at a faster clip than fossil fuels, at 4.9 percent compared to 2.9 percent of projects, respectively.
Cost and Price Volatility
New utility-scale solar and wind farms still beat gas when it comes to cost, coming in at $68 to $69 per megawatt-hour on average compared to $90 per megawatt-hour for new combined-cycle natural gas plants, the report finds. Fossil fuels are also subject to increasing price volatility. Gas and coal power plants also emit air pollutants and greenhouse gases contributing to climate change, leading to increased health costs. Electricity bills have risen across the nation as utilities upgrade power grids and build new energy infrastructure to meet rising demand.
