The fossil fuel comeback is here

This pivot toward conventional generation comes at a time when electricity demand nationwide is climbing faster than it has in more than a decade. A surge of new energy-intensive facilities, including artificial intelligence data centers, advanced manufacturing factories, and a growing fleet of electric vehicles, are plugging into the grid and straining existing resources. Despite these escalating demands and the proven economic advantages of clean power, the administration of President Donald Trump has actively sought to hobble the wind and solar industries, favoring fossil fuels instead to power the country’s technology boom.

The authors of the report warn that if all the natural gas projects currently in the development pipeline complete construction, they could lock the United States into decades of heightened pollution and higher electricity prices.

“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 emphasizes.

This shifting momentum represents a sharp departure from recent historical trends. While the United States still generates roughly 60 percent of its electricity from fossil fuels, renewable energy sources had quickly gained ground over the previous several years. For the first time in 2024, wind and solar combined to produce more electricity in the US than coal. Solar energy stood out as the fastest-growing source of new electricity generation that year, accounting for a staggering 81 percent of all added capacity. Globally, solar has also solidified its position as the cheapest power source in most parts of the world.

However, the political and regulatory environment shifted dramatically when Donald Trump stepped into his second term as president with a mandate to “drill, baby, drill” for fossil fuels. The administration has championed oil and gas as the preferred power source for energy-hungry data centers, viewing traditional baseload generation as essential for supporting the tech sector’s expansion.

To achieve this vision, federal authorities have pursued a multi-pronged strategy to stall or dismantle renewable energy projects. Actions taken by the administration have included issuing stop-work orders on major developments, blocking essential permits, and removing critical federal tax incentives that had previously catalyzed private investment. Despite these aggressive headwinds, the country continues to see a residual rush of new solar and wind farms being completed. This ongoing momentum is largely driven by historically low technology costs, though industry experts note that many of these surviving installations represent the final wave of projects that managed to secure and benefit from Biden-era incentives before the policy shift.

The broader market dynamics are now clearly pivoting in favor of gas-fired power plants. Plans for new fossil fuel infrastructure climbed precipitously from just 5 percent of all new capacity in 2024 to 30 percent by the second quarter of 2026, according to the report, which analyzed data sourced directly from the US Energy Information Administration. If current trends continue unabated, fossil fuels could make up as much as 70 percent of the entire development pipeline by the end of the decade. Planned fossil fuel capacity is projected to reach 68 gigawatts by 2030, reflecting an extraordinary 45 percent jump from construction plans recorded just six months prior.

Whether all of these planned projects ultimately break ground remains to be seen. Many could still fall through, particularly if the aggressive energy demand forecasts for AI data centers prove to be overblown by market realities. At present, however, renewable energy projects are being canceled at a noticeably faster clip than fossil fuel ventures, with cancellation rates sitting at 4.9 percent and 2.9 percent of projects, respectively, as regulatory scrutiny mounts.

This shift occurs even as utility-scale solar and wind farms retain a distinct financial advantage over gas when it comes to levelized cost. According to the report, new wind and solar generation averages between $68 and $69 per megawatt-hour, compared to an average of $90 per megawatt-hour for new combined-cycle natural gas plants. Beyond capital expenditures, fossil fuel infrastructure is increasingly exposed to severe price volatility on global markets, a risk underscored by geopolitical instability, including the conflict involving the US and Iran.

Furthermore, continued reliance on gas and coal power plants carries significant external costs. These facilities emit harmful air pollutants and the greenhouse gases responsible for driving global climate change, generating substantial public health expenses. At the same time, consumers across the nation are already experiencing rising electricity bills as utility companies work to upgrade aging power grids and construct the new energy infrastructure required to keep pace with accelerating demand.