Spurred by skyrocketing computational needs for artificial intelligence, major tech firms and utilities are turning to new fossil fuel plants to secure continuous baseload electricity, reversing previous decarbonization trajectories. According to a joint analysis by the Environmental Defense Fund and Atlas Public Policy reported by The Verge, the share of fossil fuels in the US development pipeline for new power facilities has climbed to roughly 30 percent. This represents a steep reversal from 2024, when fossil fuel projects accounted for only 5 percent of actual new generating capacity added to the grid, marking the highest pipeline share recorded since 2016. Grid operators are prioritizing natural gas turbines that can be deployed rapidly to supply the continuous, unyielding power required by hyperscale data centers, establishing a structural break with prior clean energy goals.
This infrastructure pivot coincides with significant federal policy adjustments under the Donald Trump administration, which has moved away from the clean energy incentives established under the Inflation Reduction Act. The federal government has reduced tax subsidies for wind and utility-scale solar installations while ordering aging coal-fired power plants to remain operational, backed by $850 million in dedicated facility support. Responding to these regulatory signals, utility companies are now preparing to connect about 68 gigawatts of new fossil fuel capacity to the grid between 2026 and 2030, a figure that has expanded by 45 percent compared to estimates from just six months earlier. As regulatory frameworks retreat from climate change targets, power companies are rapidly submitting expansion filings centered on natural gas generation.
The swift realignment in planning threatens to set back the transition to clean energy by more than a decade, potentially pushing the generating mix back toward early 2010s levels. At the end of 2022, fossil fuels made up only 9 percent of proposed power additions, but under current projections they could represent approximately 30 percent of the pipeline by 2026 and up to 70 percent of new operational capacity by 2030. Utilities are moving forward with gas despite economic disparities: the levelized cost of energy for new combined-cycle natural gas sits at approximately $90 per megawatt-hour, compared to between $68 and $69 per megawatt-hour for onshore wind and utility solar. David Villagrana, lead counsel for clean energy tax solutions at the Environmental Defense Fund, warned that relying on fossil fuels risks locking consumers into decades of higher electricity bills, volatile fuel prices, and increased pollution when clean generation paths should instead be prioritized to expand capacity affordably.
For enterprise operators and hyperscale AI platforms that have publicly pledged to achieve net-zero carbon emissions by 2030, the coming months represent a critical crossroads for power purchase agreements. Cloud developers facing urgent capacity shortages may find themselves compelled to contract fossil-based power to prevent compute bottlenecks, directly compromising their environmental benchmarks. At the same time, this strategy carries operational risks, including supply chain constraints on gas turbine components and long-term exposure to natural gas price volatility. As infrastructure developers push forward with plant permitting, tech investors will need to reconcile the widening gap between enterprise sustainability mandates and the sheer volume of power demanded by next-generation artificial intelligence.