The construction of numerous hyperscale data centers by tech companies to support the surge in artificial intelligence has led to varying predictions about their impact on the nation’s power grid. Critics suggest these data centers could increase power costs and carbon emissions, while proponents argue they might boost infrastructure and clean energy investments, thus reducing costs and emissions.
A clearer picture of the data center boom’s impact has emerged, and it is not promising. According to a report released last week by the Energy Information Administration, carbon emissions from the U.S. power sector increased by 4 percent last year, surpassing the overall economic emissions growth of 2 percent. This rise is attributed to a 13 percent increase in coal power generation, partly driven by the spread of large-scale data centers.
This increase in emissions from the power sector marks a shift from a longstanding trend. Prior to the AI boom, U.S. power consumption remained steady for decades. Utilities, grid operators, and energy planners had anticipated this pattern would continue, planning to retire older, more polluting coal plants with an expectation that natural gas and renewables would take their place. However, electricity demand is climbing more swiftly than expected. By 2030, data centers could account for over 10 percent of U.S. electricity consumption, operating continuously even when wind and solar outputs are low, thereby prolonging the operation of aging coal plants.
“Commercial load is starting to grow, and that’s part of the data center story,” said Steve Piper, the director of energy research at S&P Global Energy, a market intelligence firm. “It’s kind of a rising tide lifts all boats phenomenon. While we think structurally coal will decline over time, [the AI boom] is going to slow down that decline.”
The increase in emissions could have been greater if not for the surge in solar and wind energy last year. Utilities now have access to cheap, carbon-free energy for much of the day, reducing reliance on fossil fuel-burning plants that are integral to the energy system. During sunny months with low demand, solar energy generates more power than coal. However, the issue remains that while solar energy is expanding, coal usage is not decreasing.
Another factor in the emissions increase was the relative drop in coal prices compared to natural gas, the country’s primary power source. With the rise in natural gas exports, domestic gas prices have increased relative to coal.
The coal industry has also benefited from increased political support. President Donald Trump and Energy Secretary Chris Wright have pledged to rejuvenate the struggling coal industry by backing new coal power plants and facilitating the construction of an export terminal to ship coal to Asia. Wright has issued temporary emergency orders to stop the retirement of at least six coal plants nationwide, compelling utilities to operate plants they had planned to close. His department argues these orders are necessary due to the power grid’s strain from extreme weather conditions.
However, these orders are not the actual cause of the rebound in coal emissions. The plants Wright has kept open are operating at a lower capacity than before Trump assumed office, largely because cheaper power sources than coal still exist.
For instance, the J.H. Campbell coal plant in Michigan, owned by Consumers Energy, was the first major coal facility Wright stopped from closing. At that time, Wright justified the plant’s operation by stating it was essential to maintain Michigan’s “critical power generation capability as summer begins.” Yet, in each of the last three quarters, the plant produced less electricity compared to the same quarter the previous year.
Instead, the rise in coal power generation is happening nationwide. Outside of the Western U.S., nearly every state generated more coal power in 2025 than in 2024. Virginia, home to the world’s largest AI cluster, saw one of the most significant increases, with utilities nearly doubling coal power generation to meet the growing demands of data centers. Nearby coal-producing states like Pennsylvania and West Virginia also ramped up their generation to cater to data center needs.
The report is particularly concerning because decarbonizing the electricity sector, which accounts for about 25 percent of U.S. emissions, is crucial to achieving national climate goals. Unlike the transportation sector, where electric vehicles face substantial cost and infrastructure challenges, and heavy industry, which still requires natural gas to produce steel and cement on a large scale, the power sector has viable cost-effective alternatives to fossil fuels.
Once electricity becomes cleaner, transitioning cars, home heating, and other sectors from fossil fuels to electricity would significantly cut emissions.
There have been signs of progress: power grid emissions have decreased by about one-third from their peak around 2005 as utilities have replaced older coal plants with less carbon-intensive methods, such as natural gas turbines, which emit roughly half as much carbon per watt of electricity. The rapid expansion of solar and wind power was expected to further reduce power emissions.
The persistent use of coal poses a challenge to that progress.
“Coal generation may sort of have a floor in our forecasts,” said Piper. He anticipates that coal will continue to decline in the long term, but that “it will take something else” to completely remove it from the power grid. Until there is a grid with sufficient continuous power to eliminate the need for the dirtiest fuels, the nation’s move away from fossil fuels will remain at a standstill.
