Old school coal relied on as US datacenter power needs surge

US datacenters are increasingly turning to coal power due to rising natural gas prices and surging electricity demand driven by AI workloads. This shift represents a significant reversal for climate goals, as coal generation has increased nearly 20% year-to-date, with Jefferies, a financial services firm, projecting this trend will continue through 2027 as operators race to bring new capacity online during the expected 2026-2028 demand surge.

What you should know: The datacenter boom is forcing utilities to extend the life of coal plants they had planned to decommission.

• In Omaha, one power company reversed plans to stop burning coal, citing the need to serve nearby datacenters and avoid power shortages in the district.
• Natural gas-powered turbines had been the preferred choice for datacenter energy, especially for on-campus generation, but current gas prices have made this option less economically attractive.
• Jefferies raised its coal generation estimate by approximately 11%, “driven by higher capacity factors, and staying elevated through 2027 on favorable fuel pricing vs gas (particularly for existing fleet).”

The environmental impact: This coal resurgence threatens global climate commitments and dramatically increases datacenter carbon emissions.

• A 2024 Morgan Stanley report projected that datacenters will emit 2.5 billion tonnes of greenhouse gases worldwide by 2030 — triple the emissions that would have occurred without generative AI development.
• Greenpeace, an environmental campaign group, has characterized coal as “the dirtiest, most polluting way of producing energy.”
• Continued coal combustion affects local air quality near power plants and hinders broader efforts to reduce greenhouse gas emissions.

Policy challenges: The current federal administration is prioritizing energy availability over renewable development for AI competitiveness.

• The Trump administration has frozen approval processes for wind energy projects and announced restrictions on new solar and wind power projects, citing land use and cost concerns.
• This contrasts with research indicating renewable energy could power datacenters at lower cost than fossil fuels or emerging technologies like small modular reactors.

What they’re saying: Government officials are framing energy access as a national security priority over climate concerns.

• “The real existential threat right now is not a degree of climate change. It’s the fact that we could lose the AI arms race if we don’t have enough power,” US Interior Secretary Doug Burgum told a natural gas industry event last month.
• Secretary of Energy Chris Wright stated: “The Trump administration will treat climate change for what it is, a global physical phenomenon that is a side effect of building the modern world.”

Why this matters: The tension between AI development and environmental goals highlights the challenge of balancing technological advancement with sustainability commitments, as developers prioritize getting facilities online quickly with whatever power sources are immediately available.