Coal back in favour as US plant bidding war highlights rising demand to power AI

The US government, under the Trump administration, is actively pursuing policies to extend the operational life of coal-fired power plants and bolster the coal sector, driven by the escalating energy requirements of AI data centers. Energy Secretary Chris Wright has indicated that the majority of coal capacity will remain online, with utilities already extending plant lifespans, such as Southern Company's decision to extend three plants totaling 8.2GW from 2028 to 2035. The administration has also utilized emergency powers to mandate the continued operation of plants, including the J.H. Campbell coal-fired power plant in Michigan.

This push for coal comes despite its historical decline in the US energy mix, falling to approximately 15 percent of electricity generation from 51 percent in 2001. Renewable sources like solar and wind have become more cost-effective, with a 2023 Energy Innovation report stating $99 percent of existing US coal plants are more expensive to run than new solar or wind power. However, the administration has simultaneously cut funding for renewable energy projects, including returning over $13 billion in unobligated funds earmarked for clean energy, and attacked wind and solar initiatives through legislation like the "One Big Beautiful Bill" which slashed tax breaks for new renewable projects.

To further support the coal sector, the US government is planning to announce a support package of up to $700 million, with over half allocated for 13 coal plant upgrades, $185 million to match corporate funds for facilities in Alaska, Maryland, and West Virginia, and $75 million for the proposed West Gateway export terminal in Northern California. Additionally, the Department of Energy previously provided a $625 million funding package in October for retrofitting and recommissioning coal-fired power plants. This renewed focus on coal, deemed the dirtiest form of energy, is likely to lead to a significant increase in emissions, posing a stark contrast to the sustainability goals often associated with the tech industry.