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Fossil fuel plant retirements are slowing down, and projected load growth is to blame.
To fully decarbonize the electricity system will require more than just the rapid deployment of non-carbon-emitting generation capacity, plus the transmission necessary to get that electricity to where it needs to go. It will also require that our existing stock of electricity generation — which is largely natural gas- and coal-powered — get mostly mothballed. So far, this process has been proceeding briskly. Renewable deployment is on the way up and is projected to accelerate, and older electricity generation was sliding quickly but gracefully into retirement — until recently.
Retirements of existing generation have slowed down dramatically in the first half of this year, which is on pace to be the slowest for existing generation retirements since 2011, according to new data from the Energy Information Administration.
In the first half of the year, some 5.1 gigawatts of generating capacity have been retired, and another 2.4 gigawatts are scheduled to be retired by year’s end, for a projected total of 7.5 retired gigawatts. From 2004 to 2023, by contrast, just over 12 gigawatts of capacity were retired each year on average, with almost 15 gigawatts retired per year this decade. Since 2022, according to EIA data, over 90% of retired capacity has been coal or natural gas.
What’s behind the slowdown? “Reliability is threatened because the grid conditions are tightening,” Douglas Giuffre, executive director of gas, power and renewables analysis at S&P Global Commodity Insights, explained in an email. “This is partly due to the recent pace of coal and natural gas retirements in the U.S., which worked off some of the excess capacity in power markets. Now we are seeing tighter reserve margins, and a relatively thin pipeline of new gas-fired projects that can come online quickly.” That’s especially concerning for utilities at a time when projected electricity demand is way, way up.
The wave of retirements was a national phenomenon, often having nothing to do with state-level plans to decarbonize. Coal and gas were being retired so steadily over the past 20 years not just because plants were aging, but also because power use was essentially flat from the early 2000s through, essentially, yesterday. This meant that older plants — especially dirty coal plants — became uneconomic to run, especially as natural gas prices began to fall.
Now, we are in a completely different world. Electricity use is forecast to start growing again, thanks to a buildout of new data centers and manufacturing, plus the ongoing electrification of automobiles and home heating and cooling.
The Southeast offers an example of how these trends have played out on the ground. In December 2020, the Mississippi Public Service Commission determined that the state had “excess reserves … largely due to decreases in projected load” and ordered a 950 megawatt reduction in generating capacity by Mississippi Power by 2027. A consulting firm hired by the commission determined that Plant Daniel, a coal plant, was “relatively inefficient compared to other available resources;” a few months later, the utility said it would decommission Plant Daniel by 2027.
Then Georgia Power, the utility that covers most of the state (and, like Mississippi Power, a subsidiary of Southern Company), rushed out a new three-year plan for its future power usage less than a year after finalizing its old one. Its demand forecast through the end of the decade had jumped from 400 megawatts to 6,600 megawatts, the result of a projected boom in data center construction.
“They came in with a preselected list of ways it wanted to meet that power need,” including buying power from Plant Daniel and new gas, Bob Sherrier, a staff attorney at the Southern Environmental Law Center, told me. Georgia Power told the state’s utility commission that to respond to growing demand it would need to extend contracts with its sister utility in Mississippi — which meant not only that Daniel would remain open for at least another year — and build new new plants that could run on gas or diesel, plans for which regulators approved on Tuesday. The utility also hinted that its existing plans to euthanize, for the most part, its coal-fired generation fleet by the end of 2028 were likely to be revised.
“To meet that projected need, the utilities are reverting to what they know, which is fossil fuels,” Sherrier said.
In vertically integrated markets, where utilities own generating assets and sell power to customers, environmentalists have seen delayed retirements and the building of new fossil plants as examples of utilities slipping into their comfort zone, building and operating expensive projects instead of developing or procuring renewables to handle rising demand.
But it's not just in vertically integrated markets where fossil retirements are being delayed. In Maryland, for instance, Brandon Shores, a coal-fired power plant that was scheduled to close in 2025, is staying open because PJM Interconnection, the regional electricity market, determined that a plan to replace it with battery storage was not a “realistic option at present” nor “technically viable to resolve the reliability violations or avoid the need for an RMR agreement at this time,” PJM president Manu Asthana said in a letter to Paul Pinsky, the director of the Maryland Energy Administration. The transmission investments required to make up the difference, meanwhile, would take several years.
Along with the neighboring Wagner plant, which burns a mix of coal, oil, and natural gas, Brandon Shores will likely stay open more than three years past its planned retirement date thanks to what’s known as a “reliability must run” contract, which “would put Maryland ratepayers on the hook for over $600 million dollars in out-of-market payments,” according to a letter written by several Maryland congressional representatives to PJM.
Environmental advocates have blamed PJM for not doing enough proactive transmission planning to account for predictable and scheduled plant retirements.
The slowing retirements mean that emissions from the electricity sector, which have been falling since the mid-2000s (with occasional bumps up as the economy has recovered from downturns), are expected to plateau over the next year or so. EIA forecasts show carbon dioxide emissions from electricity as essentially flat from 2023 to 2025, with increased natural gas emissions essentially offsetting falling coal emissions.
There is a bright side to the data, however. So far this year, the U.S. has installed just over 20 gigawatts of new generation, 80% of which has been solar and battery storage, including a 600-plus megawatt projects in Nevada and Texas. If added generation comes on in the second half of this year as planned, the EIA projects we’ll have 15 gigawatts of battery storage by year’s end. Along with the large and growing solar generation in states like California, Nevada, and Texas, the U.S. is getting closer to a grid that can, at least, run without carbon emissions day or night.
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A new subsidy for metallurgical coal won’t help Trump’s energy dominance agenda, but it would help India and China.
Crammed into the Senate’s reconciliation bill alongside more attention-grabbing measures that could cripple the renewables industry in the U.S. is a new provision to amend the Inflation Reduction Act to support metallurgical coal, allowing producers to claim the advanced manufacturing tax credit through 2029. That extension alone could be worth up to $150 million a year for the “beautiful clean coal” industry (as President Trump likes to call it), according to one lobbyist following the bill.
Putting aside the perversity of using a tax credit from a climate change bill to support coal, the provision is a strange one. The Trump administration has made support for coal one of the centerpieces of its “energy dominance” strategy, ordering coal-fired power plants to stay open and issuing a raft of executive orders to bolster the industry. President Trump at one point even suggested that the elite law firms that have signed settlements with the White House over alleged political favoritism could take on coal clients pro bono.
But metallurgical coal is not used for electricity generation, it’s used for steel-making. Moreover, most of the metallurgical coal the U.S. produces gets exported overseas. In other words, cheaper metallurgical coal would do nothing for American energy dominance, but it would help other countries pump up their production of steel, which would then compete with American producers.
The new provision “has American taxpayers pay to send metallurgical coal to China so they can make more dirty steel and dump it on the global market,” Jane Flegal, the former senior director for industrial emissions in the Biden White House, told me.
The U.S. produced 67 million short tons of metallurgical coal in 2023, according to data from the U.S. Energy Information Administration, more than three-quarters of which was shipped abroad. Looking at more recent EIA data, the U.S. exported 57 million tons of metallurgical coal through the first nine months of 2024. The largest recipient was India, the final destination for over 10 million short tons of U.S. metallurgical coal, with almost 9 million going to China. Almost 7 million short tons were exported to Brazil, and over 5 million to the Netherlands.
“Metallurgical coal accounts for approximately 10% of U.S. coal output, and nearly all of it is exported. Thermal coal produced in the United States, by contrast, mostly is consumed domestically,”according to the EIA.
The tax credit comes at a trying time for the metallurgical coal sector. After export prices spiked at $344 per short ton in the second quarter of 2022 following Russia’s invasion of Ukraine (much of Ukraine’s metallurgical coal production occurs in one of its most hotly contested regions), prices fell to $145 at the end of 2024, according to EIA data.
In their most recent quarterly reports, a number of major metallurgical coal producers told investors they wanted to reduce costs “as the industry awaits a reversal of the currently weak metallurgical coal market,” according to S&P Global Commodities Insights, citing low global demand for steel and economic uncertainty.
There was “not a whisper” of the provision before the Senate’s bill was released, according to the lobbyist, who was not authorized to speak publicly. “No one had any inkling this was coming,” they told me.
But it’s been a pleasant surprise to the metallurgical coal industry and its investors.
Alabama-based Warrior Met Coal, which exports nearly all the coal it produces, reported a loss in the first quarter of 2025,blaming “the combination of broad economic uncertainty around global trade, seasonal demand weakness, and ample spot supply is expected to result in continued pressure on steelmaking coal prices.” Its shares were up almost 6% in afternoon trading Monday.
Tennessee-based Alpha Metallurgical Resources reported a $34 million first quarter loss in May, citing “poor market conditions and economic uncertainty caused by shifting tariff and trade policies,” and said it planned to reduce capital expenditures from its previous forecast. Its shares were up almost 7%.
While environmentalists have kept a hawk’s eye on the hefty donations from the oil and gas industry to Trump and other Republicans’ campaign coffers, it appears that the coal industry is the fossil fuel sector getting specific special treatment, despite being far, far smaller. The largest coal companies are worth a few billion dollars; the largest oil and gas companies are worth a few hundred billion.
But coal is very important to a few states — and very important to Donald Trump.
The bituminous coal that has metallurgical properties tends to be mined in Appalachia, with some of the major producers and exporters based in Tennessee and Alabama, or larger companies with mining operations in West Virginia.
One of those, Alliance Resource Partners, shipped almost 6 million tons of coal overseas. Its chief executive, Joseph Craft, andhis wife, Kelly, the former ambassador to the United Nations, are generous Republican donors. Craft was a guest at the White House during the signing ceremony for the coal executive orders.
Representatives of Warrior, Alpha Metallurgical, and Alliance Resources did not respond to a requests for comment.
While coal companies and their employees tend to be loyal Republican donors, the relative small size of the industry puts its financial clout well south of the oil and gas industry, where a single donor like Continental Resources’s Harold Hamm can give over $4 million and the sector as a whole can donate $75 million. This suggests that Trump and the Senate’s attachment to coal has more to do with coal’s specific regional clout, or even the aesthetics of coal mining and burning compared to solar panels and wind turbines.
After all, anyone can donate money, but in Trump’s Washington, only one resource can be beautiful and clean.
Two former Department of Energy staffers argue from experience that severe foreign entity restrictions aren’t the way to reshore America’s clean energy supply chain.
The latest version of Congress’s “One Big, Beautiful Bill” claims to be tough on China. Instead, it penalizes American energy developers and hands China the keys to dominate 21st century energy supply chains and energy-intensive industries like AI.
Republicans are on the verge of enacting a convoluted maze of “foreign entity” restrictions and penalties on U.S. manufacturers and energy companies in the name of excising China from U.S. energy supply chains. We share this goal to end U.S. reliance on Chinese minerals and manufacturing. While at the U.S. Department of Energy and the White House, we worked on numerous efforts to combat China’s grip on energy supply chains. That included developing tough, nuanced and, importantly, workable rules to restrict tax credit eligibility for electric vehicles made using materials from China or Chinese entities — rules that quickly began to shift supply chains away from China and toward the U.S. and our allies.
That experience tells us that the rules in the Republican bill will have the opposite effect. In reality, they will make it much more difficult for U.S. companies to move supply chains away from Chinese control. The GOP’s proposed restrictions require every developer of a critical minerals project, advanced manufacturing facility, or clean energy power plant to sift through their supply chains and contracts for any relationship with a Chinese (or Russian, Iranian, or North Korean) entity. Using a Chinese technology license, or too many subcomponents, or materials produced in China — even if there are few or no alternatives — would be enough to render a company ineligible for the very incentives they need to finance and build new U.S. energy production or manufacturing facilities.
This would put companies in the position of having to prove the absence of Chinese entanglements (and guarantee that there will be none in the future) to qualify for tax credits, an all but impossible task, particularly given the untested set of new rules. Huge portions of the supply chain have flowed through China for decades, including 65% of global lithium processing and 97% of solar wafer manufacturing. American companies are already working to distance themselves from Chinese expertise and components, but the complex, commingled nature of global supply chains and corporate business structures make it infeasible to flip the switch overnight.
On top of that, the latest version of the bill would impose a brand new tax on any new solar and wind projects that have too much foreign entity “assistance,” while providing the Treasury Secretary carte blanche for determining what that might be. The result: An impossible bind, whereby the very sectors that need the most support to disentangle from China are now the ones most penalized by the new Republican “foreign entity” restrictions.
The fact is that China is ahead, not behind, in many energy sectors, and America desperately needs help playing catch-up. Ford’s CEO has called Chinese battery and electric vehicle technologies “an existential threat” to U.S. automaking. In energy supply chains for nuclear, solar, batteries, and critical minerals, China is not merely producing cheap knockoffs of American inventions, it is churning outcutting-edge battery chemistries, advancedmanufacturing processes, and high-speedcharging systems, all at lower cost. And at least until the Inflation Reduction Act enacted incentives for U.S. manufacturing and deployment, the gap between the U.S. and China waswidening.
These untested foreign entity rules will widen that gap once more. Since the start of the year, developers have abandoned more than $14 billion in domestic clean energy deployment and manufacturing projects, citing the uncertain tariff and tax policy environment, and that was before the new tax on solar and wind. New analysis from Energy Innovation finds that the latest version of the bill would reduce U.S. generation capacity by 300 gigawatts over the next decade — multiple times what we will need to power new data centers for artificial intelligence. Stopping clean energy projects in their tracks is also likely to trigger an energy price shock by constraining the very energy technologies that can be built most quickly. In the end we will cede not only our supply chains to China, but also our competitive edge in the race for AI and manufacturing dominance.
Fortunately, we have all the ingredients in this country already to achieve energy leadership. The U.S. boasts deep capital markets, a highly skilled manufacturing and construction workforce, a strong consumer economy driving demand, and, in spite of recent attacks, the world’s greatest universities and national labs. We simply need policy to provide a workable path for companies to invest with certainty, bring factories back to the United States, hire American workers, and learn to produce these technologies at scale.
With the Inflation Reduction Act’s domestic production incentives and supply chain restrictions, hundreds of companies stepped up over the past few years and made that bet, pouring billions of dollars into American supply chains. Should they be enacted, the reconciliation bill’s foreign entity rules would slam the brakes on all that activity, playing right into China’s hands.
There is a way to apply a set of carefully crafted restrictions to wean us off Chinese supply chains, but we cannot afford to saddle American energy with new taxes and red tape. If we scatter rakes across the floor for companies to step on, they will just throw up their hands and send their investments overseas, leaving us more reliant on China than before.
On taxing renewables, climate finance, and Europe’s heat wave
Current conditions: Parts of Northern California are under red flag warnings as warm air meets whipping winds • China’s southwestern Guizhou province is flooded for the second time in a week • A potential bomb cyclone is taking aim at Australia’s east coast.
Late on Friday Senate Republicans added a new tax on solar and wind projects to the budget reconciliation megabill that sent many in the industry into full-blown crisis mode. The proposal would levy a first-of-its-kind penalty on all solar and wind projects tied to the quantity of materials they source from companies with ties to China or other countries designated as adversaries by the U.S. government. “Taken together with other factors both in the bill and not, including permitting timelines and Trump’s tariffs, this tax could indefinitely undermine renewables development in America,” wrote Heatmap’s Jael Holzman. Here are a few reactions from politicians and industry insiders:
The Senate began debating the GOP’s megabill yesterday. Republican Senator Thom Tillis of North Carolina was one of two from the majority party who voted on Saturday against debating the bill. Shortly thereafter, he announced he wouldn’t run for re-election next year after President Trump threatened to back his primary challenger. On Sunday evening, Tillis took to the Senate floor to give an impassioned speech denouncing the bill’s Medicaid cuts and defending wind and solar tax credits. The Senate will resume work on the bill today with what’s known as a “vote-a-rama,” during which senators will offer and vote on amendments that could yet introduce significant changes. A final vote from the Senate on the bill is expected sometime today.
The fourth International Conference on Financing for Development kicks off today in Spain, offering world leaders an opportunity to reform the world’s financial aid systems. The conference happens once per decade. This year’s delegates have already adopted the “Sevilla Commitment,” which commits to closing the $4 trillion financing gap for global goals such as ensuring everyone has affordable and reliable energy, making cities sustainable, and mobilizing $100 billion in climate mitigation funding each year toward developing countries. As Reuters explained, the text focuses on helping poor nations pay for adaptation through debt swaps, potential pollution taxes, and other creative funding mechanisms. More than 70 world leaders will be there, as will World Bank President Ajay Banga and representatives from the Gates Foundation. The U.S. government will not have a representative at the talks. The Trump administration withdrew after trying and failing to remove any mention of “climate” and “sustainability” from the conference’s draft text. Some sources told Reuters the event could be more successful without the U.S. there to “water down objectives.”
The European Union is considering changing its climate law to allow countries to lean on international carbon credits to reach emissions targets. The original goal was to cut direct emissions by 90% by 2040 compared to 1990 levels, but some countries have pushed back on that ambition, citing costs. A draft of the proposed change shows that the European Commission would allow high-quality carbon credits to account for 3% of the emissions cut starting in 2036. As Politico explains: “Such credits will allow the EU to pay for emissions-slashing projects in other, usually poorer countries, and count the resulting greenhouse gas reductions toward its own 2040 target, rather than the climate goals of the country hosting the project.” Accounting for 6% of global greenhouse gas emissions, the EU ranks fourth on the list of highest polluters, behind China, the U.S., and India.
Meanwhile, Europe is facing a punishing early-summer heat wave that is already smashing records and triggering weather alerts. A few numbers:
Nearly a third of the citizens of the Pacific island nation of Tuvalu have applied for the world’s first climate visa, which would allow them to permanently migrate to Australia.