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The group’s latest World Energy Outlook reflects the sharp swerve in U.S. policy over the past year.

The United States is different when it comes to energy and fossil fuels. While it’s no longer the world’s largest greenhouse gas emitter, no other country combines the United States’ production and consumptive capacity when it comes to oil — and, increasingly, natural gas. And no other country has made such a substantial recent policy U-turn in the past year, turning against renewables deployment at the same time as it is seeing electricity demand leap up thanks to data centers.
All of this is mirrored in the International Energy Agency’s 2025 World Energy Outlook, released Wednesday, which reflects a stark portrait of how America’s development of artificial intelligence and natural gas has made it distinct from its global peers. In combination, the effects of the One Big Beautiful Bill Act and the U.S.’s world-leading artificial intelligence development have meaningfully altered the group’s forecasts of global fossil fuel usage and emissions.
Much of the report compares two different scenarios for global energy usage and emissions — one looking at what governments are actually doing, and the other at what they say they want to do. The difference between the two is in the pace of the renewables buildout, and especially the pace at which fossil fuels’ place in the energy supply is wound down, if it is at all.
For example, the Current Policies Scenario (the stricter scenario) shows “demand for oil and natural gas continu[ing] to grow to 2050,” while the Stated Policies Scenario, or STEPS (the more optimistic one) shows oil use flattening “around 2030.” But in both cases, “gas demand continues growing into the 2030s, due mainly to changes in U.S. policies and lower gas prices.”

Even in the more optimistic outlook, natural gas use peaks later than it did in earlier forecasts. In 2035, the IEA projects, gas output will be 350 billion cubic meters greater than it projected last year, which is roughly equal to the annual gas production of Texas — and that’s in the optimistic scenario. “Three-quarters of this is for electricity generation, mainly in the United States, Japan and the Middle East, and reflects higher electricity demand and slower progress in adding renewables to the generation mix than projected,” the report says.
But the U.S. is not the whole story — the tide of renewable deployment continues apace. The clean energy analytics group Ember argues that the report’s “downgrades on clean growth in the U.S. are offset by rises in other countries,” especially as electric vehicles grow in popularity everywhere else. While the STEPS forecast shows a 30% drop in renewables capacity compared to last year’s projection in 2035 in the US (and a 60% drop in EVs on the road in 2035), “there are 20% more EVs projected in emerging markets outside China and the renewables forecast was also upgraded outside the U.S,” Ember said in a statement.
Ember attributes this to an “increasing focus on energy security,” with more countries following China in electrifying broader swathes of their economies in order to reduce their dependence on fossil fuel imports like natural gas, coal, and oil — including from the United States.
Similarly, Ember is sanguine about artificial intelligence throwing off projections for the wind-down of fossil fuels, which the IEA has and continues to portray generally as largely a U.S. phenomenon.
The IEA estimates that over 85% of global data center capacity growth will take place in the United States, China, and Europe, and that data centers will be responsible for only 6% to 10% of electricity demand growth in the EU and China through 2030. In the U.S., however, they’re responsible for about half of projected growth.
But it’s not just data centers that are causing the IEA to revise its figures. The IEA upped its forecast for electricity use in 2035 by 4% compared to last year, which amounts to some 1,700 terawatt-hours, a bit south of India’s annual electricity generation today. The group attributes this upward move in its forecast not just to “electricity demand to serve data centres” — which dominates discussion of energy use and climate change — but also to “higher demand for air conditioning in the Middle East and North Africa.”
While the economic benefits of artificial development are still necessarily speculative — with trillions of dollars of investment leading us potentially to a singularity of exponentially increasing technological development, machine-led human extinction, or somewhere in between — the benefits of air conditioning are far less so. With increased AC usage, even as temperature rises, heat-related mortality could fall.
And as the Global South heats and grows economically, its demand for and ability to procure air conditioning will grow, leading to higher energy usage and putting more pressure on the climate. The IEA figures square with another recent report from the climate and energy think tank Rhodium Group, which predicts a rise in emissions after 2060 due to economic development in the Global South.
In short, the energy consumption that feeds economic development all over the world is making the hottest parts of the world hotter while also enabling them to use more energy to cool their homes. At the same time, the richest parts of the world are increasing their electricity usage — and therefore their emissions — in order to develop a technology they hope will supercharge economic growth. The climate hangs in the balance.
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Maybe utilities’ “natural monopoly” isn’t so natural after all.
Debates over electricity policy usually have a common starting point: the “natural monopoly” of the transmission system, wherein the poles and wires that connect power plants to homes and businesses have exclusive franchises in a certain territory and charge regulated rates to access them.
The thinking is that without a monopoly franchise, no one would make the necessary capital expenditures to build and maintain the power lines and grid infrastructure necessary to connect the whole system, especially if they thought someone would build a new transmission line nearby. So while a government body oversees investment and prices, the utility itself is not subject to market-based competition.
But what if someone really did want to build their own wires?
“There are at least two of us who do not think that electricity is a natural monopoly,” Glen Lyons, the founder of Advocates for Consumer Regulated Electricity, told me.
The other one is Travis Fisher, an energy scholar at the Cato Institute, who corrected his friend and colleague.
“Between me, and Joseph Schumpeter, and Wayne Cruz, and Glen Lyons, there’s at least four of us. Only three of us are alive,” Fisher said, referencing the Austrian economist Schumpeter, who died in 1950, and the libertarian scholar Cruz, who was a critic of the restructuring of the electricity market in the 1990s.
Fisher and Lyons, however, are the team behind a proposal put out on Tuesday by the libertarian Cato Institute calling for “consumer-regulated electricity.” Instead of a transmission system with a monopoly franchise that independent generators can connect to and sell power to utilities in a process regulated by a combination of a public utility commission and regional transmission organization or independent system operators, CRE systems would be physically islanded electricity systems that customers would privately and voluntarily sign up for.
Crucially, CRE would not be regulated under existing federal law, and would have no connection to the existing grid, allowing for novel price structures and even physical set-ups, like running on different frequencies or even direct current, Fisher said.
They would also, Fisher and Lyons argue, help solve the dilemma haunting electricity policymakers: how to bring new load on the grid quickly without saddling existing ratepayers with the cost of paying for utility upgrades.
“If enabled, CRE utilities would generate, transmit, and sell electricity directly to customers under voluntary contracts, without interconnecting to the existing regulated grid or seeking permission from economic regulators at the state or federal level,” the Cato proposal reads.
This idea has a natural audience among political conservatives, as it’s essentially a bet that more entrepreneurship and less regulation will solve some of our biggest energy system problems. On the other hand, utilities tend to be a powerful force in conservative politics at both the state and federal levels, which is one reason why these kinds of ideas are still marginal.
But less marginal than they have been.
Consumer-regulated electricity is more than just another think tank white paper. It has also won the approval of the influential American Legislative Exchange Council, better known as ALEC, a conservative group that writes model legislation for state legislatures to adopt. Fisher proposed version of the consumer-regulated utilities plan to the network in December of last year, and ALEC approved it in January.
A few days after the group finalized the model policy to allow CRE at the state level, Arkansas Senator Tom Cotton proposed his own version in the form of the DATA Act, which would “amend the Federal Power Act to exempt consumer-regulated electric utilities from Federal regulation.”
While the CRE proposal is a big conceptual departure from about a century of electricity regulation, the actual reform is modest. Fisher and Lyons propose a structure would apply solely to “sophisticated customers … who voluntarily contract for service and can manage their own risks,” i.e. big industrial users like data centers, not your home.
While this sounds like behind the meter generation, whereby large electricity users such as, say, xAI in Memphis, simply set up their own electricity plants, CRE goes further. The idea is to capture the self-regulation benefits of building your own power within a structure that still allows for the economies of scale of a grid. Or in the words of Cato’s proposal, CRE “would enable third-party utilities to serve many customers, resulting in lower costs, higher reliability, and a smaller environmental footprint compared to self-supply options.”
Fisher and Lyons argue that CRE would also have an advantage over so-called co-location, where data centers are built adjacent to generation and share interconnection with the grid, which still requires interacting with public utility commissions and utilities. The pair have also suggested that the Department of Energy and the Federal Energy Regulatory Commission use its existing rulemaking process on data center interconnection to encourage states to pass the necessary laws to allow islanded utility systems.
While allowing totally private utility systems may be a radical — and certainly a libertarian — departure from the utility regulation system as it exists today, proposals are popping up on both the left and the right to try to reduce utility influence over the electricity system.
Tom Steyer, the hedge fund billionaire and climate investor who is running for governor of California, has said that he would “break up the utility monopolies to lower electric bills by 25%.” In a January press conference, Steyer clarified that he “wants to force utility companies to choose cheaper ways of wildfire-proofing their infrastructure and give customers other options for buying power, including making it easier to build neighborhood-level solar projects or allowing more communities to operate their own local grids,” according to CalMatters. California already has some degree of retail choice, although a more expansive version of a retail competition model infamously collapsed during the 2001 rolling blackouts.
To Fisher, while his and Lyons’ proposal is in some ways radical, it is also not a particularly big risk. If there’s truly no demand for private electricity networks, none will be built and nothing will change, even if there’s regulatory reform to allow for it.“I’m not surprised to see it get traction,” Fisher said of the plan, “just because there’s no downside, and the upside could be absolutely nothing — or it could be a breakthrough.”
On offshore wind wins, China’s ‘strong energy nation,’ and Japan’s deep-sea mining
Current conditions: Yet another snow storm is set to powder parts of the Ohio Valley and the Mid-Atlantic • Cyclone Fytia is deluging Madagascar, causing flooding that left at least three dead and 30,000 displaced in a country still reeling from the recent overthrow of its government • Scotland and England are bracing for a gusty 33-hour blizzard, during which temperatures are forecast to drop below freezing.
He’s fashioned the military’s Defense Logistics Agency into a tool to fund mineral refineries. He’s gone on a shopping spree that made Biden administration officials “jealous,” taking strategic equity stakes in more than half a dozen mining companies. Now President Donald Trump is preparing to launch a strategic stockpile for critical minerals in what Bloomberg billed as “a bid to insulate manufacturers from supply shocks as the U.S. works to slash its reliance on Chinese rare earths and other metals.” Dubbed Project Vault, the venture will be seeded with a $10 billion loan from the Export-Import Bank of the U.S. and another $1.67 billion in private capital. More than a dozen companies have committed to work on the stockpile, including General Motors, Stellantis, Boeing, Google, and GE Vernova.
The shale industry, meanwhile, showed it’s matured enough to go through some consolidation. Oklahoma City-based gas giant Devon Energy is merging with Houston-headquartered Coterra Energy in an all-stock deal that CNBC said would create “a large-cap producer with a top position in the Permian Basin. The deal would establish a combined company with an enterprise value of $58 billion, marking the largest merger in the sector since Diamondback bought Endeavor Energy Resources for $26 billion in 2024. The deal comes as low prices from the global oil glut squeeze U.S. shale drillers — and as the possibility of more oil from Venezuela threatens the sector with fresh competition.
Offshore wind is now five-for-five in its legal brawls with Trump. With Orsted’s latest victory in the Sunrise Wind case on Monday, I’ll let Heatmap’s Jael Holzman serve as the ring announcer spelling out the stakes of the legal victory: “If the government were to somehow prevail in one or more of these cases, it would potentially allow agencies to shut down any construction project underway using even the vaguest of national security claims. But as I have previously explained, that behavior is often a textbook violation of federal administrative procedure law.”
Germany is set to quadruple its installed solar capacity to 425 gigawatts by 2045, according to a forecast from a trade group representing utilities and grid operators. The projections, Renewables Now reported, mean the country needs to expand its transmission system. Installed onshore wind capacity should triple to around 175 gigawatts by that same year. Battery storage is on track to rise about 68 gigawatts, from roughly 2 gigawatts today. Demand is also set to grow. Data centers, which make up just 2 gigawatts of demand on the grid today, are forecast to balloon to nearly 37 gigawatts in the next 19 years.
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In October, the Chinese Communist Party published the framework of its next Five-Year Plan, the 15th such industrial strategy. The National People’s Congress is set to formally approve the proposal next month. But on Monday, the energy analyst John Kemp called the latest five-word phrase, articulated in the form of “formal input” from the party’s Central Committee, “the most succinct statement of China’s energy policy.” Those words: “Building a strong energy nation.” The suggested edits from the committee described “accelerating the construction of a strong energy nation” as “extremely important and timely” and called its “main shortcomings” the ongoing reliance on imported oil and gas.
Unlike in the U.S., where the Trump administration is working to halt construction of renewables, the officials in Beijing boast that China’s “installed capacity of wind and solar has ranked first in the world for many consecutive years.” Like the U.S., the Central Committee pitched the plan as “an urgent requirement” for “gaining the initiative in great power competition.”
Japan is mounting a new push to implement a decade-old plan to extract rare earths from the ocean floor. A state-owned research vessel just completed a test mission to retrieve an initial sample of mineral-rich mud from a location 20,000 feet below the surface, the South China Morning Post reported. The government of Sanae Takaichi wants to start processing metal-bearing mud from the seabed for tests within a year. “It’s about economic security,” Shoichi Ishii, program director for Japan’s National Platform for Innovative Ocean Developments, told Bloomberg. “The country needs to secure a supply chain of rare earths. However expensive they may be, the industry needs them.”
With global negotiations over a licensing framework for legalizing deep sea mining in international waters has stalled, the U.S. just finalized a rule to speed up American permitting for the nascent sector, clearing the way for Washington to fulfill Trump’s pledge to go it alone if the United Nations’ International Seabed Authority didn’t act first.
A week after signing an historic trade agreement with the European Union, India has inked another deal with the U.S. That means the world’s two largest consumer markets are now wide open to Indian industry, which relies heavily on coal. New Delhi isn’t just going to scrap all those coal-fired factories and forges. But the government’s latest budget earmarks about $2.4 billion over five years to speed up deployment of carbon capture equipment across heavy industry, Carbon Herald reported. The plan focuses on steel, cement, power, refining, and chemicals.
The offshore wind industry is now five-for-five against Trump’s orders to halt construction.
District Judge Royce Lamberth ruled Monday morning that Orsted could resume construction of the Sunrise Wind project off the coast of New England. This wasn’t a surprise considering Lamberth has previously ruled not once but twice in favor of Orsted continuing work on a separate offshore energy project, Revolution Wind, and the legal arguments were the same. It also comes after the Trump administration lost three other cases over these stop work orders, which were issued without warning shortly before Christmas on questionable national security grounds.
The stakes in this case couldn’t be more clear. If the government were to somehow prevail in one or more of these cases, it would potentially allow agencies to shut down any construction project underway using even the vaguest of national security claims. But as I have previously explained, that behavior is often a textbook violation of federal administrative procedure law.
Whether the Trump administration will appeal any of these rulings is now the most urgent question. There have been no indications that the administration intends to do so, and a review of the federal dockets indicates nothing has been filed yet.
The Department of Justice declined to comment on whether it would seek to appeal any or all of the rulings.
Editor’s note: This story has been updated to reflect that the administration declined to comment.