AI boom means US is now ‘investing more’ in fossil-fuel power than China

<p>The “data-centre boom” is driving a surge in gas investment in the US, pushing its fossil-power spending ahead of China, according to the<a href="https://www.iea.org/" rel="noreferrer noopener" target="_blank"> International Energy Agency</a> (IEA).</p>

<p>A rapid expansion of <a href="https://www.carbonbrief.org/ai-five-charts-that-put-data-centre-energy-use-and-emissions-into-context/" rel="noreferrer noopener" target="_blank">data centres</a> across the nation is at the heart of the US tech sector’s plans to continue “<a href="https://www.bloomberg.com/news/articles/2025-11-07/us-vs-china-who-s-winning-the-ai-race" rel="noreferrer noopener" target="_blank">dominat[ing]</a>” the global artificial intelligence (AI) industry.</p>

<p>High demand for electricity to power these data centres has led to companies rushing to build new gas-fired power plants across the country.</p>

<p>This trend, combined with “<a href="https://www.woodmac.com/press-releases/gas-turbine-prices-soar-195-as-market-faces-supply-demand-crisis/" rel="noreferrer noopener" target="_blank">soaring</a>” gas-turbine prices, drove a threefold increase in US gas‑power investment in 2025 – and the IEA expects this to continue throughout 2026.</p>

<p>As the chart below shows, Chinese investment in coal- and gas-fired power is expected to drop this year, amid domestic <a href="https://www.carbonbrief.org/qa-what-does-chinas-15th-five-year-plan-mean-for-climate-change/" rel="noreferrer noopener" target="_blank">policy changes</a> and the <a href="https://www.carbonbrief.org/qa-what-does-the-iran-war-mean-for-the-energy-transition-and-climate-action/" rel="noreferrer noopener" target="_blank">Iran war</a> sending gas prices spiralling.</p>

<p>Together, these trends mean the IEA expects US investment in fossil-fuelled power plants to overtake China’s in 2026.</p>

<figure class="wp-block-image size-full"><img alt="Annual investment in fossil-fuel power in China and the US" class="wp-image-62582" height="1028" src="https://www.carbonbrief.org/wp-content/uploads/2026/05/ai-boom-means-us-now-investing-fossil-fuel-power-china.png" width="1886" /><figcaption class="wp-element-caption">Annual investment in fossil-fuel power in China and the US, $bn. The figure for 2026 is an IEA estimate, based on current trends. Source: IEA.</figcaption></figure>

<p>The IEA’s latest world energy investment <a href="https://www.iea.org/reports/world-energy-investment-2026" rel="noreferrer noopener" target="_blank">report</a> shows that spending on renewables and electricity grids continues to dominate at the global scale.</p>

<p>In the US, Trump administration policies such as the <a href="https://www.carbonbrief.org/chart-trumps-big-beautiful-bill-blows-us-emissions-goal-by-7bn-tonnes/" rel="noreferrer noopener" target="_blank">phase-out of tax credits</a> for renewables has led to the IEA revising its forecast for new wind and solar power downwards.</p>

<p>At the same time, US electricity demand is expected to rise by an average of 2% per year from 2026 to 2030, with data centres contributing half of the overall increase.&nbsp;</p>

<p>This is leading to what the IEA calls an “AI-driven push” to build new gas-power plants in the US, the world’s largest data-centre market and <a href="https://www.eia.gov/todayinenergy/detail.php?id=66584" rel="noreferrer noopener" target="_blank">largest gas producer</a>.</p>

<p>Globally, orders for new gas-power plants increased to 130 gigawatts (GW) in 2025 – a 25-year high – and US demand was a “major factor” in this, according to the IEA.</p>

<p>Much of the demand is coming from tech companies in the US seeking to bypass grid connection queues by building “<a href="https://globalenergymonitor.org/projects/global-oil-gas-plant-tracker" rel="noreferrer noopener" target="_blank">captive</a>” gas-power plants.</p>

<p>As the chart below shows, since the start of 2025 these US captive data centres alone have signed off on more investment in new gas turbines than any country in the world – aside from the US itself.</p>

<figure class="wp-block-image size-full"><img alt="Total value of new gas generation final investment decisions" class="wp-image-62583" height="980" src="https://www.carbonbrief.org/wp-content/uploads/2026/05/us-data-centres-biggest-source-demand-globally-new-gas-power-plants-E28093-apart-us-whole.png" width="1846" /><figcaption class="wp-element-caption">Total value of new gas generation final investment decisions by country, region or use-case, between 2025 and the first quarter of 2026, $bn. Source: IEA.</figcaption></figure>

<p>Overall, investment in grid upgrades, power equipment and electricity generation to support the buildout of data-centre infrastructure around the world hit $105bn in 2025, according to the IEA.&nbsp;</p>

<p>This is more than the total invested in the energy sector across the whole of Africa – a continent where more than 600 million people do not have <a href="https://www.iea.org/regions/africa" rel="noreferrer noopener" target="_blank">access to electricity</a>.</p>

<p>The IEA notes that strong demand for gas-power plants for data centres in the US – and, to a lesser extent, the Middle East – is “limiting the <a href="https://www.woodmac.com/press-releases/gas-turbine-prices-soar-195-as-market-faces-supply-demand-crisis/" rel="noreferrer noopener" target="_blank">availability</a> of turbines for near-term deployment elsewhere in the world”.</p>

<p>The agency also points out that as the tech sector becomes a “major energy investor”, accounting for around 40% of all corporate power-purchase agreements, it is also “underpinning momentum” for emerging clean technologies, such as small modular nuclear reactors and advanced geothermal.</p>

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<p>The post <a href="https://www.carbonbrief.org/ai-boom-means-us-is-now-investing-more-in-fossil-fuel-power-than-china/">AI boom means US is now ‘investing more’ in fossil-fuel power than China</a> appeared first on <a href="https://www.carbonbrief.org">Carbon Brief</a>.</p>