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EPA's power-plant repeal makes coal the data-center stopgap until about 2031
The EPA finalized its repeal of the 2024 power plant carbon standards on Monday. The case that this is a supply decision for AI load comes from a sustainability consultant who gives coal three to five more years.
The Investor · Invest desk
What happened
- The EPA said Monday it had finalized the repeal of the Biden-era emission-reduction mandates for power plants that were written to combat climate change.
- EPA Administrator Lee Zeldin said at the G20 energy ministerial in Houston, "We are cutting the red tape to deliver the largest power sector deregulatory action ever."
- Fortune reported that the biggest immediate effect is keeping older coal and gas-fired plants viable for longer to supply data centers and the AI boom.
- The announcement followed NOAA's report that the 2026 US summer was the warmest on record, about 3 degrees Fahrenheit above average.
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Why it matters
- precedent The agency is also asking to remove its own authority over power plant greenhouse gases, and if that holds, a coal-linked supply contract signed now faces less federal carbon risk in the 2030s than one signed a year ago.
- decision With permitting reform unlikely to pass Congress this year, a developer's realistic options narrow to generation that is already interconnected, which is the fleet the repeal keeps economic.
- cost The deaths and health care spending that critics attribute to the rollback sit outside the power price a data center negotiates, so someone other than the buyer of the electricity pays that bill.
Dan Romito, managing director at Opportune overseeing sustainability [6], told Fortune: "We need a little bit of a stopgap here. It's not an ideal choice. But coal can fill that bill for three, four, maybe five years. And that will allow the market to efficiently incorporate geothermal and nuclear solutions into the mix." [8] Add three years to a 2026 repeal and the replacement generation has to be running by 2029; add five and the outside date is 2031 [20].
Romito put the deficit in the present tense. "This power is not going to magically come out of nowhere. You're going to have to keep coal-fired power plants and gas-fired power plants online longer, not necessarily to fulfill the anticipated demand, but to meet what demand is currently today," he said [9]. He also told Fortune, "It's a Band-Aid for a lot of these data centers to figure out how to get replacement or complementary power." [7]
The EPA argued something else, saying Monday that "emissions from power plants have no material impact on global climate change" [11].
The 2024 standards would have required plants either to cut their climate pollution or to use technology capturing 90% of it [2]. Fossil-fired plants account for almost 25% of the country's climate pollution [16], so at full compliance the rule reached about 22% of the national total [21]. Environmental critics told Fortune the rollback will cause thousands of unnecessary deaths from pollution and trigger many billions of dollars in additional health care costs [14]. Holly Bender, the Sierra Club's chief program officer, said: "This is full-throated climate denial while the climate crisis happens in real time and a shocking betrayal of the American public." [15]
In my view the emission rules were not what was holding back data-center power, and the megawatts still have to come from somewhere: congressional permitting reform to expedite power, clean and fossil alike, appears unlikely to come to fruition this year [17], and projects keep being announced without many getting off the starting line [18]. The counter-thesis is Romito's other one, that certainty pulls money into replacement plant. "It relieves a lot of the anxiety and the investor apprehension to invest in new modernized plants that are probably much more efficient as it relates to emissions," he said [10]. If that is what happens, what gets built is new gas and the stopgap runs longer than five years. The test either way is whether utilities push their announced coal retirement dates back. Fortune's account does not quantify how much capacity was set to close under the standards.
What to watch
- Whether the EPA finalizes its proposal to rescind its own authority over power plant greenhouse gases, and whether that survives court challenge.
- Whether any hyperscaler signs a coal- or gas-linked supply deal with a term running past 2031.