‘Gas is back in vogue’ as Trump embraces fossil fuels

Good morning and welcome back to Energy Source, coming to you from New York. 

The consequences of Donald Trump’s first energy orders are beginning to emerge. The new US president has jeopardised more than $300bn in federal funds for green energy and infrastructure projects after his decision to pause disbursements from Joe Biden’s industrial policies. What’s most vulnerable are loan requests or commitments that have yet to be finalised to cleantech companies under the Department of Energy’s Loan Programs Office, the country’s green bank, warn lawyers. 

The move marks Trump’s first attempts to undo Biden’s economic legacy, which aimed to revitalise the country’s industrial sector while slashing emissions. The financial scale of the president’s pause is likely much wider as the policies also direct smaller pockets of funding to initiatives to build out hydrogen hubs, electric vehicle charging networks and clean up agricultural emissions. There is also at least another $300bn in federal funds that will start to become available this year that are now likely to be frozen.

Today’s Energy Source looks at the US gas-fired power plant renaissance that is poised to take place under Trump. The president has declared a “national energy emergency” to speed up the construction of energy infrastructure and vowed to unleash the country’s oil and gas production. But the expected surge in domestic gas demand from the country’s AI revolution may pose a threat to his international aspirations.

Thanks for reading,

Amanda

What the US gas plant boom means for Trump’s energy ambitions

The world’s largest turbine manufacturers are leaning into their gas business as Trump’s mission to unleash US fossil fuel production and launch a massive AI infrastructure project create a prime opportunity for gas-fired power. 

“The tone this week has been very clear that the country needs particularly more dispatchable power. Gas is the best-equipped technology to be that,” Scott Strazik, chief executive of GE Vernova, the largest manufacturer of gas turbines, told Energy Source. 

Yesterday, GE Vernova reported orders for gas turbines doubled last year to 20GW, helping drive fourth-quarter revenue to record highs. Its shares are up more than 300 per cent since it began trading last year, and its rival Siemens Energy has also seen an astronomical rise in its share price. 

Their performance is the latest reminder of the change in fortune for US gas as a fossil-friendly administration and soaring power demand from AI data centres and the onshoring of manufacturing fuel the hunt for cheap, around-the-clock sources of power. 

“Gas is back in vogue,” said Akshat Kasliwal, a power analyst at PA Consulting. “Gas-powered facilities for years were in the trenches and they faced an anaemic outlook, but that’s now all changing once again.” 

As many as 80 new gas-fired power plants will be built in the US by 2030, according to consultancy Enverus, adding 46 gigawatts of capacity — the size of the electricity system in Norway and nearly 20 per cent more than was added in the past five years.

Wood Mackenzie and S&P Global Market Intelligence are even more bullish, predicting US gas-fired capacity additions will be 35 per cent and 66 per cent higher, respectively, over the five years, compared with the buildout in the previous half decade. In addition to AI data centres and manufacturing, the conversion of coal plants to gas is also driving growth.

“We see a lot of opportunity,” said Caitlin Tessin, vice-president of market innovation and Gulf Coast business development at Canadian pipeline giant Enbridge, which transports 20 per cent of US gas. The company plans to invest “billions” to expand its infrastructure in the next few years.

The gas-fired power plant boom will occur under Trump, who ordered the “unleashing” of US fossil fuel production on his first day in office, expediting permits for energy infrastructure and promising to export more molecules abroad.

US power demand is expected to grow 16 per cent by 2029 after two decades of nearly flat growth, according to think-tank Grid Strategies. The US Department of Energy says electricity demand from data centres used for AI will triple in the next three years.

New gas-fired power plant announcements have reversed forecasts for the country’s gas capacity. As recently as December 2023, surveys of facilities from the US Energy Information Administration had expected a net decrease in gas-fired generation capacity from 2025-2030, according to an analysis by BloombergNEF.

Some companies are delaying retirements of gas plants or building scale through acquisitions to keep up with demand. Last year, Wood Mackenzie revised down 2035 expectations for total US gas plant retirements by 10 per cent.

Earlier this month, Constellation Energy, one of the country’s largest electricity providers, announced it was buying Calpine, the biggest independent power producer of gas, in a deal worth nearly $27bn.

Artem Abramov, head of cleantech at Rystad Energy, warns the jump in demand for gas at home may pose a threat to Trump’s calls to unleash exports abroad. The industry is poised for a boom in liquefied natural gas exports in the coming years as more terminals come online. 

“By the end of [Trump’s] term . . . the industry will realise that we don’t have enough supply in the country to both keep satisfying the LNG demand from Europe and Asia and domestic demand,” Abramov said. Rystad Energy revised its 2035 forecasts for US gas-fired generation up 20 per cent in the past couple of years. 

The expansion of gas-fired generation adds to mounting doubts about the country’s progress on decarbonisation. The Biden administration had set a target to reduce US emissions by 50-52 per cent from 2005 levels by the end of the decade when it rejoined the Paris Agreement, which Trump pulled the country out of within minutes of entering office. 

US gas-fired power plants had surpassed 1bn tonnes of carbon dioxide emissions last year, up nearly 4 per cent annually and the highest on record, according to data from Ember, an energy think-tank. None of the planned gas plants tracked by Enverus will come equipped with carbon capture systems. (Amanda Chu)

Job moves

• Joshua Rogol has left Strata Clean Energy to serve as chief executive of Elevate Renewables, a portfolio company of private equity firm ArcLight.

• Danish wind turbine maker Vestas appointed Jakob Wegge-Larsen as chief executive, succeeding Hans Martin Smith.

• Nisha Biswal, former deputy chief of the US International Development Finance Corporation, joins Houston-based Excelerate Energy’s board of directors.

• Jack Hollis, chief operating officer of Toyota Motor North America, has retired. He will be succeeded by Mark Templin.

• Cheniere, an LNG exporter, appointed W Benjamin Moreland to its board. Moreland previously served as chief executive of Crown Castle, a wireless infrastructure provider.

• US utility Duke Energy has named Harry Sideris as chief executive following the retirement of Lynn Good.

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.