Trump's IRA Rollback Could Add a Billion Tonnes of Emissions by 2035, But AI Demand Is Keeping Clean Energy Capital F...

Trump's IRA Rollback Could Add a Billion Tonnes of Emissions by 2035, But AI Demand Is Keeping Clean Energy Capital Flowing Fluence Energy surged 98% on hyperscaler deals as data centre power demand offsets the US regulatory retreat, while China's coal rebounds despite clean energy gains. Fluence Energy shares closed at $24.16 on May 8, up 98.2% in a single week after the battery storage company disclosed master supply agreements with two hyperscalers and a record $5.6 billion backlog. Q1 2026 delivered positive adjusted EBITDA of $2.0 million, the fourth consecutive quarter in the black, with non-GAAP gross margin expanding to 52%. The stock was still down roughly 39% year to date before the surge, but the hyperscaler contracts transformed the narrative overnight.¹ Capital is rotating into companies that can supply power for AI data centre buildouts. Nuclear and renewable baseload generation are attracting buyers as the cleanest solutions to address capacity constraints. Data centres used about 4.6% of total US electricity in 2024, a share that government estimates suggest could nearly triple by 2028. That demand growth is creating a private-sector floor under clean energy investment that did not exist three years ago.^1,3 The US policy environment has moved in the opposite direction. The Trump administration has rolled back greenhouse-gas regulation by the EPA, scrapped fuel-economy standards for motor vehicles, and eliminated energy-efficiency rules for industry. The Economist estimated that excess emissions in 2035 compared with those expected under the Inflation Reduction Act could reach one billion tonnes or more.⁶ Big tech is quietly recalibrating. Six years ago, Google was confident it would power all operations with clean energy by 2030. Today the company calls that target a "moonshot." Google's own emissions jumped nearly 50% as data centre expansion outpaced renewable procurement. The companies say they need flexibility as they build facilities that can consume more power than entire cities.³ Google has identified three specific roadblocks to Asia's green industry transition: gaps in manufacturing capacity, mismatches between corporate demand and supply, and policy fragmentation across the region. Asia has the building blocks but lacks the coordination to deploy them at the speed the market requires.⁷ China presents the sharpest contradiction. Clean power generation growth caused Chinese CO2 emissions to fall for the first time despite rapid demand growth, down 1.6% year-on-year in Q1 2025 and 1% over the full year, according to Carbon Brief analysis. That is a genuine milestone in the world's largest emitting economy.⁴ Yet coal is bouncing back hard. Total Chinese power generation rose an estimated 6.6% year-on-year in April, but weak wind conditions, subdued solar output, and extended nuclear refuelling outages pushed coal power up for the fourth consecutive month. Thermal power commissioning in Q1 surged more than 160% year-on-year, hitting a record. Solar capacity additions fell 31% year-on-year, though they remained above 2023 levels. Wind additions rose 8%.² The Hormuz crisis is compounding the pressure. China's crude oil imports fell around 20% year-on-year in April and natural gas imports dropped roughly 13%, forcing heavier reliance on domestic coal. Solar cell production fell 25.6% year-on-year, reflecting weaker installations. But battery output remained strong, rising 55.6% year-on-year on energy storage demand and exports. New energy vehicles continued to outperform the broader auto sector.² China's state support for clean energy dwarfs anything available elsewhere. Government guidance funds have taken stakes in private clean energy businesses. State-run banks have distributed cheap loans. Local governments have competed to offer generous terms to manufacturers. The scale of Chinese industrial policy makes the IRA look modest by comparison, and the IRA is itself being dismantled.⁵ The market signal from Fluence's $5.6 billion backlog is that private demand for energy storage is growing faster than any policy can suppress it. Hyperscaler procurement is becoming the new demand anchor. Whether that private-sector pull is large enough to offset the combined weight of US regulatory retreat and China's coal rebound will determine the pace of the energy transition for the rest of the decade. Data centre electricity demand is the variable that neither bull nor bear had in their models three years ago.^1,3