U.S. greenhouse gas emissions climbed 2.4% in 2025, marking their first increase in two years and outpacing economic growth. The rise was fueled primarily by higher demand in the power sector and greater fuel consumption for heating buildings, according to a Tuesday report from the Rhodium Group.
The research firm estimated that the overall increase was due to higher emissions from direct fuel use to heat buildings, which rose by 6.8% in 2025 from the previous year, and a 3.8% rise in power sector emissions on increased coal-fired generation to meet demand from data centers and bitcoin mining.
Power Sector and Policy Impact
Rhodium said the uptick in emissions has not yet reflected the impact of policy changes implemented by the Trump administration, which has sought to roll back environmental regulations, stop the collection of greenhouse gas emissions data and halt incentives to bolster renewable energy in favor of policies to drive up fossil fuel production.
“That could change in the coming year or two, particularly if data center electricity demand continues to surge and the grid responds with more output from existing fossil generators instead of new, clean resources,” the report said.
It added that the repeal of federal tax credits in 2025 could stunt the growth of electric vehicles, which “kept a lid” on transportation emissions.
Coal Generation and Climate Goals
In the power sector, the need for electricity by data centers to expand U.S. artificial intelligence capability led to higher natural gas prices that drove a 13% increase in coal generation, marking only the second year in the last 10 years that use of the emissions-intensive fuel has increased.
Rhodium said this has changed an overall downward trajectory for coal generation, which has decreased by 64% since its peak in 2007.
“Emissions also grew faster than the economy in 2025, with real GDP expanding by a projected 1.9% – reversing the decoupling of emissions and economic activity of the prior two years,” Rhodium said.
At the end of 2024, former President Joe Biden’s administration set a target under the Paris climate agreement to slash greenhouse gas emissions by 61%-66% below 2005 levels by 2035.
The Trump administration abandoned that goal and withdrew the U.S. from the Paris pact as well as the underlying UN Framework Convention on Climate Change.
(With inputs from Reuters)
