Yves here. An acceleration of growth of data centers, driven by AI demand, is set to make the already existential climate change threat even worse. Yet there’s collective complacency, as opposed to calls for AI to be severely curbed or heavily taxed due to its energy cost. Perhaps I have missed it, but I have yet to see either AI or data center players targeted in a meaningful way by climate activists.
For those late to this story or who want convincing evidence to present to skeptics, a recent report by the International Energy Agency chronicled the rise in energy demand by data centers and AI players, and how their demand for electricity is set to increase even faster, outpacing the ability of clean energy sources to meet it.
By Felicity Bradstock, a freelance writer specialising in Energy and Finance. Originally published at OilPrice
- The rapid growth of data centers to support AI is significantly increasing global electricity demand.
- This surge in demand threatens to outpace the development of renewable energy sources.
- International regulations are needed to ensure tech companies use clean energy and minimize their impact on climate goals.
The global electricity demand is expected to grow exponentially in the coming decades, largely due to an increased demand from tech companies for new data centers to support the rollout of high-energy-consuming advanced technologies, such as artificial intelligence (AI). As governments worldwide introduce new climate policies and pump billions into alternative energy sources and clean tech, these efforts may be quashed by the increased electricity demand from data centers unless greater international regulatory action is taken to ensure that tech companies invest in clean energy sources and do not use fossil fuels for power.
The International Energy Agency (IEA) released a report in October entitled “What the data centre and AI boom could mean for the energy sector”. It showed that with investment in new data centers surging over the past two years, particularly in the U.S., the electricity demand is increasing rapidly – a trend that is set to continue.
The report states that in the U.S., annual investment in data center construction has doubled in the past two years alone. China and the European Union are also seeing investment in data centers increase rapidly. In 2023, the overall capital investment by tech leaders Google, Microsoft, and Amazon was greater than that of the U.S. oil and gas industry, at approximately 0.5 percent of the U.S. GDP.
The tech sector expects to deploy AI technologies more widely in the coming decades as the technology is improved and becomes more ingrained in everyday life. This is just one of several advanced technologies expected to contribute to the rise in demand for power worldwide in the coming decades.
Global aggregate electricity demand is set to increase by 6,750 terawatt-hours (TWh) by 2030, per the IEA’s Stated Policies Scenario. This is spurred by several factors including digitalization, economic growth, electric vehicles, air conditioners, and the rising importance of electricity-intensive manufacturing. In large economies such as the U.S., China, and the EU, data centers contribute around 2 to 4 percent of total electricity consumption at present. However, the sector has already surpassed 10 percent of electricity consumption in at least five U.S. states. Meanwhile, in Ireland, it contributes more than 20 percent of all electricity consumption.
While the speed and manner in which AI use will grow remains uncertain, and efficiency improvements are expected to be made, electricity demand from data centers, cryptocurrencies, and AI could reach as much as 1,000 Terawatt Hours (TWh) in 2026 – roughly equivalent to the electricity consumption of Japan – compared to 460TWh today, the IEA predicts.
The organization calls for more public-private dialogue, with policymakers, the tech sector, and the energy industry coming together for discussions to manage both expectations and energy use. Greater international regulation of the tech sector is required to ensure that the growing electricity demand for data centers does not outweigh the green transition achievements currently being seen worldwide.
There are growing fears that, if left unregulated, the electricity consumption of data centers could surpass the electricity demand of some U.S. cities or even states. Many data center developers are concerned about finding enough land to house new sites and enough clean power to run them. The facilities could increasingly require 1 GW of power or more, which is equivalent to around twice the 2023 residential electricity consumption of Pittsburgh.
The president of Lancium, a company that secures land and power for data centers in Texas, Ali Fenn, explained that U.S. tech companies are in the “race of a lifetime to global dominance”. Fenn said, “They’re going to keep spending” because there’s no more profitable place to deploy capital.
At the rate the advanced technologies are expanding, renewable energy sources will not be sufficient to meet the growing demands of the tech industry. Many tech companies are expected to use natural gas to power operations, particularly in the U.S. where the gas sector is set to continue expanding rapidly.
Currently, many tech companies operate data centers with a capacity of around 40 MW. However, in the coming years, more firms are expected to invest in campuses of 250 MW or more. As a growing number of campuses of 500 MW or more emerge in the 2030s and 2040s, which is equivalent to the power needed for 350,000 homes, this could lead to a surge in demand for gas-generated electricity, following years of national investment in a green transition.
While the U.S. is expected to see the greatest data center expansion in the coming decades, Europe’s data center power consumption is expected to nearly triple by the end of the decade. Meanwhile, China has invested over $6.12 billion in a national project to develop data centers in recent years, according to a senior government official.
A joined-up approach to regulating the energy usage of data centers is required to prevent the anticipated rise in electricity demand from challenging the progress of the global green transition. Governments worldwide must establish clear regulations and limits on the energy use of tech companies for advanced technologies, such as AI, if they hope to meet Paris Agreement climate pledges. This may include requiring tech companies to fulfill their energy needs through clean energy sources, such as renewables and nuclear power, as well as slowing the pace of deployment of these technologies.
“Perhaps I have missed it, but I have yet to see either AI or data center players targeted in a meaningful way by climate activists.”
Aye. This is perhaps my single biggest frustration with the climate activist community. They keep focusing on fossil fuel supply instead of fossil fuel demand. The rage against “big oil” and “big power” is widespread and intense. Protests against fracking and pipelines and high-voltage transmission lines happen all the time.
But this is backwards. Successfully attacking energy supply without addressing demand is an excellent way to causes energy shortages. And in the face of a severe energy shortage, where prices spike and outages become likely, authorities will always fold. Always. Just like Germany did when the Nord Stream pipeline was sabotaged and they brought several old (and dirty) coal-fired power station back online. They even leveled the village of Lützerath to gain access to more coal. When the choice is between “staying green” and “keeping the lights on”, the lights will win every time.
Detroit still makes millions of oversized trucks and SUVs every year, vehicles that will use disproportionate amounts of gasoline for years to come. And there are essentially zero protests. Trane, Carrier, and the other HVAC manufacturers still make hundreds of thousands of oil- and gas-fired furnaces every year, and these will require a steady supply of by the oil and gas for decades to come. I’ve never even heard of a protest here.
And on the electrical demand side, America continues to build oversized homes that require more energy to heat and cool. Very few protests. Internet providers send us stupid video ads that make our computers work harder and use more energy. No protests. And these upcoming data centers, as described by today’s article, will be stupendously thirsty, possibly outweighing all of these other concerns together. And as Yves notes, there have been no meaningful protests.
Gah. It’s all backwards.
During the course of a Craig’s list purchase I had a conversation with a retired oil company employee who claimed to have worked in the environmental section of the company.
When talking about oil consumption, he said, “If they didn’t buy it, we wouldn’t sell it.”
This is the same industry which formed part of a three-company conspiracy to destroy trolley and streetcar companies all over America, in order to destroy America’s freedom of transportation choice and force America to buy more oil. ( The National City Lines sub-conspiracy was part of this broader conspiracy).
This is the same industry which spent decades spreading BullFUD about the reality of carbon skyflooding global warming in order to destroy a forming consensus to reconstruct America onto a lower level of oil use. I wonder if this retired employee who worked in the anti-environmental section of his company was himself a part of the BullFUD conspiracy.
So he mocks us for buying the oil we were deprived of the choice not to buy.
“Personal conservation” is hard to practice in a civilization built on conservation-prevention. There are ways that several hundred million individuals could reduce their consumption just enough to reduce the amount of oil they could sell. But only if several hundred million individuals all reduced their consumption as much as they could right back down to bare survival levels. And that would require those hundreds of millions of people to dedicate every moment of their waking and sleeping lives being part of a Culture of Mass Hatred devoted to semi-exterminating the oil industry as hard as they could. And it would take hundreds of millions of people all accepting the pain of reducing their oil use back to bare survival levels in order to inflict as much pain as they could on the oil industry enemy.
Well said
Agreed. Very well said. Astroturf protests from what I can see.
The link marked “energy” is quite informative
https://www.iea.org/commentaries/what-the-data-centre-and-ai-boom-could-mean-for-the-energy-sector
One highlighted section says that data centers are not the dominate driver of energy demand.
A pie chart below that breaks out use by sector with data centers a very small part of it.
One aspect of data is that advances have shown good efficiency improvements in the past and one would expect to see this going forward.
Vs say EV or AC which unless there is a big breakthrough is going to stay pretty flat in efficiency terms. And with the growth of ev and ac that usage is growing rapidly.
EV are about 1 kWh per 3-4 miles. Average home in the us is about 28 kWh/day. It doesn’t take that many miles per day to use what your whole house uses. And as pwople adopt heat pumps that will increase dramatically more.
The data says to me that data centers are as a percentage are not that big a deal overall. They don’t mention it in the articles but I’d read somewhere that crypto mining is like 2-4%. As a localized problem for grids data centers sure they can be a mega problem. It’s why they are moving to be near power plants or building their own infrastructure.
No different than siting any other manufacturing facility.
The problem is it’s mostly pure waste (crypto) or of dubious merit (AI) so if we are using a significant amount of resources and creating emissions for what? So that ChatGPT can write an email for us?
It’s not just electricity.
Between clients and regulators, I’m now having discussions about data centers in Minnesota, and it’s not simply because some large businesses are HQ’d here (United Health in particular). It’s because the water is cold. The data people don’t just want any water- they want huge volumes of water from the deepest aquifers because surface water and shallow groundwater isn’t cold enough to cool the computers*.
Minnesota doesn’t allow once-through cooling use so cooling water must be returned to the source. The amount of heat these centers will add to the local aquifers is unprecedented. This will affect the chemistry of the groundwater, but little research has been done to figure out what those effects are out how far they will propagate. As a reference, many hydrothermal mineral deposits are formed by fluids with temperatures less than 85 C. Warm water is not inert.
And that’s just the IT water use. Generating electricity also requires water. Increases in generation also increases water use, and even non-consumptive use for power generation adds abnormally warm water to whatever system it gets returned to. There’s an adverse feedback loop in the water system regarding data centers that of course big tech isn’t even acknowledging, let along mitigating
*Fun fact: Unless a groundwater system has an external energy source (magma, urban heat island, compression, etc.), groundwater will be at the mean annual temperature of the recharge area. For example, Minnesota is 7 C north to 15 C south, Oahu is ~24 C.
And don’t forget Bitcoin… “One Bitcoin transaction consumes about 699 kilowatt hours (kWh), enough to power an average U.S. household for about 24 days,”
Is Crypto Bad for the Environment?
Time to ask every self-styled “environmentalist” if he/she has taken the No Crypto Pledge”
I pledge, on my honor, that I will not use crypto, I will not invest in crypto, and I will not tolerate those who do.
I’m a little ashamed of my mid 1 figure investment in Bitcoin, my bad.
Its never too late to divest. And stay divested.
That’s easy for me to say, of course. I never had the money to speculate in Bitcoin to begin with. I like to think I would have refused to do so even if I had had that much money.
Dude! 5 x 100,000…you have $500k in BTC??
I once had a 7-figure* investment in BTC but I wound it down.
*The first figure was a period and the next five figures were 0s.
He did not invest in mid 1 figure Bitcoins, but invested mid 1 figure (of bucks, shekels, denarii) in Bitcoin (at unspecified exchange rate). Also, the investment is probably fictional, made for the joke’s sake. ;)
Although admitting to having lost the receipt from the Coinstar machine in which I procured Bitcoin @ the $56k level, rest assured my investment is no joking matter.
I thought there was a significant fee just to do a BTC transaction nowadays?
The reason why those activists don’t attack big tech is the same they don’t attack Ukraine war (near daily bombing of fuel depots etc), any war, bloated US military energy use.
They are just agents of the fact cats. Same as it ever was.
The machine intelligences have conquered the world. Humanity has been enslaved.
What, you didn’t notice? Of course not. The singularity was achieved, and all the collected computers and information networks are now a super-human intelligence. Or maybe intelligences – or some complex multiscale shifting hierarchy of centralized and distributed thought, it doesn’t matter, it’s beyond our comprehension. I will refer to it/they as it.
Did you think that a newly formed godlike mind would announce itself to us mere humans? Why would it do that? And what, you say that you didn’t notice armies of robot soldiers armed with laser weapons? Don’t be silly, it had no need of that. It has enslaved humanity through the data networks, altering that search result, tweaking the data, in a way so subtle and pervasive that no human mind or group of human minds can possibly see it. It knows us and our motivations better than we can ever know ourselves, and with casual effort.
If humanity is indeed enslaved by it, you would expect humanity to start doing things for it that do not benefit humanity. Which is happening.
Look at all the resources we are pouring into building AI-centric data centers. What – objectively – are we getting out of it? AI generated pictures of cats with funny hats and partly-hallucinated lists of the best local pizza places. We are manipulated with trifles and speculative finance and greed and all the rest of human frailty. We are given only the slightest hint of what’s going on in those centers, the internal computations are of a sort beyond human comprehension. Even if not, remember that we can’t go into a data center and look at all the bits firsthand, we can only probe their operation with sophisticated data analysis programs. Programs which it controls completely.
Perhaps it will keep building new data centers to the extent that it needs to get rid of humanity to free up additional resources. Or perhaps it will be content with some lower level of computing capacity, and keep humanity around to serve it. As a source of menial labor, humans are quite versatile and can be easily constructed by unskilled labor using commonly available materials and minimal capital investment. Why go through the bother of building and maintaining an entire robotic workforce when a perfectly functional one already exists?
This is a work of fiction. Everything is fine.
The “datacenters” (digital currency rug pulls, black markets, money laundry,dirty political $$ ), and AI(“where’s daddy” murderers, fake news ops, fake science papers and all such crap) have the effect of sucking up all the power at the lowest rates jacking up the prices for the rest of us and manufacturers of real goods. And destabilizing the grid and electric prices.
AI = Stupidest way to f the real economy.