AI and “Green” on Collision Course

We can’t have both a “green” energy transition and artificial intelligence. That is the message of Robert Bryce on Substack. The linked essay is long and complex, and I encourage you to read it all. Here are a few extracts that I hope distill Robert’s point:

The rise of artificial intelligence has re-ignited concerns about electricity availability and strains on the power grid. Over the past two decades, worries that data centers would overwhelm local electricity providers have been muted because our computers keep getting more efficient. But this time, the concerns that there won’t be enough juice for AI and data centers are justified.

Yes, this time is different. And the key difference is Joe Biden’s EPA. On May 9, that agency published a rule in the Federal Register that, if it survives legal challenges, will force the closure of every coal-fired power plant in America and prevent the construction of new baseload gas-fired plants. If the rule survives those challenges, it will strangle AI in the crib.

The electricity demands imposed by artificial intelligence are enormous:

Last month, Tudor Pickering & Holt, a Houston investment banking firm, estimated that AI could require, in its base case, around 2.7 Bcfd of incremental natural gas. But the figure could also be as high as 8.5 Bcf/d by 2030. In mid-April, an analyst at Morningstar estimated the power burn for AI at 7 to 16 Bcf/d by 2030. Also last month, Rich Kinder, the executive chairman of pipeline giant Kinder Morgan, estimated AI would require 7 to 10 Bcf/d of new gas consumption.

Only, under the Biden rules, there won’t be any “new gas consumption.”

In an April 12 report, Enverus, a top energy consulting firm, estimated that power demand for data centers will double by 2032 to 40 GW and that gas burn for Big Tech will grow by 4.2 Bcf/d by 2035. However, Enverus added that due to the EPA rules, “we believe it will be difficult to site and supply new gas-fired generation in most jurisdictions.”

Actually, as Robert explains, under the new EPA rules it will be impossible to build new natural gas-fired power plants anywhere. But back to the prior point:

Big Tech’s power demands are headed for the exosphere. Microsoft’s electricity use has tripled since 2018. According to company data, it used 23.6 terawatt-hours of electricity last year. That’s more than what was consumed by Iceland, a country that’s renowned for its carbon-free power grid.
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Amazon’s power demand is even larger than Microsoft’s. … At roughly 57 terawatt-hours per year, Amazon uses more electricity than Greece.

And now, here comes AI with its enormous new thirst for electricity. There is literally no hope of meeting this demand without keeping our coal plants operating and adding a great deal of new natural gas capacity–now essentially illegal under Biden rules. Wind and solar? They are a joke. In 2023, gas-fired electricity grew almost ten times as fast as wind and solar combined. Note that generation from wind actually declined:

Our most obvious hope, as Robert says, lies in the courts:

On May 9, attorneys general from 27 states filed suit against the EPA. The National Rural Electric Cooperative Association and several industry trade groups have also sued. Jim Matheson, the CEO of the cooperative group, said the “EPA’s power plant rule is unlawful, unreasonable and unachievable. It exceeds EPA’s authority and poses an immediate threat to the American electric grid.” He continued, saying the agency is illegally attempting “to transform the U.S. energy economy by forcing a shift in electricity generation to the agency’s favored sources.”

My organization performed a key quantitative analysis that will be part of the basis for this lawsuit. But, as Robert Bryce says, litigation takes years to resolve–just ask Mark Steyn!–and uncertainty is fatal to multi-billion dollar energy investments. So our best hope may lie in a Trump administration, a new EPA, and a revocation of this and many other Biden-era rules.

Maybe Trump should run on that platform. Historically, environmental protection–or alleged protection–has been popular. But I think people are catching on:

[Jacob Williams, the general manager and CEO of the Florida Municipal Power Agency] told me the EPA is “trying to kill coal but they are not allowing utilities to build viable alternatives to coal. And right now, that means gas.” He went on, saying the agency “has cut off the ability of utilities to build reliable baseload gas plants. They don’t care what the price of power is going to be. When we point out that these regs will triple the price of power, the EPA doesn’t seem to care that it hurts people.

That is typical: liberals don’t care that their policies hurt people, because they don’t greatly hurt the people Democrats care about: the wealthy. The rest of us, however, need to care about tripling the price of electricity, which not only impacts our own household bills, but, probably more importantly, the cost of everything we buy. And if you think artificial intelligence will be a good thing, you can’t have both AI and Biden’s EPA.

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