AI and Cloud Computing Surge Threatens Clean Energy Transition

How AI and cloud computing may delay the transition to clean energy

A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries said the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the U.N.'s annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems. COP29 host Azerbaijan held the first-ever Digitalization Day at a world climate summit and launched a declaration, endorsed so far by 68 countries including China and South Korea, to limit the environmental impact of digitalization. The outlook also reveals the shortcomings of data-company pledges to be green. Companies including Meta Platforms , Microsoft and Amazon.com are committing to sourcing renewable energy and zeroing out emissions with clean power and offset credits -- but often that only means siphoning clean power out of the grid that could have been used somewhere else. Meanwhile, agreements by data providers to power new data centers with advanced nuclear reactors or resurrected nuclear plants are uncertain and years off. "I think everyone agrees that we need more and more renewable energy to keep up with a growing demand," said Meta spokesperson Jim Cullinan. "I think it is up to the utilities to comment on how they will fill the supply." Amazon said that investing in new renewable energy for the grid, including in regions relying heavily on fossil fuels, is part of its strategy to decarbonize. Investment bank Morgan Stanley projects the global data-center industry will produce around 2.5 billion metric tons of carbon dioxide-equivalent through the end of the decade, the equivalent of Russia's annual emissions. Northern Virginia in the U.S. has the biggest concentration of data centers in the world. Utility Dominion, which serves the area, has an answer: gas. The utility is building a 1,000-megawatt gas plant in Chesterfield County and recently slashed its 15-year projection for renewables to 80% from 95% of its power mix. "Overall, power demand in our service territory is growing at an unprecedented pace," said spokesperson Aaron Ruby. Several other U.S. utilities said they are keeping on fossil-fired power plants longer and building new facilities as data-center demand grows, according to a Reuters review of recent company earnings calls. Entergy, for example, began building its first natural gas-fired power plant in Mississippi in a half-century, the company said. The 754-MW power station will serve two Amazon data-center complexes being built in Mississippi. Nearly half of utility NiSource's new $19.3 billion capital expenditure plan through 2029, meanwhile, will be spent on natural gas system improvements, the company said. NiSource covers some of the most quickly developing data center markets in parts of Indiana, Ohio and Virginia. Rob Thummel, senior portfolio manager at Tortoise Capital, said natural gas is a clear answer for data centers. "It's just the lowest cost, most reliable, and it is decarbonizing in terms of it replacing coal," he said. "Is it perfect solution? No. But I don't know if we have a perfect solution to power these data centers." S&P said data centers could add between 3 billion and 6 billion cubic feet (85 million and 170 million cubic meters) per day to U.S. natural gas demand by the end of the decade. That will worsen the U.S. performance on emissions, possibly for decades, clean-energy consultancy RMI said. "Data centers are just a warm-up act compared to the amount of electrification we're going to have going forward. And if our first instinct is to start building gas plants and nuclear plants in order to do that, we're just going to create an energy system we cannot afford," RMI CEO Jon Creyts said. President-elect Donald Trump has said he intends to boost the U.S. power system when he takes office, and sources close to his transition team have said his plans are likely to prioritize gas development over renewables. Research firm McKinsey said in a report last month most of the increase in data-center power consumption in the European Union by 2030 will be supplied by low-carbon sources. McKinsey declined to elaborate when asked whether low-carbon sources included natural gas, and whether the trend could prolong the life of coal. In some parts of Europe, data centers will need coal. In Poland, for example, a rush of new datacenter projects will need to run at least partially off baseload sources like coal because of the still-low volume of renewables in the country, according to Szymon Kowalski, deputy head of Re-Source Poland, a platform for corporate renewable energy sourcing. The share of coal in Poland's energy mix has been falling for years as it ramps up renewables, but still stood above 60% in 2023, according to the International Energy Agency. In Ireland, meanwhile, data centers now account for over 20% of electricity consumption, according to the IEA. System operator EirGrid said it will meet demand with 650 MW of temporary emergency generation capacity, and by delaying the retirement of older generators. It said natural gas would be an important part of the mix. Ireland's only coal station, ESB Group's 915 MW Moneypoint plant, extended its retirement date last year to 2029 from 2025, but intends to burn fuel oil instead of coal during that period. In Germany, Microsoft this year announced plans to expand data-center capacity with a €3.2 billion ($3.38 billion) investment, near the 400-meter-deep Hambach coal mine. Microsoft declined to say whether the project would rely on coal. "We are still in an early stage of the project; that's why we do not comment," spokesperson Jo Klein said. In Malaysia, some data companies are taking power from the coal and gas-dominated grid instead of paying a premium for renewables, according to a government official familiar with the matter. Less than 50% of the green power Malaysia has sought to auction this year has been purchased, the official said.

How AI and cloud computing may delay the transition to clean energy

Driven by artificial intelligence and cloud computing, the surging demand for electricity from data centers is increasing reliance on fossil fuels like natural gas and coal. This trend is hindering the transition to clean energy as utilities struggle to keep pace with the rapid growth, posing a challenge to global decarbonization goals.A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries told Reuters the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the UN's annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems. COP29 host Azerbaijan held the first-ever Digitalization Day at a world climate summit and launched a declaration, endorsed so far by 68 countries including China and Korea, to limit the environmental impact of digitalization. The outlook also reveals the shortcomings of data-company pledges to be green. Companies including Meta Platforms , Microsoft and Amazon.com are committing to sourcing renewable energy and zeroing out emissions with clean power and offset credits - but often that only means siphoning clean power out of the grid that could have been used somewhere else. Meanwhile, agreements by data providers to power new data centers with advanced nuclear reactors or resurrected nuclear plants are uncertain and years off. "I think everyone agrees that we need more and more renewable energy to keep up with a growing demand," said Meta spokesman Jim Cullinan. "I think it is up to the utilities to comment on how they will fill the supply." Amazon told Reuters that investing in new renewable energy for the grid, including in regions relying heavily on fossil fuels, is part of its strategy to decarbonize. Investment bank Morgan Stanley projects the global data-center industry will produce around 2.5 billion metric tons of carbon dioxide-equivalent through the end of the decade, the equivalent of Russia's annual emissions. PUMPING THE GAS Northern Virginia in the U.S. has the biggest concentration of data centers in the world. Utility Dominion, which serves the area, has an answer: gas. The utility is building a 1,000-megawatt gas plant in Chesterfield County and recently slashed its 15-year projection for renewables to 80% from 95% of its power mix. "Overall, power demand in our service territory is growing at an unprecedented pace," said spokesman Aaron Ruby. Several other U.S. utilities said they are keeping on fossil-fired power plants longer and building new facilities as data-center demand grows, according to a Reuters review of recent company earnings calls. Entergy, for example, began building its first natural gas-fired power plant in a half-century, the company said. The 754-MW power station will serve two Amazon data-center complexes being built in Mississippi. Nearly half of utility NiSource's new $19.3 billion capital expenditure plan through 2029, meanwhile, will be spent on natural gas system improvements, the company said. NiSource covers some of the most quickly developing data center markets in parts of Indiana, Ohio and Virginia. Rob Thummel, senior portfolio manager at Tortoise Capital, said natural gas is a clear answer for data centers. "It's just the lowest cost, most reliable and it is decarbonizing in terms of it replacing coal," he said. "Is it perfect solution? No. But I don't know if we have a perfect solution to power these data centers." S&P said data centers could add between 3 billion and 6 billion cubic feet per day to U.S. natural gas demand by the end of the decade. That will worsen the U.S. performance on emissions, possibly for decades, clean-energy consultancy RMI said. "Data centers are just a warm-up act compared to the amount of electrification we're going to have going forward. And if our first instinct is to start building gas plants and nuclear plants in order to do that, we're just going to create an energy system we cannot afford," RMI CEO Jon Creyts said. President-elect Donald Trump has said he intends to boost the U.S. power system when he takes office, and sources close to his transition team have said his plans are likely to prioritize gas development over renewables. COAL IN THE MIX? Research firm McKinsey said in a report last month most of the increase in data-center power consumption in the European Union by 2030 will be supplied low-carbon sources. McKinsey declined to elaborate when asked whether low-carbon sources included natural gas, and whether the trend could prolong the life of coal. In some parts of Europe, data centers will need coal. In Poland, for example, a rush of new datacenter projects will need to run at least partially off baseload sources like coal because of the still-low volume of renewables in the country, according to Szymon Kowalski, deputy head of Re-Source Poland, a platform for corporate renewable energy sourcing. The share of coal in Poland's energy mix has been falling for years as it ramps up renewables, but still stood above 60% in 2023, according to the International Energy Agency. In Ireland, meanwhile, data centers now account for over 20% of electricity consumption, according to the IEA. System operator EirGrid told Reuters it will meet demand with 650 MW of temporary emergency generation capacity, and by delaying the retirement of older generators. It said natural gas would be an important part of the mix. Ireland's only coal station, ESB Group's 915 MW Moneypoint plant, extended its retirement date last year to 2029 from 2025, but intends to burn fuel oil instead of coal during that period. In Germany, Microsoft this year announced plans to expand data-center capacity with a 3.2 billion euro ($3.38 billion) investment, near the 400-meter-deep Hambach coal mine. Microsoft declined to say whether the project would rely on coal. "We are still in an early stage of the project, that's why we do not comment," spokesperson Jo Klein said. In Malaysia, some data companies are taking power from the coal and gas-dominated grid instead of paying a premium for renewables, according to a government official familiar with the matter. Less than 50% of the green power Malaysia has sought to auction this year has been purchased, the official said.

How AI and Cloud Computing May Delay the Transition to Clean Energy

BAKU, Azerbaijan/NEW YORK (Reuters) - A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries told Reuters the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the UN's annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems. COP29 host Azerbaijan held the first-ever Digitalization Day at a world climate summit and launched a declaration, endorsed so far by 68 countries including China and Korea, to limit the environmental impact of digitalization. The outlook also reveals the shortcomings of data-company pledges to be green. Companies including Meta Platforms, Microsoft and Amazon.com are committing to sourcing renewable energy and zeroing out emissions with clean power and offset credits - but often that only means siphoning clean power out of the grid that could have been used somewhere else. Meanwhile, agreements by data providers to power new data centers with advanced nuclear reactors or resurrected nuclear plants are uncertain and years off. "I think everyone agrees that we need more and more renewable energy to keep up with a growing demand," said Meta spokesman Jim Cullinan. "I think it is up to the utilities to comment on how they will fill the supply." Amazon told Reuters that investing in new renewable energy for the grid, including in regions relying heavily on fossil fuels, is part of its strategy to decarbonize. Investment bank Morgan Stanley projects the global data-center industry will produce around 2.5 billion metric tons of carbon dioxide-equivalent through the end of the decade, the equivalent of Russia's annual emissions. PUMPING THE GAS Northern Virginia in the U.S. has the biggest concentration of data centers in the world. Utility Dominion, which serves the area, has an answer: gas. The utility is building a 1,000-megawatt gas plant in Chesterfield County and recently slashed its 15-year projection for renewables to 80% from 95% of its power mix. "Overall, power demand in our service territory is growing at an unprecedented pace," said spokesman Aaron Ruby. Several other U.S. utilities said they are keeping on fossil-fired power plants longer and building new facilities as data-center demand grows, according to a Reuters review of recent company earnings calls. Entergy, for example, began building its first natural gas-fired power plant in a half-century, the company said. The 754-MW power station will serve two Amazon data-center complexes being built in Mississippi. Nearly half of utility NiSource's new $19.3 billion capital expenditure plan through 2029, meanwhile, will be spent on natural gas system improvements, the company said. NiSource covers some of the most quickly developing data center markets in parts of Indiana, Ohio and Virginia. Rob Thummel, senior portfolio manager at Tortoise Capital, said natural gas is a clear answer for data centers. "It's just the lowest cost, most reliable and it is decarbonizing in terms of it replacing coal," he said. "Is it perfect solution? No. But I don't know if we have a perfect solution to power these data centers." S&P said data centers could add between 3 billion and 6 billion cubic feet per day to U.S. natural gas demand by the end of the decade. That will worsen the U.S. performance on emissions, possibly for decades, clean-energy consultancy RMI said. "Data centers are just a warm-up act compared to the amount of electrification we're going to have going forward. And if our first instinct is to start building gas plants and nuclear plants in order to do that, we're just going to create an energy system we cannot afford," RMI CEO Jon Creyts said. President-elect Donald Trump has said he intends to boost the U.S. power system when he takes office, and sources close to his transition team have said his plans are likely to prioritize gas development over renewables. COAL IN THE MIX? Research firm McKinsey said in a report last month most of the increase in data-center power consumption in the European Union by 2030 will be supplied low-carbon sources. McKinsey declined to elaborate when asked whether low-carbon sources included natural gas, and whether the trend could prolong the life of coal. In some parts of Europe, data centers will need coal. In Poland, for example, a rush of new datacenter projects will need to run at least partially off baseload sources like coal because of the still-low volume of renewables in the country, according to Szymon Kowalski, deputy head of Re-Source Poland, a platform for corporate renewable energy sourcing. The share of coal in Poland's energy mix has been falling for years as it ramps up renewables, but still stood above 60% in 2023, according to the International Energy Agency. In Ireland, meanwhile, data centers now account for over 20% of electricity consumption, according to the IEA. System operator EirGrid told Reuters it will meet demand with 650 MW of temporary emergency generation capacity, and by delaying the retirement of older generators. It said natural gas would be an important part of the mix. Ireland's only coal station, ESB Group's 915 MW Moneypoint plant, extended its retirement date last year to 2029 from 2025, but intends to burn fuel oil instead of coal during that period. In Germany, Microsoft this year announced plans to expand data-center capacity with a 3.2 billion euro ($3.38 billion) investment, near the 400-meter-deep Hambach coal mine. Microsoft declined to say whether the project would rely on coal. "We are still in an early stage of the project, that's why we do not comment," spokesperson Jo Klein said. In Malaysia, some data companies are taking power from the coal and gas-dominated grid instead of paying a premium for renewables, according to a government official familiar with the matter. Less than 50% of the green power Malaysia has sought to auction this year has been purchased, the official said. ($1 = 0.9467 euro) (Reporting by Valerie Volcovici in Baku, Laila Kearney in New York, Nina Chestney and Susana Twidale in London, Marek Strzelecki in Warsaw, Riham Alkoussa in Berlin, Sudarshan Varadhan in Singapore; Writing by Richard Valdmanis; Editing by Matthew Lewis)

AI and cloud computing's energy demands could delay clean energy transition

A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries told Reuters the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the UN's annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems.

How AI and Cloud Computing Could Stall Global Energy Transition

A spike in electricity demand from the world's big data providers is raising a worrying possibility for the world's climate: a near-term surge in fossil-fuel use. Utilities, power regulators and researchers in a half-dozen countries told Reuters the surprising growth in power demand driven by the rise of artificial intelligence and cloud computing is being met in the near-term by fossil fuels like natural gas, and even coal, because the pace of clean-energy deployments is moving too slowly to keep up. In the United States, home to a third of world data centers, utilities are adding new gas plants and delaying the retirements of fossil-fuel power plants as a slew of sprawling new data centers plug in to the grid. In Poland, Germany and Malaysia, coal could also be in the mix, according to interviews with company executives, regulators and analysts. The outlook poses a new obstacle to world governments, now gathered at the UN's annual climate conference in Baku, which are already struggling to meet ambitious targets to decarbonize power systems.

AI's enormous power demand is threatening U.S. climate goals

Electric utility companies are building more power plants that will burn natural gas to meet demands of a data center construction boom. The explosion of data center development across the United States to serve the artificial intelligence industry is threatening decades of progress cutting greenhouse gas emissions, as utilities lay out plans to build scores of new gas power plants to meet soaring electricity demand. The fast rising emissions from electricity use have emerged as one of the most vexing -- and unexpected -- challenges for world leaders as they negotiate agreements for containing global warming this month at the U.N. Climate Conference in Baku, Azerbaijan, called COP29. Even as wind and solar projects are rapidly coming online around the world, experts say energy demand from data centers that are needed for artificial intelligence is growing much faster.

Energy-hungry Big Tech shrinks from the spotlight at UN climate summit

Big Tech has lowered its profile at the UN COP29 climate summit this year, as industry concerns rise about the sector being targeted as the "new oil and gas" as a result of the power demands of data centres to support artificial intelligence. In contrast to previous UN climate summits in Dubai and Sharm el-Sheikh, tech leaders such as Google, Microsoft and Amazon have been less visible in Baku. "We don't have anything there this year," a Meta spokesperson said. While tech groups place store in AI for its potential to cut greenhouse gases, as it helps to develop more efficient systems, the spike in energy use has put focus on the rising contribution to global warming in the meantime. "If our industry starts getting treated similar to oil and gas, the public relations to counter that are going to be very expensive," said Kevin Thompson, chief operating officer at Gesi, a business group focused on digital sustainability which is represented at COP29. Google reported earlier this year that its energy emissions had jumped by almost half in the past five years because of the needs of AI. Global emissions from data centres would almost triple by the end of the decade because of the buildout in generative AI, compared with a scenario in which this technology was not used, a recent Morgan Stanley analysis forecast. It said data centres could contribute to 5.1 per cent of global emissions by the end of the decade versus 1.9 per cent this year, both relative to 2022 global emissions. But Adam Elman, Google's director of sustainability in Europe, the Middle East and Africa, pointed to 2022 International Energy Agency data showing it accounted for 1.3 per cent of total electricity consumption which he said put the climate impact "into perspective". The IEA also predicted the sector's electricity demand would see "rapid" growth, however. "The Googles, Amazons, Microsofts are the big investors in clean energy," Elman added. The sector has been keen to step up its direct investments in clean energy in the past five years, including most recently nuclear energy. While still sending representatives to Baku, the big tech companies largely chose not to exhibit publicly in the conference's business area, known as the green zone. In the absence of Silicon Valley's leading lights among pavilions displaying corporate efforts, it was left to Azersun, a local conglomerate. It showed a machine-learning tool that the food and agriculture-based group said could give business and people advice on cutting their carbon footprint. It also ran AI-generated films about climate change. "We are kind of the talk of the town, or the talk of the COP," said Zeynep Yildiz, a marketing manager at the stand. One energy consultant said the reduced tech presence at COP29 was in line with the fall in the representation of the business community generally. "I think they don't see big business in [the] central Asia region," they said. The climate summit for the first time featured a "Digitalisation Day" to promote "green digital action". But the associated events focused more on extreme weather prediction than on how it could help with cutting emissions. In the official "blue zone" area open only to parties to the conference, Microsoft was one of 30 corporate and philanthropic co-sponsors of the UN climate change pavilion, alongside organisations as diverse as 3M and The Children's Investment Fund Foundation. It also contributed to a panel discussion about its role in UN initiatives on emissions reporting and early warning systems. Amazon teams also held discussions at COP29 with policymakers and with companies that have signed up to its Amazon Climate Pledge, which encourages corporates to make promises, including on clean energy, decarbonising maritime trade and the use of AI. An AI-generated PowerPoint presentation by Bulgaria, which has become a hub for corporate tech support and software engineers, highlighted the climate-predicting capabilities of its "petascale supercomputer". Petascale computing refers to systems capable of performing at least a quadrillion calculations each second -- though the demonstration suffered initial glitches before loading. The tech industry is still grappling with fundamental accounting issues that will define how it is perceived in relation to climate change, experts say. This includes the question of which party should be responsible for the CO₂ emissions produced when fossil fuels are burnt for power or cooling. There was a need for clarity on whether the data centre owner, operator or ultimate client should be held accountable, said Mary de Wysocki, Cisco's chief sustainability officer. A global standard-setting body for voluntary rules on carbon accounting, known as the Greenhouse Gas Protocol, is not expected to finalise new guidance for counting emissions from power use until next year. This will include ruling on whether the carbon footprint from energy used in one country could be offset by the purchase of certificates which loosely represent investments in wind or solar energy generated elsewhere in the world. Mark Campanale, founder of the non-profit Carbon Tracker think-tank, said the "extraordinary explosion in interest in AI and growth in power demand for cloud computing and data storage" posed a short-term challenge. It would take a few years for their investments into wind, solar and battery storage projects to "wash through" permitting systems and translate into enough clean energy to keep ahead of the rise in energy demand, he said. "They [tech companies] know they need to sort it but they're not letting concern about climate risk get in the way of delivering customers what they want, that's the brute reality."