Are AI Energy Concerns Overblown?

By Haley Zaremba - Apr 20, 2025

• The rapid growth of artificial intelligence is leading to a significant increase in energy consumption by data centers, raising concerns about the strain on global power grids and the ability to meet this growing demand.
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• There is a debate among experts regarding the severity of AI's energy impact, with some arguing it's an overblown concern due to potential technological
•  advancements, while others warn of serious consequences for energy security and climate goals.
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• Governments and tech leaders are grappling with how to address the energy needs of AI while balancing economic competitiveness, environmental responsibility, and energy security, leading to differing policy approaches and priorities.

Last week, tech moguls pleaded with the United States Congress to ramp up energy production to meet soaring energy demand driven by artificial intelligence. The already considerable energy footprint of data centers is sharply on the rise, and is projected to keep gaining steam in the coming years. As a result, industry insiders are lobbying congress to ramp up energy production so that the U.S. tech sector can stay competitive with China. 

“We need energy in all forms,” said Eric Schmidt, a former Google CEO who now leads a think tank focused on technology and security called the Special Competitive Studies Project. “Renewable, nonrenewable, whatever. It needs to be there, and it needs to be there quickly.”

Supplying enough energy to meet AI’s growing needs without threatening domestic energy security is a bipartisan priority, but there are – of course – some partisan disagreements on how to get there. In 2023, Joe Biden signed an executive order with sweeping policy goals” governing the development and use of AI safely and responsibly.” When he entered office earlier this year, Donald Trump almost immediately overturned the order, saying its “onerous” mandates would “threaten American technological leadership.” Instead, Trump is leading a charge with less emphasis on responsible development and more stress on “securing and advancing American AI dominance.”

An ongoing global AI arms race will require staggering amounts of electricity. In 2024, data centers accounted for roughly 1.5% of global electricity consumption. And the International Energy Agency projects that this energy footprint is set to double by just 2030. “The IEA’s models project that data centres will use 945 terawatt-hours (TWh) in 2030, roughly equivalent to the current annual electricity consumption of Japan,” Nature recently reported. “By comparison, data centres consumed 415 TWh in 2024, roughly 1.5% of the world’s total electricity consumption,” the scientific outlet continued.

Already, this sharp increase is placing strain on power grids around the globe. Many countries, including Ireland, Saudi Arabia and Malaysia, don’t have the energy production capacity needed to  power their already-planned data centers. And in the United States, a recent scientific study found that the government would have to invest billions of dollars in generation and transmission capacity over the next few years to meet demand. And if the government falls short, Americans can expect their energy costs to go up by as much as 70 percent.

All of this energy demand growth also threatens to seriously derail global climate accords if it results in increased fossil fuel production. Google has already admitted that powering its AI ambitions may be fundamentally incompatible with its goal of reaching net zero emissions by 2030. In 2024,  the company reported that its carbon emissions had increased by nearly 50% in the last five years. 

“When you look at the numbers, it is staggering,” Jason Shaw, chairman of the Georgia Public Service Commission, an electricity regulator, told the Washington Post last year. “It makes you scratch your head and wonder how we ended up in this situation. How were the projections that far off? This has created a challenge like we have never seen before.”

However, some experts say that concerns over AI crashing global power grids and obliterating all hopes of achieving global decarbonization goals are overblown, and that all the panic around them is a classic Malthusian fallacy. There is a global race to make AI more efficient, and some believe that technological advances will drastically reduce strain to global power grids. 

As the IBM sustainability chief Christina Shim wrote in a recent op-ed for Fortune, “Raising a flag over AI’s energy use makes sense. It identifies an important challenge and can help rally us toward a collective solution. But we should balance the weight of the challenge with the incredible, rapid innovation that is happening.”

By Haley Zaremba for Oilprice.com