$750 Billion EU-U.S. Energy Deal Faces Reality Check

By ZeroHedge - Jul 30, 2025

• The recently agreed upon U.S.-EU trade deal includes an ambitious commitment for the EU to purchase $750 billion worth of US energy products over three years, including LNG, oil, and nuclear fuel.
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• Industry analysts widely regard this target as unrealistic, citing that it would require significant redirection of US energy exports, radical shifts in global energy markets, and an improbable increase in EU imports from the US beyond current capacities and market demands.
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• Challenges include the EU's limited control over its companies' energy imports, strong global competition for US energy exports, and the substantial infrastructure investments and policy changes needed on both sides to accommodate such a dramatic shift in energy trade.
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As part of the U.S.-EU trade deal agreed over the weekend, the EU committed to purchasing a mindblowing $750 billion worth of US energy products over three years ($250 per year) including LNG, oil, and nuclear fuel (again this is very big picture: neither side has detailed what was included in the energy deal - or whether it covered items such as energy services or parts for power grids and plants).

There is just one problem: this number is laughably unrealistic because it would require the redirection of most US energy exports towards Europe and the EU has little control over the energy its companies import. 

Indeed, as Rabobank explains, unless energy prices increase materially, that figure remains beyond realistic expectations. The EU imported roughly €65 billion worth of energy products from the U.S. in 2024, including €20 billion (35 million tons) of U.S. LNG and €44 billion of oil and oil products. To reach the required $250 billion per year, the EU would need to import roughly 67% of its energy needs from the US, based on 2024 Eurostat data.

Even if the EU were to purchase all of its LNG from the U.S., the total would rise to only €40–50 billion, based on 2024 prices. This would require countries like Russia, Algeria, Qatar, Nigeria, and even Norway to completely relinquish their market share in the EU, while the U.S. government would need to mandate its LNG exporters to prioritize Europe.

The shift in flows for crude oil and refined products would be even more substantial, as the EU currently imports only around 17% of its needs from the U.S. Existing suppliers in the Middle East and India are unlikely to surrender market share without significant economic incentives, while U.S. refining and export capacity is already stretched. Capacity, cost, and competition will continue to shape energy flows, regardless of political intent.

Reuters adds that "there is strong competition for U.S. energy exports as other countries need the supplies - and have themselves pledged to buy more in trade deals. Japan agreed to a "major expansion of U.S. energy exports" in its U.S. trade deal last week, the White House said in a statement. South Korea has also indicated interest in investing and purchasing fuel from an Alaskan LNG project as it seeks a trade deal."

The flipside is just as laughable: total U.S. energy exports to all buyers worldwide in 2024 amounted to $318 billion. Of that, the EU imported a combined $76 billion of U.S. petroleum, LNG and solid fuels such as coal in 2024, according to Reuters' calculations based on Eurostat data.

More than tripling those imports was unrealistic, analysts said.

Arturo Regalado, senior LNG analyst at Kpler, said the scope of the energy trade envisioned in the deal "exceeds market realities."

"U.S. oil flows would need to fully redirect towards the EU to reach the target, or the value of LNG imports from the US would need to increase sixfold," Regalado said.

Competition for U.S. energy could drive up benchmark US oil and gas prices and encourage U.S. producers to favour exports over domestic supply. That could make fuel and power costs more expensive, which would be a political and economic headache for U.S. and EU leaders. 

Meanwhile, the EU estimates its member countries' plans to expand nuclear energy would require hundreds of billions of euros in investments by 2050. Its nuclear reactor-related imports, however, totalled just 53.3 billion euros in 2024, trade data shows.

The energy pledge reflected the EU's analysis of how much U.S. energy supply it could accommodate, a senior EU official told Reuters, but that would depend on investments in U.S. oil and LNG infrastructure, European import infrastructure, and shipping capacity.

"These figures, again, are not taken out of thin air. So yes, they require investments," said the senior official, who declined to be named. "Yes, it will vary according to the energy sources. But these are figures which are reachable."

There was no public commitment to the delivery, the official added, because the EU would not buy the energy - its companies would. Private companies import most of Europe's oil, while a mix of private and state-run companies import gas. The European Commission can aggregate demand for LNG to negotiate better terms, but cannot force companies to buy fuel. That is a commercial decision.

"It's just unrealistic," ICIS analysts Andreas Schröder and Ajay Parmar said in written comments to Reuters. "Either Europe pays a super high non-market reflective price for U.S. LNG or it takes way too much LNG volumes, more than it can cope with."

The United States is already the EU's top supplier of LNG and oil - thanks to the Biden-inspired war in Ukraine and the CIA blowing up the Nord Stream pipeline from Russia - shipping 44% of EU LNG needs and 15.4% of its oil in 2024, according to EU data. Raising imports to the target would require a U.S. LNG expansion way beyond what is planned through 2030, said Jacob Mandel, research lead at Aurora Energy Research.

"You can add on capacity," Mandel said. "But if you're talking about the scale that would be necessary to meet these targets, the $250 billion, then it's not really feasible." Europe could buy $50 billion more of U.S. LNG annually as supply increases, he said.

Amusingly, higher EU fuel purchases would, however, run counter to forecasts for EU demand to decline as it shifts to clean energy, analysts said. 

"There is no major need for the EU to import more oil from the U.S., in fact, its oil demand peaked a number of years ago," Schröder and Parmar said.

By Zerohedge.com 

Whistleblower Reveals Colombia’s Oil Spill Coverups

By Matthew Smith - Jul 30, 2025

• A BBC documentary and whistleblower allegations expose decades of unreported oil spills by Colombia’s state oil company Ecopetrol.
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• Operations by foreign companies Gran Tierra and Amerisur in the Putumayo Basin have caused major ecological harm.
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• Despite environmental promises, President Gustavo Petro’s administration has allowed oil operations to expand in the Amazon.

For decades, Colombia’s national government ignored transgressions involving the strife-torn country’s oil industry. A drill-at-all-costs mentality saw successive administrations, from the late-1980s, aggressively drive exploitation of Colombia’s hydrocarbon resources to boost the war-ravaged economy regardless of the fallout. This saw Bogota ignore a multitude of human rights abuses, severe environmental damage, and violent incidents which rocked the strife-torn nation. Even Colombia’s first leftist President Gustavo Petro, a former guerrilla who was quick to flaunt his environmental credentials, appears to have abandoned the ecologically sensitive Amazon to the oil industry’s depredations.

Earlier this year, the United Kingdom’s national broadcaster, the British Broadcasting Corporation (BBC), released a damning documentary alleging cover-ups of oil spills and other damaging incidents by Colombia’s scandal-prone oil industry. Former employee turned whistleblower, Andres Olarte, alleged Colombia’s national oil company, Ecopetrol, not only avoided reporting spills but concealed them while failing to remediate environmentally damaging incidents for decades. Olarte’s allegations align with claims, many emerging decades ago, from numerous communities in Colombia’s Middle Magdalena Valley and Amazon that oil companies, including Ecopetrol, are failing to report and clean up oil spills.

These are devastating allegations for Bogota because the petroleum is Colombia’s primary export, and Ecopetrol, of which 88.49% is government-owned, is a major source of fiscal revenue. In a shock development, the scandal-plagued administration of Gustavo Petro, Colombia’s first leftwing President, appears to have abandoned the country’s Amazon to the depredations of the fiscally crucial petroleum industry. Petro, himself a former leftist guerrilla with the 19th of April Movement (M-19), celebrated plans to reduce Colombia’s dependence on hydrocarbons and bring petroleum exploration to an end. There are indications, however, that industry operations are expanding, especially in Colombia’s Amazon, a sizeable portion of which is situated in the departments of Putumayo and Caquetá.

The Putumayo Basin, which contains significant petroleum industry operations, is located in Colombia’s south near in the border with Ecuador in Putumayo and Caquetá. This basin forms part of the larger Putumayo-Oriente-Maranon province, a sedimentary basin nestled against the Andes’ eastern flank extending from southern Colombia through Ecuador into northern Peru. While exploration efforts began in the early 1920s, it was then U.S. oil major Texaco that was responsible for a slew of major petroleum discoveries that by the 1960s had put the region on the global hydrocarbon production map. According to Colombia’s industry regulator, the National Hydrocarbon Agency (ANH), as of May 2025, there are 237 active oil blocks with 34 located in the Putumayo Basin across Putumayo and Caquetá.

Colombia Oil Block Map Putumayo and Caquetá

Source: National Hydrocarbons Agency.

Oil extraction in the Putumayo-Oriente-Maranon province has left a tragic legacy, particularly for the region’s indigenous peoples, with swathes of land and waterbodies polluted by hydrocarbon run-off. For decades, local communities complained about the contamination of water bodies, crops, and food sources with petroleum, causing serious ecological damage. Some of the worst environmental damage occurred in northern Ecuador, where Texaco and Ecuador’s then national oil company, Petroamazonas, are blamed by indigenous communities for what can only be described as horrendous pollution centered on the city of Nueva Loja, also known as Lago Agrio, a key Amazonian oil town near the border with Colombia. 

The dispute centers on Texaco disposing of billions of barrels of oil waste in vast pits, which were then buried in the jungle. Afterwards, whenever it rains, the hydrocarbon residue bubbles through the soil, coating the ground with a thick black sludge that flows into waterways, wetlands, and farmland. Those complaints eventually emerged as an acrimonious, multi-billion-dollar, decades-long lawsuit involving supermajor Chevron, which had acquired Texaco in October 2001. Ultimately, Ecuador’s highest tribunal, the National Court of Justice, upheld a lower court judgment against Chevron but reduced the damages to $9.5 billion. While the judgement remains unpaid, with Chevron bitterly arguing the ruling resulted from corruption, with Texaco having fulfilled the required remediation, immense pollution from dumping billions of barrels of oil waste remains an acute problem in the area.

Across the border in Colombia, the oil industry in the Putumayo Basin is also responsible for a slew of environmentally damaging incidents since production began with the Orito discovery in 1963. Putumayo is among Colombia’s top oil-producing departments, ranked sixth pumping accumulated petroleum production of 3.5 million barrels thus far for 2025, with oil responsible for 29% of gross domestic product (GDP). Those numbers underscore the scale of industry operations in the department, explaining why oil spills and other environmentally damaging incidents remain a major risk. 

Local communities, especially near the city of Puerto Asis, regularly complain of oil tainting waterbodies, including the Putumayo River, which is a tributary of the Amazon, wetlands, jungle, local water supplies, and crops. While it is difficult to obtain complete records showing the number of oil spills, data from Colombia’s National Environmental Licensing Authority (ANLA) shows 98 events occurring in Putumayo from the 2,129 recorded between 2015 and 2022. Nonetheless, local communities and environmental defenders claim the number is far greater, particularly with smaller leaks and other minor environmentally damaging events reputedly not being captured on official records held by Colombian authorities. Indeed, there is a long history of communities in Putumayo complaining of unremediated oil spills and repeatedly raising the alarm with Bogota, but without any concrete action taken by authorities.

There is considerable evidence supporting those claims, with Ecopetrol whistleblower Andres Olarte’s latest to emerge. He alleges that Colombia’s national oil company failed to report and remediate hundreds of oil spills over the last decade. While many of the 800 events divulged by Olarte occurred in the Middle Magdalena Valley, notably around the city of Barrancabermeja, the capital of Colombia’s oil heartland, many transpired in Putumayo. An April 2024 article published by Mongabay refers to at least 160 oil spills in the department caused solely by deteriorating pipeline infrastructure. The author contends that an over-dependence on oil revenues discourages local authorities from upgrading outdated pipelines, as this will reduce production due to the facilities being taken offline.

An April 2025 article from Colombian peace thinktank Rutas del Conflicto published by InfoAmazonas goes on to examine the impact of Colombia’s oil industry on indigenous communities in Putumayo. The author, Pilar Puentes, discusses in depth how petroleum waste from various oil spills and other environmentally damaging incidents has seeped into waterways, nearby jungle, and farmland to contaminate drinking water as well as food supplies. According to Puentes, the two oil blocks responsible for significant environmental and social impacts in Putumayo are Platanillo and PUT-1, which are both situated near the city of Puerto Asis and controlled by foreign energy companies. Block PUT-1 is controlled by intermediate Canadian driller Gran Tierra, while Platanillo is the property of Amerisur Resources a subsidiary of GeoPark, an independent energy company headquartered in Colombia, Argentin,a and Spain.

Gran Tierra holds interests in 22 Colombian oil blocks, with 13 located in Putumayo. The intermediate Canadian driller is regularly the subject of considerable controversy, which is centered on its Putumayo operations. There are frequent challenges against Gran Tierra’s operations by local indigenous communities, as well as regular oil spills.

Gran Tierra Energy Oil Blocks Putumayo, Colombia

Source: Gran Tierra Energy.

The latest reported spill occurred in October 2024 when intruders entered a compound at the Costayaco-3 project and opened valves on several trucks, releasing an unspecified volume of crude oil into the jungle and nearby waterways. This was preceded by a series of spills from Gran Tierra’s Moqueta Costayaco transmission line pipeline, which was ruptured by a June 2023 explosion and experienced leaks in 2020 and 2021 due to faulty operating procedures. 

Amerisur, which holds interests in 13 oil blocks in Colombia, with 12 located in Putumayo, is the subject of considerable controversy and is responsible for a range of oil spills as well as other environmental incidents in the country.

Map of Amerisur Oil Blocks in Colombia

Source: Amerisur.

The most recent environmental incident was the emission of Triethanolamine, a chemical emulsifier used in a range of extraction activities, from PAD 9 in the Platanillo Block in Putumayo. While that event is not significant, it demonstrates ongoing issues with operations in the Platanillo Block, which have earned considerable ire from local communities, notably the indigenous Siona people. Among the worst was a 2015 spill where FARC guerrillas forced drivers of tankers carrying Amerisur oil to dump their loads totaling 714 barrels or 30,000 gallons of petroleum into wetlands. This culminated in a lawsuit, which settled in 2023 with no admission of liability and the payment of undisclosed damages by Amerisur.

Local communities allege the Border Command, a powerful illegal armed group comprised of members of the Revolutionary Armed Forces of Colombia’s (FARC) 32nd and 48th Fronts who spurned the 2016 peace agreement and former paramilitaries, is protecting Amerisur’s operations. In December 2020, the Inter-Church Commission for Peace and Justice heard from displaced peasants that the Border Command warned communities not to interfere with seismic work on Block PUT 8, which is 50% owned by Amerisur and SierraCol Energy. While the work was completed in 2021, ANLA suspended development in July 2025 at the request of the Siona Buenavista Reservation. The Siona are opposed to the development of the block, claiming it lies within the legally constituted boundaries of the Buenavista Reservation, which Amerisur rejects.

By Matthew Smith for Oilprice.com

 

Ecuador Oil Production Plunges Due to Pipeline Shutdowns

By Rystad Energy - Jul 30, 2025,

• Ecuador's oil production has significantly decreased to multi-year lows due to the shutdown of its two largest crude pipelines, SOTE and OCP, caused by heavy rains and intensified erosion along the Coca River.
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• The pipeline closures have led to the cessation of oil production from major license blocks, including Block 61 (Auca), Block 60 (Sacha), and Block 43 (ITT), severely impacting the country's overall output.
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• This disruption is projected to cost Ecuador an additional $300 million in lost revenue, further straining the nation's fiscal stability and highlighting the vulnerability of its oil-dependent economy to operational setbacks.
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Ecuador’s oil production has plunged to multi-year lows after heavy rains and erosion caused the shutdown of the two largest crude pipelines, potentially costing the country as much as $300 million in lost revenue. On 2 July, Ecuador’s national oil company EP Petroecuador declared force majeure on the operations of the Sistema de Oleoducto Transecuatoriano (SOTE) and the Oleoducto de Crudos Pesados (OCP) pipelines, in an effort to safeguard critical infrastructure. The SOTE pipeline was shut down the same day due to heavy rainfall, while operations of the OCP pipeline were suspended following erosion along the Coca River, which posed a significant risk to the pipeline’s integrity. The ongoing heavy rains have intensified erosion in the Napo province, particularly along the Coca River, where both pipelines run in proximity for a stretch. This erosion, which first began in 2020, has since expanded and continues to cause widespread damage to key oil infrastructure and road networks.

The OCP pipeline has an operating capacity of 450,000 barrels per day (bpd), and the SOTE pipeline has a capacity of 360,000 bpd, with both capable of handling medium to heavy sour crude. Between January and May 2025, both pipelines collectively transported an average of 460,000 bpd. Of this total, the SOTE pipeline accounted for 57%, while the remaining 43% was transported through the OCP pipeline. Due to the significant outages mentioned earlier, the SOTE pipeline transported just 23,300 bpd on 13 July -- equivalent to 10% of its average throughput during the first five months of this year. Similarly, the OCP pipeline pumped an average of 3,500 bpd on the same day, representing 2% of its January–May 2025 average throughput.

The suspension of pipeline operations in July has led to the shutdown of the country's oil production from key license blocks. Ecuador’s major oil-producing blocks, including Block 61 (Auca), Block 60 (Sacha) and Block 43 (ITT), which together contributed 42% to Ecuador’s overall crude output last month, have experienced significant outages this month. According to official data, two of these blocks, 60 and 61, have not been producing since 8 July. The country’s largest producing field, Sacha on Block 60, reported zero production last week, compared to an average of 75,000 bpd in June this year.

Ecuador’s overall crude production in June stood at 464,000 bpd, out of which the output from EP Petroecuador-operated fields accounted for 80%, while the remaining production came from fields operated by private players. EP Petroecuador had 2500 actively producing wells during June; however, as of 13 July, only 523 wells were actively producing, a 79% decline. This disruption led to overall production from EP Petroecuador-operated fields falling nearly 10-fold, from 369,000 bpd to 38,500 bpd. This level marks the lowest output recorded in the company’s history.

Oil plays a critical role in Ecuador’s economy, contributing between 6% and 8% of gross domestic product (GDP) in recent years, and accounting for a significant portion of government revenues and export earnings. Last year, crude production generated approximately $13 billion. This year’s revenue was already projected to decline to $11 billion, a drop of 15%, largely due to no new wells being drilled on the ITT block, a maturing portfolio in the country, and weaker global oil prices. With this latest disruption, the country stands to lose an additional $300 million in revenue, further straining fiscal stability and highlighting the vulnerability of Ecuador’s economy to operational setbacks in its oil sector.

By Udayan Anand, Analyst, Upstream Research at Rystad Energy

 

Fifty Years On, Is the OSCE Still Fit for Purpose?

By RFE/RL staff - Jul 31, 2025

• The OSCE’s 50th anniversary is being marked with high-profile speeches and debate over its relevance in an era of Russian aggression and institutional paralysis.

• Originally forged during the Cold War as a grand East-West bargain, the OSCE's core principles are now under strain.

• Frustration over the consensus rule and limited enforcement powers has led to calls for small reforms and workarounds.

On July 31 and August 1, hundreds of officials and politicians will gather in Finland to celebrate the 50th anniversary of the Helsinki Final Act.

That agreement was something of a high-water mark of the Cold War detente, with 35 countries -- including the Soviet Union and United States -- agreeing on numerous principles after two years of talks known as the Conference on Security and Cooperation in Europe (CSCE).

This would shape the geopolitical architecture of the wider European continent and laid the foundation for what became the Organization for Security and Cooperation in Europe (OSCE) after the fall of the USSR.

At first glance, there should be a lot to celebrate.

And Finland, which fittingly took over as OSCE chair at the start of the year, is playing it big.

On July 31, both Ukrainian President Volodymyr Zelenskyy and UN Secretary-General Antonio Guterres will give keynote speeches in Helsinki followed by high-level panels of all sorts, debating the future of the OSCE under the theme: Respect, Respond, Prepare.

The Finnish chairmanship will also use the opportunity to launch the “Helsinki+50 Fund,” an initiative aimed at boosting voluntary funding for the Vienna-based organization.

Yet many are asking whether the OSCE still serves its original purpose.

A Grand Bargain

Back in 1975, it did represent something of a grand bargain between the democratic West and the communist East.

The Helsinki Final Act was celebrated in Moscow as it affirmed the status and inviolability of the existing borders in Europe at the time. It meant continued Soviet dominance of the Warsaw Pact countries and de facto, if not de jure, recognition of the annexation of the Baltic states.

But it also created three so-called “baskets” of future East-West cooperation: political and military affairs; economic and scientific cooperation; and, perhaps most significantly, human rights.

While the Soviet Union thought it had “won” at first, it was in fact the West that came out better in the long run, not least due to that third basket, which prompted an international human rights movement across the Cold War divide.

It inspired the Solidarity movement in Poland, the Baltic Way in Estonia, Latvia, and Lithuania, and Charter 77 in Czechoslovakia -- movements that helped pave the way for the fall of the Iron Curtain and the dissolution of the Soviet Union.

With the creation of the OSCE in the 1990s, that third human rights basket was expanded to include things such as the protection of national minorities, press freedom, and the Office for Democratic Institutions and Human Rights (ODIHR), which to this day sets standards for election observation missions.

In a letter to the 57 OSCE member states seen by RFE/RL, Finnish OSCE Ambassador Vesa Hakkinen invited them to the Helsinki celebration and wrote: “The Helsinki Final Act took a novel approach to managing tension and preventing conflict by setting out a comprehensive set of agreed principles and commitments to guide not only relations between States but within them. Fifty years later, the OSCE's principles and commitments remain a vital part of the European security order.

Whether that remains true is increasingly debated.

A Builder of Bridges?

The need for consensus in the organization has highlighted its shortcomings, especially as a seemingly revanchist and resurgent Russia has tested the entire post-Cold War structure for several years.

The OSCE mission in Georgia was not prolonged in 2009, a year after Russia’s invasion of the South Caucasus republic. Moscow’s subsequent recognition of the Georgian breakaway regions of Abkhazia and South Ossetia further undermined the organization.

When Russia forcibly annexed Crimea in 2014 and occupied parts of eastern Ukraine later that year, Moscow first permitted a limited OSCE monitoring mission, but this was then terminated completely not long after the full-scale invasion in early 2022.

Three former monitoring mission staff members have remained in illegal Russian captivity since then, with the OSCE making scant progress in getting them released.

This has also prompted other nations to dismiss some of the organization’s established mechanisms.

The OSCE Minsk Group, created to find a peaceful resolution between Armenia and Azerbaijan over Nagorno-Karabakh, was rendered useless after Baku seized the entire territory in 2023 and Azerbaijani President Ilham Aliyev openly called for the group to be disbanded. As a result, the OSCE budget remains stalled, with Azerbaijan withholding approval until all Minsk-related institutions are removed.

Despite this, there is no real discussion in Vienna about suspending Russia (or any other country for that matter). Instead, several OSCE officials told RFE/RL that dialogue and “open channels of communication” between all participating states remain essential.

In preparing for the Helsinki meeting, the Finnish delegation to the OSCE sent out an invitation to all countries to engage in “small group discussions” throughout the spring to tackle questions such as how to hold each other accountable, whether there is a minimum level of trust needed in order for the OSCE to function, and whether it can be a “bridge builder.”

In June, a new Finnish letter, seen by RFE/RL, was sent out summarizing the discussion, and it is evident that there might not be much change, if any, going forward.

'Frustration With The Consensus Rule'

One of the conclusions was that “while desirable, trust is not a requirement for dialogue.” Another, seemingly contradictory, finding was that “participants confirmed the continued validity and importance of the OSCE principles and commitments, even -- and especially -- as they are being violated, most severely by Russia's war of aggression against Ukraine.”

On accountability, there was even an admission that the OSCE “cannot enforce compliance with its principles.”

The letter also notes that many “expressed frustration with the consensus rule” but also added that “many clearly feel strongly that consensus is the essence of the OSCE and an important guarantor for inclusive decision-making.” The letter notes “frustration with the consensus rule” but adds that many see consensus as “the essence of the OSCE and an important guarantor for inclusive decision-making.”

Not surprisingly, the document concludes that “this is not the time for major reforms. Nevertheless, most participants called for small, incremental adjustments to enable the OSCE to better perform its core functions.”

The future of the OSCE might instead rest on a “coalition of the willing” formed to circumvent vetoes -- as seen across many other international institutions in recent years.

One such move was the OSCE Secretariat's Support Program for Ukraine (SPU) -- a portfolio of extra-budgetary projects. The idea appeared at the end of June 2022 when Russia blocked consensus on the extension of the OSCE Project Coordinator in Ukraine --- a full-fledged OSCE field operation that had been active since 1999.

Then there is the increased use of the OSCE Moscow mechanism, which has been triggered five times since Russia’s full-scale invasion of Ukraine three years ago, most recently to document alleged Russian crimes against prisoners of war and civilian detainees.

With no consensus needed to be activated, the mechanism’s fact-finding missions by experts and subsequent reporting will prove useful in various courts, notably the recently established special tribunal for the crime of aggression against Ukraine.

Whether these workarounds can keep the OSCE relevant will be debated long after the Helsinki anniversary events conclude.

By RFE/RL

Consumers Are Footing the Bill for AI’s Insatiable Appetite for Energy

By Haley Zaremba - Jul 30, 2025

• The rapid growth of data centers, particularly due to AI, is significantly increasing energy demand and jeopardizing clean energy initiatives by extending the life of fossil fuel plants and promoting new ones.
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• The issue is compounded by "phantom data centers," which inflate projected energy demand and give utilities leverage to expand fossil fuel infrastructure.
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• This surge in energy demand and the resulting infrastructure projects are projected to lead to higher energy bills for consumers, especially in the Southeast United States.
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As data centers place more and more demand on global power grids, policy and economic priorities are shifting from creating more clean energy to creating more energy, period. Projected clean energy additions are simply not enough to meet the runaway demand of the global tech sector, meaning that climate goals could be at risk. 

The proliferation of artificial intelligence is causing massive increases in energy demand from data centers, and the areas that host them are struggling to keep up. A 2024 study from scientists at Cornell University found that generative AI systems like ChatGPT use up to 33 times more energy than computers running task-specific software. As a result, it is estimated that each AI-powered internet query consumes about ten times more energy than traditional internet searches. But these numbers are just our best guess – we don’t really know how much energy AI is sucking up, because the companies who are piloting AI platforms aren’t sharing those numbers. 

But we know that the overall picture is pretty grim. Last year, Google stated that the company’s carbon emissions had skyrocketed by a whopping 48 percent over the last five years. “AI-powered services involve considerably more computer power - and so electricity - than standard online activity, prompting a series of warnings about the technology's environmental impact,” the BBC reported last summer. While Google hasn’t publicly revised its goal of becoming carbon neutral by 2030, the tech firm has admitted that "as we further integrate AI into our products, reducing emissions may be challenging." 

Already, the uptick in energy demand from data centers is causing new plans for gas- and coal-powered plants as well as extending the life of existing fossil fuel operations across the United States. Utility Drive reports that “at least 17 fossil fuel generators originally scheduled for closure [are] now delaying retirement” due to data center demand, and that “utilities in Virginia, Georgia, North Carolina and South Carolina have proposed building 20,000 MW of new gas power plants by 2040” for the same reasons. 

The issue is particularly acute in the Southeast. Major utilities in Virginia, North Carolina, South Carolina and Georgia project that they will collectively add 32,600 MW of electrical load over the next 15 years. The Institute for Energy Economics and Financial Analysis reports that in Virginia, South Carolina and Georgia, “data centers are responsible for 65% to more than 85% of projected load growth.”

However, it could be the case that this projected demand growth is overblown, and that states will add extra gas power capacity – and therefore extra greenhouse gas emissions – unnecessarily. Because the competition for energy sources is so fierce between data centers, the project managers of new centers are likely to reach out to many different power providers at once with speculative connection requests, creating redundancies and a compounding issue of “phantom data centers.” This inflates demand and makes accurate projecting extremely difficult. 

A study published last year by Lawerence Berkley National Lab calculated exactly how big the phantom data center issue might be, and they found that projected energy demand could be as much as 255 terawatt-hours of energy higher than real energy demand. That’s enough energy to provide power to more than 24 million households.

However, it’s not in utilities’ interest to simplify interconnection processes and ferret out phantom data centers. In fact, the panic over rising energy needs from data centers is giving them great leverage to expand their businesses and push through huge fossil-fuel powered energy projects. Plus, while building new plants and extending the lives of old plants is costly, those costs will be borne by the ratepayers. 

Consumers across the U.S. – and especially in the data-center-laden Southeast – can expect their energy bills to rise in response. "We are witnessing a massive transfer of wealth from residential utility customers to large corporations—data centers and large utilities and their corporate parents, which profit from building additional energy infrastructure," Maryland People's Counsel David Lapp recently told Business Insider. "Utility regulation is failing to protect residential customers, contributing to an energy affordability crisis.”

By Haley Zaremba for Oilprice.com

Utilities, AI, and the Quiet Raid on Consumers

By Leonard Hyman & William Tilles - Jul 29, 2025

• Utilities are quietly signing electricity deals with AI firms that shift major capital costs to regular customers.
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• Utilities are placing AI-related infrastructure in their regulated rate base, socializing risks and costs while offering AI firms preferential, often secretive, pricing.
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• Policymakers would be wise to force AI firms to build their own power infrastructure, shielding consumers from excessive costs.

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Ok, we are cynical. The current electric utility policy environment is not exactly what you would call a level playing field, fairly balancing corporate and public interests. Quite the contrary. Right now, we have highly profitable (and politically influential) corporations facing underpowered civil servants in diminished regulatory agencies. State regulators are in a position to grant data centers and possibly other enormous users of electricity the opportunity to milk huge subsidies from unsuspecting consumers. How? By putting these vast new power-generating resources in the utility’s rate base, thereby socializing these enormous incremental costs, facilitated by pro-business politicians.

Harvard researcher (Daniel Oberhaus, “How AI Could Be Raising Your Energy Bill, ” Harvard Magazine, July/August 2025) cites more evidence that utilities are making AI power deals whose terms are not public that burden the rest of their customers. One utility plans to build several large power plants to serve a long term contract with an AI site, put the plants in their regulated rate base, but so far, no details on apportionment of costs have been released. Another large utility has been accused of offering a cut-rate deal to an AI firm with the full expectation that the rest of its customers would make up the profit differential. Stated simply, residential utility customers would be subsidizing corporate or AI  electricity usage. In addition, several AI centers announced deals in which they would take the output of existing deregulated stations. Those are perfectly above-board transactions, but not neutral to consumers who have to finance new power stations at current, relatively high prices to replace the output taken by AI. Just a guess, but we think that if AI adds 10% to system sales, it will add 30% to the fixed and capital costs of the utility, so if the AI firm gets a discount, who pays the higher costs? You guessed it.                                                    

Next, let’s consider a few wild thoughts.

For instance, might we be in an AI bubble, on par with the dot.com bubble and the power generator bubble, and way back, the bowling alley bubble? These economic or speculative bubbles burst because actual demand did not materialize to keep up with supply based on overly optimistic forecasts. As a result, entrepreneurs overbuilt or somebody came up with a better or cheaper product. “Of course”, you say, ”this time is different.” But someone always says that.

Let’s consider possibilities. First, the AI providers may have wildly overestimated electricity demand, which will leave a lot of underutilized AI data centers looking for ways to dodge those big power bills. Second, the Chinese will develop cheap, low powered AI related computer chips that make the US version look uneconomical. For example with electric vehicles, Tesla came first but Chinese auto makers have caught up fast and now offer superior products. As Andrew Carnegie supposedly and ungrammatically said, “Pioneering don’t pay.” Third, when quantum computing makes an earlier-than-expected appearance, will all those AI data centers become white elephants?

Mind you, we don’t object to building AI centers. Entrepreneurs should take chances and reap the rewards. We just object to making consumers subsidize this essentially speculative activity via their electric bills. Given the intricacies of the electric network, and cross subsidies in pricing, the divergence in cost between new and old plant, and the political pressure to give large corporations what they want via hidden extra charges in the customer's electric bill, we suggest that there is only one way to protect consumers from what AI will do to the grid. That is by requiring that AI and similar power guzzlers build their own generation and networks. Put all these new expensive generating assets behind the meter so to speak. That means build, not snatch existing stations that consumers will have to replace. That way, data centers will pay full freight and consumers will only have to deal with all the other costs increasingly burdening the utility network.

By Leonard Hyman and William Tilles for Oilprice.com