Power Surge

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‘Gold rush’

The surge in investment also means a dramatic increase in energy use worldwide. The semiconductor chips used to train AI models and fill AI data centers are especially energy-hungry: They use more energy and give off more heat than most common chips. Today, data centers globally already use as much energy each year as Italy—which has the eighth-largest GDP of any country.

And that dramatic increase is transforming the energy industry. Chevron and Exxon, long among the biggest oil producers globally, recently unveiled plans to build dedicated power plants for AI data centers—a major shift for companies whose main business for a century has been drilling and refining crude oil.

But the surge in energy consumption by AI is also driving an unexpected and worrying rise in planet-warming, greenhouse-gas emissions. Meta’s emissions grew by 66 percent from 2021 to 2023; Google’s emissions rose 50 percent over the past 5 years, mostly because of AI. In West Virginia, coal plants scheduled for closure are now being kept open to supply energy to data centers in Virginia, the global epicenter of AI data hubs. Meanwhile, researchers in California have estimated that the excess pollution from AI’s energy use could lead to an extra 1,300 deaths and billions of dollars in healthcare costs this decade in the U.S. alone.

And AI’s demand for energy looks certain to grow sharply for the foreseeable future: Many economists expect AI energy usage to double by 2030, pushing overall energy consumption in just the U.S. to rise by as much as 20 percent. What’s this mean for the world’s energy use?

Nicholas Kumleben is the energy director at the consulting firm Greenmantle, where he leads research on energy, commodities, and climate change. Kumleben says the core of the energy industry’s transformation is the unexpected bonanza for natural gas. Oil—common in powering cars and home heating—is too dirty and too expensive for generating power at scale, while renewable sources can’t provide the uninterrupted electricity supply that data centers need.

As a result, the world’s biggest tech firms are making massive deals with energy companies to build dedicated data-center power plants that run on natural gas—and these contracts include guaranteed purchases of natural gas for decades to come.

But the climate consequences of all this added consumption of natural gas are extremely uncertain. Tech companies want clean power, and they’ve made commitments to reducing their net greenhouse-gas emissions to zero over time. These long-term power agreements will allow energy firms to develop and deploy carbon-capture technology that could someday halt emissions from these power plants—but they also mean extending and expanding the use of a fossil fuel that now often leaks harmful gases into the atmosphere during its extraction …

• “The industry is scrambling to respond to a generational change in power markets. Demand for power in the U.S. had been flat to slightly down since the mid-2000s, but those days are over. The same trend is happening in most advanced economies. Japan and Europe, for example, experienced the same trajectory of plateau and decline in demand, but that’s changing now, thanks to the power intensity of AI.”
• “Even today, some European countries are running up against the limits of their power systems. Take Ireland, for instance: It’s on the cutting edge of renewables because it has a lot of cheap wind power—but about 20 percent of Irish power demand now comes from data centers. The Irish government has responded by putting a moratorium in place on new data-center construction in the Dublin region until 2028. The Netherlands has done the same thing in Amsterdam. And there’ve been similar moratoriums in Singapore and parts of Scandinavia.”
• “In the short term, it seems likely that there’ll be a small but significant rise in power-sector emissions from data-center energy demands. And that’s in the U.S.; the climate impact is potentially much more negative in places like China and India, where they still depend heavily on coal. So AI might wind up having a much more negative emissions impact in Asia than in the West.”

Meanwhile, an increasingly popular macroeconomic theory MMT—Modern Monetary Theory—is also promising to put global finance on a fundamentally new, if fundamentally different, footing. MMT holds that the government can eradicate unemployment by being less restrictive in issuing money and other financial assets. While there’s little common ground between proponents of cryptocurrency and supporters of MMT, both camps seek a thorough reconstruction of the financial system. “Money,” Stefan Eich observes in The Currency of Politics: The Political Theory of Money from Aristotle to Keynes, “has at last reentered political debate.” Why is that?

Eich writes the current contest over monetary policy is the legacy of two global breaking points: the 2008 financial crisis and the 2020 pandemic, in which central banks played key roles in responding to the fallouts—and which revealed the global financial system’s underlying political structure. Central banks tend to present themselves as independent of politics, but they can’t really escape their essentially political nature: Beneath their technocratic lacquering, obscure central bankers routinely make political choices; and these political choices inevitably leave some better off, others poorer.

When Ben Bernanke, the chairman of the Federal Reserve, sought to reassure Americans that the U.S. government’s US$85 billion bailout of the insurance company AIG wasn’t risking taxpayer money, for instance, he told the CBS correspondent Scott Pelley that the Federal Reserve could credit AIG’s accounts with tens of billions without congressional sign-off. “We simply use computers,” he said. But that seemingly elementary technocratic maneuver imposed far-reaching costs on millions of Americans. The Federal Reserve will say its bailouts were necessary, but no one can say they weren’t political: Bailed-out banks foreclosed on record numbers of mortgaged American households.

“The myth of neutral money beyond politics is dead,” Eich writes, but what fully political money looks like is still uncertain—and contested. In this “moment of disorientation,” Eich explores how some of history’s most consequential economic thinkers have responded to past monetary crises, to help orient the reader in beginning to think about how monetary policy could become more democratically responsive.

—Gustav Jönsson

• In Brazil, armed robbers are increasingly targeting pharmacies for the weight-loss drugs Ozempic, Wegovy, and Saxenda. In São Paulo, these robberies jumped from 1 in 2022 to 39 in 2024. A month’s supply costs US$120-190 in Brazil, while the average monthly income there is US$300. Brazilian Pharmacies have responded by hiring armed guards, installing more elaborate security systems, or denying that they carry these drugs—with the hope that the issue will wane when the drugs go generic in Brazil in 2026.
• In an American initiative to address retail theft, a Michigan judge has implemented an innovative community service program. Judge Jeffrey Clothier is requiring people who shoplift from Walmart in Grand Blanc Township to provide free car-washing services in the store’s parking lot this spring. Recognizing that some offenders may face difficult circumstances, the judge plans to participate along with them. The program, supported by Walmart, aims to both discourage theft and benefit the local shopping community. Some 75-100 participants are expected to serve on weekends in March and April.
• Remember the asteroid with the non-zero chance of smashing into Earth in 2032? While the probability of a strike has gone from 1 percent to a 2 percent chance, this also means there’s still a 98% chance it will pass by our planet safely. “No one should be concerned that the impact probability is rising. This is the behavior our team expected,” Paul Chodas, the director of NASA’s Center for Near-Earth Object Studies, says. “To be clear, we expect the impact probability to drop to zero at some point.”

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