AI-fuelled data centre demand will set back energy transition

The data centre expansion required to support artificial intelligence is expected to keep fossil fuels in use for longer, a new report by think tank BloombergNEF has found.

Data centre energy use driven by AI will be a key new source of electricity demand going into the coming decade, the New Energy Outlook 2025 report predicted, requiring an additional 362 gigawatts of power generation capacity globally by 2035.

This will hamper our ability to transition away from fossil fuels like coal and gas in favour of renewable energy.

Emissions on their way down – but not by enough

The New Energy Outlook maps out a "base case" for how the global energy transition could progress, meaning it represents the most probable outcome based on current conditions and trends.

BloombergNEF, the research wing of the Bloomberg media company, built the report on the back of its previous base-case scenario, modelled in 2024, using updated information about data centre power demand, policy analysis and cost estimates for different types of power.

The report included some potentially good news: that energy-related global greenhouse gas emissions may have already hit their peak in 2024 and may now be on a downward trajectory, due to the growth of clean power sources.

Specifically, the report predicts that, while demand for electric power will grow 75 per cent by 2050, most of this will be serviced by solar, wind and other renewable sources, cutting energy-related emissions by 22 per cent and bringing them back to 2005 levels.

However, this is many orders of magnitude above the net-zero target set by the Paris Agreement and is consistent with global warming of 2.6 degrees Celsius by 2100.

Data centres account for substantial new energy demand

The reduction would be greater if not for the building of more data centres, which are expected to account for 4.5 per cent of total global power demand in 2035 and 8.7 per cent by 2050.

This is more than the total load from air-conditioning and heat pumps, which are expected to account for 7.1 per cent of global power demand in 2050, but less than the extra demand generated by electric vehicles at 11.2 per cent.

However, electric vehicles have the benefit of supplanting the transport emissions from petrol engines.

While some new data centres are being built to run on renewable energy and storage, the report suggests that some of the added data-centre demand will be serviced by existing coal and gas plants that avoid or delay retirement.

"Growing economies in Asia, the Middle East and Africa account for a large portion of the increase," said BloombergNEF global head of economics and modelling David Hostert. "We expect data-centre power demand in these markets to grow by six to 16 times by 2035 and reach 260 terawatt-hours."

Most data centres will continue to be located in the US, however, where their expansion will outstrip any other category of energy use, says the report.

AI impact already evident

The impact of AI is already being noticed in environmental reporting, with Google reporting a 50 per cent jump in greenhouse gas emissions in five years, despite the company having a net-zero target for 2030.

The electricity requirements of AI are so great because of the enormous computational demands involved in both training and running large models, calling on both powerful hardware and large cooling systems.

Amazon and Microsoft, two of the few operators of so-called hyperscale facilities, have both put a pause on new data centre deals in recent days, but there is no suggestion that either company is reassessing its overall strategy.

The findings of the New Energy Outlook report appear to echo warnings from science and technology historian Jean-Baptiste Fressoz. In a Dezeen column on Earth Day, he argued that the concept of the energy transition is deeply flawed, as humanity has so far never truly moved away from any source, merely added others to support new demands.

Photography is by Aerovista Luchtfotografie via Shutterstock and shows a Microsoft datacenter under construction in the Netherlands in 2019. 

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