At the beginning of the year, the International Energy Agency (IEA) found that, in 2022, data centers consumed around 460 terawatt-hours (TWh) of energy, or around 3% of global electricity use. The IEA further predicted that this number will likely more than double to around 1,000 TWh by 2026 — roughly the equivalent of Japan — due, at least in part, to the energy demands of artificial intelligence.
Many of the massive investments being made around the world in AI have to do with building more data centers, even as existing data centers are consuming more energy than ever before. What this means for carbon emissions is complicated (since it depends on the cleanliness of the grid at each data center location), but today, we’re talking about the grid.
There have been plenty of reports in recent months regarding the ways in which this data center expansion is stressing our grid.
What’s going on here is that, driven by spiking data center demand, electricity demand is currently experiencing a prolonged surge. Mariko McDonagh Meier, the chief revenue officer for energy storage developer Convergent, told me that this is significant, as energy demand had been relatively flat for the past 20+ years.
This was due to increasingly energy-efficient technology, which compensated for increases in electrical usage.
“That’s where things are really shifting as data centers move toward AI, they just need so much more computing power it’s going to look very different,” she said.
The details: Grid operators, according to Meier, have the basic charge of ensuring the grid is reliable. This means managing electricity supply and demand in real-time. If a massive machine — or data center — comes online and its accompanying demand hasn’t been properly accounted for, it could “break a lot of stuff.”
The reality, according to Meier, is that “the grid is the most complicated machine that’s ever been built, truly, because it is an interconnected machine.” The reason behind this interconnection has to do with built-in fail-safes; local problems can be solved by drawing on power from other places. This enhances the reliability of each interconnected grid (the U.S. and Canadian power grids, for example, are connected at 37 different points for this very reason).
The result of this interconnection — coupled with a lack of storage capabilities built into the grid — is that the grid has to be constantly balanced. This data center-driven increase then poses a significant challenge to grid operators, resulting additionally in delays for new data centers to come online.
“You can’t replace the fossil plants fast enough to meet the demand,” Joe Craft, CEO of Alliance Resource Partners, one of the largest U.S. coal producers, told the FT. “In order to be a first mover on AI, we’re going to need to embrace maintaining what we have.”
Globally, 69.5 gigawatts of new coal capacity came online in 2023, compared to just 21.1 GW that were retired, according to Global Energy Monitor (this is largely due to China).
A big solution to this rather complex mess, according to Meier, involves solar plus storage tech (something that Convergent offers). Depending on the size of the solar array in question, the combination can be enough to power a data center, perhaps with a minimal connection to the grid — the result is cheaper, sustainable energy production that doesn’t impact grid reliability.
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A majority of Americans say it is more important for the U.S. to establish energy independence than to fight climate change, according to new polling.
The poll from Napolitan News Service of 1,000 registered voters shows that 57% of voters say making America energy independent is more important than fighting climate change, while 39% feel the opposite and 4% are unsure.
Those surveyed also were asked: Which is more important, reducing greenhouse gas emissions to combat climate change, or keeping the price of cars low enough for families to afford them?
Half of voters (50%) said keeping the price of cars low was more important to them than reducing emissions, while 43% said emissions reductions were more important than the price of buying a car.
When asked, “Which is more important, reducing greenhouse gas emissions or reducing the cost and improving the reliability of electricity and gas for American families?”, 59% said reducing the cost and increasing the reliability was more important compared to 35% who said reducing emissions was more important.
The survey was conducted online by pollster Scott Rasmussen on March 18-19. Field work was conducted by RMG Research. The poll has a margin of error of +/- 3.1 percentage points
Dan McCaleb is the executive editor of The Center Square. He welcomes your comments. Contact Dan at [email protected].
Canada has set ambitious climate goals, aiming to cut its greenhouse-gas emissions by 40 to 45 per cent by 2030, and to hit net-zero emissions by 2050.
Now a senior fellow at Resource Works, Jerome Gessaroli, argues that Canada is over-focusing internally on reducing greenhouse-gas emissions, when we should “look at cooperating with developing countries to jointly reduce emissions.”
He continues: “And we do that in a way that helps ourselves. It helps meet our own goals. That’s through Article 6 of the Paris Accord, allowing countries to share emission reduction credits from jointly developed projects.”
Reduction on a global scale
Article 6, says Gessaroli, means this: “We can work towards meeting our own emission goals, and can help developing countries meet theirs. We can do it in a way that’s much more efficient. We get a lot more bang for our buck than if we are trying to just do it domestically on our own.”
The point is that, in the end, emissions are reduced on a global scale — as he stressed in a five-part series that he wrote for Resource Works last November.
And in a study for the Macdonald-Laurier Institute (where he is a senior fellow) he wrote: “The benefits could be large. Canada could reduce emissions by 50 per cent more if it carried out methane reduction projects both internationally and domestically, rather than solely in Canada.”
But is Ottawa interested?
Gessaroli says the federal government expressed interest in Article 6 in 2019 — but has not moved since then.
“They barely looked at it. Since this requires government-to-government coordination, it needs Ottawa’s initiative. But there doesn’t seem to be too much interest, too much appetite in that.”
All Ottawa has said so far is: “Going forward, Canada will explore these and other similar options to strengthen international co-operation and generate incentives for further emission reductions.”
Gessaroli on Resource Works
Gessaroli has been working with Resource Works since he first spoke with our Stewart Muir, following a letter that Muir wrote in The Vancouver Sun in 2022: ‘Gas has key role to play in meeting 1.5C climate targets.’
Gessaroli saw in Resource Works advocacy for responsible resource development “for the people, the citizens of BC, in an environmentally responsible manner and in a manner that’s efficient, driven by the private sector.”
And: “Resource Works supports responsible resource development, not uncritical expansion. We have these resources. We should develop them, but in a way that benefits society, respects nature, respects the local peoples, and so that wide elements of society can benefit from that resource development.”
Gessaroli on electric vehicles
Gessaroli hit a shared interest with Resource Works in a 2024 paper for its Energy Futures Institute, critiquing BC’s plan to require that all new vehicles sold in the province must be electric zero-emission vehicles (ZEVs) by 2035.
For one thing, he wrote, BC would need to spend $1.8 billion to provide electric charging points for the vehicles. And billions more would be required to provide expanded power generation and transmission systems.
“The Government of BC should adjust or rescind its mandated targets for new minimum zero-emission vehicle sales.”
And on ZEV subsidies
Stewart Muir and Barry Penner, chair of the Energy Futures Institute, wrote a guest column last October in Business in Vancouver. They cited Gessaroli’s paper above, and noted: “According to Gessaroli, meeting BC’s ZEV targets will require an additional 2,700 gigawatt hours of electricity by 2030, and 9,700 gigawatt hours by 2040—almost equal to the output of two Site C dams.”
Gessaroli has also looked at the subsidies BC offers (up to $4,000) to people who buy an electric vehicle.
“The subsidies do help. They do incentivize people to buy EVs. But it’s a very costly way to reduce carbon emissions, anywhere upwards of $600, $700, even $800 a tonne to eliminate one tonne of carbon.
“When you look at the social cost of carbon, the government uses a figure around $170 a tonne. That’s the damage done from every tonne of carbon emitted into the atmosphere. So we’re paying $800 to remove one tonne of carbon when that same tonne of carbon does damage of about $170. That doesn’t sound like a very cost-effective way of getting rid of carbon, does it?”
Gessaroli on Donald Trump’s policies
Gessaroli says tariffs on imports are not the only benefit that Donald Trump plans for U.S. industry that will hurt Canada.
“He also wants to reduce tax rates, 15% for US manufacturers, and allow full deductibility for equipment purchases. You reduce regulations and red tape on companies while lowering their tax rates. They’re already competitive to begin with. Well, they’re going to be even more competitive, more innovative.”
For Canada, he says: “Get rid of the government heavy hand of overtaxing and enforcing inefficient and ineffective regulations. Get rid of all of that. Encourage competition in the marketplace. And over time, we’d find Canadians can be quite innovative and quite competitive in our own right. And we can hold our own. We can be better off.
“And there’d be more tax revenues being generated by the government. With the tax revenue, you can build the roads, build the hospitals, improve the healthcare system, things like that.
“But without this type of vibrant economic type activity, you’re going to get the stagnation we’re seeing right now.”
About Jerome Gessaroli
Gessaroli leads the Sound Economic Policy Project at the B.C. Institute of Technology. He is the lead Canadian co-author of Financial Management: Theory and Practice, a widely used textbook. His writing has appeared in many Canadian newspapers.
Stewart Muir, CEO of Resource Works, highlights Gessaroli’s impact: “Jerome brings a level of economic and policy analysis that cuts through the noise. His research doesn’t just challenge assumptions—it provides a roadmap for smarter, more effective climate and energy policies.
“Canada needs more thinkers like him, who focus on pragmatic solutions that benefit both the environment and the economy.”
Gessaroli and Karen, his wife of 34 years, live in Vancouver and enjoy cruising to unwind. In his downtime, Gessaroli reads about market ethics and political economy — which he calls his idea of relaxation.
