Analysis Global datacenter electricity use is set to more than double by 2030 – slightly surpassing Japan’s total consumption – with AI named as the biggest driver.
That’s the conclusion of the International Energy Agency, which recommends energy sector policies for multiple governments. The Paris-based agency is also banking on the same artificial intelligence to help ease the energy crunch the tech itself is fueling.
The IEA this week published a sweeping study on the crucial intersection of AI and the energy it gobbles up, and believes datacenters will drive more than 20 percent of electricity demand growth in advanced economies over the next five years, with AI driving most of that energy consumption.
The US, which accounted for 45 percent of global datacenter electricity consumption in 2024, according to the agency, is expected to see that share grow significantly by 2030. By then, American datacenters are set to consume more electricity than the country’s entire energy-intensive manufacturing sector, including aluminium, steel, cement, and chemicals.
In the United States, datacenters are on course to account for almost half of the growth in electricity demand
“In the United States, datacenters are on course to account for almost half of the growth in electricity demand” over the next five years, said IEA executive director Fatih Birol. “With the rise of AI, the energy sector is at the forefront of one of the most important technological revolutions of our time.”
The report points to the need for more energy generation (renewable, ideally) to meet the demand – something that we’ve covered before and has been well established of late – but with a bit of a different take: Optimism that we can use AI to optimize systems to offset a lot of the emissions, if we use it right.
“AI is a tool, potentially an incredibly powerful one, but it is up to us – our societies, governments and companies – how we use it,” Birol said.
The report cites several ways AI is already being used by the energy industry – improving generation, transmission, and consumption; and helping the oil and gas industry optimize exploration and production. It also calls for wider adoption of AI to detect faults in power grids, fine-tune heating and cooling systems, and boost industrial efficiency.
“Energy is amongst the most complex and critical sectors in the world today, yet it can and should do more to seize the potential benefits of harnessing AI,” the report said, adding that policy and regulatory shifts will be needed to unlock those gains.
As for concerns that AI is making it harder to tackle climate change – by ramping up energy use and driving more fossil fuel burn to keep the machines humming – the IEA says those fears are overstated.
While datacenters are among the fastest-growing sources of emissions, their share of total energy sector emissions through 2035 remains below 1.5 percent, even in the agency’s worst-case scenario.
On the flip side, the IEA doesn’t expect AI to solve the climate change conundrum either.
“The widespread adoption of existing AI applications could lead to emissions reductions that are far larger than emissions from datacenters,” the IEA said, “but also far smaller than what is needed to address climate change.”
The IEA estimates that emissions reductions enabled by the widespread use of existing AI solutions could be equivalent to about five percent of global energy-related emissions by 2035. It’s a dent, but nowhere near enough to seriously move the needle on climate change.
But don’t forget about the energy used, and emissions from, chip production!
The double-edged AI sword hanging over the energy sector – where ramping up AI adoption drives energy demand, even as the tech is touted as a tool to curb emissions – has a whole other element that has to be factored into calculations: Chip production.
According to a report from Greenpeace published this week, global electricity consumption from AI chip manufacturing surged by more than 350 percent between 2023 and 2024, and could increase by as much as 170-fold by 2030 compared to 2023 levels. That would be enough for chipmaking – largely concentrated in Taiwan, South Korea, and Japan – to consume more electricity than Ireland does today, the group said.
To make matters worse, most chipmakers in East Asia are meeting rising energy demand with fossil fuels. The report cited South Korea’s approval of a one-gigawatt liquefied natural gas (LNG) plant for SK hynix and plans to build 3 GW of LNG capacity for Samsung. In Taiwan, the government is using increased power demand from the semiconductor and AI sectors to justify expanding LNG projects and grid infrastructure.
While fabless hardware companies like Nvidia and AMD are reaping billions from the AI boom, they are neglecting the climate impact of their supply chains in East Asia
“While fabless hardware companies like Nvidia and AMD are reaping billions from the AI boom, they are neglecting the climate impact of their supply chains in East Asia,” Greenpeace East Asia supply chain project lead Katrin Wu said of the report. “[This is] demand that could, and should, be met by renewable energy sources.”
The IEA report noted that while hardware manufacturing for AI is energy intensive, it still “accounts for less energy than the operation phase” over a product’s lifecycle. Not exactly reassuring, given the current surge in energy use for chip production – and the growing demand for AI hardware shows no sign of slowing down.
But hey, as with COVID-19, if emissions don’t get reported, maybe they didn’t happen. The US Environmental Protection Agency (EPA) is reportedly taking a familiar approach: Cutting back transparency on greenhouse gas reporting.
According to ProPublica, the EPA is reportedly drafting a rule to gut long-standing greenhouse gas reporting requirements, cutting the number of industrial sectors required to report emissions from 41 down to just one.
That could make any data on how well AI is helping fight climate change basically worthless – if no one’s tracking emissions, there’s not much to measure. Great news for chipmakers expanding in the US – after all, it’s hard to be blamed for contributing to climate change when no one’s collecting the receipts. ®
