From Climate Crisis to Power Shortage

For more than a decade and spanning three U.S. presidents, reducing greenhouse gas emissions was a top priority driven largely by a climate change narrative. A slew of policy proposals sprang forth from that priority including Cap-and-Trade legislation, the EPA’s Clean Power Plan regulations, and numerous state-level policy changes setting 100 percent renewable or carbon-free mandates. Years from now, historians may refer to this period of the energy transition as the ESG (Environmental, Social, and Governance) Era and show that it reached its peak in the U.S. in August 2022 with the passage of the Inflation Reduction Act.

The U.S. wasn’t alone. Countries around the world also embraced similar anti-fossil fuel policies with an array of results, including knee-buckling increases in electricity prices. Energy strategist, Dr. Jeffrey Krimmel, recently wrote about the surprising lack of effect all of this effort had on the world’s use of fossil fuels. “As of 2024,” he writes, “fossil fuels still contribute 87 percent of the world’s total energy supply. What was that number back in 1995? 89 percent.”

Why so little progress for so much froth? Nuclear power plants, while regaining some momentum in the U.S., remain difficult and expensive to build. At the same time, the uptake of solar and wind generation is slowing due to disappearing government incentives and grid-scale battery challenges.

The pendulum has definitely swung back. The realization that the grid can’t deliver on the promise of an easy energy transition is now in full view. The aging grid is in dire need of an upgrade at the same time that 100% renewable goals have become unrealistic. In what seems like just a few months’ time, however, data center load growth projections have switched the dominant energy narrative away from “climate crisis” to “power shortage.”

The invention of large language models made possible by AI technology have dramatically altered the electric load equation. The Electric Power Research Institute tells us why. In its 2024 report, it noted that one traditional Google search query uses about 0.3 watt-hour (Wh) of energy. AI-powered search engines like ChatGPT use 2.9 Wh per query, nearly 10X the power demand. Google’s former CEO, Eric Schmidt, was recently quoted saying, “AI’s natural limit is electricity, not chips. The U.S. is currently expected to need another 92 gigawatts of power to support the AI revolution” –– the equivalent of building more than 90 new nuclear power plants.

It is not an exaggeration to say that AI has literally driven green hydrogen, direct air capture technology, and battery electric long-haul trucking, ships, and even aircraft, out of the news cycle. Innovations once trumpeted as inevitable have been shelved or are being pursued out of the spotlight.

Blackout Projections Boom

DOE recently released a report entitled, “Evaluating the Reliability and Security of the United States Electric Grid.” One of the report’s key takeaways states that “Grid Growth Must Match Pace of AI Innovation,” and a second projects that the U.S. will experience a 100X increase in blackouts if coal and natural gas-powered plants are retired by 2030 as currently scheduled amid rising demand from data centers.

Major outages already occur. In 2024, a January storm with high winds and ice knocked out power for over 200,000 customers in Oregon, and another near-one million outages in the Northeast were driven by coastal flooding, strong winds, and blizzards. Heavy rain and winds in California left another 850,000 customers without power, and then the hurricanes came. Between Hurricanes Beryl, Helene, and Milton, nearly 8 million customers lost power for some amount of time.

As extreme weather events become more frequent, weather-related outages now account for approximately 80% of the 300 major power interruptions experienced every year in the U.S. Even if the DOE’s estimate is exaggerated, the U.S. could experience tens of thousands of major power failures every year by 2030.

DOE’s report makes it clear that most of the reliability problems the U.S. might face in the coming years will be the result of removing coal and natural gas sources from the grid and that intermittent wind and solar generators simply don’t provide the same reliability.

The Transition Continues

In my view, the woefully overlooked news hidden among the headlines is that while the energy narrative has changed, carbon emissions are being reduced thanks to liquid fuels like propane and natural gas. In fact, utilities in the southern U.S. have filed requests to add 19,000 megawatts of lower carbon intensive natural gas-generated power.

Propane, an under-appreciated player in places not served by natural gas pipelines, is becoming a mainstay for applications like standby power and off-road vehicles, while ports like Long Beach are using more propane in their operations as part of their long-term emission goals. Engine manufacturers who may have been diverting research resources into hydrogen have realized that with much simpler modifications, heavy-duty engines can easily run on low carbon propane and renewable propane. Small-scale power generation (2 to 4 MW) and backup power for data centers are well-suited for propane generation units as well.

The energy transition requires a wide-path approach that incorporates an array of sources to power diverse applications. More twists and turns certainly lie ahead, and we can’t control every eventuality or whatever AI invents for us in the future. What we can and should do is stay flexible and continue to match the best possible low-carbon fuels to the tasks at hand.