Ed Ballard
AI data centers guzzle as much electricity as entire cities. They have ignited demand for any energy source you can name. They're straining the grid and making people fret about their utility bills.
Yet all that gargantuan power consumption is a sideshow.
That's the conclusion of a new paper that seeks to quantify how artificial intelligence will change the energy system. It says the most profound impact won't come from how the technology is powered but what it's used for. Its big prediction: AI is on course to extend the dominance of fossil fuels.
The paper models what would happen if AI boosts productivity for renewable energy and fossil fuels alike. It finds that the improved economics of oil-and-gas production would push up global carbon-dioxide emissions by between 0.47 billion tons and 1.8 billion tons a year.
"On the smaller side it's about the emissions of Mexico annually," said Holly Alpine, one of the co-authors of the research, which was published in the journal Nature.
Like her husband Will Alpine, another co-author, Holly Alpine used to work at Microsoft, where they were both involved in sustainability initiatives. They say they left after growing disillusioned with the company's oil-and-gas work, and now run a climate advocacy group that pushes to limit the use of AI in growing oil-and-gas production.
A Microsoft spokesperson said the company believes AI can help accelerate the clean-energy transition and that its employees are "core to our sustainability mission."
The debate over AI and the climate usually weighs data centers' power consumption against the ways in which the technology could advance green technology.
The numbers on the first side of that equation keep getting bigger. In recent days, Amazon said it is behind a data-center project in Texas that has permission to tap 7.65 gigawatts of gas power, while the climate scientist Zeke Hausfather estimated that AI agents could use 600 times more energy than regular prompts.
Against that, tech giants have made big promises about AI's green potential. A 2023 report by Google and Boston Consulting Group said AI could reduce global emissions by 10%, through measures such as grid optimization. In 2024, OpenAI's Sam Altman said AI's feats would include " fixing the climate."
The Alpines wanted to assess AI-enabled productivity gains systematically. To understand their argument, listen to oil-and-gas executives. These days it's customary for companies' earnings reports to include updates on how AI is being used to scan geological data and optimize production.
AI is the latest chapter in a long history of oil-and-gas engineers expanding the frontiers of exploration and squeezing more hydrocarbons from fields. Consulting firm Wood Mackenzie estimates that AI could unlock another trillion barrels of oil. Goldman Sachs predicts that widespread adoption could accelerate projects, slash capital expenditure and reduce the price of a barrel of oil by up to $11.
Not everybody buys that AI is destined to entrench fossil fuels. Artem Abramov, deputy head of analysis at Rystad Energy, suspects that the Alpines underestimate how AI could accelerate the improvement of low-carbon technologies. He is in no doubt that AI will bring savings for oil-and-gas producers, but isn't certain what the upshot will be.
"Those savings flow mainly to investor returns," Abramov said, "not incremental barrels."
The Alpines see growing evidence for their argument that reduced costs will drive more consumption. ExxonMobil, for example, said in its recent results that it used an AI model to identify four drilling prospects in Guyana that it hadn't spotted using conventional methods.
"We have to take these sources at face value and assume that this is changing the economics and the economic viability of their industry and therefore delaying the energy transition," Will Alpine said.
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Today's email was written by Ed Ballard in London. Contact him at ed.ballard@wsj.com. Contact the team at climate@wsj.com.
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