Key Takeaways
- Global data center energy use is soaring due to AI and digital services, expected to double by 2030.
- This energy demand challenges climate goals, potentially leading to more fossil fuel use.
- Tech giants are investing heavily in AI-focused data centers ($125 billion Jan-Aug 2024).
- Climate tech startups offer solutions but face declining investment, while AI funding booms.
- Despite funding challenges, investment in sustainable data center infrastructure is growing.
- Policy changes like R&D incentives and energy credit trading could boost efficiency and climate tech.
The world’s hunger for data is growing rapidly, thanks largely to artificial intelligence and our increasing reliance on digital services. This surge means data centers are using significantly more energy.
According to the Forbes analysis drawing on International Energy Agency data, data centers consumed about 1.5% of global electricity in 2024. This figure is projected to more than double by 2030.
Hyperscale data centers, the massive facilities run by major cloud and AI companies, have seen their energy use double recently. A single large center can consume as much power as 100,000 North American homes, and new AI-focused centers require even more.
Tech giants like Microsoft, Meta, Google, and Amazon committed around $125 billion to build and run AI data centers in just the first eight months of 2024 alone.
This rising energy appetite creates challenges. Utilities in the U.S. are considering building new fossil fuel power plants and delaying coal plant retirements to meet the demand, potentially hindering climate goals, as reported by Canary Media.
Some regions are taking action. Amsterdam paused new data center construction to focus on sustainability, while Singapore requires higher server room temperatures to save on cooling.
This energy challenge also presents an opportunity for climate technology companies. Startups are developing solutions, like capturing carbon emissions or creating more efficient power components for data center equipment.
However, these climate tech innovators face hurdles. Global investment in climate technology dropped by 40% in 2024, marking the third year of decline, according to BloombergNEF data. Investors seem cautious, partly due to uncertain policies.
In stark contrast, AI companies attracted nearly $100 billion in funding in 2024. Some worry this AI boom is pulling investment away from crucial decarbonization efforts.
Yet, there’s a silver lining. AI and climate solutions can work together. Investment in areas directly supporting data infrastructure, like energy solutions and building technologies, actually increased in 2024.
A Sightline Climate report noted that several major climate tech deals last year involved companies developing sustainable data centers or related energy solutions.
Experts suggest policy changes could help bridge the gap. Supporting research into more energy-efficient computer chips and promoting AI tasks on local devices instead of centralized clouds could significantly cut power needs.
Implementing systems like energy credit trading, rewarding companies for using efficient hardware or shifting tasks to times of high renewable energy supply, could also drive change. Expanding carbon credit markets nationwide could further incentivize low-carbon computing.
Such measures could ensure that the infrastructure powering future AI also helps drive investment in climate solutions, creating a win-win for technology and the environment.
