AI Is The New Climate Crisis?

追加: 2026-05-31

[00:00:00]the thing with climate is no longer the thing. AI is now the thing.

[00:00:03]>> These data centers are becoming more efficient and they're developing new cooling systems.

[00:00:07]>> People didn't realize these things have been around forever because it's just the internet. Every time you save something to the cloud, it doesn't go to an actual cloud.

[00:00:16]>> [laughter] >> I will say it's just interesting how climate has receded as sort of a front and center concern of the American elite like a five-alarm thing. Maybe it'll come back, probably come back. But I don't I think it's more than just about the changing political winds. I think partly it's like people realized we can't just have scarcity here because we need to build our front our our most uh cutting-edge technology. And so I think the idea cuz they were like, "Oh, we're going to shut down, you know, coal plants and we're going to shut down um you know, envi- pharmaceutical I don't know.

[00:00:50]>> They I mean they wanted to ban gas-powered cars by like 2030.

[00:00:54]>> Yeah, not that long ago.

[00:00:55]>> Yeah, the the but the idea behind the climate lobby was like we're going to target dirty industries. And now like tech, which was before really seen as a clean industry, is now like consuming a lot of power, which is fine. Uh but but I think that that's part of, you know, the the thing with climate is no longer the thing. AI is now the thing. These are actually related because this is an energy-intensive project and that's fine.

[00:01:18]>> There's certain people who have like a mental mindset where they just like being against things, you know, and it's like >> Yeah, totally.

[00:01:25]>> into There are some of the same climate for lack of a better word cult. Like they were against power generation before. They're still against power generation.

[00:01:37]>> be against that. No, and and the and and like the hardcore climate people will be obviously against AI data centers and everything, but I think there's like a middle group of people who would have been like, "Oh, we should really make climate change our number one thing."

[00:01:46]who are now, you know, people like in the Bay Area who are now like well, we can't shut down and have like um sort of energy scarcity and austerity and these these things we want to make energy super expensive and also compete with China and sort of increase productivity and grow our economy.

[00:02:03]>> It's almost like life's about trade-off.

[00:02:05]>> [laughter] >> Yeah, no, I I really do think that trade-off somehow registered.

[00:02:09]>> It did. I know it totally, especially among the tech elite cuz they they were funding a lot of this climate change, you know, like >> Yeah.

[00:02:16]>> frankly what became nonsense. And like a lot of the hysteria and a lot of the like the world is going to end by X date and you know, like like the seas were supposed to have overtaken Florida by now and you know, all that kind of >> say then on the other hand, some of these people, like it reminds me of Al Gore saying, you know, whatever the projection about Florida, the AI's going to take all of the white-collar jobs in 18 months or in 20 years.

[00:02:40]>> me of that.

[00:02:41]No, and the in the media, you know, the media not this show is not about media criticism, but like the most sensational finding, right? It's like holy cow, you know, like Florida is going to be completely underwater by 2041, you know, and it's like and so that gets the headline and then people talk about that and it's like, well, actually like if these 30 things happened, like you know, they're they're that's definitely something the media is guilty of doing is falling into that hysteria and I think like it is what we're trying to do here is like be realistic and yeah. Let's talk about the electricity piece because, you know, if you take Econ 101, supply and demand, there's more of a demand for power, right? So, wouldn't that lead to higher prices? But the data says not necessarily. Uh so, there was this big study in October from federal researchers at the Lawrence Berkeley National Laboratory uh partnered with the consulting group Brattle. And they found counterintuitively that more electricity demand can actually lower prices.

[00:03:41]Between 2019 and 2024, they calculated that states with spikes in electricity demand saw lower overall prices.

[00:03:47]Uh the biggest factors behind rising rates were the capital costs, the cost of poles, wires, other electrical equipment, and the cost of safeguarding the infrastructure resiliency kind of things.

[00:04:00]So, there's a a chart that we had in our news story about it when this came out that showed that North Dakota experienced a 40% increase in electricity demand during this period thanks to an explosion of data centers.

[00:04:17]They actually saw their inflation-adjusted prices fall by 3 cents per kilowatt hour. Virginia, the country's data center hub, had a 14% increase in demand and a price drop of 1 cent per kilowatt hour. On the other hand, California started to throw a lot of numbers at you, but I think this is actually really fascinating because a lot of people think that this electricity thing is a big deal.

[00:04:41]California lost a few percentage points in demand, but saw their prices rise by more than 6 cents per kilowatt hour. So, you can see that Dominic, you're the most economically minded This is I mean I guess this is economics 201 or economics 400.

[00:04:59]Explain what's going on and explain why this Tell us what's going on.

[00:05:03]>> So, you said, you know, it's economics 101. I mean, like the electricity market is very unusual, right?

[00:05:09]Because it's not like It's not like other markets in a lot of different ways.

[00:05:14]One of the I mean, I think one of the most interesting ways is, you know, usually when we talk about a market, we talk about an equilibrium price, which happens over time, right? And so, you you know, you have buyers are willing to pay something, sellers are willing to to sell for something, and eventually you converge on a equilibrium price. The problem with that is that the process of converging involves all sorts of differences and things like that.

[00:05:39]Whereas in an electricity market, demand has to equal supply all the time at every at every single moment of the market. So, so you have to be on the equilibrium every single time because we don't really have great ways to store large amounts of electricity, right? We have batteries that can store small amounts of electricity, but enough electricity to power a town, you can't put that on a battery. So, so um so from a electric utilities point of view, um what they have to do is is figure out how to meet those demands all the time.

[00:06:11]And in order to do that, you have to build out more capacity and do things like that.

[00:06:15]And of course, because a lot of these are treated as natural monopolies, um there's the utility industry is very very heavily regulated. And there's, you know, some some good economic reason for that because you you can't you you you you don't have competing electrical grids. You really just have you really just have one. And so um uh and so in order for them to be able to uh invest money and build new capacity, they have to go and say, "Look, we're going to have these high levels of demand coming up. Um that's going to justify us borrowing a bunch of money to to build these really high upfront costs and build new uh electricity generation."

[00:06:56]>> But then once you have it, >> but then once you have it, that that's what keeps the equilibrium in place, right?

[00:07:02]>> But there's also the marginal cost goes down.

[00:07:03]>> Yeah, yeah, yeah. And sometimes from scale, you can have you can have the the average cost come down. And so, uh and so yeah, and so if they if if if higher demand allows them to go to investors and say, "Hey, look, we're going to have all this demand. You should you should lend us money so that we can we can build out more supply."

[00:07:20]They go, "Okay, that that case makes sense to us." And then they they're able to do that.

[00:07:24]>> There was this other study that came out this week uh from a consulting firm called E3, which is short for energy and environmental economics.

[00:07:32]It was funded by the data center coalition. So, uh tied industry, but it was independently authored by this group. And they uh they looked at rising electricity prices and did a pretty sophisticated analysis that that of tracked. Uh and it looked at all the different factors that are driving rate pressure.

[00:07:50]Uh and it's not just load growth, uh inflation, natural gas price volatility, resilience spending, grid modernization, uh supply dynamics. And so basically data center load growth is one factor among several.

[00:08:06]Uh and the weight really does vary by region. Uh and so um PJM gets a lot of attention in our neck of the woods here in the Mid-Atlantic, whatever you want to call the DC area, we Maryland, Virginia. PJM, which provides a lot of the power, uh an analysis that this E3 outfit did showed that uh they looked at all the capacity auctions because of what you were talking about.

[00:08:32]And um they attributed about half of electricity price increases between 2024 and 2026 to load growth, which is you know, uh and the other half to market design changes, power plant retirements, uh pullbacks on fossil fuel resources, which a lot of that is government mandates and other supply side factors.

[00:08:56]So, it it's more complicated. It's not that there's no effect on electricity prices at all, but when you look at the Pew surveys, I mean, the number one thing people say is that electricity prices have gone up because of greedy utilities, which is hilarious since it's like the most heavily regulated industry there is.

[00:09:13]>> Yeah. Uh yeah, we have the Pew poll.

[00:09:15]>> Uh and then uh so yeah, utility companies wanting to make more money, and then you data centers using more energy is the second biggest blame. Uh and you know, that it So, the >> I mean, you definitely don't want the utility companies to want to make less money. That would be I mean, that then you don't get electricity. So, >> [laughter] >> uh so so I I don't know what the alternative to that is supposed to be.

[00:09:36]Um but uh but yeah, if if if the rule now is you can't do you can't do any economic activity that changes the electricity market, then we can't do anything. I mean, that's I mean that is that is that is literally I mean, everything affects energy markets.

[00:09:53]Everything anybody does, you know, takes you know, modern society is going to take electricity.

[00:10:00]If the standard is if that's the standard, then we should just give up and go live in caves.

[00:10:05]I mean I mean seriously.

[00:10:06]>> Didn't the Trump White House sign some memorandum with the AI companies that they would somehow cover the excess costs?

[00:10:13]I don't know don't know the details of that or if it'll actually happen, but I assume that some some kind of arrangement like that is probably probably going to end up given the political reality.

[00:10:22]>> Yeah, they pay they pay electricity bill just like >> [laughter] >> They they can also they can also create their own, you know, power generation.

[00:10:31]>> Totally.

[00:10:32]>> And you know, >> And I think a lot of them would love to.

[00:10:34]>> I think yeah, and I think there's a nuclear power has a lot of potential.

[00:10:37]>> Right. Yeah, and I think there's a very good case for them to start saying, well, maybe we don't need to plug into the grid at all. We can build our own we can build our own power. And and and and part of that too is there was there was just recently a uh uh government rule making process talking about how uh uh if there's uh uh a if there's like a peak demand period where they need to reduce or utilities need to reduce power, they should actually reduce it to data centers first because data centers have their own generators and things.

[00:11:13]And so from the data center's perspective, it's like, oh great. So we're going to great [laughter] great.

[00:11:17]So now so now every time every time there's a there's a there's a there's a peak electricity demand, we're going to get cut off first. This is annoying.

[00:11:22]Like we'd rather just do it ourselves.

[00:11:24]And and if these and if these and if these companies end up being as profitable as they are and and they can just and they can just afford to do that. I I think that seems like a totally reasonable totally reasonable thing for them to do both from the interests of the electricity grid but also from the interests of themselves.

[00:11:41]>> You talk about Loudoun County you said that's for those who don't know it's the DC suburbs.

[00:11:46]>> Yeah, and they've had these data centers forever because >> It's data center alley. Going back to like DARPA and the defense >> Yeah.

[00:11:54]>> industrial base >> Because people realize these things have been around forever because it's just the internet. I mean it's just like >> cloud storage. Every time you save something to the cloud it doesn't go to an actual cloud. It goes to [laughter] it goes to a physical plant on earth and and and those are called data centers and that's what we've had forever, right? And so and so yeah, so in Loudoun County there's there's a bunch of these in in in right near Virginia, you know, a bunch of the world's internet traffic goes through the the these Virginia suburbs everyday.

[00:12:27]And and yeah, and what >> And and what was able to >> They they they developed that as a strategy for the local government there to to develop their economy.

[00:12:39]>> And it worked.

[00:12:40]>> And it worked. They raised a ton of money from property taxes there. The interesting thing about that by the way is it's not just like they're really big buildings. So any big building is going to pay a lot of property tax cuz it takes up a lot of land. But Virginia also taxes personal property in addition to real estate real property. And so actually most of the money comes from the personal property tax because you they the >> On the equipment.

[00:13:03]>> Yeah, because the equipment and the and the computer chips is all personal property. And so and so Virginia taxes all of that as well. And so they pay a huge chunk of the county budget of of Loudoun County. And as a result of that they're able to use that money for schools, for parks, for all these different things.

[00:13:23]And and look this isn't some like huge job creator program. They don't they don't take that many people to work at these things. But they're they're generally just big warehouse looking buildings that raise a ton of money.

[00:13:38]And so from a local government's perspective, if you're just looking at dollars and cents, that that seems like a totally reasonable thing to do and it's worked out very well for them.

[00:13:47]>> County has been able to reduce property tax the property tax rate because they're getting some money. So the regular citizens of Loudoun are paying less in taxes. Meanwhile, next door Prince William County has fought data centers to the nail and they're just in much worse fiscal shape as a result.

[00:14:04]>> Yeah.

[00:14:04]>> Um we're going to continue to have these fights.

[00:14:08]There's going to continue to be just like a lot of lies out there. I mean, one of the things that's happening too is these data centers are becoming more efficient and they're developing new cooling systems and various things. So already like the water use stuff is so overhyped.

[00:14:23]There's all these crazy stats floating around.

[00:14:26]But like the industry isn't standing still.

[00:14:29]>> Yeah. I mean, and we got to yeah, we got to remember it's true for the AI consumer side stuff that we use. It's also true for the data centers. Like this technology right now is the worst it will be going forward, right?

[00:14:41]>> right now.

[00:14:42]>> it's going to get better.

[00:14:44]And and and part of that is just the you know, computational power gets better as better semiconductors get developed and all those things. You know, that's been a long running trend in in the history of this. So so yeah, all this stuff gets gets gets more efficient over time.

[00:15:02]And and so and so you know, that's that's another thing too of like, okay, if you just extrapolate out based on what we know right now, it's going to look a lot worse. But we know that's not how the world actually works. How it actually works is it will get more efficient.

[00:15:42]>> Mhm.