Biden's AI and Climate Contradiction

"The Biden Presidency has been a disorienting muddle of policy contradictions, and in the final days comes another: An executive order that seeks to accelerate the buildout of both green energy and data centers for artificial intelligence.

Microsoft recently said it plans to spend $80 billion on AI data centers this year with more than half of that in the U.S. OpenAI says new data centers could need 10 times more power than New York City. The problem is that the U.S. lacks the electric grid capacity to support these new data centers, which are crucial if the country is to maintain its modest AI lead over China.

Enter Mr. Biden, who on Tuesday ordered the Defense and Energy Departments to open up land they manage for leasing to build AI data centers -- on the condition that companies also build "clean" power to offset their energy consumption. This will make electricity less reliable and more expensive, hurting Americans and the economy.

Data centers can't run on solar and wind alone because such centers require steady power around the clock. The Administration effectively acknowledges this by conditioning the federal leases for data centers on companies building renewable projects, and on those projects' power output being equal to the data centers' consumption.

Tech companies would thus be able to pocket rich subsidies under the Inflation Reduction Act, which can offset 80% of a renewable project's cost. Meantime, the addition of all these heavily subsidized renewables would make it harder for the base-power plants powered by coal, gas and nuclear to compete in wholesale markets. Many could shut down.

This would destabilize the grid that is already shaky enough. And it would require expensive back-up battery storage, which would be financed by all Americans. Obama Energy Secretary Ernest Moniz last year predicted that utilities would ultimately have to rely more on gas, coal and nuclear plants to support surging power demand from data centers in part because only they can provide steady power.

Mr. Biden is again flouting energy reality with his order. Electricity rates have soared 30% since he took office, owing in no small part to his climate first-and-only agenda. This is what happens when energy regulators live in an ideological bubble." [1]

1. Biden's AI and Climate Contradiction. Wall Street Journal, Eastern edition; New York, N.Y.. 16 Jan 2025: A16.