Old Energy, New Boom
Digital traffic will fuel the next dramatic economic expansion—but digital machines need the reliable and affordable energy that only hydrocarbons can provide.
Once upon a time, tech companies were upstarts, striving to change the world order. Not anymore. With financial potentates gathering in Davos this week for the 2020 World Economic Forum, tech giants reign in the global economy, both creating and ameliorating challenges from job destruction and wealth disparities to security, health care, and—of course—climate change.
Digital companies now “weaponize” their reputations for technological wizardry to shape our energy future. It’s ironic, then, but no coincidence, that digital infrastructure has become the fastest-growing source of energy use. Despite their best public relations efforts, these giants in fact meet increasing demand by using the same old hydrocarbon sources that power everything else in the economy.
Tech companies confront an inconvenient fact: the global cloud uses more energy than is produced by all the planet’s wind and solar farms combined. One-click shopping and streaming video, and everything else digital, rely on an ecosystem of energy-intensive hardware to mine rare-earth elements, manufacture silicon engines, and light up countless cell towers and warehouse-scale data centers. This hardware is deeply and deliberately intertwined in global systems overwhelmingly fueled by hydrocarbons—the old-fashioned stuff that provides 85 percent of all energy, with just 3 percent coming from wind and solar.
Just ahead of the Davos meeting, Microsoft raised the bar for its fellow tech titans by announcing an initiative to help change how the world gets energy. Nearly every tech firm has “taken the pledge” to transition to using renewable energy exclusively. They’re investing billions of dollars and deploying lobbyists to get more wind and solar projects going worldwide. U.S. companies fund about half of Europe’s green tech, and these firms make sure to publicize these as “offsets” for domestic operations—in effect, purchased indulgences. None of it changes the reality that data machines physically connect to conventional, local grids and pipes.
These same tech companies, meantime, are preparing for the brave new world of artificial intelligence (AI) by building out an even bigger cloud infrastructure. Global digital-energy consumption, projected to rise at an unprecedented rate, is on track to outstrip the growth in output from all wind and solar installations planned over the next decade. The AI revolution, which fundamentally changes what we do with data, is the most power-intensive use of silicon since the dawn of computers. The pattern-learning phase alone for one AI application can consume more electricity than the entire Empire State building does in a day. No wonder, then, that Facebook has already flagged AI as a “major culprit” in the annual doubling of its datacenter power use. And the applications for AI are as varied and numerous as, well, all the activities in a society.
Add to this the rollout of 5G, a quantum leap in wireless speed that enables real-time access to AI in the cloud. Thirty years ago, nobody envisioned what cellular networks would unleash, any more than they can imagine today what 5G will stimulate entrepreneurs to create. But physics dictates energy costs for speed. Global networks already use as much electricity as Italy. Forecasts see 5G at least doubling that usage. This is a good thing, though, because it’s really true that “data is the new oil.” A period of epic economic expansion is almost guaranteed to come from this next digital boom. The democratization of personal mobility propelled the early twentieth-century economy; today’s democratization of AI will do the same. Digital traffic is projected to increase 400 percent in the next five years alone.
If wind and solar offered an inherently viable alternative for fueling that growth—as is frequently claimed—we’d witness a rush of “cord-cutting,” instead of these pledges and offsets. Nothing prevents deep-pocketed tech companies from abandoning public grids to build their own green power plants. That’s not happening because the cloud needs what conventional energy systems provide: reliable and affordable power.
Give Microsoft credit for its pre-Davos candor in noting that a new energy future, pledges aside, “will require technology that does not exist today.” The physics of some challenges are not easily conquered—even by trillion-dollar tech companies.
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