Digital Economy Weekly - January 12, 2025

Story of the Week

Sustaining Sustainability

It's been a rough few weeks for sustainability and Net Zero goals. There was little to nothing accomplished at COP29 in Baku in November, a year after an entreaty to triple the world's nuclear energy ensued at COP28 in Dubai. The summit took place just a week after the US presidential election, which re-elected a candidate who will not have sustainability on his agenda. Then, as the reality set in of January 20 as the first day of the incoming Trump administration, large banks in the US and then very large investor BlackRock withdrew from volunteer organizations focused on Net Zero.?

But not all of sustainability's troubles are driven by failed debate and politics. IDCA has found concerns about energy supply in all regions and income tiers of the world. Even though data centers still consume only about 1.1 percent of the world's total grid, that percentage now exceeds 3 percent in the US as a whole.?

European data centers reported early in the year they will be pursuing Net Zero goals less aggressively, over concerns about volatile energy supplies. Trouble providing enough energy for data centers has been a norm in Data Center Alley in northern Virginia, US for some time, as the regions 3.75GW footprint consumes a very high proportion of the local grid. Concerns about electricity also drive Singapore's no-growth data center dicta, and have sparked real debate in the Netherlands and Ireland.?

In the developed world, Microsoft and Amazon (and others, no doubt) are working on plans to connect directly to existing nuclear plants, while influential business leaders (eg Bill Gates) are touting nuclear as the only way to go for future needs. In the developing world, characterized by grids that produce 1 to 5 percent of the per-person developed-world norm, discussions about new data centers invariably involve the creation of new power built specifically for the new data center.?

Over the past year, the potential of AI and its envisioned hyper-sized AI centers has dominated tech talk. Handwaving about creating specific power for specific plants ensues here, too. But everyone knows that a massive demand for AI chips cannot be satisfied in the short term, that new data centers take some time to get approved and built, and that the existence of numerous new nuclear plants will take an X number of years to happen, or maybe 2X, with X being almost any number one chooses to use.

An optimistic person will view this picture and think that times have never been better, never been more full of fruit to pick from the tree. Indeed, in recent weeks a Dubai investor has promised $20B for new data centers in the US alone, Microsoft has promised $80B, and Masayoshi Son has promised $100B (“or maybe twice that”). Early last year, an estimate from a data center real-estate company promised 44GW of new data center footprint by 2028 – more than $500B in construction costs alone.?

Humans have accomplished some very heavy lifts over the millennia, including lifting one-quarter of the world's population out of poverty (about 2 billion people) since 1990, according to the United Nations. So the ambitious plans of data center developers (and the power they'll need) should not be dismissed. The question is whether sustainable power and materials are part and parcel of this vision, whether progress toward emissions reduction continues, or whether the world has entered a new, less sustainable era.

Links of the Week

Dubai Investor Pledges $20B Data Center Commitment for United States Hussein Sassanian is a real-estate developer from Dubai, UAE who this week announced a $20B commitment to build new data centers in the United States. Initial locations in this vision include Arizona, Illinois, Indiana, Louisiana, Michigan, Ohio, Oklahoma, and Texas.?

At current construction costs, the $20B would add more than 1.5GW to the US data center footprint, an increase of about 10 percent over the current footprint. Read here.

Blackrock Withdraws from Group Focused on Net Zero

Blackrock, with $12T under investment, shook up the world this week by announcing its withdrawal from Net Zero Asset Managers (NZAM), a a voluntary organization focused on having the world reach Net Zero by 2050. Blackrock has been attacked recently by politicians and lawsuits focusing more on the social justice aspects of overall ESG and sustainability movements, rather than the aspect of reducing emissions to reach specific goals. Read here.

Big Banks Withdraw from Net-Zero Banking Alliance

The six largest banks in the United States -- JP Morgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs – have now all withdrawn from the Net-Zero Banking Alliance (NZBA), a group sponsored by the United Nations. Members of the organization had pledged "to align their lending, investment and capital markets activities with net zero greenhouse gas emissions by 2050 or earlier." Citibank was a founding member; JP Morgan was the last of the six to widthdraw. Read here.

Microsoft Commits $80B to New US Data Centers

Throwing out a figure that would add 40 percent to the entire data center footprint of the United States, Microsoft announced an $80 billion program to build AI-driven data centers in? the US this year. Company President Brad Smith described AI as a "world-changing" technology,

In making the announcement, Smith urged the incoming Trump administration to increase the amount of AI reearch funding and to develop a national training strategy for it. He also urged educators and the non-profit sector to get fully behind AI. Read here.

Nvidia's Jensen Huang Dampens Quantum Computing Enthusiasm

Nvidia CEO dampened quantum computer stocks this week when he said he saw quantum as being 15 to 30 years or decades down the road before becoming commercially viable. He said quantum computing will need a million times the qbits currently found in the systems being designed at various places in the world. Huang's remarks were refuted by Alan Baratz, a former Sun Microsystems executive and current CEO of D-Wave Quantum, which claims that its customers are deploying quantum computing now. D-Wave has revenues in the low millions of dollars annually. Read here.

Biden Administration Delivers One Final Tech Rebuke to China and Russia

The Biden administration in its final days clamped down further on high-end chip exports, seeking to limit their growth and influence in China and Russia. Nvidia CEO Jensen Huang was critical of these efforts, claiming that Biden was simply trying to pre-empt the incoming Trump administration from enacting similar policies. Biden has been very public in his concerns about China and Russia throughout his administration, maintaining tariffs on China while lobbying the EU to limit high-end chip-design services to China, and meeting with Putin just one time for a brief summit.?Read here.

Massive 250MW Data Center Planned in Ireland

One billion euro is the price tag cited for a massive250MW? data center planned by Lumcloon Energy for Ireland's Midland region. The plans call for six buildings to encompass the overall facility, to be built in Westmeath. The facility will be installed in a small nation that already devotes 5 percent of its electricity grid to data centers, so planners say it will generate and store its own energy on site. ?Read here.

Is AI a Job Killer or Job Creator? The Debate is On

The grand debate about whether AI creates or kills jobs is on. Similar debates have occurred from the dawn of the Industrial Revolution, and continue whenever a new technology looks to be consuming portions of the existing economy. The latest salvo comes from a World Economic Forum report that found 41 percent of employers intending to reduce their workforces "as AI automates certain tasks." The report also said it expected this to be a short-term trend, and still expects AI to be a "net positive" for job creation over the longer term. Read here.

Sustainability is Still "Attractive," According to Energy Company Opinion

In the midst of no new action at COP29 and many large companies cutting back their commitments to Net Zero, NRG Energy in Houston, TX says nevertheless that? "sustainability won't wait". The company says that 85 percent of investors still consider ESG factors, that 75 percent of young adults "agree that businesses should communicate more about sustainability goals," and that 71 percent of job seekers in the US say that companies with sustainability commitments are "more attractive employers." Read here.

Heard in the Industry

“This pullout (by BlackRock) actually just shows what they said in 2020 and 2021 was just performative and marketing. Today, the truth is coming out as all these companies are trying to appease the incoming administration.” –? Tracey Lewis, head of climate policy at Public Citizen, quoted by the Financial Times.

Heard in the Aisle

"Companies like Mastercard and Japan’s NTT Docomo are using our quantum computers today...not 30 years from now, not 20 years from now, not 15 years from now. But right now today.” – Alan Baratz, CEO of D-Wave Quantum, speaking to CNBC.

Country Snapshot: South Africa

Despite a rocky election in 2024, South Africa President Cyril Ramaphosa continued hi administration, which began in 2018. His African National Congress (ANC), which has been in power since the end of apartheid, remains so. The country continues to vie with Nigeria to have the continent's largest economy, and it remains the only African nation with nuclear energy.

South Africa also has the world's highest income disparity, high crime rates, a non-investment grade bond rating, and steeply dropping flows of foreign direct investment (FDI) in recent years.?

The nation ranks in the lower half of the IDCA Digital Readiness Rankings. It does so despite relatively strong digital infrastructure, a legacy and function of Johannesburg's continuing status as a world financial center, and of strong economic development in nearby Gauteng Province.?

But its Social and Governance scores are now below the world average, and its provisioning of sustainable energy is well below the world average. Nuclear provides less than 5 percent of its power, and renewable sources add only another 7 percent. In a nation with copious sunshine and an oceanic climate in much of it, here is where opportunities lie.

There is a lot of interest today in the nations of East Africa, in West Africa's Nigeria (and some of its neighbors), and in the separate region of North Africa (with its potential connection to Europe). South Africa seems to have gotten lost in the shuffle along the way. But with a renewed government that says it's committed to unity, a strong digital backbone and substantial upside in its ability to develop a more sustainable Digital Economy, the year 2025 looks like a propitious one in which to take another look at it.

Inside IDCA

IDCA Releases Global Digital Economy Report (2025)

The report is available at no fee to all nations, companies, as well as industry experts and professionals. This comprehensive worldwide report is set to serve as a game-changer agent and reference point as it builds upon the foundations of the IDCA Digital Readiness Index as a defining and up-to-date statistics and analysis of our developing world.?

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