Digital Economy Weekly - November 10, 2024

Story of the Week

AI Centers Demand New Energy, and New Energy Demands a Look at Emissions

The uses of AI are viewed as tools to improve efficiencies, and move the needle for the economies of all nations as they evolve toward the unique shapes of their Digital Economies. But, as this week's links demonstrate, AI is also driving projections of massive new energy demands for the massive new data centers needed to power it. ?

For example, a doubling of the globe's entire electricity grid can be accomplished by the year 2036 at an annual growth rate of 6 percent. Yet global consumption has recently been increasing at less than 3 percent annually and is forecast at 4 percent for this year. ?

And the 6 percent figure is viewed as timid by developers who see a need to add dozens of gigawatts to the global data center footprint. This goal is impeded by a current need to find enough power in data center hubs major, minor, and nascent.?

As nations push to swim upstream toward Digital Economies, the anticipated efficiencies will be weighed against the need for ever-more power. The challenge to build this new power sustainably will continue to run into the need for vast facilities to produce wind and solar, and safety and approval concerns about nuclear energy that will not go away.?

One is reminded of the old saying, “when you're up to your (neck) in alligators, you forget your job was to drain the swamp.” The alligators for us are the power-creation challenges; the swamp is the emissions picture. The original mission, whether we chose to accept it, is to reduce, reduce, and reduce CO2 and related emissions to eventually become carbon-neutral and then eliminate emissions altogether in some utopian vision.?

We can remind ourselves of this challenge by taking a few views of the current global emissions picture. Here are two different views of CO2 emissions by country

Top 10 Highest (Billions of Tons Per Year)

China 12.7 | United States 4.9 | India 2.7| Russia 1.9 | Japan 1.1 |Indonesia 0.7 | Iran 0.7 | Germany 0.7 | South Korea 0.6 | Saudi Arabia 0.6 | World Total 37.2

Top 10 by Highest Per Capita (Tons Per Person)

Qatar 38.0| Kuwait 25.8| Bahrain 25.3 | UAE 23.0 | Oman 19.9 | Trinidad & Tobago 19.5 | Saudi Arabia 16.9 | Canada 15.0 | Australia 14.9 | USA 14.3 | World Average 4.7 A third view of emissions flips the picture:

Top 10 Most Efficient Emissions Producers by Tons per $M of GDP

Switzerland 39.9 | DRC 51.4 | Sweden 64.7 | Ireland 66.0 | Denmark 69.2 | Norway 77.4 | Luxembourg 79.9 | Malta 88.6 | Belize 94.8 | Singapore 101.3 | World Average 354 (USA is 177)

Note: the USA and many other highly developed countries have outsourced much of their manufacturing to China and rely on Middle Eastern oil to keep prices under control. These highly developed nations have, in effect, turned over a very large part of their dirty work to these nations, so are equally complicit in the overall global situation. So the unfortunate human need for fingerpointing and blame comes into play here. So many discussions focus on isolating the bad guys that we forget this is a truly global challenge if there ever was one. The challenge is to accept we are all responsible to address this issue, to continue to develop national economies and put them on paths toward becoming more Digital, across all income tiers, while at the same time increasing economic efficiency to ameliorate per capita emissions and to drive total emissions down. Next to achieving world peace, this is the most difficult challenge facing the world's leaders and societies.?

Links of the Week

Coal Usage Projected for Steady Drop Between Now and 2050

The use of King Coal to produce the world's electricity will decline by 3 percent annually between now and the year 2050, according to a recent McKinsey report.

By that time, coal will still have a tiny percentage of overall generation. It will be supplanted by wind, solar, and “other” renewable sources, which will constitute 65 to 80 percent of total consumption, depending on three different scenarios worked out by the consulting firm. Read here .

Schneider Electric Loses Patience, Ousts CEO Peter Herweck

The board of directors at French colossus Schneider Electric ran out of patience with CEO Peter Herweck and replaced him with Olivier Blum this week. The ouster was officially described as due to “divergences in the execution of the company roadmap.” Blum has been with the firm 30 years and was previously head of the $40B company’s core energy management business. Herweck had served as CEO only since May 2023. Read here .

Independent Australian MP Criticizes Major Parties with Respect to Climate Goals

The Australian parliament voted in 2022 to reduce the country's emissions by 43 percent by 2030, and reach net zero by 2050. This in a highly developed nation that retains a strong extraction, processing, and manufacturing component to its economy.

Australia currently receives 27 percent of its electricity from renewable energy,, and has no nuclear energy. It produces 30% more emissions relative to its economy than the United States. The nation's leaders are not taking climate change goals seriously enough, according to one independent MP, who said it is “beyond ridiculous” that neither major political party talk about achieving the nation's 2035 targets. Read here .

FERC Rejects AWS Plan to Plug Directly into Pennsylvania Nuclear Plant

Pennsylvania was in the news this week for reasons other than the Presidential election, with the US government's Federal Energy Regulatory Commission FERC rejecting an agreement between Amazon Web Services and the central-eastern Pennsylvania utility Talen. The companies had agreed to scale up support of AI-centric AWS data centers in 120MW increments, up to a total of 940MW. Two commissioners cited customer service and consumer costs in rejecting the agreement, with a dissenting opinion citing the decision will have a negative effect on national security. The FERC ruling hurt several energy stocks, including that of Constellation Energy, which is planning to plug Microsoft data centers directly into a rebooted nuclear plant in southern Pennsylvania's Harrisburg area.?Read here .

UK's Energy Agency Maps Out Strategy That Reduces Nuclear Power?

The UK's National Energy System Operator (NESO) has developed plans for clean energy constituting 95 percent of all electricity generation by 2030. The plans show offshore wind growing to as much as 50GW, which is substantially higher than the UK's entire electricity grid at the moment.?

The plans also call for a reduction of nuclear energy generation of as much a 43 percent, in a nation that currently generates 14 percent of its electricity from nuclear. The UK is already a leader among developed nations in the efficiency of its carbon footprint, on a par with France for example, and producing 58% of GHG emissions relative to its economy compared to the United States.?Read here .

Russian Internet Giant Investing in AI Center in Indonesia

Yandex, a major Russian internet company, has said it wishes to “widen the search engine platform in Indonesia,” so is investing an undisclosed amount over an undisclosed timeframe in the ASEAN region's largest market. Indonesia is in the midst of creating a new capital city in a previously remote region far from the current capital of Jakarta, so presumably is planning massive digital infrastructure development in that region, as part of its government's overall strategy to improve service for this nation of 275 million people. Read here .

Johor Shows Astounding Data Center Growth Over the Past Three Years

Johor, Malaysia, located just across a narrow strait from the island-nation of Singapore, has seen its data center grow at an astonishing rate. It now has a data center footprint of 1.5GW, one of the largest in APAC and the world. Three years ago this number was 10MW, thus showing a CAGR of more than 400% over the three years.?

Malaysia in general has developed its economy to easily the the strongest in Southeast Asia outside of Singapore, and in fact has been the beneficiary of Singapore's limited space and consequent inability to continue to expand its data center footprint on the island. Singapore-based journalist Paul Mah has the story. Read here .

The AI Sustainability Challenge On Stage at Smart City Expo

UK-based AI researcher and consultant Dr. Stephanie Hare led a keynote panel this week on the topic of The AI Sustainability Challenge at the Smart City World Expo and Conference in Barcelona. This is one of those events that continues the renaissance of large, international, tech-focused events. The panel addressed questions about AI's ability to drive improved productivity, but also its very large energy requirements and whether its impact will be seen as either positive or negative overall. Read here .

COP29 Climate-Change Summit Opens In Immediate Aftermath of US Election

The UN's climate-focused COP series is set to reconvene tomorrow, November 11, 2024, in Baku, Azerbaijan, following its meeting a year ago in Dubai. Last year's meeting was notable for its 24-nation statement welcoming nuclear power back into the sustainable-energy fold.?

This year's meeting comes in the immediate aftermath of Donald Trump's election as the 47th President of the United States. A Bloomberg report has already said the election result “poses a decisive threat to the fight against global warming.”?Read here .

Heard in the Industry

“While claims (of glaring accounting red flags for Super Micro) have not been independently verified, one particularly alarming discovery is that exports of the company's components to Russia have tripled since the invasion of Ukraine, violating U.S. export bans.” – Marcus Lu for Visual Capitalist, commenting on Supermicro's recent stock decline of 75 percent.

Heard in the Aisle

“AI centers generate deafening operational noise levels. So designers of this new wave of data centers have to deal with new noise levels, and how to abate this, as well as the increased power consumption demands and the additional heat they produce. These are not small issues.” – Spoken to IDCA by a veteran industry observer and consultant reporting in from a recent inspection in the US.

Country Snapshot: The Soviet Union

It will seem odd this week to visit a “country” that hasn't existed since 1991. But there is a good reason to do this: Russia, along with many of its former Soviet republics satellite states (and its friend, former Yugoslavia) collectively constitute one of the world's great sources of nuclear energy.?

With the anticipated vast new power requirements from global AI center development, the elevation of nuclear energy at COP28 a year ago in Dubai focused the world on the nuclear capabilities of the US, France, and China and a presumed mad scramble by these nations to proliferate nuclear energy around the world.?

But, as a thought experiment if nothing else, let's not forget Russia and its former fellow travelers. By percentage of nuclear energy in their electricity grids, we see the following: Slovakia (59%), Ukraine (55% pre-war), Hungary (47%), Slovenia (43%), Czech Republic (37%), Bulgaria (33%), Russia (20%), Romania (19%), and Belarus (12%). ?

Each of these nations has substantial operational experience and a tradition of producing nuclear engineers who can continue to provide expertise, whether in their own countries or elsewhere. So this is a potential new block of countries who can lend expertise to whomever they favor if nuclear energy is on the cusp of proliferation.?

The geopolitics in this region are enormous, of course, not only regarding the current war, but also whether Russia will ultimately continue to be allied with China and how decisions by the former satellites and Yugoslav states will be affected by the former Soviet states' futures. The big influencers (eg the US, China, France, the UK) don't provide the only games in town.

Inside IDCA

The 24/7/366 World of Cybersecurity, Thursday, November 14, 11am-noon eastern time A cyber-intrusion into your enterprise IT systems can cost thousands of dollars, or million of dollars, or even threaten to put your company out of business. Cybercrime is often the result of activities from organized criminal syndicates and malignant state actors, who always seem to be a step ahead of their intended victims. What are key cybersecurity policies? What is the role of a CISO today? What, if anything, can federal regulators and international agreements to do stem the tide of cybercrime? Registration is free: https://events.zoom.us/e/view/1jUkc0RvQRilswpX9VOeTw