Is Getting to Zero Carbon a Realistic Prospect?

Breakfast with Bwana

Demand for power is insatiable and renewable sources can address only a third or less of that need. Industry and consumers demand more power. It seems unlikely that governments have the will to deny those demands

By Anil Madan

“At CERAweek, it was evident that the demands for additional power by AI-based projects will likely strain the power grid and put the transition to renewable and clean energy power sources at risk. Bill Vass, the Amazon Web Services vice president of engineering said that a new data center is added every three days somewhere in the world. Bill Gates of Microsoft fame noted that AI will consume staggering amounts of electricity and that the profitability of data centers is dependent on the availability and cost of that power…”

From time to time, we are reminded of goals set by countries to get to zero carbon emissions. Earlier this month, the Biden administration’s goal to eliminate carbon emissions from the electricity sector by 2035 was addressed by John Podesta at the CERAweek conference in Houston. Mr Podesta who was Bill Clinton’s Chief of Staff, has been the Biden administration’s point person at the White House overseeing almost $400 billion in spending on clean energy and renewable energy authorized under the Inflation Reduction Act (IRA) so-called.

In this case, Mr Podesta’s comments cast doubt on whether the US could reach its targeted reduction, saying that new challenges present obstacles although federal models show it is still possible. He did not specify which models.

So, what new challenges have come into play and who is Mr Podesta to raise them? Well, aside from his White House role in overseeing IRA spending, he has just been appointed by President Biden to succeed John Kerry as his global representative on climate. The challenges come from the enormous and unanticipated seemingly insatiable and voracious demand for electricity by technologies based on Artificial Intelligence. These add to the demands created by the Cryptocurrency infrastructure. Specifically, manipulating massive amounts of data and applying algorithms to generate results and actions requires power and lots of it.

Explosive growth in data centers

These new demands are evidenced by the explosive growth in data centers worldwide. At CERAweek, it was evident that the demands for additional power by AI-based projects will likely strain the power grid and put the transition to renewable and clean energy power sources at risk. Bill Vass, the Amazon Web Services vice president of engineering said that a new data center is added every three days somewhere in the world. Bill Gates of Microsoft fame noted that AI will consume staggering amounts of electricity and that the profitability of data centers is dependent on the availability and cost of that power.

It was reported that representatives of tech companies sought to engage with executives of utility companies and power distributors about the availability of resources for their data center needs. Former US Energy Secretary Ernest Moniz observed that utility executives are unsure whether they will be able to meet the demands of data centers. It seems clear that wind and solar sources will not be sufficient and so they will have to turn to natural gas, nuclear and perhaps even coal.

Given the costs of building new nuclear plants and the time lag involved in their construction, not to mention challenges regarding how to handle radioactive waste, and the political infeasibility of building new coal generation plants in the US, there will be no choice for US producers but to build more natural gas generation capability.

Gates’ comments emphasized that the US simply will not be able to build 100 gigawatts (GW) of power generation from new facilities based on renewables over the next few years. To put some perspective on this, according to a January 2023 S&P Global report, the power grid for the entire state of Texas has a total operational capacity of 142.6 GW in 2022, an increase of 9.1 GW over the end of 2021. The Texas council that oversees that state’s power grid, approved almost 654 MW of generation, all renewables, for commercial operation in December, and another 2.9 GW of capacity neared commercial operation. 100 GW of new power generation will indeed present daunting and perhaps insurmountable challenges for America’s utilities, not to mention for power generators around the world.

Complicating this issue is the fact that even if American utilities have the capital and technical capabilities for building such new facilities, they may be boxed in by their own pledges to decarbonize. It was reported that Dominion Energy, a Virginia utility is faced with sharp increases in power demand from the burgeoning growth of data centers in the northern part of that state near Washington, D.C. Dominion has committed to eliminate or offset its carbon emissions by 2050. But it has no choice other than to build more gas generation plants to meet demand. This puts its carbon reduction goals in jeopardy. Similar challenges are felt by utilities across the country and around the world.

Grid Strategies, a power sector consulting firm reports that just in the past year the five-year projection of electricity demand growth in the US has doubled.

The Wall Street Journal noted that tax incentives under the IRA have spurred a wave of manufacturing plants being built across the US and these add to demands for power. As well, many states see increasing demands for electric power for transportation, heat and heavy industry. New power generation plants take much longer to build than do data centers. But data centers cannot operate without power. So, construction timelines for data centers have been extended by two to six years because of power supply delays per the real estate firm CBRE Group, reports the Journal.

Nor is it feasible to rely on just wind and solar sources for tech companies’ needs which stress reliable power available on-demand. Those renewable sources are weather dependent. As one executive observed, tech companies simply cannot and will not wait seven to ten years to get this infrastructure built. That leaves natural gas as the only viable choice.

The Journal reports that last year Southern Company, a utility company serving customers in Georgia, Mississippi, and Alabama, revised its forecast of demand growth through the winter of 2030, to 17 times greater than the previous forecast. Southern has proposed adding three new gas turbines at a power plant southwest of Atlanta.

Global Perspectives and Challenges

What about the rest of the world? About a third of the world’s 8,000 data centers are in the US. As one might expect, data center build-out is happening around the world. Globally, the International Energy Agency (IEA) estimates that electricity consumption from data centers, AI and cryptocurrency could double in just two years, 2026. The US may build more than one-third of the world’s data centers in years to come, but given cheaper labour and land costs overseas, it is not unreasonable to expect that American companies will seek to locate their data centers in other countries. The challenge then is to get cost effective and enough power.

Note that electric vehicles (EVs) are not even mentioned. If the worldwide adoption of EVs proceeds as automakers project and as governments urge, the demands on the power grids of the world will create additional truly insatiable, perhaps unfulfillable demand for electricity.

The law firm, White and Case, published a survey of legislative changes to meet India’s net-zero emission targets. Readers will recall that at the 2021 Glasgow COP26 meeting, India committed to reaching net-zero emissions by 2070. An interim commitment included achieving about 50 per cent cumulative electric power-installed capacity from non-fossil fuel-based energy resources by 2030, while reducing the emissions intensity of its GDP by 45 per cent from the 2005 level and increasing its non-fossil electricity generation capacity to 500 GWs.

The report states that India currently relies on fossil fuels to meet approximately 56 per cent of its energy needs. The International Energy Agency estimates that India will need to invest more than $1 trillion over the next seven years, or $160 billion per year. And this is without meeting demands from data centers and EVs.

The strategic business consulting and auditing firm KPMG surveyed China’s commitments to get to net zero emissions. China is the largest emitter of greenhouse gases in total, and this is to be expected from a country which has both the world’s second largest population and largest manufacturing sector. China’s emissions levels on a per capita basis are lower than many other countries.

In September 2020, Chinese President Xi Jinping informed the UN General Assembly that China aims for no increase in carbon emissions by 2030, i.e., to reach peak emissions before then, and targets reaching carbon Net Zero by 2060. These dates are later than those pledged by many other countries in the NZRI. China relies on coal for much of its energy.

China already has the world’s highest level of renewable energy capacity, around three times as much as the US. China now gets more than one-third of its electricity from low-carbon sources.

On the other hand, China continues apace to approve new coal plants. Just over six months ago, The Guardian reported that China is approving new coal power projects at the equivalent of two plants every week. In 2022, China approved a record-breaking 106 GW of new coal-fired power capacity. One gigawatt is the equivalent of a large coal power plant.

China’s domestic coal plant building contrasts with its pledge to stop building such plants in other countries. Some energy experts assert that China’s buildout of coal-fired power generation plants is incompatible with its zero-emissions pledge.

About a year ago, National Public Radio (NPR) noted that energy data organizations Global Energy Monitor and the Centre for Research on Energy and Clean Air reported that China quadrupled the amount of new coal power approvals in 2022 compared to 2021. What is behind this wave of coal plants in China? In an ironic twist, NPR states that the report authors found the growth of new coal plant permitting appears to be a response to ongoing drought and the historic heat wave in the summer of 2022. The heat wave was attributed to climate change which was attributed to fossil fuel consumption. The heat wave increased demand for air conditioning and led to problems with the grid. The heat and drought led rivers to dry up, including some parts of the Yangtze, and meant less hydropower.

The story is much the same in other parts of the world. Demand for power is insatiable and renewable sources can address only a third or less of that need.

Industry and consumers demand more power. It seems unlikely that governments have the will to deny those demands. Certainly, there is no strategy to deploy new technologies to avoid burning fossil fuels. Why? Because no such technologies exist at scale.

There are reports of advances in carbon capture and sequestration. For now, although major energy companies like ExxonMobil and Chevron seek to exploit the market for carbon capture, it is mostly talk. One wonders how much more we would have advanced if the energy companies had not initially adopted an ostrich-like head in the sand approach of denial. The simple fact is that fossil fuels are not going away.

This means that with changing climate patterns, regardless of what the cause is, the world’s nations will have to resort to massive spending on efforts to mitigate the effects of severe weather, storms, floods, fires and more. The United Nations Environment Program states that climate adaptation is becoming more expensive as the magnitude of climate change sets in. It projects that countries may need to spend up to $300 billion a year by 2030 and $500 billion by 2050. Reality is not even close. These estimated costs were 5 to 10 times greater than current funding flows when the reports were issued. Given supply chain disruptions and inflation, the numbers more likely approach $500 billion to $1 trillion a year already.

Even if we take at face value the goals that the US has set for 2030, China for 2060, and India for 2070, the fact is the three largest emitters will continue to emit for decades and if we are to believe climate scientists that the problem is urgent enough to require cessation of fossil fuel consumption now, it is not going to happen.

We need to find technologies to burn fossil fuels more efficiently. In a way, it is strange that the world seems ready to return to nuclear power production despite the risks inherent in such an approach and the absence of any solution to storing waste. Fossil fuels, especially natural gas, may in the long run be the only viable solution.

For example, transitioning China’s power production from coal to natural gas may be a better solution than hoping that China will build billions of dollars’ worth of coal plants only to dismantle them within three decades. But then, getting natural gas to China presents a host of other challenges, including whether pipelines from Russia to China can be constructed economically.

Cheerz…
Bwana

Mauritius Times ePaper Friday 29 March 2024