Can Innovation Curb AI’s Hunger for Power?

Artificial intelligence is known for its seemingly insatiable appetite for energy. But some tech leaders and analysts are questioning the extent of AI’s footprint going forward, saying innovations in the sector could help offset rising energy demand.

There is certainly no shortage of forecasts detailing the ominous rise in AI’s energy consumption. One commonly-cited report by Climate Action against Disinformation, an association of environmental groups, suggests that AI could drive up global emissions by 80%.

Another estimate by researcher Alex de Vries—which he described as a worst-case scenario—suggests that Google’s AI alone could eventually rack up as much annual electricity demand as the country of Ireland.

Such predictions present a substantial challenge for the relationship between computing and the climate in the coming years.

However, others see reason for optimism. In a Salesforce survey of about 500 corporate sustainability professionals, published Wednesday, nearly half were concerned about AI’s potential negative impacts on sustainability efforts. Meanwhile, almost 60% thought the benefits of AI would offset its risks in addressing the climate crisis.

Microsoft founder Bill Gates recently weighed in on the subject, urging governments not to go “overboard” on concerns about AI’s energy footprint, and suggesting that the technology could actually drive a reduction in global energy demands.

Putting the AI boom in context

The rise of AI should be considered in a broader perspective, according to Charles Boakye, U.S. sustainability analyst at Jefferies. He noted that relative to other industries, the technology still makes up only a fraction of global power demands.

“Data centers—the engines powering everything from AI to traditional computing to cryptocurrency—currently account for about 2% of global electricity consumption. Of this, AI accounts for roughly 0.5%,” Boakye said.

In terms of emissions, statistics last year from the International Energy Agency showed in total, data centers and transmission networks are responsible for 1% of energy-related greenhouse gases. For comparison, the oil-and-gas industry contributed just under 15% of emissions in 2022.

Looking ahead, the intergovernmental organisation said that by 2026, demand for AI is expected to increase ten fold compared with 2023. Even so, IEA data showed that it will still only account for roughly an eighth of total data-center electricity consumption.

“So in terms of AI demand, we’re talking about a small piece of a small piece,” Boakye said, noting that other areas of electrification, such as electric mobility, traditional data center growth and the industrial transition, will ask much greater questions of the power sector.

Charting efficiency trends

Demand is difficult to predict. But recent trends show that in practice, a rise in demand for computing power rarely correlates one for one with a rise in energy consumption, according to climate researcher Jonathan Koomey.

“Between 2010 and 2018, global data centres saw a 550% increase in compute instances and a 2,500% increase in storage capacity. This compares with just a 6% rise in electricity use,” he said.

Koomey, previously a visiting professor at Stanford, Yale and Berkeley, is best known for his work studying long-term trends in the energy-efficiency—now known as Koomey’s Law—highlighting the propensity of computing technologies to become more efficient over time.

AI may be a different animal, with some estimates suggesting large models such as ChatGPT use 10 times more energy than a Google search. But this is unsurprising for a relatively new technology, Koomey noted. In most areas of computing, energy demand tends to spike before levelling off as efficiencies gather pace, he said, noting that forecasts based on this inflection point will often be misguided.

Koomey cited a brief moment in the mid 1990s when internet data flows doubled every hundred days—a statistic that led to overinvestment in networks in the following years and 97% of fibre capacity sitting unused.

Similar efficiency trends can be seen in the development of AI, Jefferies analyst Boakye said. Google’s new TPU processors, for example, are more than 67% more efficient than in 2022, and the energy used to train OpenAI’s ChatGPT models has gone down by 350 times since 2016, he noted.

“It’s in their best interest, and in the interest of their business models, to increase that efficiency,” the analyst said.

Going for gold in the AI Olympics

If any company will have a say in the future of AI, it’s Nvidia . The U.S. technology company designs roughly 80% of the world’s specialized AI chips. Its next-generation GPUs, known as Blackwell, are touted to be 25 times more energy efficient than current iteration Hopper, while offering 30 times more computing power. Blackwell chips are slated for release later this year.

So far, the progress appears consistent, with Hopper 25 to 30 times more efficient than Nvidia’s previous generation of chips. Overall, the company said it has experienced a 45,000 times improvement in GPU energy efficiency over the last eight years.

Nvidia added that software optimisation also plays a big role in increasing the energy efficiency of its products.

“Once a platform has been launched, we will make it more efficient in a single year,” the company said. In the year following its launch in 2022, Hopper became two times more efficient after taking part in MLPerf, otherwise known as the Olympics of AI, in which tech companies compete and collaborate to drive improvements in the speed and efficiency of their models.

Part of this optimization involves taking large, energy-intensive AI models—such as ChatGPT—and refining them to perform more specific tasks. On July 18, for example, OpenAI launched a smaller, smarter and more energy efficient version of its previous GPT model, known as GPT-4o mini. Koomey sees these more “lightweight” models driving demand in the future .

“I’m not convinced large-scale AI has a good business model at this point, despite them driving all the investment. The slam dunk machine learning usually involves smaller, more efficient models, focused on a specific task. For me, this is where most of the business value lies,” he said.

Training and education will be essential for getting a more targeted and efficient experience with AI, helping to narrow the gap between businesses and their sustainability goals, said Suzanne DiBianca, Salesforce’s chief impact officer.

According to Nvidia, another way of alleviating AI’s impact is directing workloads—particularly the more energy-intensive jobs of training AI models—to regions with more abundant resources, ideally renewables which are set to keep a lid on electricity emissions in the coming years.

One company making strides in this space is NexGen Cloud, which builds renewable-powered data centers in areas with untapped energy resources.

According to co-founder and CSO Youlian Tzanev, a large portion of AI workloads don’t need to be performed close to traditional logistical hubs like London or New York, and can be powered from more remote areas in countries like Canada and Norway with excess hydropower.

“We have significantly more power than people believe. The power just isn’t reaching the grid in many cases and is going to waste, and so that is where we focus our efforts,” Tzanev said.

In the U.S., Crusoe Energy Systems offers another example of startups finding innovative ways to power the AI boom. Crusoe’s modular data centers are designed to run on excess natural gas produced at oil wells, achieving a 99.9% methane reduction in the process.

Common forecasting pitfalls

Projecting an outlook for AI’s energy demands is far from straightforward. In its midyear electricity update, the IEA noted that estimates exhibit a wide range of uncertainty, with some analyses following overly “simplistic” extrapolations.

For instance, the organization said certain studies make the mistake of assuming data center operators build all the facilities for which they apply to utilities. Given that several applications can be made for each new data center, this can lead to a multiplication of estimates.

Within data centers themselves, it is tempting for forecasters to imagine computers working flat out around the clock, Koomey said. In practice, GPUs usually operate on much less than their full power capacity, he added.

Based on modeling carried out by Nvidia, GPUs on average tend to run on less than 70% of their potential power. One particular function, known as Multi-Instance GPU, enables workloads—and therefore energy consumption—to be split into seven distinct components, with each able to function independently.

In addition, the company noted the role of substitution effects, in which traditional computing workloads are transferred onto AI platforms and subsequently performed more efficiently—an aspect that can be easily overlooked.

Forecasts can also conflate local data-centre developments with broader energy demands , Koomey added, noting that the most common estimates for electricity demand come from local utility companies.

In the U.S. as a whole, electricity use actually fell in 2023 compared with the previous year, according to the U.S. Energy Information Administration. In March 2024—the most recent month of available data—total demand reached 306 billion kilowatt-hours, down from 317 billion kWh in the year-prior period.

“I worry that people are jumping on the explosive demand-growth train before really understanding what’s going on,” Koomey said. “If you cluster data centers in certain places you’re going to see some local power constraints, but that doesn’t necessarily mean that AI will be a key driver of electricity use more broadly.”

Corrections & Amplifications undefined Nvidia said it has experienced a 45,000 times improvement in GPU energy efficiency over the last eight years. An earlier version of this article incorrectly said the company developed its first GPU eight years ago. (Corrected on July 24)

Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn’t end soon.

Sununu, a Republican who represents some of the biggest airlines as president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.

Administration officials have gotten the message.

Privately, President Trump’s advisers are increasingly worried that Republicans will pay a political price for the rising fuel costs, according to people familiar with the matter. Many of those advisers are eager to end the war, hoping prices will begin to moderate before November’s midterm elections.

The fallout from the U.S.-Israeli attack in late February has slowed traffic through the Strait of Hormuz, a vital shipping lane, triggering a sharp increase in oil, gasoline and jet-fuel prices.

That means consumers are grappling with high costs ahead of the summer travel season, as they consider vacation plans.

Sixty-three per cent of Americans said they put a great deal or a good amount of blame on Trump for the increase in gas prices, according to a new poll conducted by NPR, PBS and Marist.

More than 8 in 10 Americans said struggles at the gas pump are putting strain on their finances.

Jet-fuel prices roughly doubled in a matter of weeks after the war began, and they have remained high. Airlines have said that will add billions of dollars of additional expenses this year, squeezing profit margins.

U.S. airlines spent more than $5 billion on fuel in March—up 30% from a year earlier, according to government data.

Carriers have been raising ticket prices, hoping to pass the cost along to consumers, and they are culling flights that will no longer make money at higher price levels.

In March, the price of a U.S. domestic round-trip economy ticket rose 21% from a year earlier to $570, according to Airlines Reporting Corp., which tracks travel-agency sales.

So far, airlines have said the higher fares haven’t deterred bookings and they are hoping to recoup more of the fuel-cost increases as the year goes on.

Earlier this week, Trump said the current price of oil is “a very small price to pay for getting rid of a nuclear weapon from people that are really mentally deranged.”

Secretary of State Marco Rubio told reporters that if Iran got a nuclear weapon, the country would have more leverage to keep the strait closed and “make our gas prices like $9 a gallon or $8 a gallon.”

Trump has taken steps in recent days to bring the war to an end. Late Tuesday, the president paused a plan to help guide trapped commercial ships out of the Strait of Hormuz, expressing optimism that a deal could be reached with Iran to end the conflict.

Crude oil prices fell below $100 a barrel on Wednesday, after reports that Iran and the U.S. are working with mediators on a one-page framework to restart negotiations aimed at ending the conflict and opening the strait.

Sununu said Trump administration officials are conscious of the economic fallout from the war: “They get it…and I think that’s why they’re trying to get through the war as fast as they can.”

But he cautioned that it could take months for prices to return to prewar levels.

“Ticket prices won’t go down immediately” after the strait is fully reopened, Sununu said. “You’re looking at elevated ticket prices through the summer and fall because it takes a while for the prices to go down.”

Since the initial U.S.-Israeli attack in late February, Sununu has met in Washington with National Economic Council Director Kevin Hassett, representatives from the Transportation Department and senior White House officials.

A White House official confirmed that Hassett and Sununu have discussed the effect of increased fuel prices on the airline industry. The official said the conversation touched on how the industry can mitigate the impact of high jet fuel prices on consumers.

“The president and his entire energy team anticipated these short-term disruptions to the global energy markets from Operation Epic Fury and had a plan prepared to mitigate these disruptions,” White House spokeswoman Taylor Rogers said, pointing to the administration’s decision to waive a century-old shipping law in a bid to lower the cost of moving oil.

Rogers said the administration is working with industry representatives to “address their concerns, explore potential actions, and inform the president’s policy decisions.”

A Treasury Department spokesman pointed to Bessent’s recent comments on Fox News that the U.S. economy remains strong despite price increases. The spokesman said Treasury officials have met with airline executives, who have reaffirmed strong ticket bookings.

“We’re cognizant that this short-term move up in prices is affecting the American people, but I am also confident, on the other side of this, prices will come down very quickly,” Bessent told Fox News on Monday.

The war has already contributed to one casualty in the industry: Spirit Airlines. Company representatives have said they were forced to close the airline because the sustained surge in jet-fuel prices derailed the company’s plan to emerge from chapter 11 bankruptcy.

The Trump administration and Spirit failed to come to an agreement for the company to receive a financial lifeline of as much as $500 million from the federal government.

Transportation Secretary Sean Duffy has argued that the Iran war wasn’t the cause of Spirit’s demise, pointing to the company’s past financial struggles, as well as the Biden administration’s decision to challenge a merger with JetBlue.

Other budget airlines have also turned to the federal government for help since the U.S.-Israeli attack. A group of budget airlines last month sought $2.5 billion in financial assistance to offset higher fuel costs, and they separately wrote to lawmakers asking for relief from certain ticket taxes.

Can Innovation Curb AI’s Hunger for Power?

Nvidia says its machine-learning chips have become 45,000 times more energy efficient, with further improvements in the pipeline

Putting the AI boom in context

Charting efficiency trends

Going for gold in the AI Olympics

Common forecasting pitfalls

Administration officials have spoken to the airline industry, which has voiced concerns about the rising costs.