AI technology, arguably the most transformative innovation of our era, heralds a future brimming with possibilities—and challenges. As AI continues its rapid evolution, there’s a looming crisis on the horizon: the energy demand required to fuel its growth.
The Politeness Cost
Interestingly, U.S. policymakers and industry leaders have found themselves at a crossroads. As highlighted by Sam Altman, CEO of OpenAI, even the politeness of users interacting with AI chatbots like ChatGPT incurs a tangible energy cost. But this is merely the tip of the iceberg.
According to City Journal, AI innovations demand significant energy resources, and the numbers speak volumes. A new report reveals that AI demands could account for 50% of U.S. electricity consumption growth by 2030.
The Energy Bottleneck
The problem does not end merely with politeness. As AI applications extend beyond simple text generation to complex tasks, like image processing, their energy requirements skyrocket. This unfolding scenario draws parallels with past energy crises. The 2030 forecast predicts that U.S. AI-related electricity demands could surpass those of all heavy manufacturing sectors combined.
A critical question emerges: How will the U.S. meet this unprecedented energy demand?
Market-Driven Solutions
Many experts suggest a pivot from traditional government interventions like subsidies. The history of nuclear energy subsidization reveals a cautionary tale of inefficiency and stagnation. Instead, deregulation of markets, as seen in the natural gas sector, showcases how innovation can thrive under market-driven incentives.
Former Google CEO Eric Schmidt’s remarks about AI being “power-hungry” blend urgency with a call to action. The future will require not just more energy but smarter and more sustainable energy.
The Geopolitical Race
Beyond domestic challenges, the U.S. is locked in a technological race with global competitors such as China. In early 2025, China’s DeepSeek unveiled a more energy-efficient AI model. This development serves as a wake-up call to innovate and stay competitive on the global stage.
To maintain leadership, the U.S. must foster a regulatory environment that encourages bold experiments and pioneering innovations in AI technology.
A Path Forward
While some may argue for governmental intervention, the theory that market dynamics can steer technological advancements remains compelling. The proposed “Zero-Based Regulatory Budgeting to Unleash American Energy” presents a clear strategy to cut through regulatory clutter.
The dialogue around AI and energy is not just about meeting demands but doing so sustainably. As creative energies align for breakthroughs, the journey towards efficient AI deployment will redefine both technology and energy landscapes.
John Garnett concludes by emphasizing the importance of letting industry experts lead the charge to ensure sustainable growth in the energy and AI sectors.
Image Credit: Chris Jung/NurPhoto via Getty Images
