AI Is Raising Energy Demand. Markets Need Better Rules, Not Good Intentions.

During Climate Week and the United Nations General Assembly in New York, the language of transition was everywhere. Executives talked about net zero. Governments talked about climate finance and energy security. Technology companies talked about artificial intelligence and the infrastructure needed to support it. A seemingly endless agenda of panels examined renewable energy, sustainable development, and the growing electricity demands of data centers.

What often remained less concrete was the allocation problem underneath all of those conversations: Who provides the energy? Who supplies the capital? Who absorbs the risk? And who ultimately pays for the transition? Those questions followed me into a conversation with Marijn van Diessen, CEO of STX Group.

The discussion began with corporate decarbonization and STX's STRIVE advisory business. It quickly widened into something more fundamental. The energy transition is increasingly a question of market design rather than corporate aspiration. That matters because the world is confronting an apparent contradiction. Governments and companies want to reduce greenhouse gas emissions at the same moment that artificial intelligence, electrification, industrial development and rising prosperity are increasing demand for electricity.

Data centers have become the most visible symbol of that tension.

The International Energy Agency projects that global data-center electricity consumption could more than double by 2030, reaching roughly 945 terawatt-hours. AI is expected to be the largest contributor to that growth. In the United States, the IEA estimates that data centers could account for nearly half of electricity-demand growth through the end of the decade. Those estimates notwithstanding, the data center debate is better understood as a symptom than as the entire problem.

Globally, increasing prosperity, electrification, cooling, manufacturing and transportation all add to energy demand. The transition therefore has to accomplish two things simultaneously: replace high-emitting energy already in the system and produce additional energy for economies that are still growing. Van Diessen does not see that as a reason to retreat from growth.

His framing is closer to the opposite. Higher productivity and prosperity require energy. Refusing additional demand altogether would amount to making a much larger judgment about economic development. The challenge is designing a system in which that growth does not lock in another generation of avoidable emissions.