AI is guzzling gas

Big Tech is paying for gas plants and pipelines to directly power data centers, threatening global climate goals.

Dec 19, 2024

AI’s huge energy appetite can only be fed by polluting methane gas, the gas industry claims. Source: Mario Tama/Getty Images

Energy experts warned only a few years ago that the world had to stop building new fossil fuel projects to preserve a livable climate.

Now, artificial intelligence is driving a rapid expansion of methane gas infrastructure—pipelines and power plants—that experts say could have devastating climate consequences if fully realized.

As large language models like ChatGPT become more sophisticated, experts predict that the nation’s energy demands will grow by a “shocking” 16 percent in the next five years. Tech giants like Amazon, Meta, and Alphabet have increasingly turned to nuclear power plants or large renewable energy projects to power data centers that use as much energy as a small town.

But those cleaner energy sources will not be enough to meet the voracious energy demands of AI, analysts say. To bridge the gap, tech giants and fossil fuel companies are planning to build new gas power plants and pipelines that directly supply data centers. And they increasingly propose keeping those projects separate from the grid, fast tracking gas infrastructure at a speed that can’t be matched by renewables or nuclear.

New pipelines and gas plants, built specifically for AI

The growth of AI has been called the “savior” of the gas industry. In Virginia alone, the data center capital of the world, a new state report found that AI demand could add a new 1.5 gigawatt gas plant every two years for 15 consecutive years.

And now, as energy demand for AI rises, oil corporations are planning to build gas plants that specifically serve data centers. Last week, Exxon announced that it is building a large gas plant that will directly supply power to data centers within the next five years. The company claims the gas plant will use technology that captures polluting emissions—despite the fact that the technology has never been used at a commercial scale before.

Chevron also announced that the company is preparing to sell gas to an undisclosed number of data centers. “We're doing some work right now with a number of different people that's not quite ready for prime time, looking at possible solutions to build large-scale power generation,” said CEO Mike Wirth at an Atlantic Council event. The opportunity to sell power to data centers is so promising that even private equity firms are investing billions in building energy infrastructure.

But the companies that will benefit the most from an AI gas boom, according to S&P Global, are pipeline companies. This year, several major U.S. pipeline companies told investors that they were already in talks to connect their sprawling pipeline networks directly to on-site gas power plants at data centers.

“We, frankly, are kind of overwhelmed with the number of requests that we’re dealing with, ” Williams CEO Alan Armstrong said on a call with analysts. The pipeline company, which owns the 10,000 mile Transco system, is expanding its existing pipeline network from Virginia to Alabama partly to “provide reliable power where data center growth is expected,” according to Williams.

A map of Enbridge pipelines and how close they are to data centers. Source: Enbridge

Energy Transfer, which is one of the country's leading methane gas pipeline companies, announced earlier this month that its new $2.7 billion project in the Permian Basin will help establish the company “as the premier option to support power plant and data center growth in the state of Texas.” In its most recent earnings call, the company said it has received requests from more than 40 proposed data centers in 10 states to build pipelines connecting to their larger gas network.

Pipeline and energy company Enbridge likewise announced this quarter that it added 50 megawatts of gas power to data centers in Utah alone. Meanwhile, Kinder Morgan is building a $3 billion expansion to its Southern Natural gas system to help meet the growing power demand.

The flurry of proposed pipelines is a result of tech companies prioritizing creating their own energy, rather than relying on an increasingly overwhelmed electric grid. “They recognized that data centers are unsustainable in terms of just being able to plug it into the grid,” said Tyson Slocum, director of the energy program at the energy watchdog group Public Citizen.

But Slocum also thinks the gas industry is aggressively lobbying the tech industry to use fossil fuels. Companies like Microsoft, Google, and Apple “pioneered a generation ago the need for sustainability,” he said. “But now I see Big Tech being a lot more comfortable with natural gas as a partner. And that should be very concerning.”

“Net zero by 2050 is dead”

It’s difficult to tell exactly which tech companies are partnering with the gas industry, because many of the details surrounding new data centers are kept secret.

But at least one data center powered by its own gas hubs is in the works. Meta is constructing a large AI data center in Richland Parish, Louisiana powered by three methane gas power plants, according to Axios. Meta has pledged to help offset emissions by updating the power plants in the future to run on hydrogen; investing in a large solar project and storage; and funding carbon capture technology at a power plant in Lake Charles, Louisiana.

Altogether, S&P Global Ratings estimates that data centers will lead to additional demand of between 3 to 6 billion cubic feet of gas per day by 2030—equivalent to the gas consumption of the entire state of Florida. That amount of gas could add anywhere from 164,000 to 329,000 metric tons of polluting greenhouse gas emissions to the atmosphere every day. But S&P Global analysts say that the significant energy needs of data centers cannot be met by renewable energy alone.

The proposed gas expansion directly contradicts experts’ warnings that the world cannot preserve a livable climate unless it stops building new fossil fuel infrastructure. And the emissions from gas-powered data centers make curbing planetary heating that much harder.

“On the current trajectory of gas buildout, net zero by 2050 is dead,” said Tyler Norris, a former solar power developer and current doctoral student studying electric power systems at Duke University. “There is just no possible way to achieve net zero when you're adding tens to even hundreds of gigawatts of more gas power to the system.”

The gas industry argues that gas is cleaner than coal power, and is therefore better for the climate. In fact, the power sector slightly reduced its emissions last year compared to 2022, a change driven in part by the shift from coal power to gas power. But according to the United Nations, global gas power plant emissions have to be cut by 28 to 78 percent to avoid the worst effects of the climate crisis, including hurricanes, floods, droughts, and extreme heatwaves.

But gas industry executives have hyped the relative superiority of gas, which they claim is reliable and faster to build than nuclear power. Proponents say that new gas infrastructure could be built in as little time as one to two years. That estimate doesn’t include environmental reviews or other regulatory hurdles. But by cutting out utilities as the middleman power supplier, the gas industry says it can circumvent many of the federal regulations that slow down pipeline construction now. Those environmental regulations may also soon be loosened by the government itself; last week, E&E News reported that President Biden is considering issuing an executive order to fast track construction of AI data centers in the name of national security.

Other experts say that AI’s energy needs may not be as big a climate threat as some predictions make it out to be. Because, at some point, the exponential growth of AI has to stop. “We can’t really go another two or three generations [of AI] at the current trajectory,” said Jerry Wang, an assistant professor of civil and environmental engineering at Carnegie Mellon University.

Wang says that if AI models continue to grow at the rate that tech executives say they will, the amount of electricity required would equal the entire planet’s energy usage. “Clearly that’s not going to happen,” he said.

But whether or not the AI bubble bursts, data centers have in the short term tipped the scales in favor of fossil fuels. Tech companies are “going to go with whoever comes to the table with the most affordable and reliable energy option,” said Slocum. “And increasingly, that means that protecting the climate and the Earth fall by the wayside.”

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