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The writer, a former secretary of the American Treasury, heads the Paulson Institute
One of the most urgent and underestimated energy challenges facing the US is the race of artificial intelligence with China. America is in the lead, but Beijing is investing a lot to close the gap. The question about Washington is: Can the US stay ahead without a national energy strategy to empower it?
The energy landscape has changed dramatically in recent years. Russia’s occupation in Ukraine reshaped it overnight. The prices increased and the governments tried to reduce confidence in Russian gas. Energy security became primary. While Europe and other regions that are not independent of energy seek to address these weaknesses, they are increasingly looking for solar and odor to reduce fossil fuel addiction.
China is falsifying ahead, joining the long -term industrial strategy with mass investment in both the infrastructure and energy to support it. His database market is expected to grow by about $ 275 billion between 2025 and 2029. He invested more in renovations in 2024 than the combined EU, the EU and the UK. Beijing’s clear ambition is to dominate the technologies of the future, the understanding that energy policy will be essential.
Meanwhile, in the US, as the models of it become more complex and set to a larger scale and the power of the clouds increases, the demand for electricity is growing faster than the municipal services can build capacity. Some data centers now consume as much power as medium -sized cities. In Virginia, they consumed approximately a quarter of the state energy load in 2023. This has increased concern about the types of system and higher housing bills, leading to new regulations and an effective moratorium on the construction of databases in the state.
The US should develop and establish a national energy strategy with a clear eye that prioritizes the speed, flexibility and effectiveness of the cost. Since demand for electricity significantly exceeds supply, it makes sense to think of clean electricity as an “additional” of existing power supplies. In fact, almost all extra electricity in the US came from the sun and wind last year – traditional energy sources cannot meet the need.
Gas cannot fill the gap in a short or medium term due to the lack of turbines. Coal will not solve the problem because decomposed services cannot be withdrawn as quickly as they meet urgent needs (and air pollution damages health). The enlargement of the nuclear energy is an essential part of the solution, but the US remains years behind and China is very forward in the development of the front nuclear energy.
Given the abundance of America’s natural gas, many data centers will still rely on it, but smarter, faster models are emerging. For example, a hybrid model that uses solar and battery storage or gas reservation at the peak at high demand periods is faster to grow, due to the order of equipment and leading time, air permits and interconnection. These also require less front investments, and “comprehensive costs” are comparable to base gas.
This model is not without risks. A close shock to solar or storage ecosystems would leave a large hole just like the energy needs he is growing. Without existing solar incentives, which have prompted an important control to create a playing field with China, and with the US administration tariff regime, the comprehensive hybrid model costs will increase. But gas climbing would be to sacrifice the speed of development and bet against the rapid decline in solar storage costs and batteries, which fell approximately 20 percent last year and more than 80 percent over the past decade.
The right answer is not to choose a source of energy over another, but to create, quickly, the conditions to increase what works. This means the low -tax, light regulation environment that enabled the US renewable energy boom during Trump’s first administration. We should also exclude technologies such as long -term batteries from import tariffs, while doubled support for SH.BA -based solutions in service storage. As for how services recover costs, we need to encourage investments in technology that bring energy prices for all.
It is a main driver of the demand for electricity. But it also has the potential to unlock significant supply profits. We cannot allow us to miss this moment. More capacities, lower costs and greater energy security are within our sense.
The US has still built an advantage in energy independence. The test is whether we can meet the energy needs of the other era of innovation. If so, we will be in a stronger position in it than any other nation for decades ongoing.
