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Observations and essays drawn from the Nelder Notes newsletter, as well as interviews and other experimental content about the energy transition and adjacent subjects by veteran energy analyst and journalist Chris Nelder.
You're listening to the Nelder Notes Podcast, a premium feature for transition time subscribers. I'm your host, Chris Nelder. This is episode three titled Data Center Revolt. You can also find this content in newsletter form at transitiontimes.net. The discourse around grid power has become all AI, all the time.
Chris:We're not even talking about how to decarbonize the grid anymore. That is so pre 2024. Utility integrated resource plans or IRPs used to be the battlefield on which the utility incumbents fought to extend the lives of their soon to be stranded assets burning fossil fuels, while consumer advocates and utility commission staff offered alternative models showing how to transition cost effectively to renewables to meet the state decarbonization goals. So many proceedings. So many models.
Chris:Tens of thousands of hours of work by skilled practitioners to plot out pathways and lead our societies into a future with a stable and livable climate. But in the past two years or so, it's all just been brushed aside by the tide of AI. Data centers are now getting approved by bypassing those IRP proceedings entirely, with the bypass justified under vague claims to emergency necessity. Meanwhile, those in media whose job it is to guide the discourse and watch out for the public interest are asking all the wrong questions. They ask, how are we going to manage these huge new loads on our grids?
Chris:Can these new loads be integrated in such a way that they are actually grid assets and not just more demands we must meet by generating more power? How can we ensure that the new power generation for these data centers gets paid for by the data center companies and not by the general public? They're not even asking about the carbon footprint of these data centers. No one is asking a governor or utility commission chairman to explain how the emissions from these new data centers, nearly all of which are being powered with generators burning natural gas or even diesel, will render moot their previous commitments to decarbonizing the energy systems in their jurisdictions. It's as if those hard fought plans and policy commitments to decarbonize a grid or a state or a region never even existed.
Chris:Nobody mentions them. All the questions they're asking assume that the entire project of building data centers has been decided. Isn't even up for debate. It's like ESG. So passe.
Chris:Nobody cares about any of that stuff anymore. Why even bring it up? It was all just a fad. Don't you know there's a gold rush on now? Can't you feel the excitement?
Chris:Aren't you all in on AI? It's the hot new sensation that's sweeping the nation. Now they have other questions they want answered. Like, how can we repurpose that new hydro project that was going to help us decarbonize a power grid so that it can supply a data center instead? Like, how are we going to power these new data centers when they consume vast amounts of water in a desert environment where fresh water was already becoming scarce before the data centers?
Chris:We need more water! What's a higher use of water? Golf courses or data centers? Like the Fantastic Future for Nuclear Power. I'm now seeing full length shows on what used to be news platforms like Bloomberg aimed at teaching the public all about nuclear power technologies and how they might be used to power data centers.
Chris:Full length programs like: Can we use Carbon Capture and Sequestration or Carbon Capture Utilization and Storage to capture the emissions from these data center power plants and come up with a solution to global warming all at once? Could AI be good for the planet, actually? I've lost count of the number of stories that have cropped up in my news feeds over the past couple of months about CCS. To read them, you'd think CCS was the biggest growth industry on the planet. New players, new technologies, incentives.
Chris:One story after another touting the pipeline of CCS projects. Wild projections about the future of direct air capture or DAC. Dreams of billions of tons of CO two safely captured and tucked away for eternity or maybe just a century. We're told AI is a juggernaut, an unstoppable force arriving from nowhere asked for by no one, just materializing out of the ether. And we all must do whatever it takes to meet these new data center loads as quickly as possible.
Chris:Grid expansion isn't moving nearly quickly enough to meet the oncoming demand. We have to speed it up immediately. We should be talking about deregulation, permitting reform, abundance. Don't you know this is a matter of national security? A new geopolitical arms race that we must win?
Chris:But hang on. None of this is real. Well, the data centers and the power demands are, but everything else downstream of that, especially the commentary, is based on a hallucination. One so big even an AI engine would be embarrassed to suggest it. Everything I just mentioned is from an alternate reality.
Chris:A hallucination so powerful, it seems to have captured the minds of just about everyone. Suddenly, everybody accepts and believes that we're inevitably headed into this new AI powered world and we have no choice but to accommodate it. Whatever it needs, we must supply. It reminds me of nothing so much as the domino theory that got The US tragically embroiled in the Vietnam War. Can we just pause for a minute?
Chris:Take a deep breath and ask what we're doing here and why? Is this in fact something we have to accept and accommodate? Let's start with where this push to integrate AI into everything came from. It wasn't consumers. I don't even think it was business leaders.
Chris:It was from a handful of tech companies that built a new technology, dazzled us with its apparent capabilities, and then sold us a story about how it will take over everything. And that if you don't integrate it into your business, then you will lose because your competitors are using it to squeeze more productivity out of fewer man hours, allegedly. So that was step one. Get business leaders excited about it either out of fear or greed, the two most fundamental animal spirits of capitalism. Either one gets the job done.
Chris:Step two. Entice elected officials with promises of jobs and tax revenue. Mostly the latter. Now, this is probably the biggest sort of deficiency I observe in the media coverage of the AI boom. I've read hundreds of articles about the potential, the cost, the impact, the opportunity, etc.
Chris:For data centers in a given community. I don't think any of those journalists ever asked an elected official why they're trying to entice a data center to locate in their jurisdiction. Not once. But that's actually where the pipeline starts. With mayors, county officials, state legislators, governors, and even US congressmen actively soliciting the business of the new data center overlords dangling tax breaks and other goodies before them to sweeten the deal.
Chris:And for my purposes today, it really doesn't matter if it's one of the dedicated AI companies like OpenAI or Anthropic or a tech titan like Meta or Microsoft or Google or Amazon. Or if it's one of those computing service providers you've maybe never even heard of like Equivonics or Vantage Data Centers or CoreWeave, who actually build and own and operate the data centers and rent out computing capacity to the big tech giants so that they don't have to invest their own capital in the infrastructure. Paul Kudrowski has written about this at length. See the links in the show notes. For my purposes today, they're all the same.
Chris:Whether they're manufacturing these picks and shovels of new AI Gold Rush for their own purposes or just renting them out to someone else. Ultimately, it results in a data center. Almost always consuming power from its own gas fired generators with no restrictions or oversight whatsoever on the carbon emissions of those generators and also consuming a ton of fresh water to provide cooling. These elected officials are starry eyed over the tax revenue and the economic stimulus they could stand to attract if they entice data centers to locate in their areas. For just one of many, many examples, Republican lawmakers in Ohio established a tax exemption in the early twenty tens to lure technology companies to Ohio, long before the modern boom in data centers.
Chris:For facilities that cost $100,000,000 or more to build, the exemption allows developers to waive up to 100% of Ohio's 5.75% sales tax for up to fifteen years, and it can apply to capital intensive private natural gas plants some developers are building to fuel their operations. In 2025, that exemption was worth a reported 1,600,000,000, 11 times more than the original estimate of a $136,000,000 that was sold to taxpayers. And who got the benefit of that $1,600,000,000 in tax breaks? The usual. Meta, Alphabet, Amazon.
Chris:All of which have recently built or are building arena sized data center warehouses there according to local reporting. But no one ever holds the officials to account for courting those data centers and their sweet, sweet economic stimulus. No one ever asked them if they did a study on the electricity and water demands of the data centers and determined that the local area's resources could actually support them. And for the record, I'm not aware of any such study being done anywhere. But of course, that doesn't mean there haven't been any.
Chris:When the question arises about who will have to pay for the grid expansion to support those data centers, the people who invited them to begin with are rarely asked to answer the question. That's easily passed off to the state utility regulator or utility or someone else. If the officials brought in some economic development that they can tout the next time they're up for election, they win. They never have to answer for the effects of those decisions on the people they're supposed to represent, let alone the CO two burden they welcomed with open arms. Step three.
Chris:Commit to building the data center or better if you're a meta or an alphabet. Get someone else to build it and put zero skin in the game yourself, but promise to buy some compute from it in the future. Let the utility regulator figure out how to allocate any additional costs of grid expansion. Let the utilities figure out how to use the data center loads to justify their own load growth forecast and thus extract more guaranteed revenue from all utility customers via their regulated rate of return whether anyone even uses the data center or not. Let the locals who have to listen to the whine of the data center's generators and cooling systems decide to either like it or move away, suck up the water, which you'll get for nearly free, as a part of your sweetheart deal for locating there.
Chris:Step four. Talk about how you'll try to rely on clean power in public, but then in private by as much gas generating capacity as you can get your hands on along with the infrastructure to deliver the gas. And promise that you'll figure out how to capture the emissions real soon now. Definitely do not mention that the world's operational carbon capture and permanent storage capacity, where the captured carbon isn't just used to produce more oil and then the carbon isn't going to be sequestered permanently, is laughably negligible. Most studies don't even try to distinguish the two and treat the carbon that gets captured, reused, and then eventually released into the air the same as the carbon that gets captured and permanently sequestered.
Chris:One study published in late twenty twenty five and led by Imperial College academics presented the first audited total amount of industrially derived CO2 permanently stored underground through carbon capture and storage. It found that since 1996, the total amount of CO2 that has been sequestered up through 2024 globally was 383,000,000 tons. By comparison, total energy related emissions globally are roughly 38,000,000,000 tons a year. In other words, the total amount of CO2 that's been permanently stored underground so far for all time globally is about 1% of annual emissions just from energy consumption, not counting CO2 from agriculture, industrial processes, land use and so on. For another point of reference, IEA estimates that global capture capacity could increase to 430,000,000 tons per year by 2030.
Chris:That's about 1.1% of annual energy related emissions. I don't suppose you've come across any of those numbers in the stories you've recently seen about CCS projects. And if you have to face the fact that global CCS technology is in no way prepared to actually capture the emissions from your project, no problem. Just promise that you'll sort that out later and get on with building whatever it is you want to build as the oil and gas industry has been doing for the past three decades. And if the gas and CCS plan meets with resistance, you can just turn to the other magic unicorn in the energy world, small modular reactors or SMRs.
Chris:Thanks to an industry sponsored all out media blitz the past couple of years, nearly everyone in the world has heard about SMRs, their virtues, and how they're the energy source of the future. They might even be under the impression that SMRs are commercial technology that exists. Definitely do not mention that there are basically two operating commercials SMRs in existence today despite years and years of hype. One in Russia and the other in China, with a combined generating capacity of about 300 megawatts. That's about one third the capacity of a single conventional nuclear power unit.
Chris:China built about three times that much capacity daily in solar alone in 2025. And then finally, step five, IPO. Launch your AI company on the public markets and rake in the bucks. OpenAI is targeting a valuation between 850,000,000,000 to $1,000,000,000,000. Anthropic has targeted a slightly lower initial valuation at 350 to 800,000,000,000, but is broadly expected to reach the 800 to $900,000,000,000 range if it maintains current revenue trajectory and reaches sustained profitability ahead of OpenAI.
Chris:Then, just kick back and watch as the world struggles to make up for job losses caused by your technology. Watch businesses struggle to find and fix all sorts of errors introduced by your technology. Watch communities struggle with the sources of fresh water drying up and their grid power prices exploding due to the cost of building out the grid. Watch residents near your data centers struggle to accept the decline in their home's value because it's now within earshot or eyesight of a data center. Watch the state's carbon reduction targets.
Chris:Arduously hammered out in uncountable public forums for years vanish without even a eulogy. All it took is a handful of billionaires with the technology they wanted to push on the public, and a few percent of the profit dished in the direction of some local elected officials to pull the whole thing off. Nobody else's opinion was even solicited. We abandoned years of effort on the project of decarbonization without so much as a debate in order to chase this shiny new AI bobble. And that's the real story here.
Chris:But hardly anyone is telling it. All of the discourse is downstream from the decisions that put this juggernaut in motion as if it just happened to us and no one had any agency in the matter. Note that so far, I haven't even critiqued the technology. I haven't even offered an opinion here about whether or not AI is a worthwhile use of our time and energy or the effects it will have on balance on humanity. I've just been trying to retrace the steps that brought us here, but it certainly has its critics.
Chris:Ed Zitron has made a new career out of being an AI hater, although mostly on the grounds that as a business, it still has much to prove. Corey Doctorow has a new book out on the subject titled The Reverse Centaur's Guide to Life After AI. Numerous artists have decried the way that AI has become a cheap, albeit often inferior, replacement for human talent. Hollywood in particular has had some very choice words about it, including Korean film director Bong Joon Ho, saying, quote, my official answer is AI is good because it's the very beginning of the human race finally seriously thinking about what only humans can do. But my personal answer is, I'm going to organize a military squad and their mission is to destroy AI, end quote.
Chris:There's enough public resistance to data centers now to qualify it as a movement, which in turn prompted Donald Trump to instruct the Department of Justice to target anyone holding anti American, anti Christian, and anti capitalism beliefs. The battle lines are being drawn that will describe where AI can play and where it will be prohibited. After a few years of unconstrained incursions into our daily lives, the way that AI is influencing and changing the economy and the culture is finally getting serious scrutiny from the classroom to the boardroom. And I think that's healthy. AI is disrupting the podcasting business in a huge way, and I don't like it one bit.
Chris:I have more to say on that in the future. Society has a lot of work to do in weighing up the costs and benefits of AI. It will take years, decades even, to work through that process. We have not demanded proof that AI is in fact such a necessary technology that it qualifies as a must win arms race. We just took the word of a few officials on that.
Chris:We have not been shown decisive evidence that the economic benefit of AI to society is worth the social cost of it. We've taken the word of a few billionaires with the technology to sell on that. We are already seeing significant layoffs attributed to AI, especially in tech jobs. But it's too soon to judge what its long term effects on the job market and the economy will be. But that's not the social question that I think we ought to be asking right now.
Chris:What I think we should be asking is this. Have we considered whether this technology is worth throwing our commitment to stop climate change under the bus? Because that's what we're doing. And I don't think anyone has seriously asked the question. I think we ought to be taking a minute here to ask what our social priorities are.
Chris:If we had to choose between struggling to survive on an overheated planet with unfettered adoption of AI and having a shot at keeping planetary warming under two degrees but not having AI, what would we choose? Or even less hypothetically, if society could mandate that all new data centers no reason to single out AI here, by the way. Crypto mining and lots of other applications also rely on data centers. That they be entirely powered by clean renewables or even SMRs if they ever became a commercial reality. And that they pay the entire cost of extending the grid to connect their new clean generators.
Chris:Would we? Will we require that? Because that's actually a choice we could make. Or would we claim that we're powerless against the mighty forces of greed and unfettered capitalism? Would we throw our hands up helplessly and claim that we're incapable of prioritizing general social welfare over the private interests of a very few powerful billionaires?
Chris:Or even expecting that our elected leadership prioritize that? Shouldn't we at least be asking the questions before giving up on society and a livable planet? Pope Leo certainly thinks so, writing in his recent encyclical, quote, the gains in efficiency and the potential to improve certain services are clear, yet rapidly and uncritically adopting them exposes us to a range of risks, including the tendency to overlook the environmental impact. Current AI systems require enormous amounts of energy and water, significantly influencing carbon dioxide emissions, and place heavy demands on natural resources. As their complexity increases, especially in the case of large language models, the need for computing power and storage capacity grows too, which requires an extensive network of machines, cables, data centers, and energy intensive infrastructure.
Chris:For this reason, it is essential to develop more sustainable technological solutions that reduce environmental impact and help protect our common home. To be sure, it's possible that some of the investment made in the grid to support AI data centers will result in new carbon free generation that will help us achieve our decarbonization goals. Some of AI's most ardent critics maintain that the entire business is a house of cards, designed to collapse in a cloud of debt and illusions as soon as its end users actually have to start paying the real cost of providing the service they enjoy and the sweet venture capital bucks dry up, which is undoubtedly the reason why these loss making companies are going public now, to find a new source of capital. Were that to happen, there would indeed be a lot of stranded grid assets around and to the extent that any of them are clean, or at least able to support clean power in the future, the grid investments being made today would not amount to wasted capital. Right now, it's far too early to tell.
Chris:But I think elected officials would be wise to perk up their ears to the cries of outrage and resistance being heard wherever new data centers are being built. To ask whether their communities really have to bear the burden of new AI infrastructure. And to demand that if new data centers are built in their jurisdictions, that they are powered entirely by clean generation. And that their costs are not shoved onto helpless captive utility customers. Because they are in a position to impose those requirements, to protect the people they were elected to serve.
Chris:And every journalist covering a new data center project ought to be asking those officials to state on the record exactly what their decision calculus was. Because as it stands today, my reckoning is this. We have accepted trillions of dollars worth of investment into data centers and power plants without granting them social license, without even trying to estimate the environmental or social costs or the climate damages first. Because the people pushing the technology have scared us into doing so while bypassing essential public protections around utility and water regulation and claiming that the carbon emissions will be dealt with in the future using technologies like CCS and SMRs that aren't even commercial. Also that a few public officials can claim to have attracted some investment to their communities and so a handful of billionaires can be enriched even more while massively impoverishing the commons and the public good.
Chris:Again, I'm not actually making a value judgment on AI here at all. I'm just saying that before we let the costs and liabilities and resource demands of data centers get pushed onto us without even so much as a vote in the matter, we should have a proper discussion about these major social questions instead of having them decided for us by people operating purely out of self interest. We ought to have a voice in it. The Nelder Notes Podcast is produced entirely by me, Chris Nelder. You can find along with the companion Nelder Notes newsletter and the Transition Times newsletter at transitiontimes.net.
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