Industrial chiller at Yotta Data Services Pvt. data center, in Navi Mumbai, India, on Thursday, Mar. 14, 2024.
Bloomberg | Bloomberg | Getty Images
A huge upswing in the number of data centers worldwide shows no signs of slowing down, prompting Big Tech to consider how best to power the artificial intelligence revolution.
Some of the options on the table include a pivot to nuclear, liquid cooling for data centers and quantum computing.
Critics, however, have said that as the pace of efficiency gains in electricity use slows, tech giants should recognize the cost of the generativeAIboom across the whole supply chain — and let go of the “move fast and break things” narrative.
“The actual environmental cost is quite hidden at the moment. It is just subsidized by the fact that tech companies need to get a product and a buy-in,” Somya Joshi, head of division: global agendas, climate and systems at the Stockholm Environment Institute (SEI), told CNBC via video call.
A wave of data center investment is expected to accelerate even further in the coming years, according to the International Energy Agency, primarily driven by growing digitalization and the uptake of generative AI.
Data centers, which consume an ever-increasing amount of energy, represent a key piece of infrastructure behind modern-day cloud computing and AI applications.
Giampiero Frisio, president of electrification at Swiss multinational ABB, said the engineering group’s data center business has enjoyed remarkable growth in recent years — with the segment on track to grow by more than 24% in 2024.
Frisio said ABB has been well placed in the AI demand boom to supply mid-sized and big-name industry players with all the components needed to run a data center.
“I think the best way to act now is to increase the energy efficiency. That’s the best way because the technology is there, for example the medium voltage HiPerGuard UPS. You can do it, and you can do it tomorrow morning,” Frisio told CNBC via video call.
The HiPerGuard UPS refers to ABB’s industry-first medium voltage uninterruptable power supply, which it says can provide continuous power to large facilities.
A server room at a data center in India.
Dhiraj Singh | Bloomberg | Getty Images
“The second one is to move on the liquid cooling, there is no doubt. Again, this is in the optic of better energy efficiency. Why? Because a single rack, you know the black boxes that look like a wardrobe with all the servers inside, the power density of those is going to be four to six times than before,” Frisio said.
“After that, we are talking about five to 10 years from now, it is the nuclear modular system,” he added.
Big Tech is going nuclear
U.S. tech behemoths Microsoft, Google and Amazon have all secured nuclear energy deals worth billions of dollars in recent months as they seek to bring additional energy capacity online to train and run the massive generative AI models behind today’s applications.
The upsurge of generative AI demand has coincided with a push to find more efficient cooling solutions in data centers, particularly liquid cooling — a process in which water is used to lower the temperatures of servers and other electronic equipment.
I think in the summer of every great technology we discover there is a winter — but don’t pay attention to it until winter arrives.
Raj Hazra
CEO of Quantinuum
French power-equipment maker Schneider Electric recently completed an $850 million deal to take a controlling stake in Motivair Corp, a U.S.-based company that specializes in liquid cooling for high-performance computing.
Schneider Electric CEO Peter Herweck told CNBC last month that the all-cash deal, which is designed to bolster its offering to data centers, was “rich, but not overly expensive” and “fits great” with the firm’s strategy.
Alongside nuclear energy and liquid cooling technology, some tech players have suggested developments within AI could help to decarbonize data centers.
Former Google CEO Eric Schmidt, for example, said last month that since “we’re not going to hit the climate goals anyway”, investing in AI could be pivotal to solving some of our biggest environmental challenges.
SEI’s Joshi flatly rejected this point of view.
“These arguments are not new, they are very much in line with the sort of ‘silver bullet’, ‘tech will save us’ rhetoric,” Joshi said.
“There is something inherently at odds with saying we operate within certain finite planetary boundaries and yet by exceeding them and continuing with the same extractive narratives, we are somehow going to solve the problem that we’re in now,” she added.
Quantum computing
“I think in the summer of every great technology we discover there is a winter — but don’t pay attention to it until winter arrives,” Raj Hazra, CEO of Quantinuum, the world’s largest integrated quantum computing company, told CNBC via video call.
“That is my way of describing what is happening with generative AI, the infrastructure needed to support it [and] the massive data centers that have to be built.”
Hazra said optimism over the generative AI boom is already straining the cost of running the technology.
Aerial view of a data center owned by the US multinational and technology company Google in Santiago on October 9, 2024. The drought that is affecting part of South America, coupled with public pressure, is forcing technology giants such as Google, Amazon, and Microsoft to reformulate their data center projects in the region in favor of low-water consumption ones.
Rodrigo Arangua | Afp | Getty Images
“As wonderful as AI is, there are two challenges to it. One is, is it sustainable from a resource standpoint? The other is, is it responsible?” Hazra said. “The reason I bring up this context is because quantum is critical to both of them.”
Quantum computing refers to an area of computer science that uses the laws of quantum mechanics to solve extremely complex problems.
Hazra said a “who’s who” of businesses and strategic investors have recently expressed an interest in Quantinuum, with the company raising around $300 million in its latest equity funding round. Honeywell, which is the firm’s majority shareholder, said the fundraise put Quantinuum’s valuation at $5 billion.
“One of the things that has become quite apparent is it’s no longer OK to say I have a solution to a problem; you have to say I have a sustainable solution to a problem,” Hazra said.
The CEO said one of quantum’s biggest contributions to society can be to make AI both sustainable and responsible.
“I predict that in the next three to five years, you will see people say, what is my compute infrastructure for running my business? It will be a combination of high-performance computing, AI and quantum,” he added.
The new Chevy Bolt EV is set to enter production later this year, with one fewer shift, following GM’s reduction in production plans at several US plants. Apart from the Bolt, GM promised a new family of affordable EVs. Are those, too, now at risk?
GM says more affordable EVs are coming, but when?
GM remained the number two EV maker in the US after back-to-back record sales months in July and August. However, with the $7,500 federal tax credit set to expire at the end of the month, the company expects a slowdown.
On Thursday, GM sent a note to employees at its Spring Hill plant in Tennessee, outlining plans to reduce output of two Cadillac electric SUVs, the Lyriq and Vistiq.
A source close to the matter confirmed the news to Reuters, saying the production halt will begin in December. GM will significantly reduce output during the first five months of 2026, according to the source.
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GM is also delaying the second shift at its Fairfax Assembly Plant in Kansas City, where the new Chevy Bolt is slated to enter production later this year. The Bolt will be the first of a new series of affordable EVs that GM intends to build in Kansas.
GM plans to build a “next-gen affordable EV) in Kansas (Source: GM)
However, those too, may now be in jeopardy. According to local news outlets, GM Korea Technical Research Center (GMTCK), a spin-off of GM’s Korean subsidiary, was recently cut out of a secret small EV project it was developing.
GMTCK president Brian McMurray reportedly announced internally last month during a trip to the US that the project was cancelled and only 30% to 40% complete.
A GM Korea spokesperson clarified that “the EV project being led by GMTCK was a global undertaking, not undertaken solely by GM Korea. The spokesperson added, “The project itself has not been canceled; the role of the Korean team has simply changed.”
The new electric car, dubbed “Fun Family,” was scheduled to launch under the Chevy and Buick brands, using a single platform. Production was expected to begin in 2027 with deliveries starting in 2028.
2022 Chevy Bolt EUV (Source: GM)
GM Korea exports over 90% of the vehicles it makes to the US, but with the new auto tariffs, the subsidiary is expected to play a drastically smaller role, if any at all. The news is fueling the ongoing rumors that GM could withdraw from Korea altogether.
In addition to the tariffs, South Korea’s recently passed “Yellow Envelope Law” could make it even more difficult for GM with new labor laws.
Chevy Equinox EV LT (Source: GM)
Will this impact the affordable EVs GM is promising to launch in the US? They are scheduled to be built in Kansas, but with the R&D Center, GM’s second largest globally, following the US, claiming to be excluded from a major global EV project, it can’t be a good sign.
In the meantime, GM already has one of the most affordable electric vehicles in the US, the Chevy Equinox EV. Starting at under $35,000, the company calls it “America’s most affordable” EV with over 315 miles of range.
With the $7,500 federal tax credit still available, GM is promoting Chevy Equinox EV leases for under $250 a month. Nowadays, it’s hard to find any vehicle for under that.
Connecticut and Rhode Island are suing the Trump administration to overturn its “baseless” decision to halt Revolution Wind, a nearly completed offshore wind farm set to deliver clean power to New England.
Attorneys General William Tong of Connecticut and Peter Neronha of Rhode Island announced Thursday that they’ll file suit in Rhode Island federal court to overturn the August 22 stop-work order from the Bureau of Ocean and Energy Management (BOEM). The order abruptly shut down construction without citing any violation of law or safety threats. Instead, BOEM vaguely referred to “concerns” under its Outer Continental Shelf Lands Act authority, offering no explanation.
Revolution Wind is 15 nautical miles off Rhode Island and expected to come online in 2026. Once complete, the $6 billion project would supply 350,000 homes with electricity and save ratepayers in Connecticut and Rhode Island hundreds of millions of dollars over 20 years. The project supports more than 2,500 jobs across the US, including over 1,000 union construction jobs, and has already cleared every required state and federal review. Construction is already 80% complete.
The lawsuit, to be filed against the Department of the Interior, BOEM, and their nominated leaders, argues that the stop-work order violates the Administrative Procedure Act and the agency’s authority under OCSLA. The complaint says the government’s action is arbitrary, capricious, and undermines both states’ legal and financial commitments.
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“Revolution Wind is fully permitted, nearly complete, and months from providing enough American-made, clean, affordable energy to power 350,000 homes. Now, with zero justification, Trump wants to mothball the project, send workers home, and saddle Connecticut families with millions of dollars in higher energy costs,” Tong said. “This kind of erratic and reckless governing is blatantly illegal, and we’re suing to stop it.”
Neronha added, “With Revolution Wind, we have an opportunity to create good-paying jobs for Rhode Islanders, enhance energy reliability, and ensure energy cost savings while protecting our environment. And yet, this stop-work order is not even the latest development in this administration’s all-out assault on wind energy. Just yesterday, we learned of reports that the Administration is pulling in staff from several different unrelated federal agencies, including Health and Human Services, to do its bidding. This is bizarre, this is unlawful, this is potentially devastating, and we won’t stand by and watch it happen.”
Connecticut Governor Ned Lamont said the administration has offered no explanation nearly two weeks after the order. “We hoped to work with the Administration to lower energy costs, strengthen grid reliability, create jobs, and drive economic growth, but only if they share those goals. But if they do not, we will act to preserve this vital project and protect the energy future of Connecticut and the entire New England region,” he said.
Senator Richard Blumenthal (D-CT) called the shutdown “insane, illogical, and illegal,” while Senator Chris Murphy (D-CT) said, “The Revolution Wind project has already made it through exhaustive reviews by multiple federal agencies, and I doubt Trump’s flimsy excuses for scuttling this project will stand up to legal scrutiny.”
Danish renewables developer Ørsted, which owns a 50% share in Revolution Wind, also announced Thursday that it’s suing the Trump administration in a bid to restart construction on the blocked wind farm.
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Canadian canola fields. Credit: Canola Council of Canada
Canada is “reviewing” its current 100% tariff on Chinese EVs, which could potentially give another entry point for the inexpensive, advanced vehicles into the North American market.
The strange part? The review is being pushed for, mainly, by the premiers of right-leaning provinces. And it has everything to do with your cooking oil.
The news of the review came yesterday from the National Post, who confirmed with Canada’s national finance minister that “officials are currently undertaking work on this review, including an assessment of China’s policies and trade practices, and whether the scope of the surtaxes, as well as the surtax rate, remain appropriate.”
Canada currently has a 100% tariff (surtax) on Chinese EVs and a 25% tariff on Chinese steel and aluminum, implemented last October. Canada’s tariffs came after similar tariffs implemented by US President Biden, though they were justified by claiming that China engages in unfair competition in EVs.
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The country does have a significant auto industry, with about 10% of Canada’s exports consisting of cars, trucks and the parts and accessories for each. This auto industry is heavily tied with the US auto industry, which is centered in Detroit, a literal stone’s throw away from the Canadian border.
As a result, Canada followed the US’ lead with tariffs, recognizing that our two countries, historically tied together by the close trade and cultural relationships across the longest border on Earth should be on the same page about an industry that is shared and important to each of us (nevermind that the US tariffs were dumb to begin with).
A souring US-Canada relationship
But since then, things have changed. A contentious election in the US led to the dumbest person on the planet squatting in an office that he is Constitutionally barred from holding, and after that election the ignoramus in question illegally imposed even dumber tariffs on China and the rest of the world.
The same ignoramus also made numerous threats against Canada’s sovereignty and targeted the country with tariffs despite the close relationship between the US and Canada.
This caused disruption in Canada’s auto industry, including immediate job losses and a scramble to beg for exemptions for the industry that has long-benefitted from free cross-border movement of supplies. (Canadian Prime Minister Mark Carney today cited US tariffs as his reason for delaying Canada’s EV transition, showing how the actions of US republicans aren’t just poisoning Americans, but Canadians as well.
And it has left Canadians thinking more about their own national identity, and searching to establish some independence from the United States of America’s whims on the International stage.
It’s all about cooking oil
With the US-Canada relationship already soured, China struck a characteristically surgical blow. In response to Canada’s tariffs on EVs, China announced it would impose heavy tariffs of 76% on… canola. Yes, the thing that’s in your cooking oil.
Canada is the world’s top producer of canola, ahead of China. And China is the world’s top consumer of canola (though US is Canada’s largest buyer of canola). So, China’s move removes a big market for Canadian farmers and disrupts the global canola market significantly. It’s estimated this has cost Western Canadian farmers nearly a billion dollars already (China did a similar move in 2018 with a soybean tariff on the US).
Now here’s the rub: Western Canada is the more rural part of the country, with giant plains provinces like Saskatchewan and Alberta whose primary industries are farming and oil. That’s where the canola is grown. These provinces, predictably, are pretty conservative. And they’re mad about these tariffs.
Canada’s right-wing leads charge for Chinese EVs
And so, the right-wing premiers of both Saskatchewan and Alberta have recently demanded that the Canadian government remove tariffs on Chinese EVs, in the hope that it would get China to remove the tariffs that are currently ruining Canada’s canola farmers. Saskatchewan’s premier is even heading to China right now to negotiate.
And it even seems counterintuitive from the Canadian perspective, as the provinces of Alberta and Saskatchewan both have ridiculous registration taxes for electric cars, where EVs suffer high opposition due to the prominence of the oil industry in the each of them. Alberta, in particular, is often referred to as the “Texas of Canada,” and has a brewing separatist movement, some members of which want Alberta to join the USA. So how’s that for an inversion of expectations.
But as a result of the US’ haphazard tariff nonsense, its own allies in Canada (even specifically those in the Canadian right wing) have been pushed towards a deeper relationship with China, with Canadian PM Carney stating this week “there may be areas where… we can expand the commercial relationship with things that China does well.”
And the charge by right-wing premiers seems to be working. After yesterday’s announcement of the Canadian federal government’s “review” of Chinese EV tariffs, and the impending trip to China by Canadian trade officials and Saskatchewan Premier Scott Moe, China delayed the imposition of canola tariffs just today.
So, Canadian farmers get some breathing room – and depending on the results of the tariff “review,” if they end up getting access to cheap Chinese EVs, they might breathe more freely in more ways than one.
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Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. Get started here.
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