Artificial intelligence’s (AI’s) alleged consumption of water and energy has become a major point of concern for policymakers. The issue was highlighted in President Trump’s recent State of the Union speech, where Trump announced he will forge deals with tech companies over energy consumption. While voluntary efforts to increase power generation are laudable, much of the underlying discussion is riddled with half-truths, incomplete information, and blatant falsehoods. Unsurprisingly, this misinformation extends all the way up to members of Congress, who can wield the most punitive regulatory hammer against AI. This threatens the most important innovative development of modern history. In the past weeks, Senator Bernie Sanders (I-Vt.) has resurfaced his idea of a “data center moratorium,” while Sens. Josh Hawley (R-Mo.) and Richard Blumenthal (D-Conn.) filed a bill that would force all data centers to go off-grid and produce their own energy.
Congress should not listen to the loud cries against data centers. Their justifications are not grounded in reality. In the case of the Hawley-Blumenthal bill, it could inadvertently increase energy costs for consumers, rather than protecting them, as the senators allege. A moratorium on data centers would be decisively worse, as it could potentially set the United States back for years, especially as the country tries to outcompete rival nations in the race for global AI leadership.
The idea behind the Hawley-Blumenthal bill – forcing data centers to generate their own energy off-grid – is an overly-simplistic solution that ignores key economic realities. It emerges from the popularized notion that data centers will cause some unsustainable spike in energy demands that a country’s or local municipality’s power supply cannot possibly offset. While data centers are indeed energy-hungry technology, focusing exclusively on energy generation overlooks other vital elements of energy markets such as transmission. In fact, a recent study by the Lawrence Berkeley National Laboratory identified investments in transmission capacity as one of the key drivers in energy price increases across the nation.
As the study highlights, the costs of these transmission upgrades are known as a fixed cost, which mean that they are distributed evenly amongst all customers, and usually do not increase with increases in demand. By introducing new customers, these costs are divided amongst more users, resulting in price decreases. However, the Hawley-Blumenthal’s short-sighted bill would do the exact opposite, forcing residential customers to shoulder the costs of replacing or weatherizing a fragile, aging grid. By constraining the growth potential of these energy markets, the bill would end up increasing the costs for the residential consumers the senators claim they would protect.
Sen. Sanders’ idea, for its part, would have ripple and long-lasting effects that would go beyond the economy. Just like the Hawley-Blumenthal bill, delaying the construction of data centers will either further delay the upgrades the U.S.’ energy grid desperately needs, or will force residential consumers to shoulder those costs.
Ironically, delaying the development of AI will hamstring the ability of the government to better serve its constituents. For example, the nation’s capital has started relying on AI call management to address chronic understaffing issues in its 911 line. Other nations (like the United Kingdom) are actively looking to incorporate AI agents to better inform its citizens of the services and programs at their disposal.
Perhaps more importantly, delaying the development of additional computing power amid a global race for AI dominance is like starving a car of gas at the start of a Formula 1 race. Foreign nations, many of them historically adversarial to the U.S., are aggressively moving forward to reap the benefits of global AI leadership. They have witnessed how much the U.S. benefited from enjoying such a position during the first digital revolution. A delay by the U.S. could leave an unsurmountable gap as other nations are moving at breakneck speeds to develop their own AI industries.
It should come as no surprise that even Democrats are passing on Sanders’ proposal. They should continue to do so. Populists have decided to put a target on data centers’ back, and the consequences for the U.S. would be disastrous. Policymakers should focus their efforts on prioritizing permitting reforms that could untangle some of the chokeholds that are slowing the infrastructure rollouts that prevent energy price increases.
