Can AI derail the energy transition?

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Artificial intelligence is emerging as the hottest topic of the year. Analysts are predicting how it will benefit virtually every industry, and developers are eager to try it out everywhere. But there's one potentially huge problem with AI: its energy and raw material requirements.

The energy problem came to light last year, when a scientist calculated how much electricity data centers hosting AI hardware would need. Warnings are pouring in that the use of artificial intelligence will reverse the transition from oil and gas to wind and solar power as data centers require a reliable, uninterrupted supply of electricity. For now, it only comes from hydrocarbons and nuclear.

But energy consumption is only one aspect of the AI ​​problem that energy transitions face. The other can be much more serious: raw materials.

“We need a lot more copper to meet demand growth ahead of AI alone,” White House energy adviser Amos Hochstein said at a recent event, discussing the prospect of significant mineral demand. “With the advent of advances in AI, we will need a significant amount of electricity generation and transmission, which will require even more,” Hochstein added, as quoted by Politico. Related: Governments deal a blow to EV darlings

The problem is that wind and solar installations also require a lot of copper because they require a lot of cables. When you add electric cars, the future looks extremely bright for copper miners and bleak for anyone who needs copper.

Investment research firm Oregon Group released a report last month predicting a 10-year supercycle in major minerals. However, this supercycle will not be driven by migration. It was powered by artificial intelligence.

“Give [data center] The market is moving much faster than the supply chains that have historically supported a very physical business have been set up to do so… it's a sprint. This is a sprint that requires all the capital in the world,” the CoreWave co-founder said in the report, providing a good summary of the situation.

The information technology industry is planning to spend hundreds of billions of dollars on artificial intelligence, meaning new data centers and new power networks. With that, it automatically becomes a competitor for transition technology developers—because they all need the same content.

Copper is a good example. It's not rare, it's not expensive, but both AI evolution and migration require large amounts of it—and no new mines are being opened at a rate to support the surge in demand. need of

Warnings about copper shortages have become part of the news landscape over the past few years, and yet the mining industry has been extremely slow to do anything about it, possibly because the boom Demand forecasts haven't always panned out, especially in EVs. So miners are biding their time until strong demand starts to show signs of emerging.

“You could ironically say that miners are looking for the next story to propel the general narrative, which is: 'Demand is going to grow faster than supply, and we're going to face structural deficits.' Looking at,'” Chris Berry, a battery supply chain consultant, told POLITICO.

Yet this is not leading to new copper mines—but it is leading to larger projects to extract the necessary key minerals. In his speech at this week's Milken Institute global conference, Hochstein urged miners to go into risky jurisdictions and ignore the threat to secure minerals and challenge China's dominance in the region.

“We can all live in capitals and cities around the world and say, 'I don't want to do business there.' But what you're really saying is that we're not transferring energy,” Hochstein said, as quoted by Reuters.

However, it is doubtful whether miners will respond effectively to what is effectively a challenge to re-prioritise, placing migration above things like security and predictability. In addition, miners seem aware of the fact that China's dominance in key minerals is the result of decades of hard work—and that kind of work cannot be replicated in 24 months.

The situation doesn't look good—AI and migration are vying for a pool of resources. But there is a silver lining, although it's not the silver lining transition champions like to talk about. The massive increase in demand for various metals and minerals coming from transfer projects has largely failed to materialize so far. Lithium prices are low. Copper is down. So is the demand for EVs. Miners are justified in their wait-and-see approach.

Yet, unlike migration, artificial intelligence appears ready. It has a lot of momentum building up behind it, and it really only needs metals, minerals, plastics, and electricity. Then AI will become a real problem for transition.

By Irina Slav for

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