Dan Yergin Is Concerned About AI-Fueled Boom in Electricity Use

(Bloomberg) -- More than 7,000 people are headed to Houston this week to attend CERAWeek by S&P Global with a key question in mind: how to meet increasing demand for power amid the transition to clean energy. Daniel Yergin, vice chairman of S&P Global, offers a window into that future.

Yergin, who wrote the Pulitzer Prize-winning book , will be the voice of the conference and lead more than two dozen panels featuring heavyweights from government, the oil and gas sectors and tech.  Peak oil demand along with the geopolitics of oil and gas likely will be a key focus, as will mining, he said. Yergin also expects a lot of buzz on artificial intelligence and other new technologies. Here’s what he had to say ahead of the conference. Answers have been edited for length and clarity.

What are you most excited to hear about?

The collision between energy and geopolitics, the struggle to define what (the) energy transition actually means and the turnaround on electricity. Concerns about electric power that really were not there before, that’s going to loom really large — and it’s not just a US question, it’s a global question. The return of energy security is a concern. It was there last year, but it’s going to be much more prominent this year.

What are you fundamentally concerned about in regards to electricity —  that there won’t be enough? 

The surge in electricity demand that’s coming with aspects of the energy transition, and not only the energy transition but data centers, AI. Is the capacity going to be there? That used to be a developing world question. Now it’s also a developed world question. It’s the capacity to move electricity from where it’s generated to where it’s needed, but also inflation and supply chain issues have affected some of the rollout of renewables even though the scale continues to grow. We saw last year coal consumption increased globally. A big question is the role of natural gas in terms of a complement to wind and solar. That’s going to be much discussed at the conference.

Given the US has become the world’s largest exporter of liquefied natural gas, what do you think of the Biden administration’s freeze on new LNG export projects ? 

Let me put it this way: That will be a very big topic of CERAWeek and I think (US Energy) Secretary (Jennifer) Granholm will address that Monday. People will be very attentive to understand what it means. And it’s not only the US LNG exporters, but the Europeans and Japanese will be listening very closely because obviously they regard the US to be a reliable supplier. The key question is clarifying and understanding the thinking behind the pause and how that pause will be carried out. People will be looking for details. 

Do you think we’re going to hit peak gas demand in the US with the growth of renewables and does that make LNG even more critical? 

One thing I was looking at is how US gas supply continues to increase and where does that supply go? Low gas prices are attributed to warm weather. But also if you look at the supply growth, it just keeps continuing. Rising US oil production means more natural gas production as well. Without US LNG, US oil would have been bottled up. One of the things we’re going to hear at CERAWeek is the geopolitical significance of US oil and gas production and how critical it’s become.

What’s striking is one would have expected with two wars and a third struggle — the proxy war in the Red Sea and everything going on in the Middle East as well as the Ukraine war — you would have expected oil prices to spike. The reason they haven’t spiked is because of the surge in the Western hemisphere and in particular because of the dramatic turnaround in the position of the United States.

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