10/29/2024 | Press release | Distributed by Public on 10/29/2024 09:14
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Commentary by Joseph Majkut
Published October 29, 2024
This commentary is part of a report from the CSIS Economic Security and Technology Department, titled Staying Ahead in the Global Technology Race. The report features a set of essays outlining key issues on economic security for the next administration, including global technology competition, industrialization policies, economic partnerships, and global governance.
As the United States adopts a more assertive approach to economic security and technological competition, it must adapt its energy policy. These efforts promise an economy that will be better able to weather global challenges, revitalizing regions with innovative technology and productive jobs and establishing a strong lead in twenty-first-century technologies. However, realizing the potential of these industries will require more energy, placing demands on the electric grid and necessitating a smart approach in order to be successful.
Under current policies, the United States is building a new industrial base in strategic technologies. Enabled by recent legislation-the CHIPS and Science Act and the Inflation Reduction Act-semiconductor fabs and battery factories now account for 60 percent of manufacturing investment. As these factories come online, they will introduce substantial new power requirements, as documented in a recent report from CSIS. The new TSMC semiconductor fabrication facility in Arizona will require more than a gigawatt of power. In Georgia, where manufacturing is a key driver of economic growth, planners are expecting six gigawatts of additional demand, more than twice what was added by the recently finished Units 3 and 4 at the Vogtle nuclear plant.
For a sector that has seen negligible growth over the past two decades, these are substantial increases, and they do not even account for the rapidly growing power demands involved in artificial intelligence (AI). Akin to factories, AI datacenters transform data and electricity into valuable tokens. The more value AI creates, the greater its associated power demands become. Optimistic projections suggest AI datacenters could consume up to 10 percent of grid capacity by the end of the decade. Such an expansion has the potential to generate immense value but could be hindered by an inability to provide sufficient energy.
To achieve these goals, it is important to continue reducing greenhouse gas emissions. The companies driving growth in AI and advanced manufacturing are committed to clean power. And policymakers, on a bipartisan basis, recognize the advantages of producing goods with lower emissions. Compared to adversaries like Russia and China, the United States produces key strategic goods with fewer emissions. As global markets increasingly prioritize sustainability, cleanliness will become synonymous with competitiveness.
The next administration will be well-positioned to build upon recent industry innovations and policy developments, leveraging U.S. natural resources and ingenuity. Three key areas are particularly important to unlocking the United States' economic and strategic potential:
To seize these new opportunities, the United States must confront familiar challenges: maintaining affordability, reducing emissions, and protecting reliability. By pursuing immediately available options today and zero-carbon options in the medium term, the United States can realize progress toward strategic goals and improve its competitiveness without sacrificing climate outcomes. By uniting bipartisan support and implementing smart, regionally adaptable solutions, the United States can seize this opportunity to ensure a sustainable and prosperous future for all.
Joseph Majkut is the director of the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.
Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).
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