The AI Energy Boom: A Climate Tech Crossroads | Project Frame March 2025 Community Meeting

The Project Frame’s community recently delved into a critical and rapidly evolving topic: the intersection of climate tech and the explosive energy demands of artificial intelligence.  

What emerged during the conversation with Michael Kearney, General Partner at Engine Ventures, Jake Jurewicz, CEO of Blue Energy, Cynthia Liao, CEO and co-founder of Vertical Horizons, and Andy Lubershane, Partner and Head of Research at Energy Impact Partners, was a stark picture of a world grappling with unprecedented energy consumption demand driven by AI data centers. 

Disclaimer:  Project Frame is not a regulatory body, nor should its content be considered financial advice. Methodology guidance produced by Project Frame represents our contributors’ consensus and no one singular entity. Our work is intended for readers to review and use their best judgement to accelerate GHG mitigation with transparency and accountability. Numbers used in Case Studies are fictional and meant for educational purposes only. 

We're witnessing a surge in electricity demand that has necessitated a massive construction boom, with AI computations dwarfing the power requirements of traditional searches. This surge isn't just a blip; it's a generational shift that will reshape the energy landscape for decades.

“If you think about it at the very smallest level, a ChatGPT query is about 10x the amount of power required as a Google search," Kearney said, helping put this technological phenomenon into perspective. Kearney has an interdisciplinary background in clean energy transition pathways and climate change mitigation, working with Engine Ventures to deploy new technologies to “solve some of the world's greatest challenges.”

This demand surge, however, is colliding with a supply crunch. The power sector is facing bottlenecks at every level, from generation to transmission. Renewable energy integration, once a beacon of hope, is encountering challenges due to grid congestion. 

To bridge the gap, there's a resurgence in natural gas generation, raising concerns about climate goals. The boom in data center construction across the US will require approximately 47 gigawatts of power capacity by 2030, with roughly 60 percent of this demand expected to be met by natural gas, proliferating the fossil fuel industry if no alternative action is taken. Simultaneously, the manufacturing of gas turbines is experiencing severe supply constraints.

Efficiency Measures and Nascent Technologies

A focus on efficiency extends the conversation beyond generation. Within data centers, advancements in power semiconductor chips, higher voltage power delivery, and integrated voltage regulators promise substantial energy savings. 

“I think we're going to see a lot more [efficiency measures] within the four walls of the data center itself but, I think we need to think beyond that in order to solve the problem," Lubershane said, reminding us that the grid is a system and that solutions must take a systems-level approach to this issue. 

Lubershane is globally recognized for his thought leadership on the course of the energy transition. He has spent the past 15 years analyzing the impact of new technology on energy markets, from renewables to storage to electrification. 

There is still a huge need for efficiency innovation, since most data centers have already capitalized on the lowest-hanging fruit, like LED lighting. 

"It's a really interesting opportunity for those of us who are … outside of the AI and data center world to actually push forward a whole bunch of nascent technologies that have been a little bit held back," Liao said, pointing out the exciting possibility for downstream innovation and cross-industry collaboration. 

Liao’s company, Vertical Horizons, specializes in high-density, high-efficiency, fast-switching power transistors for which she draws upon her background in international development, particularly in the realms of improving access to healthcare and renewable energy infrastructure development. 

The Nuclear Revival

Amidst these challenges, nuclear energy is experiencing a notable revival. Its reliability and zero-carbon emissions attract renewed interest among governments, corporations, and communities, though not without apprehension. 

Nuclear comes with its own risks to human and planetary health: The most notable nuclear meltdowns and failures include the Chernobyl disaster (1986), the Three Mile Island accident (1979), and the Fukushima nuclear disaster (2011), all of which involved significant radioactive releases and raised concerns about nuclear safety, though nuclear power has demonstrated one of the lowest mortality rate per MWh of any power source.

Innovative companies are working to tackle these concerns with the goal of streamlining nuclear deployment, aiming to reduce costs—another high barrier to nuclear projects—and construction times. 

“There's never been a better time for new nuclear in probably more than 50 years,” said Jurewicz, who has over a decade of experience building, investing in, and advising companies in the nuclear energy, climate, security, and construction sectors. The technology getting deployed today represents a paradigm shift in safety compared to the nuclear technology of the last century, he added. 

The Role of Government and the Free Market

The role of government in navigating this complex landscape is a subject of intense debate. 

"I think the role of government is critical in this massive push and not just [for] data center build out, but on all of this power infrastructure," Liao said. 

While enabling infrastructure development and streamlined regulations and incentives in key areas are seen as crucial, there's also a strong emphasis on market forces driving innovation. 

"I think it's really important for new energy technologies to figure out how to attract commercial debt financing as quickly as possible and to build their business in a way that does not at all rely on government subsidies [or] support," Jurewicz said.

Creative partnerships between hyperscalers—the tech giants fueling this energy boom—and utilities are also emerging, exploring demand-side management solutions. They are taking on a larger share of the risk associated with developing new power generation facilities.  

A Generational Moment to Work Together

“I think this is a generational moment … in terms of people working in the sector,” said Lubershane. ”The best way that we've been able to characterize this generational moment is this metaphor of a gauntlet. It's a long, narrow pathway that the sector has to navigate for the next 20 to 30 years." 

Ultimately, the AI energy boom presents both immense challenges and opportunities, requiring a collaborative, innovative, and forward-thinking approach to ensure a sustainable future. This conversation underscored that AI may not be inherently good or inherently bad, but it can be an accelerator for either, depending on the path taken. 

"None of this happens in a vacuum. It's all about the people who are doing it,” Kearney said. “We now have a ton of really motivated folks who are putting time into changing these circumstances. And that gives me hope on a day-to-day basis.”