A new report reveals that the United States allocated a record $338 billion toward the energy transition last year, yet the investment did not suffice to reduce the country’s overall carbon emissions. The report, released by BloombergNEF and the Business Council for Sustainable Energy, highlighted that solar energy spearheaded this transition by adding 49 gigawatts of new electrical generating capacity in 2024, surpassing all other technologies. Currently, solar and wind energy collectively satisfy nearly a quarter of the U.S. electricity demand and account for about 10% of the nation’s total energy consumption.
Simultaneously, natural gas demand increased by 1.3%, which slightly raised U.S. carbon emissions by 0.5%. This increase was mainly driven by industrial users and power plants that utilize natural gas primarily for power generation or heating.
This report emerges as the U.S. stands at a pivotal point. Since 2005, the country’s carbon emissions have decreased by nearly 16%, with emissions related to power dropping over 40% during the same timeframe. The U.S. has also improved energy productivity, generating 2.3% more economic output last year for each unit of energy consumed.
However, electricity demand is projected to rise significantly in the coming years. According to a report by Grid Strategies, the U.S. might see a 15.8% increase in electricity usage by 2029, and the choice of technology to supply this electricity could heavily influence the nation’s climate impact for decades.
The surging demand from data centers is a primary driver of new electricity requirements. Tech companies have been investing heavily in new data centers to support cloud operations and their AI objectives, accelerating to the point that half of new AI servers could be underpowered by 2027.
This has prompted tech firms to secure future power sources. Companies like Microsoft, Google, and Amazon have announced considerable investments in nuclear power, supporting startups such as Kairos and X-Energy. They are also reviving old nuclear reactors, which do not release carbon dioxide or other greenhouse gases.
Moreover, tech giants are continually incorporating renewable energy into their portfolios. To cater to the intensifying demands of data centers, Amazon has struck agreements with energy producers to add 476 megawatts of capacity, while Meta acquired 200 megawatts in one transaction and 595 megawatts in another. These deals, predominantly solar-focused, reflect the national trend towards solar energy, favored for its cost-effectiveness and rapid deployment capabilities.
The report suggests that efficiency-focused consumption may help tech companies extract more power from the grid without necessitating significantly more capacity. A study published last week indicates that adjusting computing tasks to periods of lower power demand or relocating them to regions with excess capacity could unlock 76 gigawatts of headroom in the U.S., which is equivalent to 10% of the nation’s peak power demand.
Such strategic adaptations might be necessary for the U.S. to compete globally, as the country currently trails China in capital deployment for the energy transition. Last year, the U.S. invested 1.3% of its GDP in the transition, compared to China’s 4.4%.
