In today’s edition:
— Diesel crunch threatens data center power security plans
— Trump’s SEC threatens large fund managers for climate proposals
— How New York City rebuilds to become greener, more resilient
— UNICEF: 347 million children at risk from El Niño threats now
— Water bills surged more than other costs in U.S. homes over past 10 years
Two days into the so-called “energy ceasefire” in Ukraine, Russia is still attacking and diesel prices are as high as ever, battering industries from trucking and transportation to construction, mining and yes, even data centers.
Amid all the furor over the environmental threats of data center growth, and particularly the fuel they use to power the AI development at them, few investors realize that the vast majority of data centers use diesel generators as backup for any power emergencies. Diesel generators are the easiest and quickest to start when the power goes down, but also the dirtiest.
The surge in diesel prices to unprecedented levels this summer will hit data center development hard as big tech companies seek to access enough fuel for their backup generators. The backup strategies are important as the amount of energy the data centers intend to use, and in many cases how that energy is taken from community electric grids, is still very much in question.
The tech companies behind the data centers are also contributing to the massive demand for diesel that results in the prices soaring when there is not enough supply. Part of this is obviously driving President Donald Trump’s desire to lower prices before the midterms, which led to his foolhardy effort to lift export restrictions on Russia over the weekend.
There are still plenty of other environmental obstacles for the data center hyperscalers. Finnish regulators this week halted a massive data center project by Google in the country after it cleared more than 700 acres of forest around the project without proper assessment procedures.
But the threat of a prolonged shortage of diesel fuel, in addition to its impact on so many other industrial companies, hangs heavy over the data center story as the midterms approach, and by extension the AI investment thesis overall.
If you have ideas or suggestions for us, contact me directly at dcallaway@callawayclimateinsights.com.
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