Will the AI race with China keep up momentum for clean energy?

In the wake of Donald Trump’s election last month, there was alarm from the clean energy sector about how much things would change. 

In his second administration, the former president has said he plans to dismantle the Inflation Reduction Act, which offers key tax credits encouraging the deployment of clean energy. And he has said he plans to gut federal agencies that are implementing environmental regulations. The latter would be a continuation of the work of his first term, when he rolled back more than 110 environmental rules. Those included replacing an Obama-era rule that limited emissions from coal plants and weakening the Endangered Species Act, in part to facilitate new mining and energy projects.

However, there is one marked change in how Trump is talking about energy: the focus on artificial intelligence.

In the announcement of his National Energy Council, for instance, Trump included winning the AI “arms race with China (and others)” as one of the reasons for “cutting red tape” and expanding “ALL forms of Energy production to grow our Economy, and create good-paying jobs.”

Despite the deregulatory agenda, that AI focus has meant that clean energy momentum is likely to continue. In fact, much of what the incoming administration has said about its plans — especially in the announcement of the cross-departmental National Energy Council — suggests that, actually, there may be continuities with what the Biden administration has done.

Shane Londagin, a senior policy advisor for innovation for center-left think tank Third Way’s climate and energy program, characterized the Trump’s focus as coming in three parts: “energy dominance,” a manufacturing renaissance, and AI superiority — and competition with China is a throughline throughout all three.

Londagin doesn’t expect to see a “huge landscape shift” on either manufacturing or energy. Encouraging the country’s “AI superiority” over China, however, could involve changes that could actually facilitate the deployment of more renewables on the grid. 

The AI energy nexus

The cross-departmental National Energy Council will include “all Departments and Agencies involved in the permitting, production, generation, distribution, regulation, transportation, of ALL forms of American Energy.” The goal: to increase baseload power on the grid to meet demand, as load grows for the first time in decades. 

That load growth is coming from multiple trends, including electrification and the onshoring of manufacturing. But, especially given Trump’s alignment with major tech players like Elon Musk and Peter Thiel, it’s meeting the needs of new data centers for the AI boom that is driving this focus on baseload power.

That power will “ensure that America has the power to serve all of our needs without the devastation of blackouts and brownouts, and to WIN the battle for A.I. superiority,” Trump wrote.

Emily Domenech, senior vice president at Boundary Stone Partners and former senior policy advisor to the Speaker of the House under both Kevin McCarthy and Mike Johnson, said that one key difference between the parties’ approach to load growth and the need for more power is motivation.

“I think Republicans look at the AI race and say, ‘we need to build as much energy as possible here in the United States, so we can win that,’” Domenech said, which includes natural gas as well as renewables. “I think the clean energy agenda says we need to build as much clean energy as we possibly can in order to meet that demand.”

Key to getting that baseload power online, though, is getting more power online, more quickly. 

“If you were to really compete with China on a on AI, what would you do?” said Londagin. “Well, you would allow the industry to flourish, which means you give them the electricity they need and are asking for. To do that, you need to massively scale up our transmissions network. You need to supply that, ideally, with clean, firm, reliable power.”

Of course, the “clean” element of that supply is less a GOP priority. But any efforts to get energy online more quickly will inevitably benefit clean energy, which represents the bulk of projects that are languishing in years-long interconnection queues. 

The National Energy Council goals of streamlining permitting and transmission decisions echoes a similar statement made by the Biden administration in April, when the Department of Energy unveiled two final rules to reform the process. However, the executive has limited tools to do so without the cooperation of Congress. In July, Senators Joe Manchin (I-W.V.) and John Barasso (R-Wyo.) introduced their bipartisan permitting bill, which would speed the building of all kinds of energy projects, as well as mining. 

While that bill has only a slim, and narrowing, chance of passage during the lame duck session, Domenech said she is “confident there will be an element of permitting reform included in the reconciliation package” in light of the GOP’s desire to streamline permitting.

And especially given the tech sector’s ambitious clean energy goals, demand for alternatives to fossil energy is sure to endure. While powering a data center entirely with renewables is challenging without abundant storage, tech companies are increasingly investing in clean baseload power options like geothermal and nuclear.

That said, gas retains its appeal for tech companies scrambling to get massive data centers built. In the weeks post-election, it was announced that Entergy is proposing a new $3.2 billion gas plant to power a new Meta data center in Louisiana.

“We’re going to see more of that in the coming months,” Londagin said, “and definitely in the coming years.”. 

Manufacturing and energy dominance 

Londagin doesn’t think the council’s other two priorities will involve dramatic change.

Manufacturing has already ratcheted up under Biden, largely as a result of key pieces of legislation such as the bipartisan infrastructure law, the CHIPS Act, and the IRA. And there’s potential for much more manufacturing across the United States, especially for the clean energy equipment like batteries and electric vehicles.

But Domenech said that “most Republicans would say that there's a little bit of a disconnect between the regulatory policies that the Biden administration has pushed or advanced and that desire to reshore manufacturing.” She pointed to stricter air quality standards that can make it more difficult to permit industrial facilities, like the PM2.5 standards updated in February, as an example. 

That difference in regulatory outlook, she added, is the “biggest difference between the two areas of [manufacturing] policy.”

Meanwhile, the drilling for more oil and gas that Trump has promised to ensure the country’s “energy dominance” is largely already in the works. The country is producing record amounts of oil. Solar deployment has also surged in recent years, representing over half the power added to the U.S. grid in 2023.

“We're already, I think, by any metric, energy independent, energy secure, and really prioritizing an all-of-the-above approach,” Londagin said.