A new era of electricity demand and climate pressure

The US and much of the developed world are experiencing profound growth in electricity demand. Two main forces are driving this trend. First is the push to electrify existing uses, such as vehicles and heating, to improve energy security, enhance system efficiency, and reduce air pollution. Second is the growth of energy-intensive sectors like manufacturing, telecommunications, data centers, and artificial intelligence (AI).

Among these drivers, AI is creating unique demands that catalyze specific investments in electric power generation. Astonishing AI data center buildout, led by a handful of large technology firms (sometimes called “hyperscalers”) and their utility and construction partners, is accelerating energy consumption. These firms prioritize speed. When asked for their top five criteria for bringing new AI infrastructure online, one executive responded: “Speed, speed, speed, cost, and carbon emissions.”  

Data centers require reliable, always-on power, which differs from other use cases such as residential or commercial, which do not need the same amount of power across all hours. While hyperscalers and their partners are investing in renewables, nuclear, and geothermal energy at a remarkable clip, those carbon-free resources alone do not yet meet the exploding demand for firm power. 

Natural gas provides firm power but drives emissions higher

The mismatch between data center power needs and variable renewable generation is fueling a boom in natural gas-fired power generation. The pipeline of new natural gas-fired power plants is enormous. The plants under construction would by themselves add roughly 25 million tonnes of greenhouse gases each year to the air and oceans. The full suite of plants in planning is nearly ten times larger. Existing gas plants are also being used more and staying online longer. 

FIGURE 1: New natural gas generation for US data centers: under construction, in pre-construction, and announced. An additional 16 GW could not be attributed to a specific year. Adapted from Global Energy Monitor.

This rapid buildout is creating tension with corporate climate goals. Hyperscalers remain seriously committed to reducing emissions, but their ability to hit those targets is undermined by the need to procure new, large-scale electricity generation quickly.

Carbon capture aligns with data center energy demands

Carbon capture and storage (CCS) is one way to bridge the gap. Data centers operate continuously, even though their power consumption levels fluctuate. This suits the duty cycles of natural gas turbines and CCS facilities well. The potential to reduce direct emissions is profound: today’s CCS technology can capture 95% or more of CO₂ emissions at competitive costs in many markets.

This has led to a resurging interest in the concept of capture-ready gas power generation. New natural gas power plants can be built and brought online in 18 months. In a capture-ready plant, the developers integrate the necessary interfaces and reserve additional land, water, and energy to enable a carbon capture project to be built at a future date. In favorable locations, carbon capture can be added to a capture-ready plant in 18-24 months.  

However, past experience shows that capture-ready plants rarely deliver. The ambition and commitment of the developers were contingent on policy and market signals that were either too small or never materialized. While the base plant may have made economic sense in terms of energy value for investment, it does not appear anyone was willing to pay the climate premium for CCS.  

As David Hawkins of the Natural Resource Defense Council famously said, “If your plant is capture ready, my driveway is Ferrari ready.” To bring David’s humorous analogy back to the specifics here: don’t build a new driveway without at least a downpayment on the car.

What it means to build capture-committed plants

A better approach is building capture-committed plants, namely facilities that integrate CCS from the start. To be capture-committed, project developers must:

• Identify geologic storage for the many millions of metric tons these plants will emit each year over the next 20-30 years.

• Plan reliable CO₂ transportation from power generation to geologic storage by pipeline, rail, barge, or truck.

• Engage credible vendors of carbon capture technology that serve their needs and fit their goals.

• Fund front-end engineering design (FEED) studies.

• Arrange, or help to arrange, financing for the construction, commissioning, and operation of all necessary components in the CO₂ capture, transportation, and storage value chain.

• Ensure natural gas supply has near-zero fugitive methane emissions.

• Partner with local and frontline stakeholders to incorporate community impact into project planning, design, and financing.

Capture-committed plants send strong market signals. They help build the permitting pathways and develop the workforce, infrastructure, and community acceptance needed to avoid extra expense and delays. Done well, early commitments and investments will likely create repeatable models that reduce build times and costs.  

A path toward power that’s clean, firm, and future-ready

Eventually more carbon-free power in the form of renewables, nuclear, and geothermal energy will be deployed to serve national and international electric load growth for all types of electrification. Over time, these resources will likely displace natural gas. Until then, hundreds of millions of tons of CO₂ will be emitted each year unless commitments are made to take tangible action now. 

Capture-committed natural gas-fired plants offer a pragmatic solution. With the right planning, financing, and community engagement, they can provide reliable power without locking in emissions, and they can deliver enormous benefits compared to uncontrolled operation. Federal and state governments can accelerate this transition by honoring and increasing CCS grants, supporting shared infrastructure, and streamlining permitting for CCS plants as they have for other clean energy supplies. These investments will enable the construction of cleaner, more resilient power infrastructure for the industries driving demand, from AI data centers to heavy industry.

Carbon Direct helps organizations design and deliver capture-committed projects that align with real climate goals. Contact us to learn more.