Romito highlights global decarbonization challenges at Power Progress Summit: Part 2
11 November 2024
In his remarks on Day 1 of the Power Progress Summit, Dan Romito, a managing director and partner at Pickering Energy Partners, said that China and India’s lack of effort was undermining the energy transition and our global aspirations to achieve net zero.
“We can decarbonize all we want,” he said. “If the United States and Europe, which is collectively one-fifth of global emissions, go to net zero, you still have to account for the other 80 [percent]. That is the problem.”
Later in his presentation, he doubled down on his claim by saying that our growing need for electric power is derailing our net zero goals, as well.
“The pursuit of net zero inherently makes a ton of sense,” Romito said. “There are margin considerations, there are societal considerations [and] there are competitive considerations. We should pursue net zero. But to think that we’re going to attain it — sorry, guys.”
Powering Generative AI
Romito cited data from statista.com that said the electric power industry contributes about 31 percent of global carbon dioxide (CO2) emissions — the largest share — whereas transportation comes in second place at about 21 percent. Poised to exacerbate this issue is one of the largest global economic trends: generative AI.
Image: JD8 via Adobe Stock
“Does anyone know what just took place in Ireland?” Romito asked. “What did they tell Google? They said no to a data center. Why did they say ‘no, thank you’ to the data center? They didn’t have enough power to satisfy it.”
In terms of anticipated power, Romito said the amount needed to power generative AI is significant. He added that for a single search, ChatGPT uses more electricity than is required to charge a smartphone. A March 12, 2024, story in Forbes would seem to bear this out, as it said ChatGPT’s daily power usage is almost equal to that of 180,000 U.S. households.
To further explain this need for power, Romito used Ashburn, Va. — which he called “data center alley” — as an example.
“Seventy percent of the world’s internet traffic goes through Ashburn, Va.,” he said.
Romito noted that the largest contributor to electric power in the Ashburn area is natural gas at about 60 percent. This is followed by nuclear power at about 30 percent as well as 8 – 10 percent renewables, which include wind and solar.
“Why is that?” he asked. “Number one, it’s super reliable. You can’t have data centers go out. Number two, mathematically, that mix of variables results in about a 30 percent cheaper electricity rate than the national average. It’s affordable, it’s reliable and you can map these things out.”
However, Romito said that if the energy mix in the Ashburn area was extrapolated to the entire U.S., we would need about three times as much electricity from natural gas as we currently generate, which is about 1.81 terawatt hours according to U.S. Energy Information Administration data cited by Romito.
“If we take into account Virginia’s energy mix — it’s 30 percent cheaper — and we need three times the amount of electricity, there are not enough windmills or solar farms in the world that would meet that demand,” Romito said.
He added, “If we want generative AI, if developing economies want reliable and affordable electricity, we’re not going to net zero.”
Minding Decarbonization Goals
According to Romito, realities such as this mean companies need to think carefully about their decarbonization goals.
“In every single sector — some more than others — but every single sector, there is a delta between what the goal is and what economic reality actually entails.”
As an example, Romito cited data from Google regarding its Scope 1, 2 and 3 emissions, which indicated its plan for achieving net zero by 2030 has already been derailed by investments in AI infrastructure. Starting in 2020, the divide between the CO2 emissions goal and actual emissions has grown to 8.1 million metric tons. It is expected to continue to widen.
Romito showed data from an Accenture report saying that of the world’s largest companies having a 2030 net zero commitment, 93 percent will fail unless they are able to at least double the rate at which they are currently reducing their carbon emissions. He added that McKinsey data shows achieving net zero by 2050 will mean reducing CO2 emissions by more than 23 gigatons.
“Are we going to get rid of 23 gigatons of carbon? No, we’re not,” Romito said. “Again, the pursuit of net zero makes total sense, and this is where carbon credits come into play.”
According to Romito, many large companies, such as Microsoft, Google and Amazon, are buying carbon credits “like they’re going out of style.” He added that’s because “you can kill a variety of emissions birds with one carbon credit stone.”
As an example, Romito talked about methane wells, which he called a serious problem in the U.S., as methane is a greenhouse gas (GHG).
“We are leaking about 300,000 metric tons of methane every single year,” he said, adding that a solution would be to “plug the wells, get the credits, sell the credits [and] use those proceeds as cash flow to decarbonize operations within the supply chain.”
Despite such a suggestion, Romito said the issue with carbon credits is that they’re in their infancy.
“We need the carbon credit markets to mature,” he said. “We need realistic solutions and realistic financial instruments and realistic technologies to mature.”
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