Crypto News: DeepSeek scrambles the AI-emissions equation

DeepSeek mania has taken the world by storm. Today's newsletter looks at what it means for emissions, utilities and the grid. You can read and share a full version of this story on Bloomberg.com. Plus, a look at a startup that wants to transmit energy via superconducting, liquid nitrogen-chilled cables. For unlimited access to climate and energy news, please subscribe.

An AI emissions reprieve?

By Michelle Ma and Mark Chediak

It took just a single day's trading for Chinese artificial intelligence company DeepSeek to upend the US power market's yearlong hot streak premised on a boom in electricity demand for artificial intelligence.

AI's energy needs have led companies such as OpenAI, Alphabet Inc. and Microsoft Corp. to seek new sources of power, such as shuttered nuclear plants. It has also complicated their ambitious climate goals. DeepSeek's model appears to be more efficient and can achieve the same results for a fraction of the energy use, which may mean AI will have a smaller climate impact than thought.

The DeepSeek development "calls into question the significant electric demand projections for the US," analysts led by Julien Dumoulin-Smith at Jefferies wrote in a note on Monday. AI represents about 75% of overall US power demand forecasts through 2035 in most projections, Jefferies said.

A DeepSeek artificial intelligence logo on a laptop. Photographer: Andrey Rudakov/Bloomberg

Some researchers believe AI power demand projections were already too high even before DeepSeek threw cold water on them publicly this week. The "gargantuan" estimates were more reflective of utilities' desires to pump up investment in grid infrastructure than reality, said Stephen Jarvis, an environmental economics professor at the London School of Economics.

"It felt like the beginnings of a tulip craze," said Eric Gimon, a senior fellow at clean energy think tank Energy Innovation, who pointed out that efficiency increased amid previous surges in data center construction, blunting energy growth.

Still, even if DeepSeek can drive down AI electricity consumption, the industry will continue to need power. And while AI's needs are now less certain, power demand is still going to climb from homes and factories that are increasingly running on electricity, said Nikki Hsu, a utilities analyst for Bloomberg Intelligence.

Big tech companies have attempted to find clean power to keep data centers running around the clock. The market has been especially strong for nuclear energy. Notable examples include a deal Microsoft inked with Constellation last year to restart the Three Mile Island plant and Meta Platforms Inc. announcing it was seeking up to 4 gigawatts of nuclear power — enough to provide electricity for millions of homes — to help power its data centers in December.

Those moves are partly in response to companies being off track to meet their climate goals. Microsoft's emissions were 30% higher last year compared to 2020 while Google's emissions were up 48% compared to 2019, in both cases largely due to AI. Energy use projections for the coming decades are even more extreme and largely driven by AI: in Sweden, it's expected to double this decade while in the UK, demand was forecast to rise 500% over that same period.

DeepSeek relies on a much lighter model, which should offer a pathway to lowering AI emissions. However, Hsu cautioned that many questions remain about the potential impact of the company's technology on the climate. "Nobody knows if the chips are really more efficient. But it seems like there's a lot of concern," she said.

More competition and innovation in AI may also only spur greater power demand, something known as the Jevons paradox.

The AI arms race could further spur more widespread use. The US was already pushing to beat China, with Trump last week touting $500 billion investments as part of Stargate. DeepSeek's emergence could redouble those efforts.

"If the US wants to be a leader in AI going forward, we need to make sure we'll be able to power all those data centers," said Benton Arnett, senior director for policy and markets at the Nuclear Energy Institute trade group. He said companies developing nuclear projects are unlikely to cancel them based on today's news.

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AI vs. climate tech

$10.3 billion

The amount raised by climate tech companies in the third quarter of 2024. AI companies raised more than double that at $21.4 billion.

Out of harmony

"The data center is a very large load. Take your house and increase that by 10,000. That is the difference between your house and a data center."

Hasala Dharmawardena

Senior member, Institute of Electrical and Electronics Engineers

AI data centers are multiplying across the US and sucking up huge amounts of power. New evidence shows they may also be distorting the normal flow of electricity for millions of Americans. The term for the issue is "bad harmonics."

Superconducting, super-cool cables

By Akshat Rathi

Massachusetts-based Veir, Inc. is betting that superconducting wires will be an answer to surging electricity demand partly driven by AI (for now), and it's preparing for the first large-scale deployment of its technology.

The startup wants to replace sagging metal cables typically strung between pylons or poles with similar-sized black pipes. Inside, there won't be a tangle of metal wires but superconducting tapes — made of a special material that carries electricity without losses — surrounded by liquid nitrogen at -196C (-321F). Veir claims the tech upgrade allows cables to carry 10 times as much electricity as similar-sized aluminum cables.

Veir's superconducting cables demonstrated in use on a small scale. Photographer: Veir

Other companies have undertaken experimental deployments. One of the earliest was a German government-supported project in 2013 that involved major cable manufacturer Nexans building a kilometer-long line connecting two electrical substations in the city of Essen. The project cost €13.5 million ($14 million) and was in operation until 2021.

But, so far, there have been no large-scale commercial deployments of the technology because it's so costly. Maintaining a line at such a low temperature means installing additional equipment such as compression pumps every few kilometers, plus the further expense to keep liquid nitrogen colder than the moon after dark.

Veir's Chief Executive Officer Tim Heidel believes the company has found the solution: Instead of relying on compressors, the company utilizes the same phenomenon that cools our body through sweating.

Click here to read the full story.

More from Green

The world's oceans are warming four times faster than they were in the late 1980s, according to a new study. The alarming acceleration helps explain why 2023 and 2024 saw unprecedented ocean temperatures — and more extreme storms.

The findings have enormous ramifications for ocean health, as rising temperatures impact everything from coral reefs to fisheries. The longer-term knock-on impacts are even more concerning, including higher sea levels, more extreme storms, and more frequent and severe fires, said Christopher Merchant, lead author of the study, which was published in Environmental Research Letters on Tuesday.

Waves crash above the seawall flooding Malecon esplanade following Hurricane Ian in Havana, Cuba in 2022. Photographer: Natalia Favre/Bloomberg

Climate change means more deaths in Europe. New research shows more people will die from overheating in the coming years than the fall in deaths from extremely cold weather.

German banks need a better understanding of climate risks. Industry watchdog BaFin said financial institutions need more data on the increasing impact of events such as floods and droughts.

Trump asserts control over California water management. The president ordered US officials to override local authorities, casting the steps as necessary to boost the state's firefighting capabilities.

Weather watch

Storm Herminia triggered the worst flooding in four decades in parts of northwest France and created dangerous avalanche conditions in the Alps.

In Brittany, hundreds of people were evacuated from their homes in the department of Ile-et-Vilaine, including the city of Rennes. Further south in Guichen, the Vilaine River rose to a record level, according to Mayor Dominique Delamarre. The flooding disrupted transport and cut power to more than 2,300 homes.

Emergency services evacuate residents in Guipry-Messac, France, on Jan. 27. Photographer: Damien Meyer/Getty Images

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Worth a listen

As Donald Trump returns to the White House, Akshat Rathi speaks to Yale University historian Paul Sabin about whether recent presidential history might hold some lessons on what to expect from the Trump administration's approach to energy and environmental policy this term. Looking back at the Carter and Reagan years, Sabin says Trump's priorities — from dismantling government agencies to ramping up oil and gas production — have historical precedent. And Jonathan Lash, who was an environmental lawyer in the Reagan years, explains why he's feeling déjà vu in these early days of Trump's second term.

Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.