America’s AI Moonshot: The Economics of AI, Data Centers, and Power Consumption

Commerce, Consumer, and Monetary Affairs

2025-04-01

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Source: Congress.gov

Summary

This meeting of the Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs focused on America's "AI Moonshot," exploring both the immense opportunities and significant challenges presented by artificial intelligence. Discussions highlighted AI's transformative potential across various sectors, the substantial infrastructure demands it imposes, and the critical need for balanced policy to foster innovation while addressing environmental and societal concerns.[ 00:17:32-00:17:49 ]

Themes

The Promise and Potential of AI

Artificial intelligence is poised to revolutionize numerous sectors, including healthcare, manufacturing, and national defense.[ 00:17:57-00:18:38 ] For instance, AI is already being used for cancer screening, predictive maintenance, and improving decision-making for military personnel.[ 00:18:18-00:18:38 ] Experts project AI will have a global economic impact of $19.9 trillion by 2030 and could significantly boost U.S. productivity, potentially adding an extra $10 trillion to the economy by that year. Beyond economic gains, AI is expected to create high-skilled jobs, enhance worker productivity by up to 43%, and even improve worker morale and skills for low-skilled workers.[ 01:33:36-01:33:40 ]

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 President Trump's "Stargate" initiative, a $500 billion investment, aims to secure America's global AI dominance and ensure future economic prosperity.

Energy Demands and Infrastructure Challenges

The rapid growth of AI necessitates a massive increase in data center capacity, which in turn demands an astonishing amount of electricity. Data centers consumed 4.4% of U.S. electricity in 2023, a figure expected to rise to between 6.7% and 12% by 2028. This growth means new data centers could require an additional 70-130 gigawatts of power by 2030, equivalent to adding the entire generating capacity of California in just a few years. Key challenges include slow permitting processes for energy projects, which can take up to seven years for transmission infrastructure, and significant supply chain shortages for critical electrical equipment like transformers and switch gears.[ 00:41:00-00:41:42 ]

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 To address these issues, solutions proposed include streamlining permitting, accelerating grid interconnection, expanding domestic manufacturing of electrical components, and exploring the use of small modular reactors (SMRs) at existing power plant sites.[ 00:41:37-00:41:42 ]

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 Concerns were also raised that increasing natural gas exports could inflate domestic gas prices and hinder the nation's ability to power its growing AI infrastructure.

Environmental and Community Impacts of Data Centers

The expansion of data centers, while economically beneficial, carries substantial environmental and community costs. These facilities consume millions of gallons of water daily for cooling, exacerbating water scarcity issues in regions like Arizona, and also place a significant strain on local power grids, potentially leading to higher utility bills for residents. Furthermore, the regular testing of massive diesel backup generators emits toxic fumes, contributing to air pollution, and the development can lead to noise pollution and the loss of green spaces.[ 00:55:46-00:56:27 ]

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 Local communities often face disproportionate impacts, with data centers receiving tax breaks that can compromise funding for local services.[ 00:55:35-00:55:41 ]

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 There is a call for a national strategic plan for data storage deployment that thoughtfully considers these impacts on communities, costs, and the environment. Despite these concerns, the data center industry is continuously innovating to improve energy and water efficiency, noting that centralized computing already provides significant efficiency gains over disaggregated systems.

Regulatory Environment and Safeguards

The regulatory landscape for AI is a critical factor in America's ability to lead in this field. While a "light-touch, sector-specific" approach has fostered innovation, a patchwork of state-level regulations is emerging that could threaten this environment. Conversely, some argue that federal efforts to remove AI safeguards, such as regular testing for civil rights compliance, are problematic and could prioritize corporate interests over public welfare. Concerns include the potential for AI to be used for deepfakes, copyright infringement (as seen with Studio Ghibli and H&M), misdiagnosis in healthcare, and national security threats like autonomous weapons. Congress is urged to establish federal regulatory sandboxes to encourage innovation while developing policies that protect civil liberties and address environmental impacts.

Tone of the Meeting

The overall tone of the meeting was mixed, characterized by both enthusiastic optimism for AI's transformative potential and serious concern regarding the challenges it presents.[ 00:17:32-00:17:49 ] While speakers expressed excitement about AI's economic benefits and its ability to solve complex problems, there was also a palpable sense of urgency regarding the "AI arms race" against other nations like China. Concerns were strongly voiced about the escalating energy demands, environmental impacts, and potential burdens on local communities due to data center expansion. There was a clear debate between fostering unfettered innovation and implementing responsible safeguards, reflecting a desire to balance progress with protection of public interest and rights.

Participants

Transcript

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Mr. Josh Levi
This hearing of the Subcommittee on Economic Growth, Energy Policy, and Regulatory Affairs will come to order.  Without objection, the chair may declare a recess at any time, recognize myself for the purpose of making an opening statement.  And I'm gonna need my glasses for that.  We're here today to discuss America's AI Moonshot.   Artificial intelligence or AI is likely to become one of the most consequential technology transformations of the century.  America is seeking to redefine the possibilities of this emerging technology around the globe.   AI has the potential to transform countless economic sectors.  In healthcare, AI is already allowing providers to create cancer screening and pretreatment plans for patients diagnosed with cancer.  This could transform how our healthcare providers provide the best possible care.   In manufacturing, AI is being used to predict machine failure, allowing proactive maintenance that saves money, time, and even lives.  In defense, AI is being used to improve decision-making processes to protect our men and women in uniform.  Many more examples exist, from education to finance to government services.  Even industry will benefit from AI.  Our country has the skills,   the expertise, and the capital necessary to bring this vision to life, but what we needed most was a president who sees the importance of this innovation for future economic prosperity.  In his first news conference following his inauguration, President Trump announced the plan of Stargate, a joint venture between OpenAI, Oracle, SoftBank, and MGX to invest in AI infrastructure to propel new developments in this field.   This $500 billion investment will allow both the US and our strategic partners around the globe to unlock the next generation of AI.  Later, President Trump signed Executive Order 14179 to sustain and enhance America's global AI dominance in order to promote human flourishing, economic competitiveness, and national security.
But planning for the future of machine learning is complex, as there are numerous factors that must be considered by Congress and the administration to ensure that America's private sector will be leading the charge on AI.   Data Center power demand is reshaping how power generators and utilities plan for future demand growth and the infrastructure needed to support this demand.  According to a report by the US Department of Energy data centers consume roughly 4.4% of all US electricity in 2023.   a percentage that is expected to rise to between 6.7 and 12% by 2028.  This rapid growth is astounding and has concerning implications for both current and future power generation.  Additionally, companies are in search of qualified and skilled workers to fill the estimated 100,000 jobs that are needed to support this moonshot.   Northern Virginia, which is just across the river, is a crossroads for an estimated 70% of the world's internet traffic.  A report published in December by the Joint Legislative Audit and Review Commission found that the data center industry is estimated to contribute 74,000 jobs, 5.5 billion in labor income, and 9.1 billion in GDP to Virginia's economic, to their economy each year.   President Trump has made his intentions very clear.  America can and will become a global leader in the field of artificial intelligence.

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