When Demand for Energy Outstrips Supply

When the demand for energy outstrips the supply of clean energy sources, the decarbonization movement suffers. 

Consider a few examples you may not have heard of that demonstrate the complex dynamics of the energy transition.

First, there is the case of the startup CarbonCapture Inc., a carbon capture and sequestration (CCS) operation that builds facilities to remove CO2 from the air and store it permanently by returning it to the long carbon cycle underground. Sightline Climate (CTVC) reported earlier this month that CarbonCapture has scrapped plans to build Project Bison, the largest CCS facility to date in Wyoming. The issue is that the company simply cannot get access to enough clean energy due to competition from data centers and crypto miners. Because they don’t want to dilute the impact of their efforts by using carbon-based energy to pull CO2 from the air, they’ve decided to seek another location where they can access an ample supply of non-carbon-based energy.

Increasing energy demand is also contributing to a bit of a resurgence of the fossil fuel industry. About a year ago, for example, the International Energy Agency (IEA) released a report showing that coal demand hit an all-time high in 2023. As CNN reported at the time, “Panasonic built a new electric vehicle plant in Kansas to aid its transition to clean energy. But the factory’s vast energy needs have led the county where the factory is located to extend the life of a local coal plant.” 

You read that correctly. Demand for clean energy solutions is extending the life of the highest carbon-emitting and dirtiest energy source. How’s that for a conundrum?

Another example – earlier this month, the The Seattle Times published a story with the headline “AI boom is driving a surprise resurgence of U.S. gas-fired power.” They wrote, “From Florida to Oregon, utilities are racing to meet a surge in demand from AI data centers, manufacturing facilities and electric vehicles.

The Bison Project and the Panasonic project are both good illustrations on the part of the producer to supply the market with clean energy. But the energy demand is associated with what the user of the energy would support. The Panasonic case, especially, illustrates that what the user wants is energy, pure and simple. Neither CarbonCapture nor Panasonic could supply the demand sufficiently with just clean energy.

Resource Availability is one of the elements of the PRISM framework for systems-based contextual analysis that we use at Tilt Global. Understanding not just how your strategic decisions are constrained by access to certain resources but how decisions you make will ripple through the available resources for a given context is critical to effective decision-making.

These are the sorts of complex questions we are set up to help you think through.