Up to $80 billion is estimated to be spent on new natural gas plants and retrofits with carbon capture technology, a buildout made viable by federal tax credits set to expire in 2033. This investment, driven by deep-pocketed tech companies and oil and gas firms, aims to meet climate goals while simultaneously fueling the expanding energy demands of artificial intelligence.
At least five projects are under consideration across the U.S. to capture carbon dioxide emissions from natural gas plants connected to data centers. These include publicly touted initiatives by Google in Illinois, another Google project reportedly in Nebraska, and projects involving ExxonMobil, Chevron, and Meta. Meta has the option to add the technology to its projects.
The surge in electricity demand from AI applications is lifting nearly every type of energy technology, with natural gas being a primary beneficiary. Alex Dewar, managing director at consulting firm BCG, stated that "Unabated natural gas is being pursued by all the hyperscalers no matter how stringent their climate goals."
Subsidizing Fossil Capital
Oil and gas companies have led much of the early development of carbon capture technology. Despite high costs that have historically limited its deployment, the confluence of tech companies' climate commitments and their need for reliable, around-the-clock power for data centers is now driving renewed investment.
KR Sridhar, co-founder and CEO of Bloom Energy, asserted that big tech companies "will be the leaders in demonstrating carbon capture," predicting this leadership would help the technology "proliferate around the world." Sridhar added, "I strongly believe carbon capture use and storage will be the only way we will decarbonize the planet in a big way over the next two decades." Bloom is in early talks with "many of the hyperscalers" regarding deployment.
BCG's recent analysis indicates that gas plants paired with carbon capture are the only option consistently scoring well across cost, speed, scalability, and emissions among eight power sources for data centers. This analysis supports the continued reliance on fossil fuel infrastructure, with a technological add-on.
The federal tax credit is identified as key to making these projects viable, despite upfront capital costs remaining high even with subsidies covering some operating expenses. Dewar noted, "The biggest hurdle is the scale of the capital required," highlighting the necessity of state intervention to de-risk private investment and ensure capital accumulation.
The Limits of 'Solutions'
Despite the push, no natural gas plants currently operating in the U.S. have carbon capture equipment. Michael Terrell, head of advanced energy at Google, acknowledged that it is "still a technology that has a long way to go before it can be commercialized at scale." He added that Google is "committed to helping get it there."
Cully Cavness, co-founder and president of data center developer Crusoe, has been making comments about pursuing carbon capture opportunities for "a couple of years without much to show for it publicly." Cavness stated, "Ultimately, it's an economics question," indicating that profitability, not environmental necessity, dictates deployment. He added, "Soon we'll be able to share something."
A report from the Great Plains Institute released last week identified the Gulf Coast, West Texas, and Oklahoma as prime regions for this buildout. This geographic focus points to areas with existing fossil fuel infrastructure and land for carbon storage, further entrenching the current energy regime and the interests of fossil capital.