2025 AI Index Report

Surprised not to see a whole chapter on the environment impact. It's quite a big talking point around here (Europe, France) to discredit AI usage, along with the usual ethics issues about art theft, job destruction, making it easier to generate disinformation and working conditions of AI trainers in low-income countries.

(Disclaimer: I am not an anti-AI guy — I am just listing the common talking points I see in my feeds.)

Every time I have seen it mentioned, it has been rolled into data center usage.

Is there any separate analysis on AI resource usage?

For a few years now it has been frequently reported that building and running renewable energy is cheaper than running fossil fuel electricity generation.

I know some fossil fuel plants run to earn the subsidies that incentivised their construction. Is the main driver for fossil fuel electricity generation now mainly bureaucratic? If not why is it persisting? Were we misinformed as to the capability of renewables?

There's a couple of things at play here (renewable energy is my industry).

1. Renewable energy, especially solar, is cheaper *sometimes*. How much sunlight is there in that area? The difference between New Mexico and Illinois for example is almost a factor of 2. That is a massive factor. Other key factors include cost of labor, and (often underestimated) beautacratic red tape. For example, in India it takes about 6 weeks to go from "I'll spend $70 million on a solar farm" to having a fully functional 10 MW solar farm. In the US, you'll need something like 30% more money, and it'll take 9-18 months. In some parts of Europe, it might take 4-5 years and cost double to triple.

All of those things matter a lot.

2. For the most part, capex is the dominant factor in the cost of energy. In the case of fossil fuels, we've already spent the capex, so while it's more expensive over a period of 20 years to keep using coal, if you are just trying to make the budget crunch for 2025 and 2026 it might make sense to stay on fossil fuels even if renewable energy is technically "cheaper".

3. Energy is just a hard problem to solve. Grid integrations, regulatory permission, regulatory capture, monopolies, base load versus peak power, duck curves, etc etc. If you have something that's working (fossil fuels), it might be difficult to justify switching to something that you don't know how it will work.

Solar is becoming dominant very quickly. Give it a little bit of time, and you'll see more and more people switching to solar over fossil fuels.