Reid riffs on the energy arms race and AI addressing climate change

Could the very technology that requires massive amounts of energy to power it also be key to solving the climate crisis? This week, Reid and Aria discuss the global energy arms race and why the U. S. is lagging behind competitors like China. Reid weighs in on the environmental impact and human costs of AI infrastructure, along with mounting tensions between hyperscalers and the communities that host their data centers. For more info on the podcast and transcripts of all the episodes, visit https://www.possible.fm/podcast/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Reid Hoffman?

  I'm Reid Hoffman.

• 0:02Aria Finger?

  And I'm Aria Finger.

• 0:03Reid Hoffman?

  We want to know what happens if, in the future, everything breaks humanity's way.

• 0:08Aria Finger?

  Typically, we ask our guests for their outlook on the best possible future. But now, every other week, I get to ask Reid for his take.

• 0:18Reid Hoffman?

  This is possible.

• 0:24Aria Finger?

  Reid, great to chat with you today. We are going to talk a lot about energy. So when people are talking about AI, they often talk about the global arms race between the US and China and other players involved as well. But there's also a geopolitical energy arms race. So recently, a report from Anthropic, they highlighted that China added 400 gigawatts of electricity in 2024, while the US added only a few dozen. And the EU is now spending 250 billion plus on liquid national gas and fossil imports, but they're relying on China to source their solar and their battery tech. It seems like China is just light years ahead of the US when it actually comes to energy.

• 1:09Aria Finger?

  So my question for you is, in this energy arms race, how is the US keeping up? And do you think that this energy availability is going to be a new access in this geopolitical fight?

• 1:21Reid Hoffman?

  Well, the very quick answer is the US is doing a lousy job of keeping up. And while this is a definite criticism of the current administration, it's also a criticism of the former administration. And it already is the line of sight. We know this is going to be the new axis of AI geopolitics. It's one of the reasons why there's so many discussions in the Middle East. It's one of the things that I'm hopeful for, is the kind of thing that if the current administration was keeping its premise of being more business and AI forward, it would be driving on versus, for example, sending Marines to Los Angeles, like choice of things,

• 2:04Reid Hoffman?

  or trying to destroy American science and universities. But I'm hopeful that they'll get there. Now, the other thing that is the side thing is, are we doing the regulatory permitting, capital allocations, enabling the companies to do the capital allocations, the building of it, the resources for building, the availability of different locations, et cetera, et cetera, all of which are part of raw what? The US needs to be doing across the entire front is like, how do you essentially blitz scale on every single of these vectors and more. But you know, one of the problems with the general like cause friction with Canada is, you know, my backup plan had always been, go cut a deal with the Canadians because, you know, they have tons of hydro, clean

• 2:48Reid Hoffman?

  energy, also oil, and say, here's our business development deal that we can do with you. But of course, you know, just reading the news, what it seems to be is we're mostly just trying to irritate them. I've never seen the Canadians so pissed off with anyone as they are with us. And that's of course, because, you know, treating them with disrespect and engaging in derapores is not a good way to, you know, keep friendships.

• 3:09Aria Finger?

  Well, I mean, I just saw last week, I think they said that Germany for a day had negative energy prices, like everywhere, lots of our, you know, sort of partners or former potentially allies are shooting forward in, you know, solar, wind, et cetera. And if we alienate them, obviously we can rely on them. But so like, what happens then? Like in addition to energy, everyone is spending huge sums on this AI infrastructure. I think Meta raised their guidance to $70 billion this year on AI infrastructure. We are building data centers. And so if we can't build these data centers, if we can't get the land, if we can't get the energy, does AI then stall? Like, how big of a risk is this in terms

• 3:50Aria Finger?

  of getting to AGI and sort of AI accomplishing the goals we want it to?

• 3:55Reid Hoffman?

  Well, the what is getting the AGI, as you know, is a complicated can. So that's an entirely different question to itself, mostly because people mean different things with it, as you know. But it's, look, the refresher is what's going on with AI is scale compute to learning systems with scale data and scale talent. And part of the scale compute is it needs data centers and it needs energy. And even when you improve efficiency of algorithms, even when you get algorithms to AI at the edge, even when you get better neuro architectures, you know, neurally inspired architectures, you can do all that stuff. You're still going to need as much scale in compute as you can get,

• 4:38Reid Hoffman?

  which means data centers and energy. So it is fundamental. Now, it may be that you go, hey, we've done all these algorithmics and invention in such ways that we don't lose out entirely based on inability to deliver energy and inability to deliver data centers. And, you know, one of the, I think, you know, treasures we have as a country is that many of the most significant investing hyperscalers, including Meta, but also, you know, obviously Google, Microsoft, you know, OpenAI and others are all like massively driving this on a private ecosystem basis. But of course, are running into a whole set of the traditional, you know, think of it as the, you know, abundance was focused on, you know,

• 5:23Reid Hoffman?

  consumer prices in terms of regulatory and kind of saying, hey, look, we should be cheaper on regulation for house building. We should be cheaper on regulation for, you know, other kinds of things so that we can accomplish the social goods. We have the same issues around data centers, around, you know, energy provisioning, et cetera, even though we have a ton of private capital that is willing to do this, let alone anything else that can happen. And so you just got to solve the problem. And like I said, my backup was if we couldn't get out of our own way and enable it in the US, which we continue to seem not to be able to do, although I remain hopeful, my backup was always go to Canada. And now I think the Canadians are not so happy with us.

• 6:07Reid Hoffman?

  So we need different backups.

• 6:10Aria Finger?

  I mean, I couldn't agree more. It's like the abundance mindset. It's like, how do we reduce regulation in so many of these situations? Reducing environmental review for things that are solar farms or wind farms is like a no brainer because we need to create this renewable energy. And of course, we're also still relying on non-renewable energy. And that's just a fact of where we are. But a lot of people would say that these data centers are actually what's causing some of the environmental problems. So specifically, I'm looking at a report. It was saying that XAI had a site in Memphis and they had 35 methane gas turbines. Without proper air permits, they were releasing harmful pollutants, nitrogen oxides and formaldehydes into the surrounding community, which happened to be a historically black,

• 6:52Aria Finger?

  low-end community. They're already burdened by high asthma rates and now they're also being burdened by this additional sort of environmental harm. I read just this week that places where there was a Microsoft data center, people were going to have to limit their showers because Microsoft needed more water. So I'm not trying to pick XAI. I'm not trying to pick on Microsoft either. You know, this is just the reality in some places where there are data centers. The costs are borne by like the local people. Like, what do you say when people say like, "Well, this isn't a trade-off we're willing to make." Like, these big tech companies are putting these data centers in and it's like sort of the local people that are feeling the environmental effects.

• 7:27Reid Hoffman?

  Well, the very first thing is, obviously, local people should be able to determine, you know, "You gotta make it worth my while, whatever I'm gonna do," right? So if you're gonna do stuff that is gonna have massive health and environmental impact on me, you can't do it unless I buy into it and know what I'm buying into. Now, that being said, I think most of the hyperscalers, including Microsoft, are pretty committed to doing the right thing by both generally the environment and their local communities. And so, you know, they've been doing tons of pre-purchase orders on green energy, kinds of fusion and

• 8:08Reid Hoffman?

  geothermal and other kinds of things as ways of making this happen. They're very focused on, you know, kind of like, how do you make sure that you don't have pollutants? They're also very focused on how do you hire people from the local community, park these in places where communities get an economic boost from these. Now, you know, I am happy to pick on XAI because I don't think they care about any of this stuff, unlike, you know, the other hyperscalers. But I think that's an important thing to do. Now, that being said, You know, I think Microsoft, Google and others have demonstrated that you can build energy and you can build these data centers at speed with a green focus with all of these things. It's some more intelligence and some more work in order to do that, but that's

• 8:53Reid Hoffman?

  obviously worth doing it because you know, if you said, does it make a huge difference of, you know, X gigawatts, month one, month six, month 12, it's like, look, it's always better to be closer, but it's better to be month nine. Now, not month 50, but like month nine versus month one and to, you know, ameliorate all the health impacts. If you said you can't do that, you immediately need to do it, then you have to figure out other solutions. But those solutions are there. Capitalism and invention does solve this most often. It's one of the things that I find most frustrating in talking to a lot of the climate change people is like, look, I think fundamentally, much more than legal permitting, I think what you want is invention in technology and geoengineering for what

• 9:38Reid Hoffman?

  kind of stuff you need to do. And that's what we should be focused on getting. And the regulatory should be incenting that versus, you know, trying to be overly predictive of the whole thing.

• 9:55Aria Finger?

  So Reed, I couldn't agree more. If there are bad actors who are polluting their local community, breaking the law, they should not be doing that. We've seen especially Microsoft, Google, these companies do want to be good corporate citizens. We want people wanting AI and we want people believing in these companies and they're trying to do the right thing as they're building it. I think a lot of people just see the negative side. They say, oh, these data centers and these companies are using electricity, they're using water, they're bad for climate. But you would argue that like, no, no, no, the only way we are going to solve this climate change issue, which we actually believe is real, is with AI. So make the bull case to the environmentalists who might be listening, who are like, ah, Reed, you just don't care about the environment. What's the bull case for AI actually being the solution?

• 10:39Reid Hoffman?

  Well, two parts to answer. One is, I don't think AI is the only answer, but I think AI is a positive solution versus a decrement. I will get to that. And then second, I think that technology is the answer to climate change. That, you know, basically when you look at what is the climate change problem is, the more and more hundreds of millions of people that we have joining the lifestyle of what is considered to be middle class today. That involves new buildings, new cars, even if you say, well, we're doing electric cars. Well, electric cars also come with a carbon footprint relative to batteries manufacturer, et cetera, et cetera. And so you go, okay, what is the solution? The solution is better technologies, right?

• 11:21Reid Hoffman?

  There's no ways to limit it without technologies and include those technologies are things like, for example, carbon capture, which is too expensive right now relative to the amount of clean energy you'd have to do. But if you make the carbon capture cleaner and you make clean green energy plentiful, you can also capture carbon. So it's a technological solution. And frankly, everyone who cares about it should be trying to take the moonshots of this. Yes, we should have a cord. Yes, we should try to limit the temperature. Yes, we should, you know, kind of do things, but that's not the solution. That is simply a delay. And so the solution is technology. And part of that solution, like, for example, one of the things that generally is considered to be too questionable by most people is geoengineering.

• 12:04Reid Hoffman?

  And so geoengineering, we should be experimenting with today. Doesn't mean we should go whole hog into it, but experiment and understand. Like if we put, you know, some, you know, kind of sulfur in the upper atmosphere to try to bring down cooling, if we do a little bit, what happens? It can't be that that's like the same thing as an asteroid hitting the world, right? So like, well, fine, now we go, oh shit, doesn't really work, changes weather patterns too much, et cetera, et cetera. Okay, stop doing it. All the sulfur falls out of the atmosphere within a year. Do these experiments. And so I think solving climate change is fundamentally about technology. And we should be doing technology, technology, technology. Now, number two, you get to AI and it's an easy criticism that a lot of people say,

• 12:47Reid Hoffman?

  oh, look, it's got an exponential energy demand curve. You know, even though, you know, data centers are only call it 7% of first world energy output today and only, you know, 10 or 15% of that might be charitably, you know, thought of as AI, but it's going to be going up at a huge rate. We just talked about, you know, the gigawatts. And you go, well, okay, is that just going to put a huge burden on the system? Well, the answer is the whole point of AI is intelligence per watt. And when you begin to get intelligence per watt, you can also apply that intelligence per watt on a whole number of climate change issues. Now, this isn't the pie in the sky, science fiction. It'll be inventing fusion. You know, if we're in that universe, that's a very interesting universe to be in.

• 13:31Reid Hoffman?

  But, you know, not intrinsically that. But it's the, hey, let's analyze our grid and make the grid a lot better. Let's make all of our appliances a lot smarter. Let's be intelligent about HVAC. Let's be intelligent about washing machines. Let's be intelligent about power regulation and monitoring to be much greener and much more efficient across the whole thing. The whole point of intelligence is to be more efficient on those things. So it's not very good intelligence if it can't do that. And it's only going to get to scale. Like, we're only going to be spending massive gigawatts on it if it is good intelligence. So that should be a solvable cycle. And that's the kind of thing we need to be doing. And it's one of the reasons why I tend to think

• 14:12Reid Hoffman?

  that the electricity environment critique of AI tends to be very misplaced from a, I don't understand how intelligence could be helped to solve the climate change problem.

• 14:24Aria Finger?

  Well, and also just to reinforce your point, we do see, like, the UK, through new technologies and more efficiency, they're reducing their carbon output to the lowest in 100 years. And so, technology, to your point, is the only way out of this, especially if we actually want other people to bring into the global middle class. So appreciate it, Reid. Thank you, as always.

• 14:43Reid Hoffman?

  Always a pleasure.

• 14:50Reid Hoffman?

  Possible is produced by Wondery Media Network. It's hosted by Ari Fingler and me, Reid Hoffman. Our showrunner is Sean Young. Possible is produced by Katie Sanders, Edie Allard, Tanasi Dilos, Sarah Schlied, Vanessa Handy, Elia Yates, Paloma Moreno Jimenez, and Mulia Agudelo. Jenny Kaplan is our executive producer and editor.

• 15:14Aria Finger?

  Special thanks to Surya Yalmanchili, Sayida Sapieva, Ian Alice, Greg Beato, Parth Patel, and Ben Ralas.