How is Joe Biden Boosting Sustainability in Data Centres?

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The executive order comes days before Donald Trump becomes President of the US
President Joe Biden signed an executive order to provide federal support to address national energy needs for fast-growing advanced AI data centres

US President Joe Biden has announced a significant initiative regarding the future of artificial intelligence (AI) infrastructure in the United States.

This strategic move involves leasing federal sites, specifically from the Defense and Energy Departments, to establish gigawatt-scale data centres dedicated to AI.

These ventures are not just about technological prowess but are also coupled with new clean power facilities, setting a benchmark for addressing the considerable power demands these technologies herald. 

President Biden explained that the order would “accelerate the speed at which we build the next generation of AI infrastructure here in America, in a way that enhances economic competitiveness, national security, AI safety, and clean energy."

“This renewed partnership between the government and industry will ensure that the United States will continue to lead the age of AI.”

US President Joe Biden

The timing of this announcement is particularly poignant, as it comes just before the transition of presidential power, with Biden making way for President-elect Donald Trump to take office once again.

Meanwhile, Trump himself has not shied away from prioritizing data centre expansion—a recent testament to this is his agreement on a US$20bn project with DAMAC Properties to erect multiple new data centres throughout the nation.

US government support for AI advancements

The US aims to secure its position as a leader in the AI industry, especially in developing robust infrastructure required to train advanced AI models, including the high-demand frontier models that need substantial compute power and electricity. With this objective, Biden is pushing for better facilitation of connections to the electric grid to enhance transmission development.

The US is eager to expand its data centre industry

“We will not let America be out-built when it comes to the technology that will define the future, nor should we sacrifice critical environmental standards and our shared efforts to protect clean air and clean water,” Biden said in his statement.

“These efforts also will help position America to lead the world in clean energy deployment in the context of strategic competition abroad. Some of this new capacity will also be committed for use by small businesses and startups. This renewed partnership between the government and industry will ensure that the United States will continue to lead the age of AI.”

The White House labels this endeavor to expand AI infrastructure as a national security imperative due to its growing influence on American life and safety. Further development is essential for sustaining the U.S. economy's competitiveness across pivotal sectors such as healthcare, transport and education.

Donald Trump takes office as President on 20 January and has already garnered support from big tech

Beyond economic benefits, burgeoning electricity demand for large-scale AI operations signifies a pivotal movement towards positioning the U.S. as a leader in clean energy technologies.

The administration hopes that leveraging data centres will foster cleaner energy without increasing costs for consumers.

“Domestic data centres for training and operating powerful AI models will help the United States facilitate AI’s safe and secure development, harness AI in service of national security and prevent adversaries from accessing powerful systems to the detriment of our military and national-security,” the White House explains via its announcement. 

“It will also help prevent America from growing dependent on other countries to access powerful AI tools.”

The sustainability pledge

The executive order also directs the Departments of Defense and Energy to fast-track the clean energy transition in a way that is both responsible and respectful to local communities.

Over recent months, sustainability has become an even more crucial focus in the data centre industry. Despite the rapid growth of these facilities, increasing demands on electricity have posed significant challenges in maintaining carbon neutrality.

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Addressing these challenges, Biden’s order specifically requires companies utilising federal land to purchase a considerable portion of American-made processors.

It demands that each department identifies at least three sites where private sector entities can construct AI-ready data centres, setting the stage for "competitive solicitations" to build on these federal lands.

Future prospects amidst political shifts

With Trump set to assume the presidency once more on 20 January 2025, the permanence of Joe Biden's AI strategy remains uncertain. Developers navigating the dynamic landscape of data centre demands through 2025 face myriad challenges.

Analysts, including Moody’s Ratings, estimate that about US$2.5tn in investment is necessary to meet the unrestricted demand for AI capabilities through 2028. Developers are likely to accrue significant debt as they continue to develop and enhance data centres.

Key findings from a Moody report:
  • Developers will incur more debt to build and upgrade data centres as demand exceeds supply
  • US ABS transactions and debt issued reached record levels in 2024
  • US data centre CMBS cumulative global issuance volume reached record high in 2024
  • Private capital will continue to pour into data centre development, which will help to meet hyperscaler demand for more and larger data centres

“President Biden’s executive order to accelerate AI infrastructure development is a credit positive for the US AI industry, given the scarcity of prime locations with access to large quantities of power,” explains Raj Joshi, Senior Vice President of Corporate Finance, Moody’s Ratings.

“Building data centres on Federal land reduces the permitting burden for developers, although power availability will remain a key constraint. 

“While these initiatives won't immediately address the anticipated data centre capacity shortfall over the next two to three years, they will eventually benefit companies in the semiconductor, IT hardware, AI software development, data centre development, and power utility sectors as additional capacity on government-owned lands becomes available.”


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