Energy Consumption Ramifications of U.S.-China AI Competition

Abstract

U.S.-China AI competition has created a ‘race to the bottom’, where each nation’s attempts to cut each other off artificial intelligence (AI) computing resources through protectionist policies comes at a cost – greater energy consumption. This article shows that heightened energy consumption stems from six key areas: 1) Limited access to the latest and most energy-efficient hardware; 2) Unintended spillover effects in the consumer space due to the dual-use nature of AI technology and processes; 3) Duplication in manufacturing processes, particularly in areas lacking comparative advantage; 4) The loosening of environmental standards to onshore manufacturing; 5) The potential for weaponizing the renewable energy supply chain, which supports AI infrastructure, hindering the pace of the renewable energy transition; 6) The loss of synergy in AI advancement, including the development of more energy-efficient algorithms and hardware, due to the transition towards a more autarkic information system and trade. By investigating the unintended consequences of the U.S.-China AI competition policies, the article highlights the need to redesign AI competition to reduce unintended consequences on the environment, consumers, and other countries.

Keywords: AI Energy Consumption, Algorithms, Chips, Protectionist Policies, U.S.-China Competition