S&P Global — 7 January 2025
Daily Update: January 7, 2025
AI Adoption and a Delayed Transition in 2025
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
In an economy that depends on burning fossil fuels, an economic opportunity can contribute to environmental degradation. Generative AI has been an undeniable boon to the US economy, motivating investment and driving GDP growth in advance of other developed nations. But the datacenters that power AI require vast amounts of energy to function. Without ample new, renewable energy sources, the economic opportunity of generative AI will require a delay in the energy transition toward net-zero emissions.
AI is only the latest technology to drive the build-out of huge new datacenters across the world. Before AI, it was the adoption of cloud services that drove hyperscalers to construct and expand datacenters. According to S&P Global Market Intelligence, datacenter construction will further accelerate in the coming year. Globally, new datacenter capacity is forecast to increase by 14.3 GW in 2025, with 7.32 GW of net new datacenter capacity being added in the US alone.
Energy owners and developers are scrambling to meet the increased energy demands of datacenters and broader electrification of the economy by upgrading and maintaining the existing grid and energy generation facilities. Already, fossil fuel electricity generation is increasing and nuclear facilities are ramping up capacity. While renewable capacity is being added quickly, there will be a delay in implementation. By 2030, 38% of the US’ electricity generation fleet is forecast to be renewable, up from a projected 21% in 2025, according to S&P Global Market Intelligence.
Hyperscalers such as Amazon, Google and Microsoft have aggressive decarbonization targets that have already been reset due to AI demand. As a result, these companies have been leading efforts to use more nuclear generation to balance economic opportunity with environmental concerns. Amazon announced the construction of additional datacenter capacity that will draw power from the 2.5-GW Susquehanna nuclear facility. Microsoft and Constellation Energy announced plans to draw energy from the Three Mile Island nuclear plant, which was retired five years ago and scheduled to be restarted in 2028. Google announced plans to license small modular reactors from Kairos Power, starting in 2030. Further, the planned retirement of many coal- and natural gas-powered energy plants is being reconsidered due to datacenter demand.
From a policy perspective, it is difficult for the US to create an overarching policy on datacenters and energy given the patchwork of state and local regulations. Even if the incoming Trump administration has little interest in reducing carbon emissions, it will still be forced to confront the mismatch between power supply and datacenter demand.
Today is Tuesday, January 7, 2025, and here is today’s essential intelligence.
Listen: How a Nonprofit is Convening Competitors to Make Travel Sustainable
As many of our ESG Insider listeners take trips to visit family and friends this holiday season, we’re focusing our final episode of 2024 on sustainable travel. We sat down for an interview with Sally Davey, the CEO of Travalyst. This is a nonprofit that convenes a global coalition of some of the biggest names in travel and technology to make credible, consistent sustainability information mainstream and to help people make more informed travel choices.
—Listen and subscribe to the podcast from S&P Global Sustainable1
Economic Research: 2024: Resilience Almost Everywhere 2025: Reconfiguration, Not Rebalancing
The resilience of household services spending and the strength of labor demand was the biggest surprise for me in 2024. Growth stayed higher for longer in the US and recovered a bit faster in Europe than expected. Unemployment rates remain near multi-decade lows across a wide swath of advanced economies. The new year will almost certainly feature large tariff policy moves by the US Some of these may be proposed for economic reasons, and others will not.
—Read the article from S&P Global Ratings
US REIT Share Prices Plunge During Q4 2024, After Q3 2024 Spike
Australia's biggest banks demonstrated resilience in their financial results for the recently concluded fiscal year, reflecting robust capital levels amid intense competition. The country's four major lenders reported a decline in their net profits for the fiscal year ended Sept. 30, as net interest margins narrowed with the Reserve Bank of Australia maintaining its benchmark cash rate at 4.35%. Despite this, three of the four banks improved their common equity tier 1 ratios over the past two years.
—Read the article from S&P Global Market Intelligence
Trump Trade Tactics Loom Over 2025 Copper Demand, Prices
President-elect Donald Trump has been weighing the use of broad tariffs on imports from key trading partners. The planned tariffs from US President-elect Donald Trump could move copper prices further from market fundamentals and cloud the 2025 outlook on demand for the crucial industrial metal, analysts told S&P Global Commodity Insights.
—Read the article from S&P Global Ratings
Brutal Cold Snap Boosts US Power, Natural Gas Demand, Prices
Power and natural gas demand and prices surged across a wide swath of the United States on Jan. 3 in reaction to forecasts of winter storms plus lake-effect snow across much of the northern half of the nation, and sub-freezing weather reaching as far south as central Texas. The National Weather Service issued winter weather advisories from the Pacific Northwest to the central Great Plains, plus much of the Great Lakes and Mid-Atlantic region.
—Read the article from S&P Global Commodity Insights
Prime Video Scores 'Thursday Night Football' Viewership Gains
Amazon.com Inc.'s Prime Video tallied its most-watched NFL season with "Thursday Night Football," but it still fell short of linear television's reach. Prime Video’s third season of "Thursday Night Football" averaged 13.20 million viewers, including viewership from broadcast stations in the participating teams' home markets. That was up 11% from 11.86 million in the 2023 season, according to Nielsen Holdings PLC data.
—Read the article from S&P Global Mobility
Webinar: What's in Store for The Global Oil and Gas Industry in 2025 (Jan. 14, 2025)
Please join S&P Global Ratings sector leads for the oil and gas industry for a live interactive webinar on the key drivers and what we expect for in 2025. Look for our published outlook in advance of this webinar.
—Register for the webinar from S&P Global Ratings