US Data Centers May Consume More Gas Than Germany and Japan Combined

The global race for artificial intelligence is taking a toll that few anticipated. By 2035, American data centers are expected to consume around 18 billion cubic feet of natural gas per day, a volume greater than that consumed by Germany and Japan combined. This data comes from a report by BloombergNEF and represents nearly double the projection made by the same organization just nine months ago.

The escalation is so abrupt that data centers are set to become the second-largest driver of natural gas demand growth in the US, trailing only liquefied natural gas (LNG) exports. And even considering that not all announced projects will be completed, the numbers are impressive.

Big Techs Are Building Their Own Gas Plants

Meta, Microsoft, Google, and Amazon have already announced plans to build natural gas plants directly on their data center sites, bypassing the conventional power grid. These on-site generation projects are expected to consume between 2.9 billion and 3.4 billion cubic feet of gas per day by 2035. For comparison, this volume is equivalent to everything that American data centers consume today, combining self-generation and consumption via the power grid.

But on-site generation is just a fraction of the problem. According to BloombergNEF, data centers connected to the power grid are expected to generate an additional demand of 15 billion cubic feet of natural gas per day for the power sector by the middle of the next decade. This represents five times more demand growth than all other sectors connected to the grid combined.

As we have already analyzed when discussing large-scale digital transformation, the infrastructure behind AI requires investments that go far beyond chips and software. The energy bill is increasingly becoming the real bottleneck.

Natural Gas Prices Could Surge and Affect Ordinary Consumers

The stability in natural gas prices over the past few years has supported much of the data center construction boom. But analysts at Noreva warn that this calm may be illusory. The combined impact of data center growth and LNG exports could trigger a price surge that is difficult to absorb.

Big techs, with their billion-dollar balance sheets, would likely be able to cope with higher gas prices. The same cannot be said for residential and industrial consumers who depend on the same power grid. If prices rise consistently, the electricity bills for millions of Americans will also increase.

This is a point that directly connects technology and finance. As we discussed in articles about the macroeconomic impact of technological trends, infrastructure decisions made by a handful of companies can reverberate in the pockets of entire populations.

The Environmental Cost Is Gigantic

According to data from the International Energy Agency (IEA), each cubic foot of natural gas burned releases the equivalent of 60 grams of CO₂ into the atmosphere, considering extraction, processing, and distribution. With the projected additional demand, American data centers would generate an additional 1 million metric tons of greenhouse gases per day.

To put this in perspective, this additional daily emission is equivalent to about 12% of all greenhouse gas emissions in the US at current levels. It is an extraordinary increase coming from a single sector of the economy.

The paradox is evident. The same companies that invest in zero-carbon goals and publish detailed environmental reports are simultaneously building the most fossil fuel-intensive infrastructure of the last decade. The sustainability narrative of big techs is facing its toughest reality check.

What This Means for the Market and Investors

The explosion in energy demand from data centers creates cascading opportunities and risks. On the opportunity side, natural gas companies, turbine suppliers, and electric infrastructure companies are likely to benefit. On the risk side, rising energy costs could compress margins for the big techs themselves in the long run, especially if stricter environmental regulations come into play.

For those following the cryptocurrency sector, the dynamics are also relevant. Bitcoin mining has already faced similar pressures related to energy consumption, and the narrative surrounding AI data centers could reignite this debate. As we explored in analyses of the energy consumption of the crypto ecosystem, the competition for cheap energy is becoming a determining factor for multiple sectors.

The fact that BloombergNEF's projection has nearly doubled in nine months reveals something deeper: the market is still underestimating the speed of AI expansion. If the trend of upward revisions continues, the numbers for 2035 could be even larger than the 18 billion cubic feet per day currently projected.

The race for artificial intelligence is reshaping not only the technology sector but the energy matrix of entire countries. The question the market needs to answer is not whether this demand will grow, but who will foot the bill.

This content is informational and educational and does not constitute investment advice. Past performance is not indicative of future results.