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Misguided energy policy could sink renaissance of manufacturing

An extraordinary but little-noticed economic phenomenon is occurring across the United States today. Electricity demand — which has been relatively stable for more than a decade — suddenly is surging. The U.S. economy is embarking on a literal power trip, and the pace is likely to increase.

Consider that California’s major utility, PG&E, expects the state’s electricity demand to jump 70% in the next two decades. New York’s electricity demand is on track to double by 2050. And Virginia’s power demand is projected to jump 85% in just the next 15 years.

Why such huge increases?

For starters, more and more data centers are going online across the country to support the needs of an increasingly digital world.

In Virginia, the state’s largest utility has connected 75 massive new data centers to the electrical grid since 2019. And the growth of these uniquely 21st century facilities isn’t slowing down. According to one estimate, America’s data centers could require 45 gigawatts of electricity by 2030 — enough to power the daily needs of roughly 30 million homes.

Manufacturing, a voracious consumer of electricity, also is growing.

Thanks in part to government incentives to revitalize America’s industrial base, an estimated $481 billion has been committed to investments in semiconductors, solar panels, batteries, and electric vehicles (EVs) since 2021.

Electric vehicles certainly need plenty of electricity. The nation’s largest grid operator, PJM, estimates the power demands of EVs will climb to nearly 13,530 megawatts by 2034. That’s a huge jump from the current 500 megawatts.

Essentially, America is embarking on a deep electrification experiment. And Tesla founder Elon Musk believes U.S. electricity demand could triple by 2045.

He recently told the nation’s utility executives, “I can’t emphasize enough: we need more electricity. However much electricity you think you need, more than that is needed.”

Musk’s words hint at an alarming reality: the nation is woefully unprepared for the coming surge in power demand. And worse, the reliability of our national power supply is already flirting with catastrophe.

Grid emergencies and projected supply shortfalls have become ubiquitous from one region of the country to the next. However, instead of helping to formulate smart, forward-looking public policy to meet this ever-increasing surge in demand, the U.S. Environmental Protection Agency (EPA) is actually making the situation worse.

The Biden EPA is using a barrage of rules to force the closure of traditional, baseload power plants. These new EPA rules threaten to rapidly wipe out the vast majority of the nation’s coal and natural gas power plants.

But these are the same power plants that currently meet 60 percent of America’s electricity needs. Replacing them poses a colossal challenge, but the EPA isn’t providing a solution.

The nation’s grid operators and reliability regulators are already warning of supply shortfalls.

In their view, the nation should focus on rapidly building new energy capacity and infrastructure — not tearing down current capacity before reliable alternatives are in place.

The Biden administration must heed these warnings and revisit its blitz of EPA rules. Affordable and reliable electricity is the foundation of our economy.

Unless the Biden EPA recognizes and understands America’s newfound power demands, the administration’s highly touted EV agenda — and its signature effort to revitalize American industry — could hang in the balance.

Kevin L. Kearns is president of the U.S. Business and Industry Council.

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