ES #147: China v. U.S. is about energy

Energy Shots #147

In the race between nations to dominate in artificial intelligence, crypto, and blockchain, global superpowers have returned to the first principles of economics—energy abundance wins.

The forecasted demands of emerging energy-intensive technologies like artificial intelligence and crypto are well documented. While many call to these projections outlandish, the sums spent to secure energy for these technologies indicate the demands are real and supply is the primary constraint.

Furthermore, the upside risks to these forecasts should not be discounted, as evidenced by this week’s headline news that the GENIUS Act and CLARITY Act cleared Congress—and, in the case of the GENIUS Act, were signed into law by President Trump. With a new framework for regulating stablecoins and other digital assets, the velocity of non-AI energy demand growth is likely to accelerate. Separately, the U.S. administration reversed its ban on AI chip shipments to China for U.S. advanced manufacturers like Nvidia or AMD, adding incremental tailwinds to the energy-intensive AI competition between the world’s two largest economic powers.

For the U.S. and other Western economies, however, China’s competitive shortfall in advanced chip technologies contrasts against its emerging superiority in energy security. Today’s ES chart deck (below) offers a closer look at this competition:

China’s All of the Above Strategy for Energy Abundance

Total Generation: China generated over 10,000 terawatt-hours (TWh) of electricity in 2024, accounting for over 30% of all electricity produced worldwide and more than doubling total U.S. generation last year.

Fuel Mix: Coal’s share of China’s total generation fell to 58% in 2024 from 78% in 2000 despite recording another absolute demand record. Solar grew from <2TWh in 2000 to 839 TWh in 2024 (+38,000%). Nuclear output grew nearly 26x from 17 TWh in 2000 to 451 TWh (more below).

The U.S. has only grown total generation by 14% since 2000, including negative growth from nuclear and coal.

Germany—the conventional symbol of the EU economy—has seen total generation decrease since 2000 as historically short-sighted energy polices shut down 100% of Germany’s functioning nuclear facilities while restricting or retiring other existing thermal base capacity.

Meanwhile, China added enough nuclear capacity to become the second-largest country by total nuclear generation in 2020.

And despite less emphasis on energy transition policymaking than its EU counterparts, China’s solar 2024 solar generation exceeded the combined total of the remaining top 10 largest countries by solar output.

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See you next Sunday.

ES.

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