Data center energy use could become cheaper and more efficient if AI facilities shift electricity consumption to off-peak hours, according to a new MIT study that highlights both economic and environmental trade-offs.

As artificial intelligence fuels a rapid expansion of data centres around the world, concerns are growing over how much electricity these facilities will consume—and whether power grids can keep up.

A new study by researchers at the Massachusetts Institute of Technology (MIT) suggests there may be a way to ease the pressure. Rather than consuming electricity around the clock at fixed rates, data centres could shift a significant portion of their energy use to off-peak hours, lowering electricity costs while making better use of existing grid capacity.

The findings, published in the journal iScience, indicate that if data centres adopt more flexible electricity consumption patterns, average power system costs could fall by as much as 5 per cent in Texas, 4 per cent in the Mid-Atlantic region and 2 per cent across western U.S. states.

Data Center Energy Use: Flexible Data Centers Could Reduce Energy Costs

The researchers modelled how expanding data centres would affect electricity grids in three regions that are expected to host about 82 per cent of U.S. data centres by 2030: Texas, the Mid-Atlantic and the Western Interconnect, which covers 11 western states.

Their simulations found that shifting at least one-fifth of a data centre’s electricity use away from peak-demand periods could reduce overall system costs. In some cases, as much as half of a facility’s energy demand would need to be moved to quieter periods of the day.

“The key with data centers is: How can we add them to the network without adding a lot to our peak usage?” said Christopher Knittel, economist at the MIT Sloan School of Management and co-author of the study, in a media statement.

“One way for data centers to do that — to add to average usage but not the peak usage — is if they provide some grid flexibility during those high-cost periods. And that’s what we’ve been interested in understanding.”

The researchers note that most data centres already have some operational flexibility because they typically run below full capacity. Instead of carrying out energy-intensive computing tasks during periods of peak electricity demand, many could shift those operations to midday, when solar power generation is often highest and overall demand is lower.

AI Growth Is Putting Pressure on Power Grids

The rapid expansion of AI has dramatically increased demand for computing infrastructure, raising questions about whether electricity grids can support hundreds of new data centres without driving up costs or emissions.

The study suggests that adding more data centres does not automatically translate into higher electricity prices. Because much of the cost of running a power grid comes from fixed infrastructure such as transmission lines, increasing electricity use can spread those costs across a larger customer base—provided peak demand does not rise at the same pace.

“It’s really just math,” Knittel said.

“There are two dimensions that data centers have to make decisions about. One is how much of their load in any one time period is flexible. And two, how many hours, plus or minus, can they move that computation?”

Flexible Data Centers May Have Different Climate Impacts

The environmental picture is more complex.

The researchers found that the projected growth in data centres by 2030 could significantly increase carbon dioxide emissions if electricity demand is met through fossil fuels. Compared with a scenario without new data centres, emissions could rise by 58 per cent in Texas, 20 per cent in the Mid-Atlantic region and 24 per cent in the western United States.

However, the impact varies depending on how regional electricity systems generate power.

In Texas, where wind energy accounts for a large share of electricity generation, shifting data-centre operations to times when renewable energy is abundant could reduce carbon emissions by as much as 40 per cent.

In contrast, the Mid-Atlantic region presents a different picture. There, flexible electricity use could unintentionally keep coal-fired power plants operating for longer periods.

“When data centers provide some flexibility in that latter scenario, the data centers actually move hours to when sun and wind energy production is slowing, and that allows a coal plant to stay on,” Knittel observed. “So it doesn’t necessarily attract more renewable investment. It attracts more coal investment.”

Policy Could Shape the Future of AI Infrastructure

The researchers argue that flexibility alone is unlikely to become common unless governments and grid operators create incentives for companies.

“That’s why we have policy,” Knittel said.

One option would be to allow data centres that agree to flexible electricity use to connect to the grid sooner.

“One big concern about these data centers now is how long it takes for them to connect to the grid,” Knittel said. “One way to provide flexibility now is what’s called ‘connect and manage,’ which is, connecting you faster to the grid if you agree to provide flexibility. Tech firms would take that deal. They would rather connect a year earlier, and throttle down computation a few hours a day, than to have to wait. We do this with power plants too.”

He added that industry-wide rules would help address competitive concerns.

“Tech companies say they won’t provide flexibility alone. But if everyone in the industry has to, it’s okay.”

Balancing AI Growth With Sustainable Energy

As governments and technology companies race to build the computing infrastructure needed for the AI era, the study suggests that when data centres consume electricity may prove to be as important as how much they consume.

The researchers conclude that smarter scheduling of electricity demand, combined with supportive public policy, could lower power system costs while reducing pressure on electricity grids. At the same time, the study highlights that the environmental benefits of flexible energy use will depend on how individual regions generate electricity, reinforcing the need for location-specific energy planning.

As Japan expands its role as a global gas trader, a new analysis raises questions about whether Asia is importing energy security—or future climate liabilities. Japan US LNG trade generated lifecycle emissions equal to about 17 coal plants in a year, raising concerns about Asia’s growing dependence on imported gas.

The liquefied natural gas (LNG) cargoes that Japan resold across Asia over the past five years generated greenhouse gas emissions equivalent to running about 17 coal-fired power plants for a year, according to a new analysis by Zero Carbon Analytics.

The finding comes at a time when several Asian economies are turning to LNG as a bridge fuel in their energy transition strategies, while governments simultaneously pledge to cut emissions and expand renewable energy.

According to the analysis, Japan resold 16.5 billion kilograms of US-produced LNG to nine Asian countries between 2020 and 2025. Across the fuel’s lifecycle—from extraction and liquefaction in the United States to shipping, regasification and combustion in Asia—those sales generated an estimated 63.5 billion kilograms of carbon dioxide emissions.

The report highlights a little-discussed aspect of Asia’s gas trade: Japan is increasingly acting as a middleman in the global LNG market.

Japan’s US LNG Trade–Japan Now Resells More US LNG Than It Uses

Japan remains one of the world’s largest LNG importers, but its domestic demand for gas has been declining.

The analysis found that between 2021 and 2025, Japan sold 77 percent more US LNG to other countries than it imported for its own domestic consumption.

In 2024, Japan ranked as the world’s second-largest LNG trader. While Europe remained the largest destination for Japanese LNG resales, nearly one-third of those transactions were directed to Asian markets, including South Korea, China, India, Taiwan, Thailand, Singapore, Bangladesh, Pakistan and Malaysia.

Three of Japan’s top ten LNG resale destinations were Asian economies: South Korea, China and India.

The numbers reflect a broader shift in regional energy markets. Countries seeking alternatives to coal have increasingly turned to LNG, often presenting gas as a cleaner transition fuel. Yet critics argue that this framing overlooks emissions generated throughout the fuel supply chain.

The Methane Problem

Natural gas is composed primarily of methane, a greenhouse gas that has far greater warming potential than carbon dioxide in the short term.

According to the International Energy Agency’s 2026 Global Methane Tracker, methane emissions from fossil fuel operations remain near record levels globally.

The Zero Carbon Analytics analysis estimates that roughly 30 percent of total LNG lifecycle emissions arise from methane released during extraction, processing and transportation.

Methane can trap around 80 times more heat than carbon dioxide during the first two decades after it enters the atmosphere, making leakage a critical concern for climate scientists.

The report’s emissions calculations include every stage of the LNG supply chain rather than focusing solely on combustion emissions at power plants.

Energy Security or Fossil Fuel Lock-In?

The findings arrive amid renewed concerns over energy security following instability in the Middle East and uncertainty surrounding global gas supplies.

Several Asian economies, including Thailand, Vietnam and the Philippines, have expanded LNG imports in recent years to diversify their energy systems. However, the same dependence has exposed them to volatile international fuel prices.

Yu Sun Chin, Asia Regional Researcher at Zero Carbon Analytics, said the growing trade has implications beyond emissions.

“Japan’s growing role as an LNG trader has significant implications for Asia, which is absorbing close to a third of Japan’s excess supplies. Our calculations of the full lifecycle emissions of these LNG resales highlight the risk they pose to a region already vulnerable to extreme weather and other climate impacts. Rather than increasing reliance on gas as a ‘transition fuel’, transitioning to renewables offers Asia a clearer route to a clean and secure energy future.”

The concern is not merely about current emissions. Energy analysts warn that investments in LNG terminals, pipelines and related infrastructure could lock countries into fossil fuel consumption for decades.

Sam Reynolds, LNG and Gas Research Lead for Asia at the Institute for Energy Economics and Financial Analysis (IEEFA), noted that Japanese companies are increasingly looking abroad as domestic demand declines.

“As Japan’s own LNG demand continues to decline, Japanese companies are becoming increasingly active traders of the fuel to other countries. At the same time, public and private financiers in Japan are investing in downstream infrastructure to stimulate demand and secure long-term customers.”

He added that such investments could leave emerging economies dependent on “a volatile, expensive fuel source for decades” while delaying renewable energy deployment.

Asia’s Climate Challenge

Asia is simultaneously one of the world’s fastest-growing energy markets and one of the regions most vulnerable to climate impacts.

From deadly heatwaves in South Asia to flooding in China and stronger tropical cyclones across Southeast Asia, the region is already experiencing the consequences of rising temperatures.

Climate scientists estimate that global emissions must nearly halve within this decade to keep the Paris Agreement’s 1.5°C goal within reach.

Against that backdrop, environmental groups argue that expanding LNG infrastructure risks undermining climate commitments.

Shruti Shukla, Senior Advocate for International Energy at the Natural Resources Defense Council (NRDC), said the region faces a strategic choice.

“Japan has long positioned itself as a regional energy and economic leader in Asia. That leadership should help accelerate a resilient clean energy transition across the region, not deepen dependence on another generation of imported fossil fuels.”

She warned that growing LNG imports expose countries to methane emissions, volatile fuel markets and costly infrastructure that could become obsolete as renewable technologies become cheaper.

The Economic Risks

The debate extends beyond climate concerns.

Researchers increasingly point to the possibility that LNG infrastructure built today may become stranded assets before the end of its expected lifespan.

Nawaphat Junkrajang, senior researcher at Climate Finance Network Thailand, cited research suggesting that nearly half of Thailand’s operating and proposed LNG terminal capacity could become economically unviable under the country’s climate commitments.

“Each additional resale cargo is not energy security. It is one more step into a lock-in the transition will eventually have to unwind,” he said.

Bangladesh faces similar concerns.

Dr Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue, said new energy agreements and infrastructure investments could deepen dependence on imported LNG while narrowing opportunities for renewable energy investment.

A Growing Regional Debate

The analysis arrives as governments across Asia reassess their energy pathways.

Supporters of LNG argue that gas provides reliable electricity generation and can complement intermittent renewable sources. Critics counter that falling costs of solar, wind and battery storage are weakening the economic rationale for large-scale LNG expansion.

What is clear from the data is that Japan’s role in regional gas markets is evolving rapidly. The country is no longer simply a major LNG consumer; it has become a significant intermediary connecting US gas producers with Asian buyers.

As Asia balances energy security, affordability and climate goals, that role is likely to attract increasing scrutiny.

For policymakers, the question may no longer be whether LNG emits less carbon than coal at the point of combustion. Instead, it is whether a region racing to build a low-carbon future can afford to lock itself into another generation of fossil fuel infrastructure.

The world is building more coal plants, but using less coal than before. That contradiction lies at the centre of a new report by Global Energy Monitor (GEM), an international organisation that tracks energy infrastructure and the global shift toward cleaner power.

According to GEM, whose databases and research are widely used by institutions including the IPCC, IEA, UNEP and the World Bank, countries are continuing to expand coal power infrastructure even as coal’s role in electricity generation weakens globally.

The latest edition of GEM’s Boom and Bust 2026 report found that global coal power capacity grew by 3.5% in 2025, while coal-fired electricity generation declined by 0.6%. The report describes the trend as a major structural shift in the global energy system, where coal remains politically important in several countries even as renewable energy increasingly replaces it in practice.

China and India Drive Coal Growth

The contradiction is most visible in China and India, the world’s two largest coal consumers. Both countries commissioned large amounts of new coal capacity in 2025, even as coal generation declined because of record additions in solar and wind power.

China expanded coal capacity by 6% in 2025, while coal-fired generation fell by 1.2%. India recorded a similar pattern, with coal capacity increasing by 3.8% even as coal generation dropped by 2.9%.

The report suggests that coal’s decline is becoming increasingly durable despite global energy uncertainties, including geopolitical tensions affecting fuel supply routes such as the Strait of Hormuz. Renewable energy expansion has continued rapidly enough to reduce coal’s role in meeting new electricity demand.

Christine Shearer, Project Manager of GEM’s Global Coal Plant Tracker, described the trend as a defining paradox of the global energy transition.

“In 2025, the world built more coal and used it less,” she said. She added that 95% of all coal plant construction is now concentrated in China and India, even as both countries expand renewable energy fast enough to displace coal generation.

China’s Coal Pipeline Continues to Surge

China remained the dominant force in global coal expansion during 2025. The country recorded a record 161.7 GW of new and revived coal projects, while more than 500 GW of coal-fired capacity is currently under development.

The report warned that if these projects move ahead, China could remain locked into years of additional coal use throughout its 15th Five-Year Plan period from 2026 to 2030, despite official commitments to reduce coal consumption during the same timeframe.

India Expands Coal While Renewables Accelerate

India is also continuing major coal expansion plans. The country recorded 27.9 GW of new and revived coal proposals in 2025. Overall, India now has more than 107 GW of coal capacity in pre-construction planning and another 23.5 GW already under construction.

The Indian government has announced plans to add 100 GW of new coal capacity over the next seven years, even as renewable energy growth continues at record pace. In 2025, non-fossil fuel sources crossed the milestone of accounting for more than half of India’s installed electricity capacity.

Coal Development Shrinks Outside Asia

Outside China and India, coal development is shrinking rapidly. Only 32 countries were proposing or building new coal plants in 2025, down from 38 countries the previous year and less than half the 75 countries pursuing coal expansion in 2014.

Coal construction activity outside China and India accounted for just 5% of global coal construction capacity in 2025, marking a record low and highlighting how geographically concentrated coal development has become.

Several regions also made notable progress away from coal. Latin America achieved “No New Coal” status in 2025, while South Korea committed to a complete coal phaseout.

Türkiye, which is preparing to host COP31, now has only one active coal plant proposal remaining, compared with more than 70 proposed projects in 2015.

Delayed Coal Retirements Raise Concerns

The report also found that retirement plans for existing coal plants are slowing in several regions. Nearly 70% of coal-fired units scheduled for retirement globally in 2025 failed to retire as planned.

In the European Union, many delays were linked to energy security concerns that emerged during the 2022–23 energy crisis. In the United States, several ageing coal plants remained operational because of direct government interventions aimed at maintaining grid reliability.

Indonesia continued expanding its coal fleet, which grew by 7% in 2025, largely driven by captive coal plants supporting nickel and aluminium processing industries.

South Asia and Southeast Asia Show Mixed Trends

Elsewhere in South Asia, Pakistan rapidly expanded distributed solar energy, helping stabilise its electricity system against volatile fossil fuel markets. Bangladesh, meanwhile, continues to face fuel supply and technical challenges linked to its fossil-fuel-based power sector.

Across Southeast Asia outside Indonesia, coal commissioning declined for the third consecutive year. However, disruptions in regional gas supplies during 2026 led some countries to rely more heavily on existing coal infrastructure as a temporary backup source.

In Africa, new coal proposals remain limited and are mainly concentrated in Zimbabwe and Zambia.

Renewable Energy Reshapes the Global Energy Transition

The report concludes that coal is no longer expanding as a universally accepted solution for rising electricity demand. Instead, coal development is increasingly concentrated in a small number of countries, even as renewable energy demonstrates its ability to meet growing demand more efficiently and sustainably.