COP30 + Data Centers + Carbon Coalition

News from MIT's front door for climate policymakers

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This issue we’re recapping MIT’s impact at the COP30 climate summit, a new 20-country coalition aimed at strengthening global carbon markets, and an MIT working paper examining data center demands on the grid.

Sincerely,

Bethany Patten, Executive Director, MIT Climate Policy Center

For the first time since its inception, MIT’s Climate Policy Center led the coordination of the Institute’s dynamic presence at COP30. Members of the MIT community shared research, informed policy discussions, and developed new collaborations while in Belém, Brazil.

At COP30, informed and inspired by a report co-authored by the Global Climate Policy Project at Harvard and MIT, leaders from 20 countries and the European Union signed on to a new Open Coalition for Compliance Carbon Markets.

Concern: The surge in electricity use from data centers is outpacing most other forms of demand growth, creating new challenges for grid management and climate targets.

Utilities forecast escalating energy demand to power data centers that are powering the rapidly growing AI economy (The Post) with annual energy use that could reach 6.7%-12% of total U.S. electricity consumption by 2028 (Reuters).

Where things stand: Data centers currently operate at ~80% utilization, leaving ~20% of capacity that could be used to provide grid flexibility. Utilities are increasingly concerned about peak load strain. Policymakers are interested in whether data center-driven load growth will accelerate or hinder decarbonization.

Stakes & relevance: Flexible demand has the potential to lower costs, improve reliability, and accelerate decarbonization by shifting demand from high-demand hours to low-demand hours.

Zooming out: Data center flexibility interacts with grid conditions and can influence generation investment, storage build-out, and the retirement timeline for coal and nuclear.

Key challenges: 1. Flexibility saves money everywhere, but doesn’t automatically cut emissions. In regions without strong renewable penetration or policy, flexible loads may increase reliance on existing fossil plants. 2. Market signals today do not always incentivize shifting demand to cleanest hours.

Clearing the air: This MIT working paper clarifies that flexibility is not inherently green, it depends on the grid mix. The paper shows that 12-hour shifting of 60% of workloads delivers most of the benefit, full 24-hour flexibility isn’t required. Regions like Texas (with ~54% renewable generation) see up to 40% emissions reductions from flexible data centers. Lower-renewable regions may see small emissions increases (~3%) even as costs fall.

The path forward with insights from the MIT study

Policy Signals: 1. Align incentives so data centers shift to clean hours, not just cheap hours (e.g., real-time carbon signals). 2. Pair flexibility requirements with renewables expansion, not as a substitute for it.

Industry Practices: 1. Data centers can play a proactive role by participating in demand response and co-locating with renewables

E&E News: A proposal authored by MIT economist Catherine Wolfram informed and inspired eighteen national and regional governments to join force at the COP30 conference in Brazil to strengthen and coordinate efforts around around carbon markets.

Heatmap: A new working paper by MIT economists Catherine Wolfram and Christopher Knittel, and UCLA economist Kimberley Clausing tallies the effects of global warming--particularly extreme weather--on Americans' budgets.

Commonwealth Beacon: Massachusetts lawmakers are weighing whether to eliminate two caps the state enacted over a decade ago on the amount of solar energy municipalities can net-meter from panels on rooftops, parks, and parking lots. Faculty Director Christopher Knittel weighs in.

Star Tribune: City and state governments in the US are stepping in to take the lead with carbon fees. But there are limits to what local governments can do to address a global issue like climate change. See what Catherine Wolfram has to say.