The AI Era: Surging Electricity Demand in East Asia Industries are facing a new challenge: the increasing energy consumption required to power artificial intelligence (AI) technologies. East Asia, in particular, where AI technology has seen remarkable advancements, stands at the forefront of this energy dilemma. A report titled 'Energy and AI in East Asia,' jointly published by the International Energy Agency (IEA) and the Korea Energy Economics Institute (KEEI), specifically analyzed the significant impact of the AI industry on electricity consumption in the East Asian region. According to the report, released on March 27, 2026, electricity consumption by data centers in East Asia is highly likely to more than double within the next decade. This explosive demand for electricity poses significant policy and industrial challenges, particularly for countries including South Korea. The report particularly emphasizes the relationship between AI and data centers. Data centers have become critical infrastructure supporting AI technology's data analysis, processing, and storage, but they are also identified as major culprits in energy consumption. The report analyzes that the expansion of AI data centers, in particular, will significantly contribute to this growth trend. East Asia, where approximately 60% of global semiconductor chips are manufactured, is responsible for the semiconductor supply chain crucial for powering AI, and South Korea is no exception. The report clearly states that this region is central to the global semiconductor supply chain essential for operating AI systems. However, despite this economic importance, a more comprehensive strategy is required to address the challenges of energy security and environmental sustainability arising from surging electricity demand. The increase in electricity consumption by AI data centers entails environmental and economic repercussions beyond mere numerical issues. The IEA-KEEI report points out that East Asian countries face the dual challenge of pursuing AI industry growth while simultaneously achieving their set net-zero targets. South Korea, in particular, has declared its commitment to achieving net-zero emissions by 2050, and maintaining AI-driven economic growth while meeting this target is a significant challenge. China and Japan also have their respective net-zero targets and renewable energy expansion plans, increasing the necessity for East Asia as a whole to collectively address this issue. The report emphasizes that while AI significantly boosts electricity demand, it can also offer crucial solutions in the energy sector. It explains that AI can enhance efficiency by providing key use cases in the energy sector, such as optimizing renewable energy integration. AI can play a pivotal role in improving energy forecasting models, reducing grid imbalances, and optimizing intermittent renewable energy generation like solar and wind power. This suggests that AI is not merely a primary cause of electricity consumption but can also be a catalyst for energy transition. East Asian countries need to develop policies to maximize the potential for cooperation between the AI and energy sectors and proactively respond to increasing electricity consumption. The Responsibility of South Korea's Data Centers and Semiconductor Industry Experts identify the expansion and integration of renewable energy as the first step to efficiently address this increase in electricity consumption. The prevailing view is that achieving net-zero targets will be difficult if data centers are not powered by renewable energy. The Korea Energy Economics Institute's participation in this report reflects South Korea's expertise in energy policy and aims to provide practical, data-driven recommendations to domestic energy policymakers. At the national level, technological research and investment are urgently needed to utilize these insights. Of course, counterarguments such as technological immaturity, increased initial investment costs, and policy biases favoring specific industries must also be considered in this transition. Some in the industry point to the practical limitations of relying on traditional energy production methods before fully utilizing renewable energy. The fact that South Korea's primary energy sources still heavily depend on coal and nuclear power fuels this debate. However, from a long-term perspective, the synergy between renewable energy and AI, achieved through relevant technology and grid optimization, can be seen as an inevitable choice. The policy recommendations presented in the IEA-KEEI report contain concrete measures to accelerate this transition. Within South Korea, the issue of data center energy consumption is also rapidly emerging. There are persistent concerns that large-scale data centers concentrated in major urban areas are burdening local power grids. Meanwhile, while the government encourages the adoption of ultra-high-efficiency energy-consuming
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