The United States economy faces a critical paradox: while electricity demand skyrockets due to artificial intelligence, the country’s power grid is being “strangled” by policies that pick technological winners instead of focusing on results, claims economist Julia R. Cartwright in a new paper published this Tuesday (24).
For Cartwright, the American system has transformed into a patchwork of “politically favored technologies” that ignores the laws of physics and the market. With over 2,000 gigawatts (GW) of generation and storage projects stalled in interconnection queues—equivalent to nearly 1,000 Hoover Dams—the country risks seeing blackouts increase 100-fold by 2030 if it does not adopt radical technological neutrality.
This diagnosis serves as a warning to the Global South: the energy transition, when driven by ideologies or subsidies for specific groups, ends up making electricity more expensive and braking industrial development. In the current scenario, the US is failing to leverage the potential of advanced nuclear and geothermal energy simply because licensing and credit rules favor only pre-selected categories.
The “Farce” of Neutrality and the Cost of AI
The advancement of AI data centers, which consume energy massively and constantly, has exposed the fragility of a grid that prioritizes intermittent sources by decree. Cartwright argues that US energy policy has fused distinct goals—such as emission reduction and industrial promotion—into a single package of inefficient subsidies. The result is a distorted market where capital does not flow to the most efficient project, but to the one that best fits the tax code.
By 2026, record-breaking electricity demand is projected. However, the Department of Energy (DOE) has already issued warnings about the system’s inability to respond. For the author, the solution is not more subsidies, but “technology neutrality by law”: the government should set emission and reliability targets and let the market discover which combination of sources—whether nuclear, natural gas with carbon capture, or solar—delivers the lowest cost.
Blocked Nuclear Renaissance
Nuclear energy is identified as the primary victim of this favoritism. While wind and solar sources enjoy simplified Production Tax Credits (PTC), advanced nuclear projects face decades of regulatory uncertainty inherited from the Cold War era. The article highlights that nuclear capacity could triple by mid-century if licensing processes were decoupled from unnecessary bureaucracies and focused strictly on safety and performance.
This institutional paralysis creates what Cartwright calls “interconnection queues,” where viable low-carbon projects wait years for a grid connection authorization. The cost of this wait is passed directly to American families, who see their electricity bills rise while infrastructure ages.
Lessons for the Global Market
Cartwright’s critique resonates at a time of global reindustrialization. By adopting “domestic content” bonuses and restricted incentives, the US ends up creating protected monopolies that stifle innovation. The proposal for a neutral “externalities track” suggests that if the goal is to reduce CO2, any technology that does so should be treated identically under the law and tax system.
The political economy of the power sector, marked by organized interests that capture government rents, is the main obstacle. Without a reform that separates industrial policy from climate policy, the United States could lose the lead in the AI race to nations that manage to solve the dilemma of cheap and abundant energy more pragmatically.
Will the United States be able to abandon the addiction to targeted subsidies before the energy crisis halts the digital revolution?
