Trump’s Former Energy Secretary Predicts How the Energy Market Will Transform

By Drew Robb

At the Baker Hughes Annual Meeting in Italy in February, Dan Brouillette, 15th US Energy Secretary during President Trump’s first term, spoke about the changes in US energy policy, how the market is likely to transform, and how this might impact the data center sector. He was quick to point out that he holds no official position in the administration and that his data should not be construed as anything other than conjecture and opinion. However, he did say that he expected the liquefied natural gas (LNG) pause enacted by the Biden administration in early 2024 to be lifted imminently – that has since come to pass.

 

Changing Energy Policy  

One of President Trump’s common campaign slogans was “Drill, Baby, Drill.” Rather than applying purely to drilling, Brouillette interprets the phrase as signaling infrastructure upgrades and expansion.

“Having worked with President Trump, what we are likely to see are efforts to improve the pipeline and transmission networks,” said Brouillette. “The challenge will be how fast this can take place.”

According to the Energy Information Administration (EIA), the US has at least 691 trillion cubic feet (20 m³) of proven gas reserves and 44 billion barrels of oil. However, it would be difficult to extract some of these reserves and get them to demand centers or to the coast for export.

As well as lifting the LNG pause, Brouillette thought it likely that the new Energy Secretary would make changes to permitting speed for pipelines, LNG, and existing export authority rules. He noted that the sluggish pace of permitting makes things unaffordable by creating scarcity. He hoped to see a shift to enable faster infrastructure buildout to address the urgent energy needs of the country.

With tariffs very much in the news, Brouillette opined that many of the analyses being done by the news media were overly simplistic.

“Superficial analysis might make it appear that tariffs will raise prices, but it may well do the opposite in some cases,” he said.

As for Canada attempting tit-for-tat tariffs, he believes our northern neighbors have limited options, particularly with their oil and gas resources. If exports of oil and gas from Canada come to an end. The alternatives are bleak. Building pipelines to take these assets from Alberta, Saskatchewan, and Manitoba to either coast would take a long time at great expense, Brouillette commented.

Although a surge in the use of traditional energy sources can be expected under Trump, Brouillette doesn’t anticipate any lowing of investment in renewables.

“The Inflation Reduction Act (IRA) can’t be rolled back by Executive Order, and we are short of power so we need to get it from a variety of sources, including renewables,” he said. To make his case, he noted that both wind and solar reached then record levels in the US in 2019 – at a time when Trump was in power.

Brouillette called for more rule stability. The investment community is looking at a return on investment over 20 years. They need enough certainty in the market to build new generation plants to ensure they don’t become stranded assets.

As well as permitting reform and policy stability, he argued in favor of litigation reform as a key factor in accelerating the pace of infrastructure expansion.

“The easing of regulations and permitting at a federal level is a good start but there are still many state and local barriers to negotiate,” said Brouillette. “Permitting reform might need to be supported by legal reform.”

 

Data Center Panel Highlights US Power Capacity Shortage

Later in the Baker Hughes event, Brouillette spoke at a data center panel along with speakers from data center operator Digital Realty, Shell Energy, and Sustainable Development Capital. He kicked things off with some statistics. By the end of the decade, the US will be 25 GW short of forecasted power capacity – and that’s without factoring in the ongoing data center boom.

“This is a huge challenge as it’s the equivalent of five New York City-sized grids,” said Brouillette.

His numbers are supported by those from other sources. Goldman Sachs predicts that data center power demand will grow by 165% by 2030. And the Electric Power Research Association (EPRI) has forecast that US data center power demand is likely to grow from around a 2% share of the national total to as high as 9% by 2030. As a result, he doesn’t believe that rapid expansion of the grid will be enough. Thus, onsite power and colocation will take up the slack.

“Bringing your own power is going to be a future trend for data centers,” said Brouillette.

The needs of data centers, he added, preclude heavy usage of renewables. A capacity factor of 30% won’t cut it for operations that require reliable power. In addition, the land needs of wind and solar add substantially to data center construction costs.

Another panelist chimed in on this point. “We prefer the land for the data center itself and not for battery storage and renewables,” said Jeffrey Tapley, chief operating officer, Digital Realty, the largest owner operator of data centers globally.

Nuclear, too, isn’t a solution for immediate or mid-term data center load growth. The first small modular reactors aren’t likely to be online until at least 2031. Larger nuclear facilities will take much longer. Natural gas plants, on the other hand, can be built within a year or two. There are even mobile units that can be towed onsite within a couple of months.

“People are comfortable with natural gas,” said Brouillette. “It will take a while for SMRs and advanced nuclear to build up its supply chain and a workforce to serve the data center industry.”

 

The DeepSeek Threat

Audience members asked about the DeepSeek artificial intelligence (AI) engine that claims to consume 11 times less power than comparable engines from the likes of Amazon, OpenAI, Microsoft, Meta Platforms, and Google. Does this development mean that the predictions for data center power growth for the rest of the decade are invalidate – or at least need to be severely downgraded?

Brouillette doesn’t think so. Perhaps over the short term, DeepSeek may make some difference. It forces other AI developers to find ways to be more energy efficient. But over the long-term, he doesn’t see DeepSeek changing projections much.

“Even if the energy consumption rates of DeepSeek prove out broadly, it might impact the timeline for data center capacity predictions but not the amount,” he concluded.