Wildfires, AI and California’s complicated water politics

Summary

POLITICO Tech Podcast Summary

Title: Wildfires, AI and California’s Complicated Water Politics
Host: Stephen Overle
Guest: Tyler Katzenberger, POLITICO's California Tech Reporter
Release Date: January 15, 2025

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Introduction

In the January 15, 2025 episode of POLITICO Tech, host Stephen Overle delves into the intricate relationship between California's devastating wildfires and the burgeoning demands of artificial intelligence (AI) data centers. With wildfires ravaging Los Angeles, resulting in at least 24 fatalities and the destruction of thousands of homes and businesses, the episode explores how the tech industry's resource-intensive operations, particularly data centers, are being scrutinized for their environmental impact.

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Wildfires and AI Data Centers: An Unlikely Connection

Timestamp [00:32] - [04:36]

Stephen Overle sets the stage by highlighting the severe wildfires in Los Angeles and introduces the surprising link between these disasters and AI data centers. He explains that data centers, essential for powering AI technologies, consume vast amounts of water to cool servers. During a wildfire crisis, when water is desperately needed for firefighting, the competition for this scarce resource brings the tech industry's environmental footprint into sharp focus.

Notable Quote:

"These data centers that power artificial intelligence and other high tech computing. You know, they take tons and tons of water to cool off these giant computers."
— Tyler Katzenberger [02:18]

Tyler Katzenberger elaborates on the indirect connection between data centers and the drying hydrants encountered by firefighters. He clarifies that while data centers do consume substantial water, the immediate cause of the hydrants running dry was more directly related to issues like lack of water pressure and offline reservoirs, adding layers of complexity to the blame attributed to tech infrastructure.

Notable Quote:

"There's no, I think A to B connection that's very direct... Hydrants running dry was due to a lack of water pressure... because a lot of these homes... were at high elevations."
— Tyler Katzenberger [03:13]

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Legislative Responses: Transparency, Sustainability, and Accountability

Timestamp [04:36] - [12:22]

The conversation transitions to the legislative efforts in Sacramento aiming to address the environmental impact of AI data centers. Tyler outlines a comprehensive approach focusing on three pillars: transparency, sustainability, and accountability.

1. Transparency:

   • Energy Reporting: Assemblymember Rebecca Bauer-Cahan's bill mandates data centers to disclose their energy usage and efficiency levels, providing much-needed data to assess their environmental footprint.

2. Sustainability:

   • Tax Credits: Legislation is proposed to incentivize sustainable practices among data centers through tax credits. These incentives encourage the adoption of water recycling technologies and other eco-friendly measures without imposing stringent regulations.

3. Accountability:

   • Electricity Costs: Ensuring that the rise in electricity demand from data centers does not translate to increased costs for everyday consumers is another focal point. This aims to prevent the financial burden of energy consumption from being passed onto the public.

Notable Quotes:

"The idea is to try... transparency, sustainability, and accountability."
— Tyler Katzenberger [05:02]

"Offering a tax credit if they're hitting certain water sustainability targets, electricity sustainability targets..."
— Tyler Katzenberger [05:02]

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Challenges in Passing Legislation and Tech Industry's Role

Timestamp [06:22] - [12:22]

Tyler discusses the early stages of these legislative efforts and the potential resistance from the tech industry, known for its robust lobbying prowess in California. The tech sector's significant economic contribution, including job creation and revenue generation, provides them with substantial leverage to oppose stringent regulations.

Notable Quote:

"The tech companies are huge. They know how to work California politics... they know who to go to to lobby against these efforts."
— Tyler Katzenberger [06:33]

Despite the legislative momentum, Tyler anticipates that Governor Gavin Newsom may prefer incentivizing sustainable practices over imposing restrictions, reflecting his more restrained approach compared to the legislature.

Notable Quote:

"I think Gavin Newsom has shown a little bit more restraint than the legislature at just creating new restrictions for tech companies to follow."
— Tyler Katzenberger [12:09]

Moreover, Tyler highlights that while current bills are in nascent stages, upcoming hearings and debates will likely intensify the discourse around data centers' environmental impact. Environmental groups and utility reform organizations, such as TERN (The Utility Reform Network), are expected to play pivotal roles in advocating for more sustainable practices.

Notable Quote:

"There are plenty of groups in California who are committed to fighting for more tech restrictions and what they see as rules that make tech safer and more responsible."
— Tyler Katzenberger [13:07]

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California's Pioneering Role in Tech Regulation

Timestamp [12:27] - [14:01]

The discussion underscores California's influence as a trendsetter in tech regulation, with its legislative outcomes often shaping policies in other states and influencing national discourse. Tyler predicts that regardless of the immediate outcomes, California's legislative actions regarding AI and data center sustainability will set precedents and inspire similar initiatives elsewhere.

He also touches on the broader regulatory environment, noting that forthcoming legislative battles involving AI safety, social media accountability, and other tech-related issues will continue to dominate California's political landscape in the near future.

Notable Quote:

"Whatever its result may be, could drive inspire or back legislative efforts in other parts of the country."
— Tyler Katzenberger [10:35]

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Conclusion

The episode concludes with Stephen Overle reflecting on the balancing act between incentivizing sustainable practices and regulating resource-intensive tech operations. Tyler's insights highlight the ongoing tension between environmental sustainability and the economic imperatives of the tech industry, particularly in a resource-constrained environment exacerbated by natural disasters like wildfires.

Final Notable Quote:

"I want to watch to see if lawmakers are going to choose to incentivize tech companies to further sustainability initiatives for data centers and to make data centers more sustainable, or are they going to create restrictions."
— Tyler Katzenberger [12:22]

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Key Takeaways

• Complex Interdependencies: The relationship between AI data centers and California's water scarcity is multifaceted, with data centers contributing to resource strain but not being the sole cause of firefighting water shortages.

• Legislative Focus: California lawmakers are proactively seeking to regulate the environmental impact of AI through transparency, sustainability incentives, and accountability measures.

• Tech Industry's Influence: The tech sector's economic significance grants it substantial influence over regulatory outcomes, potentially shaping the future of sustainability initiatives.

• California as a Policy Leader: Decisions made in California are likely to have ripple effects nationwide, setting benchmarks for how technology and environmental policy intersect.

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This episode of POLITICO Tech offers a comprehensive exploration of the pressing issue of technological sustainability amidst environmental crises, providing valuable insights into the interplay between policy, industry, and natural disasters in one of the world's most influential tech hubs.

Transcript

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[Stephen Overle]

Hey, welcome back to Politico tech. Today's Wednesday, January 15th. I'm Stephen Overle. The wildfires burning across Los Angeles have left at least 24 people dead and thousands of homes and businesses destroyed. And naturally, the harrowing ordeal has led to plenty of finger pointing. But I'll admit I was surprised to see artificial intelligence catching some of the blame. See the data centers that power AI use large amounts of water to keep servers cool. And at a time when firefighters desperately need water, critics have been quick to pounce on the tech industry's environmental Footprint. In fact, POLITICO's California tech reporter Tyler Katzenberger tells me lawmakers in Sacramento are already working up legislation hoping to stem the vast amounts of water and electricity AI companies consume. On the show today, Tyler explains whether AI is actually a culprit and whether the fight over sustainable AI is shaping up to be tech's next big headache in California. Here's our conversation. Hey, Tyler, welcome to Politico Tech.

[Tyler Katzenberger]

Thanks so much for having me.

[Stephen Overle]

The wildfires in Los Angeles, I mean, have been really devastating to watch play out. And, you know, one thing I'm seeing more and more on my social media are people kind of calling out data centers and generative AI for how resource intensive they are. How are people connecting these two issues?

[Tyler Katzenberger]

Sure. So, of course, when you have a wildfire, everyone who's watching is asking, where's the water? You're gonna need water to fight fires. And that's been a particular concern in Los Angeles because there have been reports of hydrants running dry when the fires first started. And so I think people naturally jump to that conclusion that, like, okay, when I see water shortages, I'm thinking of, like, what are other places that are taking up water? And one of those things are data centers. These data centers that power artificial intelligence and other high tech computing. You know, they take tons and tons of water to cool off these giant computers. And so in California, water's always a perennial problem. So when you have millions of gallons going to a data center. You're thinking, okay, how can we take that water and reroute it to somewhere like Southern California, make sure that there's more water on hand to fight natural disasters like wildfires when they come up?

[Stephen Overle]

And so is there an actual connection here? I mean, are data centers the reason why we are seeing these reports that firefighters are encountering empty hydrants?

[Tyler Katzenberger]

I mean, it's complicated. There's no, I think A to B connection that's very direct. So, for instance, the hydrants, when we're talking about the hydrants running dry, that was due to a lack of water pressure in these hydrants. Because a lot of these homes, especially in Pacific Palisades, were at high elevations. And obviously you're gonna need to pump that water up. And if it's coming from a lower elevation. And one of the reservoirs that was up in higher elevations was offline for repairs. And that's been a subject of huge controversy. Gavin Newsom announced that the state is gonna look into that within an independent investigation. And even if the reservoir was online, it's unclear exactly how much it would have helped the firefighters fighting that Palisade's fire, just because of how quickly it was growing due to the very high wind speeds.

[Stephen Overle]

Right.

[Tyler Katzenberger]

But of course, these data centers are still sucking water. And so there is kind of a loose connection to be made of how do we just in general think about water sustainability in California? California water politics are just a very messy, high profile fight in the state. And so anytime you have an issue that's going to touch on it, people are going to instantly be thinking about ways to save water or to redirect water. And data centers are one of those ways.

[Stephen Overle]

Got it. So it's not exactly a direct cause here, but there's limited water to go around, and these data centers are demanding more and more of it. You know, some California lawmakers are, though, seizing this moment to introduce legislation that would put new rules on AI data centers and kind of their resource demands. I know from reading your story, that includes a pair of bills that would essentially prod these data centers to be more sustainable. What exactly is the big idea there?

[Tyler Katzenberger]

Sure. So the idea is to try, I think I'll put it in three different, like kind of along three different lines, which are transparency, sustainability, and accountability. The first one being transparency. So energy reporting one of the bills from assemblymember Rebecca Bauer Cahan would require data centers to be transparent about how much energy they're actually using. What actually is their level of efficiency. Trying to gather more data that we're missing that second bit. Sustainability is being worked on through, I think, two different ways. The first one being tax credits. Like, how can we encourage these data centers to adopt sustainable practices in a way that's not adding regulations, but making it worth it for the data center? So offering a tax credit if they're hitting certain water sustainability targets, electricity sustainability targets, implementing things like water recycling technologies, then that last one is accountability. And this has to do more with, I think, energy and electricity than water, but making sure that the massive amounts of electricity that it takes to run these, you know that as these data centers increase electric demand, that those costs aren't being pushed back onto everyday people, maybe like you and I, who are using electricity in our homes and happen to just be located next to a data center.

[Stephen Overle]

I get the impression that these bills are very early on in the process. What kind of timeline are we looking at here? And is there any way at this point to kind of gauge whether there will be much support?

[Tyler Katzenberger]

Yes, it is still early on in the process. The timing certainly will benefit lawmakers. I think it's pretty difficult to come in and offer this measured approach, I think, on how maybe water sustainability for data centers isn't as tied to the wildfires. The fact that these fires exist and are making it an issue is already going to help lawmakers who are looking to increase water efficiency. Obviously, there are high profile political arguments, even between Gavin Newsom and Donald Trump, about how California should manage its water. And so they'll have that backdrop as these fights play out. The thing, though, is that we haven't heard yet from Big Tech. And Big Tech is pretty darn good at lobbying in California. I mean, these companies are huge. They know how to work California politics. They know who to go to to lobby against these efforts. And there are times when they have a favorable ear in the governor's office. Like one of the arguments that they could probably easily make is that these data centers create jobs in California. They employ people, they help drive the state's economy. And the state's economy is so centered on tech. It's such a big piece of how the state raises its revenue and how the state attracts people they'll have that leverage to come in with.

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[Stephen Overle]

I was thinking, you know, during this last legislative session in California, the tech industry sort of biggest battle around AI had to do with safety regulations. And ultimately Governor Gavin Newsom stepped in and vetoed a big AI safety bill that had passed in the state. Are you anticipating that these energy and water use concerns are going to be a big fight for the tech industry in the session to come?

[Tyler Katzenberger]

I don't think I'd put them on the same scale as the AI fight which we know is going to return. The lead senator behind that, Scott Wiener has already introduced what we call intent legislation in California. Basically a bill that's saying, hey, I am going to do, I'm going to take action on this thing. This thing of course being safety regulations for frontier AI models in Scott Wieners case. We obviously haven't seen full text of that yet, but that's probably going to suck a lot of the oxygen out of the room. We also have high profile legislation coming up on social media. Assemblymember Bauer Cahan, who I mentioned earlier, is working with the Attorney General's office to try to push through legislation that would create warning labels for social media. And I would expect to see another fight on whether or not social media should be held accountable for harms caused against youth. And so I think we'll have a lot of higher profile fights than this. But it's still a very interesting issue to watch, especially because what comes from it often, and this is often the case with California legislation, whatever its result may be, could drive inspire or back legislative efforts in other parts of the country.

[Stephen Overle]

Right. A lot of folks look to California. They're often a leader in any sort of tech regulation. You mentioned how the tech industry has not really commented on these issues yet. And it strikes me, you know, the tech industry has long sort of championed its sustainability and has long sort of touted, you know, accomplishments it has around addressing climate change, reducing its carbon footprint, et cetera. Do you get the sense from lawmakers that sort of that goodwill is being tested because of AI and because of all the energy it's consuming.

[Tyler Katzenberger]

I think it's hard to look at these bills and not see that as a conclusion. Again, these were dropped last week. There are more pressing issues at hand at the moment and we haven't had committee hearings for these bills yet, and I'm sure that will draw a lot more voices into the room. However, yes, I do think it is a sign that lawmakers are a bit worried about this issue and that they are seeing the writing on the wall that energy that's required to power these data centers and to power artificial intelligence could derail some of these clean energy goals. Even if tech companies say they're still committed to them, like everybody and their mother wants an AI assistant added into their app, they want to incorporate AI into pretty much every part of your lives. It's the hot topic right now. And so lawmakers are a little bit wary of it, clearly, through some of these bills. And I don't think we're going to see that trend going away anytime soon. I want to watch to see if lawmakers are going to choose to incentivize tech companies to further sustainability initiatives for data centers and to make data centers more sustainable, or are they going to create restrictions? Are they going to be. Are they going to try to work with tech companies or against them? Which. That might not be the right way to put it, but I'm wondering, are they going to create requirements that tech companies are going to need to meet, or are they going to take that approach of offering tax incentives? I think if I had to take a guess, that the tax credits might go a little bit further, just because once, you know, it's one thing to clear a bill through the legislature, it's another thing to get it signed and across Gavin Newsom's desk.

[Stephen Overle]

Right.

[Tyler Katzenberger]

And Gavin Newsom, I think, has shown a little bit more restraint than the legislature at just creating new restrictions for tech companies to follow. But I do want to see which one of those two approaches is going to have more mileage.

[Stephen Overle]

Got it. Now, that's a really interesting point. I mean, ultimately, you have sort of a carrot or a stick. And California.

[Tyler Katzenberger]

Yes, thank you.

[Stephen Overle]

Yeah, yeah.

[Tyler Katzenberger]

Yes.

[Stephen Overle]

Yeah. California legislature over the last few years has not hesitated to reach for the stick. But I think your point about Gavin Newsom, for all the criticism that Gavin Newsom has sustained for his response to the wildfires, he ultimately has sort of shown a sympathy for the tech industry. I think that's a very valid point. As this legislation kind of gets off the ground and really becomes an active debate there in California, who will be sort of standing on the opposite side of the tech industry, do you think? What industry groups or what activist groups are likely to be pushing this kind of legislation, trying to get it to pass?

[Tyler Katzenberger]

That's a great question. We're still, I think we're going to want to wait and see who's going to bring their face into a committee meeting. But in terms of energy efficiency, I think you're going to see there's a group called tern, the Utility Reform Network, who's pretty involved in a lot of legislation that looks to, I think, like, either rein in utility companies or create new utility restrictions. And so I would expect to see them in this playing field as well as other environmental groups who are focused on sustainability and then for just tech fights in general. There are plenty of groups in California who are, are committed to fighting for more tech restrictions and what they see as rules that make tech safer and more responsible. And this obviously falls right in, you know, in their orbit.

[Stephen Overle]

Got it. Listen, Tyler, appreciate you being here on Politico Tech.

[Tyler Katzenberger]

Yeah, thanks so much. It was really nice to join you all.

[Stephen Overle]

That's all for today's Politico Tech. If you enjoy Politico Tech, be sure to subscribe. And for more tech news, subscribe to our newsletters, Digital Future Daily and Morning Tech. Our managing producer is Annie Reese. Our producer is Afra Abdullah. I'm Stephen Overlee. See you back here tomorrow.