Paul Krugman’s Substack today talked about AI’s energy use and specifically how Elon Musk is taking advantage of MAGA privileges to pollute the air his Black neighbors breathe. Apart from Musk’s practices, the piece does raise the larger issue of AI’s electricity demand. 

As Krugman points out, we are likely to be paying higher prices for our electricity because of the demand created by AI. The government could decide to price electricity use so that AI bears most of the cost of the additional demand it is creating, and the rest of us are little affected — but in Donald Trump’s America, that is not going to happen. Trump is happy to make his working class base subsidize the electricity use of his billionaire AI friends. It’s very MAGA, as they say.

But there is another part of this AI and electricity story that is worth mentioning. China is also investing heavily in AI, and with the breakthrough of Deep Seek last February, its technology is close to the best the United States has to offer. 

But in addition to being cutting edge, Deep Seek is also hugely more energy-efficient, requiring an order of magnitude less electricity than the AI systems being built by Musk, Microsoft, Zuckerberg, and the rest. If the US were to develop AI along the lines being pioneered by Deep Seek, we would not see our grid being stressed by its growth. 

There is also the other side of the equation. Electricity is cheap and plentiful in China, with the average cost per kilowatt hour roughly half of the US price. 

Access to electricity is not going to be a constraint to developing AI in China. This is largely because the country is not run by people like Donald Trump, who have a superstitious fear of clean energy. Or alternatively, are so indebted to campaign contributors in the fossil fuel industry that they are prepared to handicap the development of new industries like AI.

There also is evidence that China’s leading AI companies are jumping ahead in developing uses for AI. There is clearly a lot of money at stake in this competition, but the fact that Donald Trump has jumped in with both feet cannot be good news for the American team.