Can Europe close the AI gap with the US and China?

{"text":[[{"start":null,"text":""}],[{"start":7.05,"text":"Hello and welcome to Energy Source, coming to you from New York, where the US oil and refining industries are enjoying a record export boom. "}],[{"start":16.55,"text":"More than 8.2mn barrels a day of refined fuels including petrol, diesel and jet fuel were shipped from the US to overseas last week, an increase of more than 20 per cent on the same period last year, according to the latest data from the US Energy Information Administration. "}],[{"start":35,"text":"The surge in overseas purchases is contributing to a windfall for US energy companies, which may earn an additional $60bn of cash flow this year if prices remain elevated. It highlights how the closure of the Strait of Hormuz, through which a fifth of global oil supplies flow, has forced global customers as far away as Australia to turn to the US for supplies. "}],[{"start":58.2,"text":"Last month, huge demand for US energy saw America become a net exporter of crude oil for the first time since the second world war, a sharp reversal of the US position little more than a decade ago when it was one of the world’s largest importers of crude. "}],[{"start":74.45,"text":"On the surface this appears to be a huge win for Donald Trump’s policy of “energy dominance”, which promised to boost production, reverse regulations and maximise exports. But it also risks a political backlash for the US president as domestic pump prices rise, with the average price of petrol reaching a four-year high of $4.53 a gallon."}],[{"start":97.65,"text":"Stocks of distillates, which include diesel, the lifeblood of the US economy, fell to two-decade lows last week at a time when prices of the fuel are hovering close to an all-time record of $5.81 a gallon. With the midterm elections approaching in November, it is little wonder that Trump is racing to clinch a deal to end the Iran war as soon as possible. "}],[{"start":120.80000000000001,"text":"Whether the Iranian leadership feels ready to sign up to Trump’s proposal remains unclear. The country has successfully humbled American leaders in the past — most notably during the 1979-81 hostage crisis at the US embassy in Tehran — which wrecked Jimmy Carter’s presidency. "}],[{"start":139.75,"text":"In today’s newsletter I look at Europe’s attempts to close the gap with the US and China on AI. Thanks for reading, Jamie "}],[{"start":146.85,"text":"Europe plays catch-up in global AI race"}],[{"start":149.95,"text":"Is Europe at risk of losing the AI race to the US and China? This is one of the most important questions facing EU policymakers as business leaders in the bloc warn that without decisive action the continent’s economy will fall behind its rivals. "}],[{"start":166.04999999999998,"text":"“The issue today is Europe doesn’t have the infrastructure,” Nokia’s chief executive Justin Hotard warned last month in an interview with Reuters in which he emphasised the need for a major acceleration in investment in data centres and grid connectivity."}],[{"start":180.95,"text":"Data centres provide the computing power needed for the storage, transport and processing of data, enabling AI applications, streaming services, online banking and a myriad other innovative services that help an economy to grow."}],[{"start":194.2,"text":"Europe lags behind the US and China in terms of data centre deployment and the gap is set to widen, according to a report from ING. Using energy demand data from the International Energy Agency, the Dutch bank forecasts the US will double its current data centre capacity by 2030 and China will add roughly 2.5 times its capacity."}],[{"start":214.45,"text":"ING said: “Europe will add roughly 75 per cent of its current capacity until 2030. Moreover, Europe already has less data centre capacity than China, which has roughly 1.5 times Europe’s capacity, and the US, which has roughly three times Europe’s capacity. In short, Europe is already behind the US and China and the gap will widen in the years to come.”"}],[{"start":237.75,"text":"So what can be done about it? On Tuesday the CEOs of several European technology companies, including ASML, Airbus, Ericsson, Mistral AI, Nokia, SAP and Siemens, published an opinion piece in several newspapers calling for a reduction and simplification of AI regulations."}],[{"start":256.6,"text":"“More than three years after the ‘ChatGPT moment’, Europe is still debating regulation, while others have long shifted focus to scaling AI in physical systems and robotics,” the executives wrote. “We face fragmented markets and subsidised rivals with very strong market penetration in the EU.”"}],[{"start":274.85,"text":"They call for: robust market-driven support from the EU and national governments; reform of competition and M&A regimes, enabling the strategic consolidation and scale necessary to compete globally; and incentivising private capital by fully realising the savings and investments union (a plan to establish a pan-European financial market that mobilises and makes savings available for investment across the EU)."}],[{"start":299.3,"text":"Officials in the bloc are negotiating ways to streamline the 2024 AI Act to remove excessive regulatory burdens and the EU’s executive arm is expected to unveil new support measures for the industry."}],[{"start":312.5,"text":"German Chancellor Friedrich Merz is among the strongest advocates for reform, arguing recently to exempt industrial AI from the “current regulatory ⁠straitjacket that ‌is too tight”."}],[{"start":324.5,"text":"But lighter-touch regulation is only part of the solution, according to experts, who say investment in European AI is badly needed to bridge a massive funding gap with the US."}],[{"start":335.6,"text":"Between 2020 and 2025, the US dedicated 34 per cent of its €1.33tn in VC funding to AI, while Europe allocated 18 per cent of its €252bn, according to a report published by the European Commission."}],[{"start":353.15000000000003,"text":"“While total venture activity is expanding, the scale, structure and distribution of AI funding remain fragmented and modest compared to key global competitors,” the report concluded. "}],[{"start":365.3,"text":"John Pettigrew, the former chief executive of National Grid and an adviser to Krios Infrastructure (more on this new company below), said change was happening in Europe already."}],[{"start":376.05,"text":"“Just before I stood down at National Grid, I think we’d had over 30 gigawatts of data centre demand requests to connect to the grid. And I’ll put that into the context in the UK of a 50 gigawatt system,” he said in an interview. "}],[{"start":389.95,"text":"“Demand from the data centres came earlier in the US, as the federal government put security of supply and the national security element behind it. So we saw stronger growth earlier in the US. But Europe is following,” he said."}],[{"start":405.4,"text":"Krios Infrastructure targets European AI boom "}],[{"start":409.45,"text":"Sandbrook Capital, an investment firm with almost $5bn in assets under management, has set up a new infrastructure company to tackle the power constraints on AI data centre growth in Europe. "}],[{"start":421.34999999999997,"text":"Krios Infrastructure is backed by a €200mn capital commitment from Sandbrook with the aim of accelerating delivery of grid-secured land sites to build large-scale AI and data centre projects. It is focused on building a portfolio of zoned sites across Europe capable of supporting large-scale facilities requiring 300 megawatts to 1 gigawatt of power capacity. "}],[{"start":444.9,"text":"It is led by founders, including Patrik Öhlund, a former director of energy markets for Microsoft in the European region, and Philip Lewis, founder of VaasaETT, a Helsinki-based energy consultancy. John Pettigrew, who stepped down from his role as CEO of National Grid in November, has been appointed as a senior adviser to the company."}],[{"start":467.34999999999997,"text":"Sebastian Serra, managing director at Sandbrook Capital, said the company would bring many of the learnings from its work in the US, where it established a company called Cloverleaf Infrastructure in partnership with Texas-based private equity firm NGP. "}],[{"start":481.95,"text":"“The ability to pick and choose where the communities and the utilities really need a partner to help unlock sites, we think it’s fundamental. That has worked incredibly well in Cloverleaf and we’re trying to replicate that with Krios.” "}],[{"start":496.45,"text":"Power Points"}],[{"start":497.65,"text":"Trump paused his plan to guide commercial ships through the Strait of Hormuz on Tuesday."}],[{"start":503.45,"text":"The exit by United Arab Emirates from Opec is not just a commercial decision — it reflects structural changes in global energy markets, writes Yousef Al Otaiba, the nation’s ambassador to the US."}],[{"start":516.3,"text":"Carlyle Group is joining Diversified Energy to acquire roughly $1.2bn of oil and gasfields in Oklahoma from Camino Natural Resources"}],[{"start":null,"text":"

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"}],[{"start":526.65,"text":"Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard, Malcolm Moore, Ryohtaroh Satoh and Stephanie Findlay with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here."}],[{"start":null,"text":""}],[{"start":555.9499999999999,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1778320055_2592.mp3"}