Biden’s Executive Order on AI Data Centres: Explained

The order from US President Joe Biden concerning AI data centres calls for leasing federal sites owned by the US government’s Defense and Energy departments. This will be to host gigawatt–scale AI data centres and new clean power facilities to immediately confront significant power needs.

Biden explained that the order would “accelerate the speed at which we build the next generation of AI infrastructure here in America, in a way that enhances economic competitiveness, national security, AI safety, and clean energy."

The news comes just days ahead of the inauguration, which will see Biden handing the baton to President-elect Donald Trump for his second term in office.

Trump has been vocal about US data centre growth in recent weeks, having just agreed to a US$20bn data centre deal with leading real estate firm DAMAC Properties to build new data centres across the country.

Government support for a growing AI industry

The US is eager to ensure that the growing AI industry is able to build out the infrastructure for training models across the country. Larger volumes of compute power and electricity will be required to train such models, including the more powerful frontier models.

With this in mind, Biden states he wants agencies to facilitate interconnection to the electric grid to advance transmission development.

“We will not let America be out-built when it comes to the technology that will define the future, nor should we sacrifice critical environmental standards and our shared efforts to protect clean air and clean water,” Biden said in his statement.

“These efforts also will help position America to lead the world in clean energy deployment in the context of strategic competition abroad. Some of this new capacity will also be committed for use by small businesses and startups. This renewed partnership between the government and industry will ensure that the United States will continue to lead the age of AI.”

The White House states that building AI infrastructure in the US is a “national security imperative”, as the growth of AI is inevitably starting to impact the lives and security of Americans.

Continuing to build AI infrastructure is also of critical importance to continued economic competitiveness in the US. Already, AI is expected to continue having an impact on the economy across key industries like healthcare, transport and education.

Likewise, growing electricity demands to support large-scale AI operations presents an opportunity for advancing US leadership in clean energy technologies. The White House states that it hopes data centres will help to support this clean energy deployment without raising costs for US consumers.

“Domestic data centres for training and operating powerful AI models will help the United States facilitate AI’s safe and secure development, harness AI in service of national security and prevent adversaries from accessing powerful systems to the detriment of our military and national-security,” the White House explains via its announcement. 

“It will also help prevent America from growing dependent on other countries to access powerful AI tools.”

The sustainability pledge

The executive order says it will also direct the Department of Defense and the Department of Energy to accelerate the clean energy transition in a way that is responsible and respectful to local communities.

In recent months, sustainability has become quite a buzzword in the data centre industry, as developers have continued to make carbon neutrality pledges. However, rapid growth in their operations and AI investments has increased demands on electricity, which has made it more challenging for operators to keep their promises. 

In response, Biden’s order is ordering the leasing of federal locations with certain requirements for participants. This includes companies utilising federal land having to purchase an “appropriate share” of American made processors.

The order also states the departments of Defense and Energy have to each identify at least three sites where the private sector can build AI data centres. These agencies will then run “competitive solicitations” from private companies to build AI-ready data centres on the selected sites.

Shaping the industry under Trump

It remains to be seen if this executive order will stand when Donald Trump re-takes office on 20 January 2025.

As developers navigate data centre demands throughout 2025, a range of challenges will impact the sector. According to Moody’s Ratings, roughly US$2.5tn of investment will be needed to meet “unconstrained demand growth” through 2028.

Likewise, developers will continue to incur more debt to build and upgrade data centres as demand continues to outpace supply.

“President Biden’s executive order to accelerate AI infrastructure development is a credit positive for the US AI industry, given the scarcity of prime locations with access to large quantities of power,” explains Raj Joshi, Senior Vice President of Corporate Finance, Moody’s Ratings.

“Building data centres on Federal land reduces the permitting burden for developers, although power availability will remain a key constraint. 

“While these initiatives won't immediately address the anticipated data centre capacity shortfall over the next two to three years, they will eventually benefit companies in the semiconductor, IT hardware, AI software development, data centre development, and power utility sectors as additional capacity on government-owned lands becomes available.”

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