MHI Solutions Improving Supply Chain Performance
BY JASON SCHENKER, PRESIDENT, PRESTIGE ECONOMICS; CHAIRMAN, THE FUTURIST INSTITUTE; AUTHOR, “COLD WAR TWO” AND “THE FUTURE AFTER AI”
ENERGY RISKS HAVE become more pronounced this year. The conflict with Iran and elevated oil prices continue to expose companies to inflationary and profitability challenges, including higher fuel costs, broad‑based inflation and supply chain risks. At the same time, expansion of artificial intelligence (AI) is creating an additional source of energy demand that could place upward pressure on power and natural gas prices.
The takeaway for supply chain professionals is that sustainability is more than a way to reduce emissions. Many sustainability investments have become valuable hedges against higher hydrocarbon prices. It is increasingly a strategy for managing total energy exposure, including the cost, availability, reliability and source of electricity.
Companies that improved efficiency, reduced hydrocarbon consumption or invested in on‑site generation appear better positioned to navigate this high‑risk environment and a potential future with ongoing high volatility and prices across energy markets. However, the extraordinary—and seemingly almost limitless— power requirements associated with growing AI demands also reveal an important qualification: Electrification alone does not eliminate energy price risks.
WAR, TECHNOLOGY AND THE GLOBAL OUTLOOK
The July 2026 International Monetary Fund (IMF) World Economic Outlook Update reflected mixed developments compared with the April release. The IMF expects global gross domestic product (GDP) growth of 3.0% in 2026 and 3.4% in 2027, following stronger growth of 3.5% in 2025. The 2026 forecast was lowered from 3.1%, while the 2027 forecast was raised from 3.2%. Most importantly, the weakening of the 2026 economic outlook reflects in large part the negative effects of the U.S. war with Iran.
The July IMF outlook also reflected important differences across economies based on their exposure to two increasingly strategic forces: energy markets and technology. Energy-exporting economies benefit from higher commodity prices, while net energy importers may face weaker growth, higher inflation and adverse terms‑of‑trade effects. Economies with greater exposure to technology investment and the AI value chain may experience stronger capital spending, exports and productivity gains.
These dynamics are highly relevant to sustainability. Countries and companies with diversified energy sources, greater efficiency and access to reliable power may be better positioned to capture technology‑related upside while limiting the adverse effects of energy‑market disruptions.
The IMF also raised its global inflation projections for 2026 and 2027. Higher energy costs are a major source of inflation risk, and those risks could remain elevated as geopolitical disruptions collide with rapidly increasing electricity demand. The resulting environment could reward countries and businesses that have taken steps to reduce energy intensity and improve resilience.
SUSTAINABILITY AS A STRATEGIC HEDGE
Earlier in 2026, surging oil prices demonstrated the financial value of reducing dependence on gasoline, diesel and other hydrocarbon fuels. Companies that invested in electrification, energy efficiency, renewable power or a combination thereof gained some insulation from the rapid increase in oil and fuel prices.
For companies operating fleets, warehouses, factories and distribution networks, energy efficiency can translate directly into margin protection. Lower fuel consumption reduces exposure to oil‑market volatility. More efficient buildings and equipment reduce utility expenses. On‑site generation and energy storage can improve predictability while providing a measure of protection against grid disruptions and peak electricity prices. The geopolitical environment continues to demonstrate that the future of sustainability increasingly supports economic resilience, supply chain security and operational continuity.
However, recent developments surrounding AI power demand add an important layer of complexity. Electrified equipment may offer protection from high oil prices, but electricity costs are not immune to market pressure. As AI data centers, advanced manufacturing facilities, warehouses and transportation systems compete for incremental power, access to affordable and reliable electricity could become an increasingly important source of competitive advantage.
TWO SIDES OF THE AI SUSTAINABILITY PARADOX
AI presents both an enormous sustainability opportunity and a significant energy challenge.
For material handling and manufacturing companies, AI can improve demand forecasting, preventative maintenance, inventory management, warehouse utilization and energy efficiency.
These applications can reduce waste, limit unnecessary movement, improve asset utilization and increase output from existing resources.
At the same time, the computing infrastructure that enables AI requires extraordinary amounts of electricity. The International Energy Agency expects global data‑center electricity consumption to roughly double from 485 terawatt‑hours in 2025 to around 950 terawatt‑hours in 2030.
This creates an apparent sustainability paradox. AI can help individual companies use energy and physical resources more efficiently, while the infrastructure supporting AI places significantly greater demands on the overall energy system. Fortunately, according to the IEA, renewables are expected to be significant for future data center power demand.
The growth of agentic AI, increasingly complex models and more widespread adoption is poised to drive up global demand for all varieties of power generation, including natural gas, coal, nuclear and renewables. Even as the energy required for individual AI tasks becomes more efficient, the number and intensity of AI applications are increasing rapidly. The resulting expansion could overwhelm some of the efficiency gains achieved at the individual‑computing‑task level.
This dynamic presents both risk and opportunity. Increased competition for electricity could raise costs and complicate facility planning. At the same time, the buildout of data centers, power infrastructure, generation assets, cooling systems, transformers, batteries and related equipment will require significant manufacturing, transportation, warehousing and material handling capacity.
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