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Values Proposition

AI data centers are undermining climate solutions

The scrutiny of data centers has intensified because of tech company secrecy, energy consumption and societal impacts on customers, policymakers and communities.

3D rendering of data center server room

Source: Shutterstock/Production Perig 

Some industry sectors — the chemical and petroleum industries come to mind — have ample experience in being in the political and social crosshairs for extended periods. The more recent anti-woke eruptions against Disney, InBev and Target showed how ill-prepared were these enterprises to understand and effectively respond to anti-LGBTQ+ campaigns waged against their brands.

The latest entry in the saga of misguided corporate strategy belongs to the technology sector. While controversies over the proliferation of data centers have been building at the local level, a broader array of secrecy, economic, environmental and social impacts have catapulted onto the national stage.

How did data centers become so controversial? 

The tech industry, including data centers, have long basked in a reputation as a "clean" industry that would facilitate the transition to a decarbonized economy, invest in renewable energy portfolios to supply their energy needs and provide tax revenues and other benefits to local communities. The reality of this reputation has long been more complicated as air pollutant and groundwater contamination from the use of chemicals in semiconductor operations was prominent as far back as the 1980s.

The expanding conflicts over the negative energy, environmental and social impacts of data centers are of the tech sector’s own making.

The controversies stem from data centers being inherently energy- and resource-intensive because of the major scale and complexity of their operations. They provide power and cooling for large numbers of servers and networking operations necessary for processing and storing enormous amounts of data. Several major problems originate from these characteristics:

  • The International Energy Agency estimates that from 2022-2026, global data centers’ electricity consumption will double, rising to more than 1,000 terawatt hours in 2026, an amount equivalent to the entire annual consumption of Japan. By 2030, data centers are expected to require up to 9 percent of U.S. electricity according to the Electric Power Research Institute, a massive increase from the current 1.5 percent.
  • Utilities face major challenges in providing future electricity supplies for data centers, electric vehicles, cryptocurrency and other new demand sources. Utilities such as Dominion Energy, Duke Energy and Georgia Power have developed plans to delay their shutdown of coal-fired power plants and will add natural gas capacity in order to meet expected future electricity demand. The North American Electric Reliability Corporation (NERC) concludes that electricity providers will struggle to keep pace with expanding needs, and that power generation plans need to take grid stability into account
  • Data centers also consume substantial amounts of water for cooling operations. In 2021, Google’s data centers extracted about 4.3 billion gallons of water. The average Google data center uses 450,000 gallons of water per day.
  • Noise, ubiquitous power lines and sprawl from continually expanding data center operations have disrupted many suburban lifestyles. In some instances, new buildings have arisen directly adjacent to residential areas.
  • The expectation of good jobs and higher tax revenues from data center expansion is, at times, offset by the burden of higher utility bills, infrastructure investments or pollution borne by local residents. In some states, the expectation of a greater local tax base was canceled out by state-level decisions to provide tax incentives to tech companies, thereby reducing their local tax obligations. In other areas, fewer jobs resulted from tech sector investments.

These and other controversies are playing out across the nation but nowhere more intensively than across several counties in Northern Virginia, where approximately 70 percent of global internet traffic traverses the region’s data centers. According to The Wall Street Journal, Amazon Web Services invested $52 billion in Virginia from 2011 to 2021 and plans a further $35 billion expansion by 2040. Loudoun County alone (a 45-mile drive from Washington, D.C.) has about 37 million square feet of data center capacity and aims to add 42 million square feet in the future.

High-voltage transmission lines provide electricity to data centers in Ashburn, Virginia.

High-voltage transmission lines provide electricity to data centers in Ashburn, Virginia. Loudoun County is home to the world's largest concentration of data centers. Source: The Associated Press/Ted Shaffrey

The future is unfolding

What is emerging is a multifaceted agenda, designed on the fly, that will likely be revised many times in the rapidly changing future. Its key elements include:

  • Demands for greater data center transparency and accountability: It’s difficult to imagine that tech companies didn’t know in advance how their significant expansion plans would affect local communities. Whether in the form of expanded water and energy consumption (and associated increases of greenhouse gas and other emissions from on-site and electricity suppliers), greater traffic and noise levels, or the actual number of jobs created, a credibility chasm has widened between multiple stakeholders, including local officials and data center operators.  
  • Proposals for new data center siting criteria and regulatory oversight. State and local officials that oversee siting and compliance are evaluating how best to update the factors they consider for approving new construction. This would include closing loopholes to require companies to pay for infrastructure upgrades (expanded transmission lines and energy capacity) rather than offloading such costs on the taxpayers.
  • Need for new performance standards: Both voluntary standards developed by the industry and federal standards established through the collaboration of the Environmental Protection Agency and Department of Energy, are necessary to ensure consistency of data center performance and stakeholder confidence.
  • New tech sector goals: Industry giants such as Alphabet, Amazon Web Services, Meta and Microsoft are reviewing their existing commitments and practices to better position themselves against growing calls for construction moratoria, regulation and taxation. On June 4, Microsoft published a new "Datacenter Community Pledge" with an array of sustainability and community commitments.

The controversies stem from data centers being inherently energy- and resource-intensive because of the major scale and complexity of their operations.

The entire tech industry should endorse the need for robust disclosure standards backed by effective regulatory oversight. In parallel, companies should endorse a range of goals and specific time-bound metrics to fully service their electricity needs from renewable energy sources, become water-positive and zero-waste performers, and deliver specific and comprehensive societal benefits to workers and communities such as light and noise reductions and additional green space.

The expanding conflicts over the negative energy, environmental and social impacts of data centers are of the tech sector’s own making. Undoubtedly, state and local officials, always seeking to expand their economic base, often welcomed significant new investments. However, such officials, because of their lack of information and expertise and tech companies immense financial and lobbying power, remain at a decided disadvantage in assessing the benefits and externalities of such large, complex and constantly changing technologies. The question going forward is whether the dynamism of the technology industry can be channeled to speed the transition to a more sustainable and equitable society or whether the beating drums of investors and senior management with short-term and sky-high compensation expectations will win the day.

Terry F. Yosie has held senior leadership positions at the U.S. EPA and in the chemical and petroleum industries and, most recently, he served as president and CEO of the non-advocacy World Environment Center for 12 years. 

[Learn how companies are navigating the fast changing sustainability agenda and driving more impact with Trellis Network.]

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