Data Centers and the Environment

Broadband Breakfast Club Exclusive Report

Data Centers and the Environment - March 2025

Editor's Note: Broadband Breakfast is making our Exclusive Report from August 2024, on "Data Centers and the Environment," available more widely in advance of the March 27, 2025 event, "Data Centers, Nuclear Energy and Broadband."

Some of the news has been superseded by events of the past six months; still, there is enough good background information here to make it worth republication.

Once a quiet, rural community, Prineville, Oregon is now the bustling home of a sprawling network of high-tech facilities around which its economy centers. These facilities, called data centers, are thanks to investment from tech giants like Facebook and Apple.

What began as a small-scale operation has evolved into a display of human innovation. Much like the early days of electrification, where power lines connected cities and towns, data centers are now the nodes connecting the digital world, ensuring that vast amounts of information flow seamlessly across the globe.

However, demand for and reliance on these centers continues to rise, more attention is being paid to the costs of such facilities. The expansion of data centers presents challenges, particularly in energy consumption and sustainability. As these facilities grow in size and number, so too does their demand for electricity.

The question on the industry’s mind is how to sustain high energy consumption while continuing to expand data centers to support emerging technologies that will drive innovation and shape America’s economic landscape.

Role of data centers

The ascent of data centers to the status of critical infrastructure marks a significant shift in the global economy. These vast, climate-controlled facilities, housing thousands of servers, support cloud computing, artificial intelligence, and data-driven decision-making, the very innovations that drive technological innovation and economic growth in the modern age.

Data centers are not just supporting businesses; they are powering entire economies. The relentless demand for digital services—from e-commerce and social media to complex financial transactions and telemedicine—has turned data centers into indispensable assets. They enable companies to process and analyze vast amounts of information in real time, offering the computational power necessary for breakthroughs in fields ranging from genomics to autonomous vehicles.

Data-driven insights are becoming key to optimizing operations, reducing costs, and enhancing productivity. As a result, the expansion of data centers is not merely a response to growing data demands but a fundamental enabler of economic modernization and competitiveness.

However, data centers are voracious consumers of electricity. The energy required to power and cool these facilities often surpasses that of entire cities. A Jaymie Scotto & Associate’s report finds that data centers devour over 460 terawatts of electricity annually, with expectations that they will exceed 1000 terawatts per day by 2030, roughly the equivalent of the usage of the entire country of Japan.

Furthermore, American data centers are expected to grow from 4 percent to 6 percent of domestic energy consumption by 2026, read the report. This surge in demand will be attributed to a proliferation of 5G networks, cloud-based networks and state-level tax incentives, it said.

Global technology company Siemens issued a report in June revealing that data centers are pushing the limits of their processing capabilities and power consumption and urged companies to secure sustainable power sources and reallocate cooling infrastructure.

Google reported in its annual environmental report that its greenhouse gas emissions rose 13 percent in 2023 and 48 percent since 2019 primarily due to data centers used to power artificial intelligence.

As the push for greener energy intensifies, the spotlight on data centers as major contributors to carbon emissions has sharpened.

Energy consumption by data centers

This surge in energy demand has begun to strain the energy grids in regions where data centers are concentrated. Unlike traditional industries, where energy consumption can be spread out over time and space, data centers require a constant, reliable, and high-intensity supply of electricity. Any disruption to the energy supply can lead to immediate and widespread impacts on digital services.

In some cases, the concentration of data centers in specific areas has led to bottlenecks in the energy supply, requiring substantial upgrades to local grids and transmission networks to keep pace with the growing demand.

Northern Virginia, particularly Loudoun County, has become one of the largest data center hubs globally, often referred to as "Data Center Alley." The region hosts a significant portion of the world's internet traffic, with major companies like Amazon, Microsoft, and Google operating large facilities there.

The demand for electricity has grown so rapidly that local utilities have had to accelerate investments in grid infrastructure, including new substations and transmission lines, to avoid potential blackouts and ensure that future data center projects can be accommodated.

A similar result occurred in the Dallas Fort Worth area, which became a major hub for data centers due to its central location in the state. Here, the increased energy demand has required local utilities to accelerate grid expansions from Oncor, the primary electricity provider in the region.

While industries such as manufacturing, mining, or transportation also consume significant amounts of energy, their usage patterns are typically more predictable and can be managed through established energy infrastructure. For example, a steel mill or an automotive plant will have well-defined peaks and troughs in energy use, allowing for more efficient grid management.

Regional differences in grid capacity further complicate the picture. Areas with already robust and well-developed energy infrastructure, like Northern Virginia, are better positioned to handle the influx of data centers, though not without challenges. Conversely, regions such as Central Oregon, where the energy grid was not originally designed to support such energy-intensive facilities, have faced significant hurdles in scaling their infrastructure.

What about Internet Exchange Points?

Internet Exchange Points are often lumped together with data centers but they retain a significant differentiation. Where data centers are used by companies to host data infrastructure, IXPs are a physical location where multiple internet service providers and network operators come together to exchange internet traffic.

IXPs are the carrier hotels that route traffic from all types of carriers, from local internet providers to transport networks to tier one careers to cloud and content networks. Data centers often host IXPs or are located near them, as this proximity allows for faster and more efficient data exchange, essential for the performance of data-intensive applications and services.

As data centers increasingly house ISPs, they become critical nodes in the internet infrastructure, further driving their energy demands.

Experts have long pointed to the expansion of IXPs in the United States as a number one driver of widespread internet connectivity in the country, particularly with federal funding rolling out.

Connected Nation Vice President Brent Legg said in an August conference that communities that do not have an IXP are at an inherent disadvantage for internet connectivity because they are fully dependent on an IXP that may be hundreds of miles away, often in another state.

Legg said that U.S. policymakers and industry leaders need to think about improving the quality of American internet connection through an investment in IXPs. According to the internet society, of the 630 registered IXPs in the world, 229 are in Europe whereas only 126 are in North America.

Indeed, several experts and industry leaders advocate for the construction of more data centers as well. Microsoft, Amazon Web Services and Google have publicly supported the construction of more data centers, particularly in underserved regions.

The push for greener data centers

The same tech companies are increasingly vocal about their commitment to adopting renewable energy, driven by the growing demand from consumers and investors. Companies like Google, Microsoft, and Amazon made pledges to power their operations, including data centers, entirely with renewable energy. These companies have invested billions in solar, wind, and hydroelectric projects.

For instance, Google claims to match its energy consumption with renewable energy purchases since 2017. Similarly, Microsoft has announced plans to be carbon negative by 2030, a goal that heavily relies on sourcing renewable energy for its data centers.

However, there is a growing dichotomy within these companies' strategies. While they are pushing towards renewable energy adoption, they are simultaneously investing heavily in artificial intelligence and other advanced technologies that require intensive data center use.

AI, with its vast computational needs, demands significant processing power, which in turn drives up energy consumption at data centers. Training AI models, particularly those involved in deep learning, requires running thousands of GPUs or TPUs, tensor processing units, for extended periods.

Governments at various levels are also taking up the call to drive towards more sustainable data center operations. Federal programs like the Department of Energy’s Better Buildings Initiative encourage data centers to adopt energy-efficient technologies by offering technical assistance and recognition for achieving significant energy savings.

State and local governments also play a pivotal role, particularly in regions where data center growth is most concentrated. In states like Virginia, which hosts a large percentage of the world’s data centers, the government introduced incentives such as sales and use tax exemptions for data centers that meet certain energy efficiency standards. These incentives are designed to attract data center investment while ensuring that new facilities are built with sustainability in mind.

States like California, with its aggressive renewable energy targets, are pushing data centers to align with broader state goals, requiring higher percentages of energy to come from renewable sources and setting standards for energy efficiency.

Moreover, governments are increasingly integrating sustainability requirements into the permitting and approval processes for new data centers. This can include mandates for energy efficiency, waste heat recovery and the use of renewable energy. In some cases, local governments have started to collaborate directly with tech companies to develop shared infrastructure, such as microgrids or district energy systems, that can deliver more sustainable power to data centers and surrounding communities alike.

Solutions to the environmental impact of data centers

Energy consumption is not the only concern regarding data centers. The buildings, by their very nature, are large, energy-intensive operations that can have significant effects on the surrounding environment. Beyond energy use, data centers also generate a considerable amount of heat, necessitating robust cooling systems that can strain local water resources, especially in areas prone to drought.

The need for constant cooling, often achieved through the use of large-scale HVAC systems, can also result in localized temperature increases, further impacting the surrounding environment.

Furthermore, the construction and operation of data centers can lead to habitat disruption, noise pollution and increased traffic in those localities. The physical footprint of these facilities, which often require large tracts of land, can encroach on natural habitats, leading to the displacement of wildlife, degradation of local ecosystems and soil erosion.

To mitigate these impacts, data center operators are increasingly adopting sustainable practices and innovative technologies. Google’s data center in Finland opted to use seawater for cooling, convenient for its location off the Gulf of Finland. Google has also committed to powering this data center with 100 percent renewable energy through local wind farms and the integration of machine learning to optimize energy use within the facility.

Facebook’s Prineville, Oregon facility invested heavily in solar and wind projects in the region to ensure it is sustained by 100 percent renewable energy. It also takes advantage of the region’s cool, dry climate to reduce the need for energy-intensive cooling systems.

Many more data centers are turning to advanced cooling technologies that minimize water usage, such as liquid immersion cooling and air-cooled systems that use ambient air to dissipate heat. Some data centers are exploring the use of recycled or reclaimed water for cooling purposes.

Growing opposition and NIMBYism

Public opposition to new data centers in response to these environmental and land use concerns is increasingly becoming a significant hurdle for tech companies as they seek to expand their infrastructure.

The rapid pace at which data centers are being proposed and built has heightened public fears about unchecked development. In some communities, residents feel that their voices are not adequately heard in the planning process, leading to frustration and distrust of both the companies behind the data centers and the local governments that approve these projects.

The perception that data centers bring limited local benefits—such as relatively few jobs compared to their environmental and land use impacts—further fuels opposition, as communities question whether the trade-offs are worth it.

The outer suburbs of northern Virginia have long fought against the proliferation of data centers in their area. Public outcry against further development came as Republican Gov. Glenn Youngkin embraced data centers in a 2023 announcement to invest $35 billion into data centers by 2040.

Loudoun County residents called for a moratorium on all new data center construction in March.

In early June, a $1.3 billion data center project was pulled from an Indiana town after city council members announced opposition to the plan. Furthermore, Arizona, Illinois and Arkansas have passed laws that suspend data center development or restrict whether they can be built in the state. Georgia passed a moratorium on tax incentives allotted to the data center industry for two years.

Public opposition has manifested in various ways, from organized protests and petitions to legal challenges aimed at halting or delaying data center projects.

Importance of middle-mile infrastructure

Another critical component of data centers is middle mile networks, which act as the connective tissue between data centers and the broader internet infrastructure. These networks form the backbone that links data centers to last-mile networks, which deliver internet services to homes and businesses.

By providing the high-capacity, high-speed connections necessary for data transmission over long distances, middle mile networks ensure that data centers can effectively serve users across large regions. These networks must handle massive amounts of data traffic with minimal latency, making their reliability and capacity key to the performance of data centers.

Despite their importance, middle mile networks often face significant infrastructure bottlenecks that can hinder connectivity. One of the primary challenges in middle mile infrastructure is the uneven development of these networks across different regions.

In many rural and remote areas, middle mile networks are either underdeveloped or entirely lacking, creating bottlenecks that can slow down data transmission and reduce the overall efficiency of data centers.

With the launch of the Infrastructure Investment and Jobs Act, the United States provides significant funding for broadband expansion, with a specific emphasis on building out middle mile infrastructure.

State governments are also playing a role in enhancing middle mile infrastructure. Some states have introduced their own programs to support the development of these networks. These initiatives typically involve grants, tax incentives, and public-private partnerships aimed at incentivizing the construction of middle mile networks in areas that have historically been overlooked by traditional telecom providers.

Final thoughts on policy and regulatory outlook

This is not the only way that the government is seeking to improve data centers in the United States. The Energy Efficient Government Technology Act, part of the larger Energy Act of 2020, mandates that federal data centers implement energy-efficient technologies and practices and that federal agencies conduct energy usage assessments. The act also directs the Office of Management and Budget and the Department of Energy to develop guidelines and metrics for tracking and reducing energy use in federal data centers.

Furthermore, the Energy Permitting Reform Act of 2024 includes provisions aimed at improving the permitting process for renewable energy projects on federal land. The bill, introduced in July, would increase the Department of the Interior's goal for permitting renewable energy projects on federal land, doubling the target from 25 gigawatts to 50 gigawatts by 2030 if adopted.

The House Energy and Commerce Subcommittee on Energy, Climate and Grid Security held a hearing in June to discuss energy demands of emerging technologies. Policymakers called for the strengthening of the electricity grid to keep up with growing needs and stay ahead of innovation in China.

Energy consumption in the U.S. continues to remain predominantly reliant on fossil fuels, with natural gas, coal, and petroleum accounting for the majority of the country's energy use.

Data centers are vital for the AI-driven economy of today. How they manage the growing concerns over their energy consumption will be critical to the role they play in the broadband-driven economy of tomorrow.