Data centers defend environmental record amid AI push

Two recent announcements from two different states highlight the growing importance of data centers, especially as they are crucial to providing more computing power for the expanded use of artificial intelligence.

Stillwater, Oklahoma, announced in March that Google had purchased land on which it intends to build a data center, part of the company’s planned $75 billion investment in data centers and other infrastructure. Then in early April, Pennsylvania leaders announced that the former Homer City Generating Station near Pittsburgh will become a 3,200-acre data center campus powered by natural gas and expected to deliver several gigawatts of power to support AI-driven hyperscale data centers.

Meanwhile, many legislators across the country are desperate to get in on the action and establish their states as hubs for data centers as other companies pledge to build more. They cite the economic benefits and jobs that come with the data centers, as well as the ability to be a key part of the next chapter of the country’s technological evolution.

But many are skeptical about data centers’ environmental impacts and the strain they put on power grids and water supplies. Natural resources are critical to keep the data centers powered on and cooled.

“These generative AI companies use a tremendous amount of energy, which results in climate impacts, which makes for more severe weather events,” Kyle Patterson, director of organizational effectiveness for Boise, Idaho, said on stage during the recent Smart City Expo USA conference in New York City. “As somebody who uses generative AI, I love it as a tool, but I'm really worried about it. I'm hopeful that we'll see more efficient models coming out that use less energy but also see a lot of these companies invest heavily in clean energy, because maybe they're responsible for that too.”

Those involved in the data center industry have moved fast to try and show that they hear those environmental concerns and are working to mitigate them, while also demonstrating their economic value.

A February report from the Data Center Coalition, the industry’s membership association, found that data centers contributed $3.46 trillion to U.S. gross domestic product and created more than 600,000 direct jobs, while each direct job in the sector supported more than six other jobs elsewhere in the economy. The report also argued that the industry has advanced “green energy integration” as part of the “evolving role of data centers as both technological hubs and drivers of economic transformation.”

The coalition also pointed to findings that data centers now account for half the nation’s corporate spending on wind and solar, and that its members include four of the top five purchasers of clean energy in the United States, according to a 2021 report by the Clean Energy Buyers Association.

At the state level, a Virginia report before this year’s legislative session found that data center water use is sustainable, and that the sector used either the same amount of water or less than the average larger office building. Dan Diorio, senior director of state policy for the Data Center Coalition, said in an interview that its members are “fully committed” to paying for the energy they use and finding ways to lessen strain on power grids and water systems.

“As we get these questions as far as load growth and water, it's important for us to be an engaged stakeholder,” Diorio said. “We're hoping to bring to the table to show the economic value, but also show why we're an engaged stakeholder here, what the state is poised to benefit from, but also how we can be partners in that conversation. That's key: leaning in, asking questions, looking for innovative solutions — which our members are doing in spades right now — trying to find short-term and long-term solutions to all these issues that really benefit the whole grid.”

Those innovative solutions, which Diorio said include metering, co-location with existing power generating sources or clean transition tariffs, may not be enough to prevent knock-on effects for electricity prices. Harvard’s Electricity Law Initiative forecasted that data centers will account for up to 12% of U.S. electricity demand by 2028, compared to 4% at present. And it will be consumers that pay for that higher demand, the report said, with “staggering” rises in their bills.

“We don't want residential rate payers subsidizing data center energy use and the build out of the data center industry on the electricity grid,” Diorio said. “If you adhere to good rate-making principles, including no cross subsidization and cost causation, you will be able to ensure costs are allocated appropriately.”

Virginia is just one example of the push and pull between state lawmakers and their desire to balance economic development with environmental protections. Gov. Glenn Youngkin, a Republican, recently vetoed bipartisan legislation that would have required those applying to build data centers to disclose a project’s noise and environmental impacts. In his veto message, Youngkin said it “limits local discretion and creates unnecessary red tape” around an industry that could “represent an immense opportunity for localities around the Commonwealth, especially those that don't already have them.”

Others are desperate to get in on the action, where states like Virginia have been leaders in the sector. Pennsylvania, for example, is considering legislation to accelerate data center permitting, which supporters said will protect the environment while at the same time capturing private investment dollars.

While there is some skepticism among state officials, they also appear hopeful of working together with data center providers to find a way forward to simultaneously protect the environment and natural resources while preparing for a technology-driven future.

“I am worried, but I also know that there's more that I can learn about data centers,” Summer Dawn Shumway, IT and communications manager at the Division of Water Resources within the Utah Department of Natural Resources, said in an interview at the Google Cloud Next conference in Las Vegas last month. “I'm in the midst of digging in and I'm hoping to be able to tour some of them that are saying they've found ways to use less water.”