Data centres need a green growth plan
OpenAI CEO Sam Altman earlier this month dismissed popular opinion that data centres are hurting communities, forests and water resources. He argued that 38,000 ChatGPT queries consume as much water as growing a single California almond, noting that he isn’t sure of the exact number, and it “might be wrong, but it’s close”.
Yet, the larger point remains. The data centre industry has joined sectors such as agriculture and mining that consume vast amounts of water and natural resources. Even so, halting the growth of data centres and artificial intelligence (AI) because they consume critical resources is pointless and paradoxical. Most digital services that individuals and institutions use depend on Cloud computing and data centres.
Curtailing the growth of data centres will hamper economic growth and personal convenience. Global data centre investment will reach $7 trillion by 2030, according to an assessment by consulting firm McKinsey. “Driven primarily by the explosive growth of AI workloads and hyperscaler demands, this monumental build-out represents a major structural shift in the digital economy,” it said.
Data centres’ power demand is projected to grow by more than 20 per cent annually through 2030, says research firm GlobalData.
BCG expects global data centre power demand to grow at a compound annual growth rate of around 16 per cent from 2023 through 2028, reaching approximately 130 gigawatts. That will be a 33 per cent acceleration in demand compared to 2020–2023 levels. The consulting firm notes that non-AI workloads — such as file storage, transaction processing, and standard business operations — currently account for most data centre power demand and will remain the majority long term.
Therefore, blaming AI or data centres is not a relevant issue. Setting up data centres that have a minimum impact on the environment is the way ahead.
A recent World Economic Forum report highlights the urgent need to embed sustainability into data centres from the design stage. With local concerns over energy, water, land, and community benefits increasingly stalling projects, companies must re-evaluate their strategies. The report advocates for sustainable designs that ensure long-term operation within environmental and social boundaries by optimising resource use, reducing harm, and — where possible — generating positive outcomes. Furthermore, it stresses that data centres must be built to adapt to ongoing environmental degradation and withstand severe physical, operational, and systemic shocks, from natural disasters to infrastructure collapse.
The report estimates that between $700 billion and $1 trillion in investment is currently lost to delays, disruptions, and cancellations — value that could be unlocked if hyperscalers and data centre firms prioritise sustainability and resilience from day one. Rather than treating these factors as afterthoughts, companies must systematically embed them into siting, design and procurement decisions throughout the entire project lifecycle.
Various companies are experimenting with placing data centres underwater and some are planning to send them to outer space.
India has emerged as one of the world’s fastest-growing data centre markets. Although estimates vary based on whether they track committed, announced, or planned investments, most industry reports indicate the sector is attracting tens of billions of dollars. With cumulative commitments exceeding $90 billion to $100 billion and another $20 billion to $30 billion expected by 2030, such investments are cementing India’s role as a major Asian digital infrastructure hub.
As India and the world adopt AI at a rapid pace, the consequent growth of data centres should be driven by sustainable policies.
The writer is an economic analyst and author
