Green or greedy? The environmental impact of data centres

Green or greedy?

Data centres power our digital world—but they come at an environmental cost. Learn how their energy and water demands impact the planet, and the innovative solutions aimed at making data storage more sustainable.

Data centres power the digital economy offering a range of benefits. However, as they start to increase in numbers, they also raise environmental concerns. Their rising carbon footprint, water demands and energy consumption levels pose a dilemma: are data centres a necessary tool for modern economies, or are they putting a strain on our planet, or, both—and if both, what should leaders do?

Data centres: overview

• The global data centre boom
• Draining resources: the hidden cost of cooling down
• Answering the call for sustainable solutions
• The digital climate dilemma
• Looking forward: sustainability as a priority

The global data centre boom

With data centres booming around the globe, certain countries have become data powerhouses thanks to their unique advantages. This includes robust infrastructure, a skilled workforce and favourable climates for cooling (refer to liquid cooling in ‘the digital climate dilemma’).

Regions like Northern Virginia in the US, the Netherlands and parts of Scandinavia have experienced a rapid increase in data centre clusters. What makes these regions so attractive to companies looking to establish data storage facilities? It is mainly down to tax incentives, established technology ecosystems and energy access, enabling a continuous flow of information and support for several services, including the cloud.

Yet, the environmental toll is significant. A 2021 report by the International Energy Agency showed data centres consume roughly one percent of global energy, with emissions contributing between two to four percent of the world's carbon footprint. 

This percentage may seem minor, but it actually translates to tens of millions of tons of CO₂ annually—the impact can mean increased energy prices, water scarcity and heightened greenhouse gas emissions.

Draining resources: the hidden cost of cooling down

At the core of data centres’ environmental issues is their vast energy consumption. To run thousands of servers and ensure 24/7 access to data, data centres require significant amounts of electricity and cooling. 

Cooling represents a considerable energy cost, as data centres generate intense heat that must be controlled to avoid damaging sensitive equipment. This instant cooling, often achieved through air conditioning or other high-energy-consuming methods, exacerbates carbon emissions.

As demand for data centres grows, so does the impact on local water resources. The majority of data centres rely on water-based cooling systems to regulate temperatures, also placing additional stress on areas already vulnerable to drought or water shortages. For example, in the United States, data centres in states like California and Arizona—that are both frequently facing droughts—have triggered public outcry due to their water use practices. 

Answering the call for sustainable solutions

Climate activists have raised alarm bells about the rapid expansion of data centres in climate-sensitive areas—campaigns urging technology companies to adopt greener practices have drastically highlighted the ethical and environmental risks of clustering that many data centres in regions with what are considered “fragile ecosystems”.

Organisations including Greenpeace have consistently called for increased transparency and accountability in how companies address their environmental impact and footprint. 

Denmark and Sweden have taken leading roles, not only adopting renewable energy for powering data centres but also exploring new technologies like liquid cooling, which uses less water and energy than traditional cooling methods. In Denmark specifically, data centres are integrating with the local energy grid to recycle excess heat generated by servers, redistributing it to heat nearby homes and businesses. 

The digital climate dilemma

Countries with a high concentration of data centres are exploring several technological and policy responses to reduce the environmental impact. 

Liquid cooling, as seen in Denmark and elsewhere, offers a better alternative to traditional air cooling by reducing water consumption. Similarly, advanced energy management systems (AEMS), which optimise power usage and limit the amount of waste, are helping data centres achieve better Power Usage Effectiveness (PUE) scores, a metric that is commonly used to measure energy efficiency.

In regions like the Netherlands, policymakers have introduced environmental regulations to limit energy consumption and require data centres to incorporate renewable energy into their operations. The Dutch government recently implemented restrictions on data centre energy consumption near urban areas.

Still, many experts argue that we cannot rest solely on technological fixes; it requires an overhaul in energy policies and industry norms—this shift requires collaboration between governments, technology giants and energy providers to establish a certain set of standards or rules that minimise ecological impact.

Looking forward: sustainability as a priority 

With global data demands only expected to increase, the data centre industry faces the all-important question: Will it embrace sustainability and transform itself into a greener sector, or will it continue on its current path, exacerbating environmental challenges?

Some countries are already demonstrating that a sustainable approach is doable. Sweden and Finland, for instance, have leveraged their colder climates (also referred to as free-cooling) to minimise cooling energy needs and have integrated renewable energy sources into the power supply for data centres. Others say that the future of data centre cooling is underwater.

As countries explore policies for a greener data infrastructure, and major corporations increase transparency about their carbon emissions, the future for sustainable data centres becomes more promising. However, meaningful progress will require both regulatory push and corporate responsibility, with climate-conscious investments becoming a priority rather than an afterthought.