The Hidden Environmental Cost of the Data Centre Boom

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As the world accelerates toward a digital future powered by artificial intelligence, cloud computing, and online services, an unseen environmental crisis is quietly intensifying. At the heart of this issue lies the rapid expansion of massive data centres—facilities that store, process, and transmit the world’s digital information. While these centres are essential for modern life, their growing demand for energy and water is raising serious environmental concerns across the globe.

News organisations like The Guardian continue to highlight how technological progress often comes with complex trade-offs. One recent focus has been the strain data centres place on natural resources, particularly water and electricity. As governments and companies promote digital transformation, the environmental consequences of this infrastructure are becoming harder to ignore.

Water Stress and Data Centres

A striking example comes from Australia, where the rise of large-scale data centres has begun to affect drinking water supplies. These facilities require enormous amounts of water to cool servers that operate around the clock. In regions already facing droughts and water scarcity, this added pressure can have severe consequences for local communities and ecosystems.

The issue is not limited to Australia. Globally, data centres are increasingly being built in areas where water availability is uncertain. Cooling systems, especially those relying on evaporative cooling, consume millions of litres of water annually. As climate change intensifies heatwaves and reduces rainfall in many regions, the competition between data centres and residential or agricultural water needs is becoming a major point of concern.

India’s Growing Digital Ambitions

India presents another compelling case. The country is witnessing an unprecedented surge in data centre investments, with approximately $30 billion (£22.5 billion) being poured into the sector. This growth is driven by expanding internet usage, digital payments, cloud services, and AI-based applications.

However, experts warn that India’s national power infrastructure may not be reliable enough to support such energy-hungry facilities. Frequent grid instability has led many developers to plan large diesel generator farms as backup power sources. According to consultancy firm KPMG, this trend represents a “massive carbon liability,” potentially undermining climate commitments and worsening air pollution.

Diesel generators not only emit significant amounts of carbon dioxide but also release harmful pollutants that affect public health. If widely adopted, they could offset any gains made through renewable energy initiatives, especially in urban and semi-urban areas where many data centres are being constructed.

The Transparency Problem

One of the biggest challenges in addressing the environmental impact of data centres is the lack of transparency. Technology companies often publish sustainability reports, but these disclosures are frequently insufficient to capture the full scope of their environmental footprint.

Researcher Alex de Vries-Gao has pointed out that it is difficult to assess the total impact of data centres, let alone isolate the specific effects of artificial intelligence workloads. For example, when Google recently reported on the environmental impact of its Gemini AI model, it did not include the water used to generate the electricity that powers the system. This omission highlights how indirect environmental costs are often excluded from official figures.

Without comprehensive reporting standards, policymakers and the public struggle to understand the true scale of the problem. This lack of clarity also makes it harder to hold companies accountable or to design effective regulations.

Progress and Persistent Challenges

To their credit, some technology companies are making efforts to reduce their environmental impact. Google reported that in 2024 it successfully cut energy emissions from its data centres by 12%, largely due to increased use of clean energy sources such as wind and solar power.

However, the company has also acknowledged that achieving its long-term climate goals is becoming increasingly difficult. In its 2025 environmental report, Google stated that progress is now “more complex and challenging across every level – from local to global.” One of the key obstacles is the slower-than-required deployment of carbon-free energy technologies at scale.

This admission underscores a broader issue: while renewable energy capacity is growing, it is not expanding fast enough to keep pace with the explosive demand generated by AI and cloud computing.

The Road Ahead

The rapid rise of data centres reflects humanity’s dependence on digital technology, but it also forces a reckoning with sustainability. Addressing this challenge will require coordinated action from governments, technology companies, energy providers, and civil society.

Possible solutions include investing in more efficient cooling technologies, locating data centres in regions with abundant renewable energy and water resources, improving grid reliability, and enforcing stricter environmental reporting standards. Without such measures, the digital revolution risks deepening existing environmental and social inequalities.

As journalism continues to shine a light on these issues, public awareness and informed debate will be crucial. Supporting independent journalism not only helps uncover hidden costs but also ensures that the push for innovation does not come at the expense of the planet’s future.