Intersection between large-scale digitalization and environmental sustainability: an overview of use and impact of data centres

Data centres are integral to the transformation underpinning modern energy systems and economies. As the backbone of digitalization, they enable critical services ranging from cloud computing to Artificial Intelligence and Internet of Things ecosystems. Their rapid expansion, however, poses significant sustainability and infrastructure challenges that necessitate action to align with climate goals and ensure energy systems resilience.

Between 2010 and 2020, energy demand of data centres stabilized thanks to efficiency gains and shifting to larger cloud facilities. Yet, more recently the electricity consumption has increased sharply driven by surging global digital demand (due to broadening of internet access, digital transformation across sectors, and the rise of emerging data-intensive technologies) amid limited opportunities for further efficiency improvements following the most impactful upgrades. These place mounting pressure on power grids, notably their transmission capacity and the high cost of upgrades, urging utilities in fast-growing technology hubs to impose moratoriums or restrict new data centres connections.

Beyond operational energy, data centres also strain natural resources through water use for cooling, depend on complex supply chains for critical minerals, and contribute to growing volumes of electronic waste. These raise concerns about environmental degradation and ethical sourcing.

The document examines the evolving role of data centres in the power sector, emphasizing their growing environmental footprint and impact on grid infrastructure, offering policy recommendations on five priority areas:

1. Establishing robust key performance indicators on sustainability across the full lifecycle of data centres (including carbon, water, and material circularity metrics, sensitive to regional context)
2. Enhancing data transparency and availability to better understand and manage environmental impacts;
3. Enabling demand-side flexibility through grid integration, advanced automation, and regulatory clarity;
4. Promoting circular economy principles by extending hardware lifespan, improving reuse and recycling;
5. Fostering public-private partnerships to drive investment, innovation, and workforce development aligned with sustainable outcomes.

The document urges redefining the performance criteria for data centres, moving beyond uptime and throughput to embedding sustainability at the core of design, operation, and governance, to prevent compromising climate targets and broader resource management efforts.