The Problem of Data Centers

Data center construction has exploded in the US over the past few years both in numbers and in scale of facilities, driven by Big Tech’s speculative AI “boom” and its close ties to the fossil fuel industry, military and defense industries, and cryptocurrency mining.[^7] Contrary to data center backers’ claims that this expansion serves everyday people, there is a deep lack of evidence of benefits—and even of any justification for the demand.

Tech firms are investing a tremendous amount of money in AI infrastructures based on projected future demand that is detached from demonstrated need. Bain & Company estimates that $2 trillion in annual revenue will be required by 2030 to make the AI infrastructure build-out profitable—more than the combined 2024 revenue from Amazon, Alphabet, Apple, Meta, Microsoft, and Nvidia.[^8] At present, however, AI firms are showing nothing remotely approaching this kind of scale on the near- or mid-term horizon. This ratcheted-up pressure to show a return on investment for shareholders and investors incentivizes AI firms to adopt increasingly toxic business models.[^9]

The data center build-out reveals who truly benefits from the acceleration of AI across all sectors of society, and who is left to pay the price. More than a decade of evidence and community experience shows that data centers, particularly hyperscale facilities, operate as tangible sites of corporate extractivism, in the form of empty promises made to localities that are trying to survive austerity and legacies of deindustrialization. This rampant expansion has deep consequences for local communities, our regional infrastructure, our scarce natural resources, our public budgets writ large, and our futures. See our recommendations to prohibit or restrict data center development locally, reject data centers that do not fit within a locality’s goals, and pass statewide or regional moratoriums.

Data Centers Are Bad for Economic Development

AI developers justify data centers’ immense resource use and billions in tax breaks with promises of economic development that fail to materialize—and prevent investment in industries that are more sustainable.

Data centers are one of the most subsidized industries in the US, costing states billions of dollars in lost revenue annually through tax breaks and other corporate giveaways. They also threaten our public budgets, including for education and basic infrastructure.[^10] According to Good Jobs First, at least 10 states lose more than $100 million annually in tax revenue to data centers, with Texas losing over $1 billion in 2025 and Virginia over $700 million in 2024.[^11] The few states that have calculated their returns on taxpayer investments have determined that they lose between 52 and 70 cents for every dollar they spend on data center sales tax exemptions[^12]—only one type of tax break that data centers typically receive.

This stands in sharp contrast to the promises data center developers and tech companies make of billions in investments for localities, and their performative donations to local school districts and other institutions. Oregon public schools, for example, lost an estimated $275 million to property tax abatements in 2024 alone.[^13] Oregon’s Crook County, home to numerous data centers including facilities operated by Meta and Apple, gave away $29 million in 2024 in local revenue to property tax exemptions to corporations—orders of magnitude away from Meta’s donation of roughly $2 million to the county school district over the past decade.[^14] Simultaneously, data centers require so much electricity—and have the power to negotiate preferential deals with utilities—that they crowd out more sustainable industries from the grid and thus the local economy. See our recommendations to repeal or limit tax incentives and subsidies at the local and state level.

Data Centers Are Not Significant Job Creators

The other justification for billions in tax breaks is the promise of job creation, despite the fact that most data centers create remarkably few permanent jobs.[^15] A single facility can operate with only a few dozen employees, including both higher-paid technicians and lower-wage security, landscaping, and janitorial roles, who may be subcontractors.[^16] The promised jobs numbers are often vastly inflated by temporary construction positions, with no guarantee these roles will go to local workers.[^17] Subcontracting practices with specialized temp agencies hire data center workers in temporary positions without benefits, rather than as direct employees, as in the case of a Google facility in Council Bluffs, Iowa.[^18] High-paid construction roles, such as electricians, are often filled by workers who travel from project to project across the country.[^19] These numbers pale in comparison to other developments; Indiana Michigan Power’s (I\&M) own report shows that data centers create 100 times fewer jobs than other industries, by amount of power used.[^20] In exchange for these jobs, states are paying almost $2 million in tax breaks on average.[^21] See our recommendations to establish fair labor requirements at the local and state level.

Data Centers Threaten Our Scarce Natural Resources, and Subsequently Our Public Health

Data center expansion is returning communities to reliance on fossil fuels and reversing our limited climate progress. States are keeping coal plants open, building new gas-fired power plants, and reopening nuclear plants solely for data center use.[^22] According to the Center for Biological Diversity, carbon emissions from data center expansion, primarily powered by fracked gas and goal, are expected to triple by 2035, reaching 10 percent of our economy-wide emissions and 44 percent of the power-sector emissions allowable to meet the US 2035 climate target.[^23] See our recommendations to regulate data centers’ energy use at the local level and accelerate renewable energy infrastructure at the state level.

Carbon emissions threaten not only our planet’s future, but the immediate health of communities, with air pollution leading to rising cancer and asthma rates. By 2030, air pollution from data centers alone could cause an additional 600,000 asthma cases annually in the US and an estimated 1,300 premature deaths.[^24] As the electricity grid struggles to keep up with the immense demand of AI data centers, companies are increasingly turning to dirty behind-the-meter power sources, further exacerbating public health impacts. The diesel generators frequently used for backup power release additional pollutants and toxins that cause asthma, cancer, heart attacks, and cognitive decline.[^25] Nitrogen oxide from gas turbines is making it hard for nearby residents to breathe: In the Boxtown neighborhood of Memphis, for example, xAI’s supercomputer facility operates 35 turbines without pollution controls or adequate permits.[^26] Noise pollution from data center construction, generators, heating and cooling systems, and energy sources can also result in negative health consequences for workers and nearby residents (including headaches, stress, and disrupted sleep, which in turn lead to cognitive impairment and cardiovascular risks), as well as impacts on local wildlife.[^27] See our recommendations to prevent air pollution and protect community health locally and institute strong noise-mitigation measures.

Data centers are using up precious water resources across the country, with a single data center consuming as much water as a city of 50,000 people.[^28] Tech companies report record water consumption figures due to their growing data center footprints, even as they build more data centers in water-scarce locations.[^29] These numbers are also likely an undercount, as water for construction, cooling, and energy infrastructure is rarely considered in projections of data center water use.[^30] Claims that projects will be “water positive” do not replenish stressed aquifers, but refer to nominal fees paid by companies for water stewardship projects elsewhere.[^31] See our recommendations to regulate data centers’ water use.

The data center build-out is also a massive land grab that threatens historic sites and cultural landmarks, Tribal Nations and Indigenous communities, rural and agricultural communities, and affordable housing. Data center construction has encroached on wilderness areas, state parks, and historic sites, and has also damaged century-old Black cemeteries.[^32] Recently, the federal government has opened up federal lands to data center construction.[^33] Tribal Nations and Indigenous communities have raised alarms about the threats of data centers to their sovereignty, lands, water, and environment, as well as about the impact of nuclear energy projects and mining of critical minerals.[^34] Data center proposals and expansion of energy infrastructure including transmission lines cut across and reduce working farmland.[^35] Data centers lower quality of life for homeowners and residents close by—in some cases reducing potable water and increasing power outages, noise, and light pollution—and divert resources from affordable housing construction.[^36] See our recommendations for establishing conditional use permitting for data centers and passing zoning ordinances and municipal code amendments. Note: This toolkit does not yet include protections specific to Tribal Nations and Indigenous communities; for more information, please see No Data Centers on Native Land.

Data Centers Destabilize Our Energy Grid—and Pass Energy Costs Onto Everyday People

By 2030, data centers are expected to use 12 percent of US electricity consumption, triple the current 4 percent.[^37] Even in lower estimates, this exceeds the amount of electricity needed to power 26 million households.[^38] This energy grab is already destabilizing our energy grid, with the North American Electric Reliability Corporation (NERC) citing data center growth as one of the greatest reliability challenges for US power grids,[^39] increasing the risk of power outages and bringing higher risks of energy shortfalls to virtually the whole country.[^40] Near misses of blackouts are already increasingly common; for example, in July 2024, data center operators almost caused blackouts across Virginia as they prioritized their own facilities’ continued operations following an equipment failure.[^41]

As the wealthiest corporations in the world demand exponentially more power for their data centers, everyday people are regularly subsidizing the companies’ energy costs. Across the country, energy bills have gone up for regular ratepayers (individual households and small businesses),[^42] directly attributable to the buildout of data centers and associated energy infrastructure.[^43] Despite promises to pay their fair share, the industry has fought against obligations to ensure its costs aren’t passed along to ratepayers, in states including Georgia and Ohio.[^44] See our recommendations to establish strong ratepayer protections and promote grid stability.

Data Centers Are Introducing Massive Risk into Our Infrastructure and Financial Markets

The AI market is increasingly based on speculative financial structures, with a growing reliance on private credit markets. If there is indeed an AI bubble and that bubble bursts, this dynamic could jeopardize the stability of our pensions, retirement savings, and insurance policies; it could also potentially produce stranded assets.

The data center build-out is largely built on demand projections—not actual demand—which works to the advantage of AI companies jockeying for investments and rapid access to energy infrastructure. Forecasters tend to overestimate electricity demand because they emphasize static load growth, increasing at similar rates over time, rather than efficiencies that are likely to develop.[^45] Utilities companies are simultaneously incentivized to overproject energy demands to grab investors’ attention;[^46] this overestimated demand is likely further inflated, as data centers tend to request—but not use—services from multiple utilities.[^47] All of this functions to benefit tech firms, which can use demand projections as a strategic policy lever to petition the government to bring more power sources, like natural gas plants and nuclear development, online quickly.[^48] Not only does this harm communities by backtracking on decarbonization goals and increasing reliance on fossil fuels; it also significantly introduces the risk of stranded assets if and when actual demand fails to materialize.

Some firms are already walking back their data center commitments because the math simply doesn’t add up. Microsoft has pulled back on multiple data center projects globally,[^49] and a US Census Bureau study found that AI adoption rates are starting to decline for large companies.[^50] This has stopped neither the proliferation of data center investment, nor a nationwide push to expand fossil fuel infrastructure and redirect energy infrastructure investments toward AI’s insatiable ends.

This investment further consolidates corporate power and serves to expand a technology largely used to surveil everyday people and degrade the quality of our lives, access to resources, and basic rights. See our recommendations to protect constituents from AI harms at the local and state level.

Data Center Developers Benefit from Economic Development Policies, Secrecy, and Regulatory Systems That Assume Corporate Interest Will Lead to Public Benefit

More than a decade of existing data center development shows that the supposed gains from this trickle-down approach fail to materialize. Our local and state regulatory systems often prioritize attracting economic development regardless of the cost to residents, and largely do not take into account users operating at such a massive scale of resource consumption. Widespread corporate use of nondisclosure agreements, backroom deals, and secretive practices excludes the public—and in some cases local officials—from decisions about data centers in their backyards.[^51] Corporate lobbying (which operates largely without spending limits) and campaign contributions from super PACs further exacerbate this dynamic, as tech companies pour millions into shaping elections and the outcomes of legislation to their benefit.[^52]

Part of the work of opposing data centers is addressing these flaws in our systems, as much of data center development is governed by zoning processes, economic development boards and corporations, and local and state bureaucratic mechanisms. See our recommendations to establish statewide oversight and transparency mechanisms and limit corporate influence over processes and institutions involved in data center development.

The Current Trajectory of Data Center Development Is Not Inevitable

Data centers simply do not need to be built out at the size, scale, and level of acceleration currently pushed by AI firms, tech companies, and developers increasingly backed by private equity. We are facing a critical inflection point in the expansion of this infrastructure and the acceleration of AI technologies used to justify it, as the takeover of our electric grid, precious resources, public and Tribal lands, and infrastructure ramps up to previously unthinkable levels. We can choose another direction, following the lead of communities already living the impacts of these toxic developments and their visions for an alternative future.