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The expected expansion of data centers in the European Union and United Kingdom can significantly increase emissions if they rely even partly on fossil fuels, according to a new report from Beyond Fossil Fuels. The organization recommends securing power supply from new renewable energy projects alone rather than existing ones, to ease pressure on electricity demand and prevent throwing the energy transition off course.
New data centers using renewables without increasing the overall share of renewable energy, could mean other critical sectors falling back on fossil fuels, according to a sector analysis for the EU and UK.
Booming data center growth in Europe is leading to a surge in power demand, potentially posing a serious risk of escalating emissions – either through expanded gas infrastructure or by pushing other sectors onto fossil fuels, Beyond Fossil Fuels said in its report, called The System Overload: How New Data Centres Could Throw Europe’s Energy Transition Off Course.
The expected increase in electricity consumption in data centers could indirectly raise emissions if they rely on existing or already planned renewables rather than being powered by new renewable energy, the authors warned.
Data centers could consume 20% of new EU renewables, adding demand pressure
Electrification and energy savings are supposed to enable a reduction in greenhouse gas emissions. At the same time, electrifying sectors such as heating and transportation bolsters demand. The IT sector is a significant contributor, too, especially data centers and artificial intelligence.
Over the next six years, soaring power demand from data centers in the EU could drive a 121-million-ton growth in carbon dioxide emissions. It is nearly equivalent to all gas power plants in Italy, Germany, and the UK combined. In an alternate reality, where the expansion relies solely on already planned renewable energy, data centers alone would consume almost 20% of new EU renewables by 2030.
One scenario is renewables only and the other includes a 61% share of fossil gas
The report reveals two calculations of sourcing options for data centers. In the first one, 61% is fossil gas and the rest comes from renewables, and the other is for 100% renewables. The authors argue that traditional nuclear energy wouldn’t be available at the necessary scale, speed and costs.
Nevertheless, Google, Microsoft, Amazon, and Meta do count on nuclear power, both conventional and small modular reactors (SMRs), judging by their strategies, investments and power purchase agreements over the past few years.
European market expected to reach USD 64.5 billion by 2029
Artificial intelligence (AI) is a major factor driving global growth in data center development, along with digitalization, the expansion of cloud infrastructure and cryptocurrency. One projection shows the European data center market, valued at USD 42.98 billion in 2023, is reaches USD 64.5 billion by 2029.
The growth of the European data center sector is driven in part by the said major tech companies. They are expanding cloud infrastructure and investing heavily in parallel efforts to create the most commercially successful and dominant AI models.
The main AI systems being rolled out today are highly resource-intensive. A single query from ChatGPT, the AI model developed by OpenAI (with multi-billion dollar investment from Microsoft), requires 2.9 Wh of electricity, compared with 0.3 Wh for a Google search
Projections of share in power demand growth range from 15% to 29%
The International Energy Agency has forecast that by 2026 data centers could account for 29% of new electricity demand in Europe while McKinsey projects that it could remain at 15% to 25% of net new demand by 2030. Morgan Stanley suggests that carbon emissions in the segment are set to triple by 2030 on account of AI.
In the United States, expansion plans are already bolstering the gas sector, the report’s authors underscored. There are indications that data centers are prolonging coal and gas infrastructure in Europe, the document reads.
If not enough renewable energy projects are built across the EU to meet all the new demand, renewables would fail to displace overall fossil fuel use
The EU and UK could see an additional 287 TWh of electricity demand altogether from data centers, assuming high demand growth. If it is met with new renewables, emissions would fall to almost zero. However, assuming the renewable energy is from the already planned growth, it could limit access to renewables in other sectors. If not enough renewable energy projects are built across the EU to meet all the new demand, renewables would fail to displace overall fossil fuel use in the economy, according to the organization.
“Without clear policies from big tech companies and governments to ensure new demand is met with new and additional renewables and grids, data centre expansion could significantly increase emissions. The report urges tech companies to commit to phase out fossil fuels and ensure new data centres are powered by additional renewable energy, delivered by the same grid and in the same hour as their energy needs,” Beyond Fossil Fuels said.
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