The global data center industry is projected to emit around 2.5 billion metric tons of carbon dioxide-equivalent emissions (CO2e) through the end of this decade, a new research report by Morgan Stanley has revealed. This very astonishing figure really reflects the environmental costs of the massive scale of the development and expansion of data centers, driven primarily by hyperscalers: tech behemoths like Google, Microsoft, Meta, and Amazon.
Companies are hurrying to match explosive growth in artificial intelligence, cloud computing, and digital storage by building energy-guzzling data centers at a pace that could materially affect carbon emissions worldwide. At the same time, these companies are making striving initiates to minimise or eradicate their carbon footprints by 2030. This mixture—rapid organization growth and stringent climate goals—is anticipated to fuel a flow in reserves meant at decarbonizing data centers.
Data centers form the backbone of our digital economy, which relies heavily on everything from online banking and e-commerce to AI-powered innovations and cloud computing services. Yet data centers are anything but virtual in the physical infrastructure they require to power the Internet; they consume large amounts of electricity while running and cooling servers, releasing an enormous quantity of greenhouse gas emissions.
According to the statistics posited by Morgan Stanley, the carbon load of data centers will cumulatively amount to approximately 40% of what the entire United States creates in just a one-year. This report thus stresses the fact that unless there is a serious effort within a very short period to combat this challenge of global warming, the data centers might be one of the largest contributors to global warming in the next ten years.
“This creates a large market for decarbonization solutions,” it said, pointing to the rising demand for clean energy and energy-efficient technology, as well as new building materials innovative enough to curb emissions from the sector.
Key drivers of this trend are the hyperscalers—companies that operate massive, scalable data center infrastructures. Leading this data center boom are Google, Microsoft, Meta, and Amazon, each investing hundreds of billions into global digital infrastructure at a pace quick enough to keep up with the exploding demand for cloud computing services and AI-based technologies. They have a vested interest in keeping up the infrastructure as it allows them to deliver services fast, reliably, and securely to billions of users around the world.
Nonetheless, the energy that powers these centers is monumental. Many data centers run 24 hours a day, 7 days a week, and demand continuous cooling and electricity to keep servers at an ideal working temperature. Yet tech giants have made tall promises, like cutting their greenhouse gas emissions by 2030: Google has promised to be running on carbon-free energy by 2030, while Microsoft has set the target to be running carbon-negative in the same year.
Amazon, which is the world’s largest purchaser of renewable energy, is on a pathway to zero-net carbon by 2040. The challenge will indeed be mammoth: projections demonstrate the current growth of AI and cloud computing, held to be on a straight path to expanding electricity consumption by data centers enormously.
Artificial intelligence models, especially those belonging to machine learning and deep learning, have an insatiable hunger for computational power, a demand that escalates in data centers. In this context, balancing rapid technological growth with climate commitments requires focused efforts toward the adoption and scaling of decarbonization technologies.
Morgan Stanley’s report points out an economic opportunity in the decarbonization of the data center industry. Indeed, investment in clean power generation, energy-efficient equipment, and sustainable construction materials is poised to soar as tech companies work to meet their climate goals.
A major investment focus will go into renewable energy. A number of hyperscalers are already at the forefront in data center investment while deriving power from wind, solar, and others. For example, Amazon’s push toward 100% renewable energy by 2025 has already made the corporation the largest corporate user of renewable energy across the planet. Another example is Google, which has invested in renewable sources, with over 5.5 gigawatts of renewable energy capacity contracted to power its operations worldwide.
In addition to the switch to renewable energy, data centers will benefit from the inherent advantages they enjoy for being energy efficient. Advanced cooling systems, energy-efficient server technology, and intelligent power management solutions are some of the innovations that may be key in reducing the energy intensity in data centers. Solutions in advanced greening materials for data center construction would grow popular, as tech companies seek to make their infrastructure projects greener and more sustainable.
Similarly, there are expected to be some key beneficiaries of CCUS technologies and CDR processes. These technologies seize carbon dioxide discharges from industries and dump them secretive or recycle them into other engineering usages. Alternatively, CDR technologies seek to eliminate carbon dioxide from the air and stock it in normal or synthetic reservoirs. Both are critical elements in achieving the “net-zero” ambitions of hyperscalers, particularly when firms are seeking ways to deal with emissions that cannot be eliminated through the use of renewable energy or an improvement in energy efficiency.
Ultimately, the success of decarbonization in the data center industry rests on government policy and not just corporate investments.
Policymakers must strongly advocate for a transition to cleaner energy sources and incentivize innovation in energy efficiency and carbon capture technologies. For example, tax incentives or subsidies for renewable energy projects would likely lead to many more data center operators going green.
In a related way, rules that could force data centers to meet some demanding energy efficiency or carbon emission standards might speed up the process by which the industry moved towards sustainability.
For instance, the European Union has already implemented very strict regulations regarding energy efficiency and carbon emissions in the industry of data centers as part of its larger climate goals. In the United States, the focus of the Biden administration on the fight against climate change is likely to bring new policies in its sweep to reduce the carbon footprint of the tech industry, including data centers.
While data centers are a blessing for the global economy’s exponential growth, their footprint in environmental considerations is without debate. Morgan Stanley supports this, indicating that the data center industry is set to emit billions of tons of CO2 within the coming decade, hence the need for decarbonization more than ever.
Based on the usage of renewable energy, energy-efficient technology, and carbon capture procedures, there may be a path for the data center industry to move toward a more sustainable future, but it will be through heavy investment and unlikely cross-sector collaboration.
