Will data centres power the UK’s economic growth or quietly drain energy, water and scupper Labour’s plan to decarbonise the rest of the economy?
That is the question MPs are now putting under the microscope as Parliament launches a new inquiry into the environmental impact of the AI driven expansion of the data centre sector.
The Environmental Audit Committee has opened an investigation into how much electricity and water data centres are likely to consume – and whether their rapid growth risks cutting across the Government’s net zero plans.
The move reflects growing unease about a sector that ministers actively court as a driver of growth while privately conceding its future energy demand is far from settled.
Data centres were designated critical national infrastructure in September 2024 giving them stronger legal protections and political backing.
But their footprint is growing fast. The National Energy System Operator expects electricity demand from data centres to quadruple by 2030 driven by AI cloud computing and digital services.
That surge would land on an already congested grid struggling to connect renewables fast enough while holding down bills.
Alongside the inquiry the Committee has published a letter from Energy Secretary Ed Miliband responding to concerns that data centres were omitted from projections for the Seventh Carbon Budget.
Miliband says emissions from data centres are included in the modelling but admits future demand “remains inherently uncertain” with officials testing a range of possible growth trajectories.
Chair of the Environmental Audit Committee Toby Perkins MP said:
Will data centres power the UK’s economic growth? Perhaps. But what kind of implications will they have for energy and the environment? How will they impact the already tortuous queues for grid connections and the Government’s plans to bring down energy bills?
“And what impact will their energy consumption and water usage have on the decarbonisation efforts and viability of other sectors?”
The inquiry will examine whether planning authorities are properly factoring in the environmental impact of data centre developments including water use grid access and knock-on effects for other sectors waiting to connect.
MPs will also explore whether new technologies can reduce energy and water demand and what lessons the nation could learn from countries that have already faced pushback over data centre growth.
For ministers the timing is awkward.
Data centres are being fast-tracked as engines of productivity while the energy system that supports them remains fragile expensive and slow to upgrade.
The Committee’s work will test whether Britain can scale its digital economy without undermining its climate goals, or pushing costs onto households and businesses elsewhere in the system.
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