The Cloud vs the Climate? Lessons from Ireland on the data centre debate

As our lives become increasingly digital, the infrastructure powering them is sparking a global debate: we need data centres, but at what cost to the climate and our access to energy? These massive facilities are the backbone of everything from streaming to AI, yet they consume staggering amounts of electricity and water, often straining local grids and and in some cases, threatening to derail decarbonisation efforts.

In this episode of Cities 1.5, we explore how Ireland became the "canary in the coalmine" for this issue. With data centres projected to consume nearly 30% of the nation’s electricity by 2030, the Irish experience serves as a critical warning – and a roadmap – for cities worldwide. We examine the tension between economic ambition and climate mandates, questioning how urban leaders can manage the rapid expansion of digital infrastructure without derailing net-zero goals. Join us as we dive into the lessons learned from the frontlines of the data centre boom and what they mean for the future of sustainable cities.

Featured guest: 

Professor Hannah Daly, Professor of Sustainable Energy at University College Cork

Links:

Ireland’s data centre boom is driving up fossil fuel dependence - The Irish Times, by Professor Hannah Daly

Data Centres Metered Electricity Consumption 2024 - Central Statistics Office

Energy for who? Data centres and the grid - Friends of the Earth Ireland

How Big Tech wrote secrecy into EU law to hide environmental toll - The Journal Investigates

What Ireland’s Data Center Crisis Means for the EU’s AI Sovereignty Plans -  AlgorithmWatch

Ireland’s data centre policy reset: The end of the blanket moratorium -  KPMG Ireland

Google’s Dublin data centre blocked amid energy usage concerns - Tech Monitor

Data Centres Ireland – Energy, Growth and the Grid Debate - Enable Research

If you want to learn more about the Journal of City Climate Policy and Economy, please visit our website at https://jccpe.utpjournals.press/

Listen to the Cities 1.5 five-part miniseries “Going Steady with Herman Daly: How to Unbreak the Economy (and the Planet)" here: https://lnk.to/HDMiniSeries

Cities 1.5 is produced by the University of Toronto Press and the C40 Centre, and is supported by C40 Cities. Sign up to the Centre newsletter: https://thecentre.substack.com/

Writing and executive production by Peggy Whitfield.

Narrative and communications support by Chiara Morfeo.

Produced by Jess Schmidt: https://jessdoespodcasting.com/

Edited by Morgane Chambrin: https://www.morganechambrin.com/

Music by Lorna Gilfedder: https://origamipodcastservices.com/

Transcript

[theme music]

David 00:01

I’m David Miller, and you’re listening to Cities 1.5, a podcast exploring how cities are leading global change through local climate action. [music ends]

[fast rhythmic music] Right now, many cities around the world are being asked to make a choice: open your doors to data centres, take the investment, the promises of jobs, the signal that you’re a player in the digital economy. It sounds straightforward, but increasingly it isn’t. Residents are asking why their electricity bills keep rising, why the grid is being disrupted, and whether data centres are the cause. Climate scientists are warning that the fossil fuels being burned to power server halls are locking in emissions for decades, and that the clean energy transition is being hijacked to serve the needs of big tech rather than communities. [music ends]

[rousing music] But why have data centres suddenly become so important? Put simply, they are the physical infrastructure of the digital world. Every search, every stream, every AI query, every financial transaction, it all runs through buildings that need to be powered and cooled continuously at an enormous scale. The AI boom has superpowered the need for this infrastructure. Unfortunately, the conversation about the cost of this boom largely didn’t happen at the beginning, but it’s happening now. If you want to know where that conversation leads, look at Ireland. Not as a cautionary tale from some distant future, but as a live experiment in a country that opened its doors early and is now further down this road than almost anywhere else on earth. Ireland is the proverbial canary in the coal mine, and the canary is struggling. Data centres are on course to consume 30% of the country’s entire electricity supply by the end of this decade. The clean energy Ireland generates isn’t displacing fossil fuels. It’s feeding growth that outpaces it, putting its national climate goals at risk. And discussions about Ireland’s reliance on fossil fuels, how energy is used, and who bears the cost have exploded into the national conversation after widespread protests around energy prices rocked the nation, threatening the stability of the government itself.

Beneath that, a deeper tension is cracked open. Can a city be a global tech hub and a climate leader simultaneously, or is the former quietly cannibalizing the ambition of the latter? Is there a way for data centres to be truly sustainable for both people and planet? [music ends]

[slow rhythmic music] Today, we’re going to hear from an expert who has been responsible for modeling Ireland’s path to deep decarbonization, spending years translating complex energy systems into hard political realities. Most recently, this includes laying bare what Ireland’s experience with data centres is actually costing to the country’s climate commitments. She’s a former lead analyst at the International Energy Agency, advisor to the government and civil society, and contributor to the Irish Times, ensuring that the truth around these issues breaks out of academic journals and into the mainstream. [music ends]

Hannah Daly 03:58

[phone rings] [whooshing] Hi there, this is Hannah Daly. I’m professor in sustainable energy at University College Cork in Ireland. [handset clicks]

David 04:08

Professor Daly, thank you so much for being with us today.

Hannah Daly 04:12

So happy to be here. Thank you for the invitation. Looking forward to the chat.

David 04:16

Could you just—to set the background, could you just introduce yourself and tell us a bit about what you do and how you got interested in climate and then data centres in particular?

Hannah Daly 04:29

After a career that’s taken me to a few places, including London and Paris, working on global energy issues related to climate change, I took the opportunity to come back to Ireland and really work on—sort of on the ground at the coal face of supporting energy transition policy and climate policy. Because I worked at the global level at the International Energy Agency, for example, but it’s really at the national level where climate policy is implemented. Where evidence and where supporting good choices for policymakers, I think, can make a difference.

I come at this from looking at Ireland’s energy transition, and Ireland is really a forerunner in integrating data centres into our energy system. It’s become a very hot topic globally at the moment because of this transformation and the huge growth in hyperscale data centres. So, I think Ireland has a lot of lessons to teach the world about many topics related to our energy system and our climate. But I think one of the most important lessons that we have to teach the world and cities is our experience in data centres. I’m afraid it’s quite a cautionary tale, and I’m looking forward to unpacking that with you.

David 05:43

Let’s go right to the data centres because there is kind of a debate. The industry is saying, “These are the infrastructure we need for the world to succeed. They’re critically important, we’re going to create even more. This is so important for the economy.” On the other hand, there are many in civil society, some city leaders, mayors and academics who are concerned about the unchecked growth of data centres from a variety of perspectives, including climate. Can you talk about the insights you’ve seen because of Ireland’s strategy to embrace them?

Hannah Daly 06:22

There’s a lot of narrative around the necessity or the value or the damage of data centres. One of my insights is, I suppose quite ironically, is that there’s a really lack of data underpinning a lot of these narratives. It’s a sector that’s actually very cautious with releasing data. We know very little about many data centres, their energy consumption, their water consumption, and in that gap comes these narratives about their necessity. So, you know, unpacking what you said, for example, about we have this expression like ‘essential digital infrastructure’. And infrastructure, it connotates something that is essential for modern life. And of course, I don’t dispute. You know, we’re here talking using a data centre. I make banking payments, I store my photos. You know, so much of our life now relies on digital services. But if we can kind of transfer the analogy, for example, to the transport sector. You wouldn’t say that—okay, we know that transportation like roads and bridges and railways and so on are essential for getting around, but you wouldn’t say that everybody needs a private jet in order, you know, to survive in the world. There is this narrative that all growth in data centres is a good thing. This is something that we should really critically examine. Because the real thing about resource consumption, climate and energy, is that the growth of these data centres that AI relies on is really extraordinary. I really could not have foreseen this, even from when I started looking at the trends in Ireland a number of years ago. Hyperscale data centres that AI rely on, it’s really difficult to express how large these data centres are and how quickly they’re growing, and they’re outpacing the ability of sustainable energy and sustainable infrastructure to keep up. I think it poses a really significant threat to some countries’ climate goals and fossil fuel independence as well.

So, if I can talk a little bit about Ireland’s example, last year, data centres consumed more than one-fifth of all of Ireland’s electricity demand. So, Dublin itself, the capital city in the region, has become a global hub for data centres. There’s a large concentration of data centres in the region. This was economic policy by the government. Ireland is itself a hub for tech companies, and so it’s seen as this forerunner of digital infrastructure like that. I was one of the first to really examine, “What is the impact of these trends on our energy system and also on our statutory climate goals?” Because we have legally binding commitments to phase out fossil fuels and to reduce greenhouse gas emissions very quickly. So, this is just an example of what happens when a country like Ireland or a city like Dublin leans into these data centres. So, the growth in data centres electricity demand since 2017 has outpaced the growth in renewable electricity generation. So, now, 40% of Ireland’s electricity comes from a clean source, which is wind energy. The rest comes from gas. But because our electricity demand is growing so quickly that we’re kind of running up a down-moving escalator and gas is not being phased out quickly enough, what is even more concerning for me is that these data centres are so large, so concentrated, and they’re such large energy users that they have started to have to build their own on-site electricity generation capacity. So, they’re literally building power plants on-site that run from gas. Gas is the only fuel that can meet their needs at that scale. Renewables, if you have a data centre out in the desert with a lot of solar panels, a lot of batteries, it’s possible to run them on a clean fuel. So, what the research shows is that this potentially represents this new era of fossil gas growth. And we’re seeing this replicated in other countries which are leaning into the data centres for the local economies. These are forces that are large enough to shape whole power systems.

David 10:29

[slow rhythmic music] I want to ask you about the argument that’s made in favor of data centres, which is essentially that, “This is critical digital infrastructure for the 21st century. If we want to be a centre for AI, we have to have these data centres. And in fact, for a small country like Ireland or a large city like many C40 members, it’s really good for the economy and, you know, will be a leader in AI and therefore create huge amounts of economic activity and jobs.” What’s your response to that argument? [music continues then ends]

Hannah Daly 11:11

I suppose I don’t want to argue with the economic rationale for this. You know, I’m a user of AI, and as I said, it is a part of the modern world. But you and your listeners are really concerned about climate change, right? This is the major existential threat that we all face. And is it necessary? Is it really worth sacrificing that mission to have a stable climate to allow these hyperscale data centres to grow with fossil fuels or should we put regulation in place so that they can only grow with clean energy sources? Whatever you might have locally, that might be nuclear, that might be wind and solar with batteries, that might be other clean energy sources. But we know that if hyperscales continue to grow in this model that they are at the moment, fossil fuels are the main source. So, the question is, is the growth of any economic sector worth that when we know that we have to get on a really rapid declining trajectory for fossil fuels?

David 12:14

Well, I know what my answer to that is, of course. But I’m intrigued by your earlier comment that ironically there’s very little data about data centres. Because I suspect that’s also true about the jobs they create, that it’s hard for them to prove that case, let alone other cases.

Hannah Daly 12:35

And we see this narrative in Ireland. You know, tech companies genuinely bring a lot of economic growth in Ireland and provide jobs. But the data centres themselves, you’re talking about a few dozen, maybe a couple of hundred jobs for a massive investment. The main business case of AI, the main prospect for growth that these companies are presenting is actually to replace workers. So, if we’re really thinking critically about this trend for AI coming into everything, we have to look beyond, “What is the narrow advantage of this data centre in my region? What is the big social and economic force that this very disruptive technology will bring?” And as decision makers, as policymakers, as leaders, how do we keep ahead of that and ensure that the benefits are spread equally and the impacts are not sacrificing our environmental well-being, which we all rely on for the sake of unchecked growth of this sector?

David 13:34

Can you speak to the impact that this growth of data centres in Ireland, particularly around Dublin, has had on people and their ability and the city’s ability, I guess, to access infrastructure that’s needed for other purposes, including the electricity grid?

Hannah Daly 13:54

Yeah. One feature of data centres is that they like to be close to each other and close to population centres. There’s just competitive advantages to data centres for being clustered like that and to be clustered near the fiber optic and communications infrastructure. They effectively compete for infrastructure with other businesses and with households as well. I’m very surprised that there’s very little research apparently done internationally on this. Because, like, Ireland has a major housing crisis, and we also have the highest pre-tax electricity prices in Europe. And no economist has come and said that this is because of data centres, but our electricity demand has grown almost entirely because of their growth, so I really wouldn’t be surprised if data centres are implicated in increasing our energy bills. But as you said, they also have an impact on electricity infrastructure. In the Dublin area effectively grid infrastructure is overwhelmed with data centres demand. And there have been cases where local substations have been built to supply new housing, but there was cases where this electricity infrastructure was overwhelmed with demand by data centres which came first before the housing could be built and it delayed or led to cancellations in new housing. And this is, I suppose, tied back to the fact that Ireland doesn’t—and many cities, they don’t prioritize infrastructure for different needs. It’s kind of first come, first serve. One feature of data centres is that they can be built once they have permits very, very quickly. You’re seeing very, very large-scale [demand 15:29] centres being built in a matter of one or two years, whereas it can take much longer than that to build the infrastructure to meet that.

[melancholic music] So, this is another cautionary tale, I suppose, for cities. That the response a number of years ago was to pause new permits for data centres until the grid could catch up. And our energy regulator finalized a new policy on grid connections for data centres last year, and it concluded that data centres have to build their own local power generation so that they’re not reliant on infrastructure. But this then, it takes some pressure off the electricity system. As I said, that means that they’re building their own power plants, which bring a host of other problems because that power typically comes from fossil fuels. [music ends]

Peggy 16:17

[theme music] This episode of Cities 1.5 is produced by University of Toronto Press, with generous support from C40 Cities.

Jess 16:27

Want more access to current research on how city leaders are approaching climate action? We also publish the Journal of City Climate Policy and Economy.

Peggy 16:36

Our mission is to publish timely, evidence-based research that contributes to the urban climate agenda and supports governmental policy towards an equitable and resilient world.

Jess 16:47

The journal serves as a platform for dynamic content that highlights ambitious, near-term climate action, with a particular focus on human-centered solutions to today’s most pressing climate challenges.

Peggy 16:59

To read the latest issue, visit jccpe.utpjournals.press or click on the link in our show notes. [music ends]

David 17:08

Advocates for the data centres say, “Well, we’re going to get to this artificial intelligence. It’s incredibly important. It’s critical for everything, national security, everything.” But what happens if this push is a bubble? You know, we’ve seen this again and again and again. We saw it with railways, for example, 200 years ago or so. What if it’s a bubble and we’re now building a huge amount of fossil fuel-dependent infrastructure that might not follow the industry’s projections?

Hannah Daly 17:43

This is a really important question. Because we know that when infrastructure, whether it’s for fossil fuels or roads, if that infrastructure is built and there’s a plan to transition that to clean sources in 10 years’ time, or even if that bubble bursts and that energy use never materializes, or there’s speculation that quantum computing or advances in chips or AI algorithms will bring massive efficiency savings in AI and actually all this energy won’t be needed in the first place. If that fossil fuel infrastructure is built in the short term, even if there are claims that it will be decarbonized in the long run through these speculative technologies, that presents this lock-in risk. And we know the energy system is so path-dependent. You know, you build infrastructure, it’s much, much harder [then 18:33] to retire it early. A pertinent example from Pakistan, electricity from the central grid is quite unreliable. And for many homes and businesses, it’s unaffordable as well. Because batteries and solar power have fallen in price so dramatically, a lot of households and businesses are basically building their own small energy systems with solar and with batteries, and they’re actually defecting from the grid, so they’re not paying for this centralized electricity generation. And so, it’s leaving this huge, stranded assets that the Pakistani government has invested in and borrowed heavily from international actors to build often coal-fired power stations and now it cannot attract the revenue from electricity sales to pay back those loans because of this defection from the grid. You would think, you know, “More solar, more batteries, great, less coal, that’s a good thing.” What the Pakistani government is now doing is offering attractive tax rates packages to AI firms and to Bitcoin miners to come in and locate, to actually be customers for the coal-powered generation. So, it’s not enough to say that supply follows demand, and if demand switches away then that supply will just go away. If you build the infrastructure, and if you’re emitting greenhouse gas emissions, it doesn’t go away. You also have to count all of those greenhouse gas emissions that are in the atmosphere in the first place.

One of the very strong claims for sustainability that I see in the industry in Ireland is that it’s fine to connect these data centres to the gas network and to generate their power needs on site in the short term, because in the long term, we plan to decarbonize the gas network. Maybe we plan to put hydrogen or biogas in there by 2050, and therefore this development is compatible with net zero. But this—you know, this has many problems, one of which is that it ignores all of the CO2 emissions that are emitted while you’re burning natural gas. It’s not enough to be net zero at the destination, but if the journey is lots of fossil fuels to get you there, then that is still a major threat to our climate commitments. The second fact then is that I’m highly skeptical that hydrogen and biogas can actually scale to the extent necessary. These are very speculative, and they come with significant trade-offs. I strongly suspect that they’re being used to, I suppose, excuse the construction of fossil fuel infrastructure in the short term. So, I would express a lot of caution about these claims of sustainability if fossil fuel infrastructure is being constructed. It might be a simplistic solution, but I don’t see why regulations shouldn’t require that any new data centres are simply not being built with fossil fuels. That they are built with 24/7 clean energy sources that are not redirecting clean energy sources from decarbonizing other end-uses.

And this is entirely possible. So, ambitious cities, ambitious countries can design regulations to facilitate data centres to grow in the region, but in a way that doesn’t grow with fossil fuels. Because this is one of the major threats to everything. Our whole civilization is this dependence on fossil fuels, and any economic sector that requires them to grow should be treated with huge caution.

David 21:59

[fast rhythmic music] Pakistan’s been in the news recently. For other things, it’s trying to broker some kind of deal to open up the Strait of Hormuz. Ireland’s been impacted by that. There’s been these protests about the price of fuel, of gasoline, diesel. We see a country where data centres consume a huge percentage of the country’s electricity. What does that tell us about the political power here, and I guess the practicalities of who the Irish grid is really being operated for at the moment? [music continues then ends]

Hannah Daly 22:40

It’s been an extraordinary week here in Ireland politically, and as an observer of our energy transition. Because following the big spike in oil prices as a result of what’s happening in the Middle East, some industries here who are highly exposed to diesel prices in particular, so that would be hauliers or truckers, people who drive big machinery for a living. That also includes agricultural contractors, so people who use big machinery on the land. And for many of these businesses, fuel might be, you know, half of their input costs. The cost of diesel doubles, which it has for them in recent weeks, it’s an existential problem for them. These are often small businesses who can’t pass on higher fuel prices. They might be fixed into long-term contracts, and they may not have hedged their fuel price costs or had some form of insurance against this eventuality. So, many of them are really on the line.

What happened last week is that a very kind of, I would say, organic bottom-up, some, say, organized in the Facebook comments or on Snapchat, groups started to blockade motorways and city centres with their machinery in protest that the government wasn’t doing enough to bail them out. About a week ago, they started to blockade fuel infrastructure as well. So, Ireland has one oil refinery in Cork, and a number of ports through which all of our oil is imported, and they placed the machinery at these points and oil ran dry. So, over a third of our petrol pumps—diesel and petrol pumps ran dry. It was just an extraordinary experience and there were reports of, you know, ambulances and buses and so on not being able to operate. And the government blinked. The government agreed half a million euros in what are effectively indirect fossil fuel subsidies. So, these are the excise tax duties on fuels and some financial bailouts for the industries who are most exposed to diesel prices. And that is on top of another €250 million, the package that was agreed previously. Now Ireland’s indirect fossil fuel subsidies—direct and indirect fossil fuel subsidies amount to nearly €5 billion each year. From a country of 5 million people, that is an extraordinary amount of money that we spend every year.

And what I would say is that, you know, the fossil fuel system has, you know, held us hostage here. This is the ransom that we’ve had to pay to get out of the situation. I grappled with the many, many layers of irony here, because I found it especially revealing that the truckers and agricultural contractors, they used the same strategy as the blockade of the Strait of Hormuz to get what they want, you know. And in doing so, they exposed an inherent vulnerability of the fossil fuel system, which is that it’s geographically concentrated, it’s very fragile. It has to be constantly imported and burned, and it has to be constantly replaced, and that we’re so reliant on it. And another irony, I think, is that probably this protest will do more than any climate protest or any climate action in demonstrating the vulnerability that we face as a result of our fossil fuel reliance. There are alternatives to diesel trucks. You know, China, towards the end of last year, the sale of fully electric heavy goods vehicles, heavy trucks, outstripped sales in diesel trucks. And in Ireland, so far this year, only one fully electric truck has been sold. So, this is a bit of a—sort of a tangent from data centres, but I think it’s just a very interesting moment here.

You spoke then about data centres, and yes, they use an extraordinary amount of electricity, and increasingly they’re using gas as well. The connection with these fuel protests, it’s a bit more disconnected. But what I would observe here is that the electricity grid is not being envisaged as a way to get off fossil fuels. We need to electrify transport, electrify heating, and still in Ireland, nearly 80% of all of our energy comes from fossil fuels. Data centres have a significantly lower electricity price than households do. They’re able to buy in bulk. You know, when you can buy wholesale, you pay much less. And they also pay much lower infrastructure costs. I don’t know why the Irish people haven’t raised up against data centres. You know, they’re also linked to a new import infrastructure, so liquefied natural gas, LNG, imports are being planned to meet their needs for the gas network as well. This just very blatantly contradicts our legally binding climate commitments, and, you know, that contradiction is not being resolved.

David 27:34

Yeah, LNG is even worse than gas because of the energy used to create it and then to regasify. One final question. I’m a mayor of a big city. The lobbyists approach me, “We want to make you a centre of artificial intelligence by making these data centres. They’re going to create tens of thousands of jobs. You’re going to be the centre of AI globally.” And I have climate goals I want to achieve because I know they matter to my people. Climate change is real. It’s serious. We’re seeing the impacts today in extreme weather events, all sorts of problems and challenges happening now. What do I do?

Hannah Daly 28:17

So, my advice to city leaders is simple. So, don’t let digital infrastructure sit outside climate planning. So, you govern all other major urban systems like land, like power, like transport, water, in a framework that meets essential needs. Put data centres inside that same framework. Make sure that they run on renewables or clean energy, your own clean energy of choice, but make sure that this clean energy is genuinely additional and only if the grid and the timing and the backup requirements also line up with the energy needs. Don’t be taken in by promises of net zero in the future because some new advancement in technology will allow us to get there. Think about fossil fuels in the here and now and make sure that you’re not getting locked in to more fossil fuels.

David 29:12

[slow rhythmic music] “Don’t be taken in,” perfect advice. Professor Daly, thanks so much for spending your time with us on Cities 1.5, but more importantly for your ongoing work in really investigating the details of how we do undertake the necessary energy transformation that we all need everywhere in the world, not just in Ireland. Thanks so much.

Hannah Daly 29:38

Thank you so much. [music ends]

David 29:41

[rousing music] Having emissions by 2030 and hitting net zero by mid-century are crucial goals if we are to avert the climate crisis, but they are goals which are already under threat. It’s crucial that every mayor considering whether to say yes to a data centre pays close attention to the Irish experience. If you do say yes, they’ll know how to avoid baking in emissions and infrastructure that are not aligned with keeping global heating under 1.5°. They will know to be skeptical about the job claims and any new policy created around this burgeoning digital demand must be compatible with the needs of both people and planet. [music ends]

[theme music] In the next episode we’re joined by former LA mayor and C40 chair Eric Garcetti to discuss his trailblazing work decarbonizing our ports and shipping lanes, work that has led to significant change still happening today. Make sure you’re ship-shape. You won’t want to miss it.

This has been Cities 1.5, leading global change through local climate action. I’m David Miller. I was the mayor of Toronto, Canada, and I know firsthand the role cities can play in solving the climate crisis. Currently, I’m the editor-in-chief of the Journal of City Climate Policy and Economy, published by the University of Toronto Press in partnership with the C40 Centre, the thinktank for cities and climate, where I’m also the managing director.

This podcast is produced by Jessica Schmidt and edited by Morgane Chambrin. Peggy Whitfield is our writer and executive producer with narrative and communication support from Chiara Morfeo. Our music is by Lorna Gilfedder. The future isn’t waiting and neither are cities. To learn more, visit the show’s website linked in the episode notes. See you next time. [music ends]