Hannah Daly 00:00
[theme music] I don’t want to argue with the economic rationale for this. You know, I’m a user of AI. It is a part of the modern world, but 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? 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 hundred jobs for a massive investment. And in many cases, 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, what is the big social and economic force that this very disruptive technology will bring? And as decision makers, as policy makers, as leaders, how do we keep ahead of that and ensure that the benefits are spread equally and we’re not sacrificing our environmental well-being, which we all rely on, for the sake of unchecked growth of this sector? I’m sure there are examples of cities who are doing this right and who are integrating data centres in a sustainable way. Maybe they’re integrating heat networks or ensuring that they’re powering with clean sources, and unfortunately, I tend to see only the negative cases. [music ends]
David 01:35
[fast rhythmic music] Welcome back to Cities 1.5 ‘HOT TAKES’. The voice you’ve just been listening to is Hannah Daly, Professor of Sustainable Energy at University College Cork. We spoke to her last season when she told us the cautionary tale of Ireland, the canary in the coal mine for data centre expansion, and the negative impacts it could have on both people and planet. Data centres were a hot topic at the recent London Climate Action Week in late June. Attendees had a stark and sweaty reminder of what the climate crisis actually feels like as London sweltered through the events in record-breaking extreme heat. More recently, media reports alerted us to other potential harms of digital expansion. In Wyoming, a Meta data centre discharged wastewater carrying a rare metal-resistant bacterium into the water the city sprays onto parks and playing fields. The pitfalls of data centres have morphed from abstract anxieties to very real impacts. They are already tainting our water, raising our temperatures, and threatening our health and our futures. But cities aren’t just sitting back and passively observing debates around the AI infrastructure boom. At London Climate Action Week, 41 mayors across six continents, representing the interests of more than 90 million constituents, launched the Global Urban Data Centres Pact. This shared commitment aims to ensure that future data centre expansion delivers cleaner energy, lower costs, and healthier communities around the world. [music ends]
[slow rhythmic music] Later, we’ll hear from Lord Mayor Nicholas Reece of Melbourne, Australia, a returning guest to the podcast, and an early advocate for climate-friendly digital infrastructure. But first, I’ll speak with another returning guest, the brilliant Mayor Kate Gallego of Phoenix from the United States of America. Her desert-bound city knows all too well how heat, water access, and environmental fragility intersect with the demands of data centres, and that it’s up to the people whose lives are impacted by their development to speak up. [music ends]
Kate Gallego 04:14
[phone rings] [whooshing] I’m Phoenix Mayor Kate Gallego. We’re here in London for London Climate Action Week. [handset clicks]
David 04:23
Gallego, welcome back to Cities 1.5.
Kate Gallego 04:26
Good to be back, David.
David 04:27
Can you talk about the Data Centres Pact? First of all, it might not be obvious to people, why would cities be involved internationally on working on the issue of data centres?
Kate Gallego 04:40
Data centres are so important to where the economy is going right now. We’re seeing trillions of dollars go into artificial intelligence and data centres. So many of these data centres are in major metropolitan regions. My own, Phoenix, Arizona, has one of the largest concentrations anywhere in the world, and it’s a global issue. We see sovereign wealth funds from all over the world, private equity funds from all over the world that are investing in data centres in Phoenix. Mayors know what’s happening on the ground. We can help these companies understand what local communities want. What are the benefits we expect? And we can also be a voice to make sure that sustainability is at the forefront of data centres.
Right now, it feels like there’s a rush for AI investment. The thought is some companies may become dominant or perhaps one player, and so there’s a huge amount of dollars and other currencies going into these capital investments, buying server farms and the enormous amount of power needed to make sure they keep going. We’ve not seen a growth in any industry that demands power like these data centres are. Mayors know it needs to be sustainable. If AI is powered with fossil fuels, it will have global implications that could be very, very difficult. And too often right now, we are seeing fossil fuels as the power behind data centres. We need to make sure data centres have sustainable energy, that they put responsible water use at the forefront, and that they benefit the local communities in which they’re located.
David 06:20
[rousing music] So, we’re seeing a whole range of issues there from a Phoenix perspective: energy, you mentioned, water use, benefiting local communities, and I’m sure also heat. Can you speak to the local impact that people in Phoenix are worried about that the city might be able to address, particularly as part of this global network?
Kate Gallego 06:47
We are seeing a big challenge with heat. These data centres use an enormous amount of electricity, and one of the byproducts of that is that they release heat. In Phoenix, that goes into the environment and has an impact surrounding the data centre. In other communities, the heat can be captured and used to reduce heating costs. So, if a data centre were to go into a cooler climate, perhaps it can reduce the energy bills for neighbours. [music ends]
We don’t spend a lot of money heating in Phoenix, so in our case, perhaps it could go to an industrial process or some other off-put. In the United States, we’ve seen local fossil fuel combustion on site to power these data centres. That’s a real challenge as well. It has both global implications but also local air quality impacts. You will see people who live near these combustion sites who have higher rates of asthma and COPD. Clean energy would have many, many more benefits. We also need to talk about the electric transmission lines that bring this electricity supply in. We’ve seen huge ecosystem disruptions as high-voltage power lines go through. C40 is calling for data centres to be located on brownfield sites such as former fossil fuel generation. Those would be likely to have on-site power generation. So, instead of clear-cutting a forest in Virginia, you might see a local community that had lost a fossil fuel employer get economic growth and opportunities. If we’re smart about where we put data centres, the benefits will be much larger. Perhaps the data centre can help bring needed electric generation or fibre connectivity to help a community develop responsibly?
David 08:31
Now, Phoenix is in Arizona, which is a water-scarce state. Can you speak to the possible impact of data centres on water and if that’s a concern that residents of Phoenix share as well?
Kate Gallego 08:46
Phoenix is a desert city. I think about water every single day and it’s at the forefront of our economic development policies. We have limited water in our community, and we want to use it with the greatest benefit. We’re concerned many of these data centres create wonderful construction jobs but not a lot of ongoing employment. And so, to have an enormous amount of water used for an industry that doesn’t create a lot of jobs is very concerning, especially since so many of these data centres also chase tax cuts or tax incentives and so they don’t contribute at the rate that other types of employers might to the local tax base.
David 09:27
Finally, can you just speak to why being part of an international collaboration on this issue is important to Phoenix, is important to you as mayor, and is particularly important given its data centres we’re speaking about?
Kate Gallego 09:45
So much of the investment capital that’s coming into Phoenix comes from all over the world. We had a major private equity fund from Australia that was investing in data centres in Phoenix. By working with Lord Mayor Reece of Melbourne, he has a more direct pipeline and relationship to help me tell the story of what’s happening on the ground and hopefully get better outcomes. So, we think because this industry is so global, giving mayors a global voice is important. We think subnational leadership is very important here. This could be the biggest industry growth of any industry in the next decade, and we have to get it right. Mayors make local land use decisions, so we can influence this. We don’t want data centres to go into the communities with the lowest standards and the least understanding. We want data centres who are good local partners, who care about our communities, to go into educated communities who understand their options and who benefit from these investments. So, I’ve benefited from sharing information. I’ve seen incredible stories out of Europe about how the waste heat is captured to benefit the community. That’s really inspired my thinking, and I’ve also been able to share. The United States has the largest concentration of data centres right now, so I’ve dealt with issues that will be on other mayors’ desks, and I want them to learn from my mistakes as well as the things we’ve done right.
David 11:11
I suspect the mistakes are few, Mayor. I’m sure I speak for all of our listeners who may look forward to seeing how this evolves.
Nick Reece 11:19
[phone rings] [whooshing] Good day. Good day. I’m Nick Reece, Lord Mayor of Melbourne in Australia. And I’m here with David Miller at Climate Week in London and we’re talking data centres and what’s next. [handset clicks]
David 11:37
Mayor, thanks very much for joining us again on Cities 1.5.
Nick Reece 11:41
Good day, David. Great to be with you. It’s a delight to be back.
David 11:45
You came to London in part to announce a global collaboration about data centres. Can you speak to why that’s an issue that matters to Melbourne as a city? Why is it concerned about data centres? Why were you so keen to start this global collaboration to address the issue?
Nick Reece 12:07
So, this is an issue which first came to my attention through responsibilities I had in a previous role as the planning lead at the City of Melbourne and doing the planning assessment on data centre applications where they would apply for statutory planning approval prior to commencing construction. It came to my attention that these data centres were huge consumers of energy and water, and often the way they’re built and how they present to the street, to the community, wasn’t great either. The huge boxes often behind high security fences.
David 12:47
Right, no windows.
Nick Reece 12:48
And being an elected official, I know how that’s going to go down in many neighbourhoods and so I started doing a little bit more work to find out about the impact of data centres. I should say in Melbourne, Australia, we’re an advanced economy, very prosperous city, we really lean in when it comes to new technologies. We want to remain at the forefront. And so, across Melbourne, I should fast forward a little bit in the story, so we’ve now got about 50 data centres across the city that would be certainly on current plans, the most of any city in Australia. But when I started to look at the cumulative impact of the energy consumption of these data centres that were being applied for, I realised it was going to have a very significant impact on our energy grid. I want to say big impact. Like the biggest thing to hit our energy grid since air conditioning back in the 1960s. But instead of that being rolled out over decades, this was happening in a five-year period.
I actually reached out through the C40 network to see if I could find out if other cities were experiencing the same thing, and sure enough I found that in the US, which was a bit ahead of where Australia was, this had already emerged as a serious issue. And got in contact with Mayor Kate Gallego, the brilliant mayor of Phoenix, and we—both Kate and I, we’re forward-thinking mayors. We want the best for our cities. We want to be smart cities, but we don’t want to see a Wild West scenario where anything goes around this investment rush around data centres, where there’s really serious negative externalities for the communities, the people we serve, in terms of impact on our energy grid, impact on energy prices, impact on water security, and impact on local neighbourhoods in terms of amenity. That was the genesis for the Global Urban Data Centre Pact. It started in Rio last year, testing the water, and now we’re scaling it here in London.
David 14:44
Well, as of the moment of announcement, you had 40 members, which is pretty extraordinary. Can you speak to what a race to the top looks like? Where is the pact trying to go and what are cities trying to achieve by creating this first international collaboration to set standards for data centres?
Nick Reece 15:05
So, I absolutely believe that there is a win-win in this. I recognise the great benefits that AI can bring to humanity. I’m not a Luddite. I can see that that additional compute power can help solve many of the challenges that we face, including potentially climate change. But I also recognise that if we allow, certainly in my country, current practises to keep going, then the cost to the local environment—local communities was unacceptable. But if we get a proper framework in place that does things like require new investment in energy supply, renewable energy, puts in place investment that helps firm up the energy grid, like batteries, puts in place water recycling infrastructure, proper water management plans, then we could actually get a win-win here. Where, yes, the technology companies proceed, bring the value that they can to societies, but we can also get a major upgrade to our energy grids with new renewable power and new firming technology that is dispersed across the energy grid, which is a really critical factor in the engineering of grids that allows them to accept more renewables overall. That could be a really positive outcome. That’s a win-win.
David 16:25
[rousing music] Can you talk about the heat impact from Melbourne’s context? Melbourne’s a city that faces a heat challenge already. It has very high temperatures for extended periods of time. We’ve already spoken about the measures the city’s trying to take to address that because it’s a huge health hazard for people. How do you deal with the heat that’s a waste byproduct of data centres in the context of Melbourne, or is this the kind of thing that you need to work with international colleagues to find solutions?
Nick Reece 16:57
So, in an Australian context, I think we’re doing pretty well on the waterfront. Water is a very scarce resource in Australia, so as a consequence it’s an area where there are some pretty strict rules in place about… [music ends]
David 17:11
Already?
Nick Reece 17:12
Oh, yes, already. So, if it’s a new factory or a new housing estate, there are already what I would somewhat patriotically describe as world-best standards in place around requirements around recycled water use, requirements around sustainable water management plans, requirements about working with the water utility companies to ensure that any new demand that you’re bringing into the system for water can be managed within the overall water budget. So, on the current data centres we have in Melbourne, they’re using about 4% of all the water across the city, which I should say in a city of five and a half million people where water is a real scarcity, it’s pretty significant.
I’d say probably the bigger challenge in the Australian context, however, is on energy supplies with current estimates that data centres are going to consume about 10% of the power across the city by 2030, and about 20 plus percent by 2040. Now, if that new demand for energy is not coming from renewables, we’re going to miss our climate targets. We’re not going to be closing the coal-fired power stations, which are currently scheduled to be closed, the next one being Yallourn Power Station in 2028. That is unthinkable as far as I’m concerned. That’s why I’m so delighted about this global city agreement that we’re reaching here in London. This is a true world first. Now, this is the first time that governments across the world, national, state or city, have actually said, “Hey, we need to get international cooperation going. We need to get some international standards in place. We want to see a race to the top, not an ‘anything goes’ race to the bottom.”
David 18:49
One of the political challenges I expect is that the builders of data centres, who seem to be in a race to dominate the industry, are going to make the argument that you’re anti-jobs if you impose criteria. Are you seeing that in Melbourne, and do you have thoughts about the job creation potential of a data centre as a data centre? Not the construction, but once it’s running?
Nick Reece 19:17
So, yes, predictably, those arguments do get run. And, you know, this is always a sensitive spot for governments. Making sure this works for people is a real top priority wherever you go. I mean, my argument would be that data centres are providing fantastic headline investment numbers for jurisdictions around the world. They’re also producing, you know, some good numbers of construction jobs during that construction phase, but both of those benefits can be short-lived in terms of the—you hope that AI is an enabling technology that actually leads to new types of businesses opening, and so we hope to see those new jobs coming down the line. And that’s why actually one of the points in this Global Urban Data Centres Pact is a requirement that data centre operators clearly articulate what are the community benefits, including jobs. You know, we need to get transparency into the system here and we need to be clear about what we think are the overall benefits and call on the industry to be partners with us in trying to achieve those.
David 20:33
Final question. We’ve seen, certainly in the United States, and to some extent in my home country of Canada, some real pushback against data centres. What’s the feeling amongst people in Melbourne and in your part of Australia in general? Is there a similar public concern being articulated or is it seen as a normal sort of economic development or political kind of issue?
Nick Reece 21:00
I would say that public opinion in Australia has moved quite dramatically in recent months. It’s as recent as that. Even a year or so ago when I first really started raising these issues in a public way in Australia, I was experiencing very strong pushback. You know, at a state government level and a national level, there was this real sense that Australia was in a race, and if we didn’t get out there and try and attract as much of this investment as possible, we were going to miss out in this race. And so, it was a case of, “Pick me! Pick me!” And so, there was almost a desperation in trying to win as much investment in data centres as possible. People are now having the lived experience of seeing the consequences of data centres in their communities, and as that local lived experience has shifted community and people’s opinions. You’ve seen public opinion shift as well. The national government recently came out with a national data centre plan which had some quite positive pillars as part of it, and which, you know, headlined with an Australian sustainable data centres plan. So, they’re trying to put those sustainability principles front and centre, which is good to see.
David 22:08
One could say the national government has caught up to a leading mayor.
Nick Reece 22:12
[laughs]
David 22:13
But perhaps I’ll say that.
Nick Reece 22:14
Well, you know more about these things than me, David.
David 22:18
Lord Mayor Reece, thank you very much for taking the time to be with us on Cities 1.5 today. More importantly, though, thank you for your leading work with Mayor Gallego and the 40 colleagues who’ve signed the Data Centres Pact. It truly has the potential to change the world and it’s needed.
Nick Reece 22:35
Hey, thank you, David, and thank you for everything you do with this beautiful podcast.
David 22:39
[theme music] The Global Urban Data Centres Pact shows what’s possible when cities lead. Digital expansion can’t come at the expense of their communities’ water, health or energy bills. The fork in the road is real. The decisions we make now will shape our economies and planetary health for decades, but increasingly, it’s mayors, not markets, showing us the way forward to ensure that digital infrastructure is not created at a detriment to the planet. ‘HOT TAKES’ will be returning in two weeks’ time with more updates from London Climate Action Week. Next time, we’ll be focussing on what the C40 Centre has been doing, along with other partners, to tackle the rising tide of disinformation around urban climate action. So, make sure you tune in. You won’t want to miss it. [music ends]
