How Governments in the U.S. and Europe Are Stalling the AI Buildout

SPEAKER_1 (0:00)

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Alex Ossola (0:18)

Hey, What's News listeners. It's Sunday, July 19th. I'm Alex Ossola for The Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news.

On the show this week, data centers are being built all over the world to power the artificial intelligence boom. We're looking at efforts across the US and elsewhere to slow their build out.

As AI becomes more embedded in people's lives, there's a growing need for data centers to power it. According to recent Pew research, there are more than 3,000 operating data centers in the US and another 1,500 in the works. The AI giants are paying a lot to make those happen. Analysts estimate that the capital spending by just five of the hyperscalers, Alphabet, Amazon, Meta, Microsoft, and Oracle, to be $741 billion this year alone. But the communities where these data centers are being built or proposed have been less enthusiastic.

SPEAKER_1 (1:16)

Anybody that's against this, please stand up for the next minute.

Will Parker (1:23)

Project Blue will be net water positive. It sets a new standard.

Alex Ossola (1:35)

People are worried about how much water these buildings use, how much electricity they consume. They think they're noisy and that they're bad for the environment, and that having one nearby will make their homes less valuable.

A May poll from Gallup shows that seven in ten Americans oppose data centers being built in their local area.

That's not the case everywhere. But increasingly people are making their opposition known. They're protesting, joining Facebook groups, and pushing local lawmakers to stop the data center's construction. As of last week, the journal has found that about 240 local governments had moratoriums on building them. Also last week, New York became the first state in the US to issue a temporary ban. Here's New York Governor Kathy Hochul announcing it.

Kathy Hochul (2:16)

These hyperscale AI data centers consume enormous amounts of power, truly threatening to outpace our grid's capacity. And they drive up costs for local ratepayers.

And I refuse to let those costs be passed on to New Yorkers who already pay too much for their utility bills.

Alex Ossola (2:38)

Also last week, Australia's prime minister said his country plans to require data centers to underwrite their electricity and water supplies, with legislation expected early next year. To understand more about how governments are stalling the data center buildout, I'm joined by journal reporter Will Parker, who covers data centers in the US, and Yusuf Khan, who's following the story in Europe.

Right off the bat, we're talking about opposition and moves to delay some of these projects. But are all communities approaching it like this? Or are some sort of welcoming in these projects with open arms?

Will Parker (3:12)

There's a distinction to be made between the local governments in these places and their voters and constituents. Often what you see is that many of the local governments are extremely supportive, right? I mean, they are the ones that update their zoning codes and try to make their laws amenable to data center developers, so they can come in and build these projects. One of the reasons that they're doing it is that the data centers oftentimes produce a lot of revenue for local governments. There are some that are extremely proud of their track record on this, Loudoun County in Virginia, for example, often touts how robust their finances are now because of the data center boom and what they're able to spend on public infrastructure in schools and so forth.

And among the general public, separate from local governments, there are people who support the data centers as well, or at least are ambivalent about them, but there's some opposition almost everywhere.

Alex Ossola (4:02)

Yusuf, do you have anything you want to add to that?

Yusuf Khan (4:04)

It's kind of the same story, really, especially in certain countries like Ireland. A lot of the tax coffers come from these big tech companies. And so, you know, it's a catch-22. I think one of the things that Europe has seen, obviously, for the last few years is very, very high energy prices and a cost of living crisis. And the main things that politicians and companies, when they talk about this, is how do you mitigate those things and then also have this AI development and AI growth? Can they work in tandem? What's the ways to do that?