Governments worldwide restrict data centres amid AI boom

A growing number of governments, regulators and cities around the world are moving to freeze, restrict or ban new data centre construction, as concerns mount over electricity costs, strained water supplies, land scarcity and the burden on local communities from the infrastructure powering the AI boom.

Data Centre Restrictions by Region

United States

In the US, several states have imposed moratoriums or restrictions on data centre construction. Governor Josh Shapiro signed an executive order requiring companies setting up AI data centres in his state to meet environmental and transparency safeguards. Governor Kathy Hochul imposed a one-year construction moratorium on data centres using 50 megawatts or more of power, making New York the first US state to enact a full moratorium. However, Governor Janet Mills vetoed a bipartisan bill that would have enacted an 18-month moratorium on new data centres using more than 20 MW of power.

Europe

In the Netherlands, the Dutch capital imposed a one-year moratorium on new data centre developments in 2019. In April 2025, it barred new data centres or expansions in the municipality until at least 2030. The Dutch government's 2022 hyperscale ban restricts large facilities to two designated locations nationally. Ireland's grid operator effectively blocked new data centre connections around Dublin from 2021 after warnings that the facilities were straining the grid.

Australia

Australia will establish a government office called the "Office of AI" to manage the development of AI standards, including rules for large data centres covering their location, power and water use. The country does not currently have specific AI laws, relying instead on a range of privacy and consumer protection laws and a voluntary AI ethics framework.

Denmark

Denmark's government has introduced a draft bill to its parliament that would give new data centres the lowest priority for power grid connections amid growing capacity shortages. The proposed law, backed by a broad cross-party agreement representing 80% of the parliament, would prioritise households, healthcare, industry, transport and renewable energy projects instead.

Impact of Data Centre Restrictions

The restrictions on data centre construction are expected to have significant implications for the AI industry. With the growing demand for data storage and processing, the lack of new data centre construction could lead to increased costs and reduced efficiency. The restrictions may also have a negative impact on the environment, as data centres are major consumers of electricity and water.

Conclusion

As the demand for AI continues to grow, governments and regulators are taking steps to address the environmental and social impacts of data centre construction. The restrictions on data centre construction are a step in the right direction, but more needs to be done to ensure that the AI industry is developed in a sustainable and responsible manner.