Forty mayors from around the world announced a pact Tuesday aimed at managing the expansion of urban data centers, even as these facilities continue to drive up electricity bills for working families and compete directly with housing developers for scarce land. The agreement, launched by C40 Cities during London Climate Action Week, seeks to guide data center development sustainably, without sacrificing cities’ natural resources, energy prices, or climate targets.
C40 Cities, an alliance of nearly 100 cities, noted that while many new data centers are built in rural areas for cheap land, metropolitan areas host approximately 1,700 data centers within its network. Projections indicate that data center development is expected to grow by over 40% in 50 of these cities, intensifying the pressure on urban resources and the cost burden on residents.
Capital's Expanding Footprint
The expansion of these data centers is driven by the demands of capital, with major companies locating facilities in cities to be near business operations and firms requiring instantaneous responses for artificial intelligence systems. Andrew Batson, global head of data center research at JLL, explained that data centers often form "ecosystems" in metropolitan areas, a factor that can outweigh land costs. This trend has only recently seen a shift towards rural areas, indicating capital's relentless pursuit of optimal conditions for surplus extraction.
This rapid expansion has generated growing political and local opposition due to fears of blackouts, rising electricity bills, and the centers’ voracious water needs. Some states have responded by suspending tax breaks or considering moratoriums on new data center construction, reflecting the public cost of private profit and the pressure from organized resistance.
Phoenix, a top 10 data center market in North America, faces pending permit requests that would double its electricity demand if approved. Developers are drawn to the area by its reliable power and predictable weather, conditions favorable for uninterrupted capital accumulation. In Southeast Asia, the region accounts for a quarter of global energy demand growth, partly fueled by over 2,000 data centers in countries like Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines. The International Energy Agency projects the annual energy demand from these data centers will more than double in the next five years, with Malaysia attracting significant investments from Microsoft, Google, and Nvidia, demonstrating the global reach of capital's resource demands.
Melbourne’s Lord Mayor Nicholas Reece stated that if all planned data centers proceed, they could annually consume up to 20 billion liters (5.3 billion gallons) of water, approximately 4% of the city’s drinking water supply. This demand exacerbates existing strains on the water supply due to population growth, longer dry periods, and extreme heat, effectively privatizing a collective resource for corporate use.
The State's Limited Response
The pact, endorsed by about half of the participating mayors from the U.S., alongside cities in Europe, Africa, Asia-Pacific, and Canada, proposes several standards for data center developments. These include building on underutilized land, minimizing noise and pollution, using renewable energy, reducing water use and emissions, capturing waste heat, creating jobs, buying local goods, paying for infrastructure upgrades, and incorporating community feedback. These measures represent an attempt to manage the visible contradictions of capital's expansion.
However, Cassie Sutherland, a managing director at C40, acknowledged the inherent limitations of municipal power, stating that mayors are constrained in unilateral action and require "buy-in from other government officials, utilities and the private sector." This highlights the structural dependence of local governance on the very capital it seeks to regulate, revealing the state's primary function in facilitating, rather than controlling, accumulation.
Phoenix Mayor Kate Gallego expressed concern that current data center investments worsen climate change and fail to meet community needs. She noted that mayors are forming a unified front to prevent developers from exploiting communities unable to advocate for their own benefits, yet still affirmed the importance of "innovation" and "great jobs." Lord Mayor Reece of Melbourne similarly voiced concern about a "race to the bottom" where governments, desperate for investment, offer favorable terms to data centers, advocating instead for a "win-win" for investors and local communities—a framing that prioritizes capital's continued profitability over fundamental community needs.
Who Bears the Cost
The inadequacy of these reform efforts is further revealed by the fact that stricter environmental regulations in Melbourne are "likely not to threaten future plans," as data centers will simply relocate to areas with sufficient power, land, and proximity to markets, demonstrating capital flight as a tool against regulation. Furthermore, several Southeast Asian cities could not endorse the pact due to "national policies or other complications," demonstrating how national states often prioritize capital attraction and accumulation over local environmental or social concerns. The pact, while aiming to mitigate some of the most visible harms, ultimately functions to manage the contradictions of capital accumulation rather than challenging the systemic drive for resource extraction and profit that underpins data center expansion, leaving working communities to bear the costs.