Data centres: Balancing economic growth and environmental concern

Almost two years ago, Prime Minister Keir Starmer announced that data centres would be classed as Critical National Infrastructure (CNI). The move placed them alongside water, energy and emergency services, ensuring additional protection and priority in the event of disruption. 

Since then investment has accelerated, with companies targeting Scotland as a base for AI infrastructure. In January it was announced that North Lanarkshire would become the centre of a new AI ‘growth zone’, with the aim of turning it into one of the world’s most advanced AI sites.  

The hub will be based at DataVita’s data centre site in Airdrie, and it will be run in partnership with AI cloud firm CoreWeave. The UK Government, which has pledged over £540m of investment into the site through a new community investment fund spread over 15 years, estimates that it will bring in more than £8bn in private investment to the area.  

Scotland Office minister Kirsty McNeill said the zone would place the region at “the very heart of Scotland’s and Britain’s industrial story”. 

The cutting-edge site will be powered by on-site renewables, with excess heat then redirected to power the nearby University Hospital Monklands. When the facility opens in 2031, the hospital will become the first full net zero hospital in Scotland. 

Ben Richardson, vice president of strategy at CoreWeave, explains why the US firm was looking to expand its operations outside of the US and why the UK was chosen. “You need to see a clear strategic rationale from the government supporting long-term decision-making. That’s really important to us, and that’s one reason why when CoreWeave was expanded from the US, the first place it came to was the UK,” he tells Holyrood. 

“From a government perspective, it’s a consistency of policy, it’s a clear strategy, it’s a clear drive, and a clear framework in which you can operate, which just makes sense. And there’s a level of stability in this country.” 

Starmer has been keen to point out the jobs that will be created by the development. “By bringing billions of pounds of investment into Lanarkshire, we are creating good, well-paid jobs and funding support that directly helps families with the cost of living,” he said.  

However, for such a large investment, it is expected that only 800 AI sector jobs will be created as a result, while there will be 2,600 roles related to the construction sector to get the facility operational by 2031.  

While that may sound like a relatively small number of jobs, Adam Turner, head of innovation at The Data Lab, says that running a data centre does not create lots of jobs directly.  

“You need to think about it foundationally. There are people that are going to build the data centres – these are high-value jobs in the construction sector. There are also local supply chains that will benefit, that wouldn’t have got this focus had we not had the data centre. 

“Then there’s the downstream, once it’s up and running. There are co-location benefits to companies being near the data centre. Companies will choose to base themselves in close proximity to these facilities for reasons like low latency.  

“You will see a clustering of organisations around the data centre that will bring economic value. Think of the data centre as a service that companies will be using locally. The jobs really come from the companies that will build on top of this investment.” 

Richardson, whose company provides the cloud services for the AI growth zone, says the latency is key, explaining “it is essentially the amount of time it takes between a keystroke and pressing return to get any answer back”. 

He tells Holyrood: “For me, latency is more about how long it takes to write your query into a model and get a coherent answer back. If you’re using AI tools like Perplexity or Anthropic, you will see that in real time.” 

While the economic case for building more data centres in Scotland has become stronger as AI expands, the main tension lies in concerns about the significant energy and environmental costs that are associated with supporting rapid digital growth. 

In February, the City of Edinburgh Council rejected plans for an AI data centre proposed for the former RBS site in South Gyle, despite planning officers recommending the project be approved. 

Concerns were raised about the environmental impact of the centre by campaigners in the run-up to the decision. The application was for a “green data centre with associated infrastructure”, as well as the creation of a “public park with sports facilities”. It argued that “modern cooling technology” would allow the site to use less energy than traditional data centres. 

With data centres requiring energy 24/7, campaigners raised concerns over the impact of diesel generators which would provide back-up power to the centre in the event of an electricity outage. The charity Action to Protect Rural Scotland (APRS) estimated the site would require the equivalent energy of over 100,000 idling diesel cars each hour. 

The following month, the council agreed to back a moratorium on green AI data centres, amid environmental concerns. While this does not mean there is an outright ban in place, and new centres will still be judged individually, it set out a clear sign that councillors, at least in the short term, are prepared to block all new plans.  

Alys Mumford, the Green councillor who proposed the move towards a moratorium, said: “In the face of the climate and nature emergencies, and the growing understanding of the huge energy and water consumption required by AI, it is right that Edinburgh agrees to have a moratorium on any data centres until we can be reassured that they are more than simply green by name.” 

It is expected that officials will produce a report by June advising whether the City of Edinburgh Council has the power to ban AI data centre developments it does not regard as environmentally friendly. 

Kat Jones, director of APRS, explains that she became aware of data centres and the energy usage concerns when she saw the planning applications. She references a report by the Parliamentary Office of Science and Technology which found that these centres are “crucial for economic activity”, but raised concerns related to energy, water, and the availability of resources. It is estimated that in 2024 data centres in the UK used around two per cent of the country’s energy, while in Scotland energy usage was around 30 megawatts. 

Jones says that when she looked at the planning applications, which were either in the Environmental Impact Assessment or pre-planning stage, “all added up to 4,000 megawatts”. “That’s almost four times as much as we had in the whole of the UK in 2024. These ones that are in planning are clearly an order of magnitude bigger than what has been before, and that’s what is worrying us. 

“This isn’t an evolution from the data centres that we currently have, the ones that are running our economy, where banks and the NHS keep their data, it’s like a revolution, and it’s such a huge jump. 

“Our estimate is that some of these data centres that are being planned are 100 times the existing data centre sizes.” 

She added: “It’s so hard for people to get their heads around the amount of energy that they use because it is so out of the normal zone of use.” 

Scotland and the UK are behind the development of data centres seen elsewhere in Europe. Ireland, which has a decades-long history of working with the world’s largest technology companies, has seen seismic growth in data centres in the last 10 years. According to the Sustainable Energy Authority of Ireland (SEAI), they are responsible for 88 per cent of the demand growth for electricity in the country since 2015 and, as of 2023, they account for 21 per cent of Ireland’s entire electricity usage.  

EirGrid, Ireland’s grid operator, has described them as a “key driver of electricity demand” and warned of a “potentially challenging situation” in meeting future needs. Forecasts suggest data centres could account for around 30 per cent of Ireland’s electricity demand by 2030, underlining the scale of the challenge facing policymakers. 

A report published by the SEAI in December raised concerns about the scale of development of these centres, which is approximately 10 times higher than the European average. It also raised concerns over the supplemental use of gas generators. 

It said: “These developments attract substantial foreign direct investment, provide the government with tax receipts, local authorities with rate returns and generate profits for the corporations developing them.   

“However, with compliance costs on the horizon and demand pushing targets out of reach, the question of whether these developments provide a net return to society remains unanswered.” 

There is a balancing act to be struck here in Scotland. One that accepts AI and the economic growth it brings, but one that also recognises the environmental and energy usage concerns.  

Adam Turner, head of innovation at The Data Lab, says there is an opportunity to use Scotland’s natural resources to its advantage. 

“It is becoming increasingly expensive to transmit high levels of energy long distances from the national grid. So, what we’re effectively saying is that there is a great opportunity to locate these data centres where the energy is being produced, rather than transmitting it at a high cost. 

“We also have the competitive advantage of the weather. The colder climate is a fantastic thing for a data centre. If you’re worried about your environmental impact, you’re going to pick the place where it takes less energy to cool the infrastructure.” 

On the concerns that have been raised recently in Scotland, he says it is “a fear response”, and that he doesn’t think “it’s unnatural”. 

“You’re going to have a lot of public perceptions to change, and the politicians [in Edinburgh] are acting on behalf of that public concern.” 

That tension between public concern and national ambition is at the heart of Scotland’s approach to AI infrastructure. With investment accelerating and energy demand set to rise sharply, the question is no longer whether data centres will shape Scotland’s economic future, but the terms on which that future is built and the cost it is willing to bear.