More than 230 environmental and public-interest groups asked Congress to halt approvals for and construction of new data centers. They want a temporary national moratorium until federal rules address energy use, water needs, local impacts, and emissions. The request came from Food & Water Watch and was signed by national and local groups across the country.
They said that the fast growth of artificial intelligence (AI) and cloud services is putting big new demands on local grids and water systems. They also said current federal rules do not cover the environmental or social impacts linked to data center growth.
Why the Groups Want a Moratorium
Data centers are using more electricity each year. U.S. data centers consumed an estimated 183 terawatt-hours (TWh) of electricity in 2024. That was about 4% of all U.S. power use. Some national studies project that number could rise to 426 TWh by 2030, which would be about 6.7% to 12% of U.S. electricity, depending on growth rates.
Global data centers used around 415 TWh of electricity in 2024. Analysts expect double-digit annual growth as AI loads increase.
AI-ready data center capacity is projected to grow by about 33% per year from 2023 to 2030 in mid-range market scenarios. Industry groups say global data center capacity could reach over 220 gigawatts (GW) by 2030.
Some groups warn that data center CO₂ emissions might hit 1% of global emissions by 2030. That’s about the same as a mid-size industrial country’s yearly emissions. They say the growth rate is rising faster than the reductions in many other sectors.
An excerpt from their letter reads:
“The rapid expansion of data centers across the United States, driven by the generative artificial intelligence (AI) and crypto boom, presents one of the biggest environmental and social threats of our generation. This expansion is rapidly increasing demand for energy, driving more fossil fuel pollution, straining water resources, and raising electricity prices across the country. All this compounds the significant and concerning impacts AI is having on society, including lost jobs, social instability, and economic concentration.”
When AI Growth Collides With the U.S. Power Grid
Several utilities have linked new power plant plans to data center growth. In Virginia, the largest power company and grid planners see data centers as a key reason for new infrastructure.
In Louisiana, Entergy moved forward with a new gas-plant plan expected to support a large hyperscale data center campus. These cases show how utilities now size new plants with AI-related load in mind.
Some utilities believe these expansions might increase local electricity rates by a few percentage points. This depends on how costs are shared. Regulators in various areas say that extra load can increase distribution and transmission costs. This might lead to higher bills for households.
Several grid operators also report congestion or long waiting lines for new power connections. Northern Virginia, Texas, and parts of the Pacific Northwest now have interconnection queues. In these areas, data center projects make up a large part of the pending requests.
Water Use and Siting Concerns
Water demand is another point of conflict. Many large data centers rely on water-cooled systems. A typical water-cooled data center may use around 1.9 liters of water per kWh. More advanced or dry-cooled facilities may use as little as 0.2 liters per kWh, but these designs are not yet common.
One medium-sized data center can use about 110 million gallons of water per year. Large hyperscale sites can use several hundred million gallons annually, and, in some cases, even more. Global estimates suggest data centers could use over 1 trillion liters of water per year by 2030 if growth continues.
These demands have triggered local resistance. In parts of Arizona, California, and Georgia, community groups have raised concerns about water use during drought periods. In some cases, local governments paused or limited data center approvals. A single campus can use more water each year than some small towns.
Trump Plans Executive Order on AI Regulation
While groups push for limits on new data centers, the White House is also preparing an executive order that would reshape AI policy nationwide, as reported by CNN. President Donald Trump has said he plans to issue an order that would block states from creating their own AI rules.
The administration aims to create one national standard for AI. This way, companies won’t have to deal with different state regulations.
Drafts of the plan say the order may tell federal agencies to challenge state AI laws. This could happen through lawsuits or funding limits if the laws clash with federal policy. Supporters say a unified national rule could help U.S. companies compete globally and reduce compliance costs.
State leaders and consumer protection groups argue the opposite. They say states have a legal right to pass their own rules on privacy, safety, and data use. Some governors argue that an executive order cannot override state laws without action by Congress. Minnesota lawmakers, for example, continue to write their own AI bills focused on deepfakes and child-safety concerns.
The debate adds another layer to the data center issue. AI systems require massive computing power. If AI keeps growing quickly, analysts expect even heavier pressure on local grids and water systems. Advocacy groups say that this makes federal regulation more urgent.
Scale of AI and Hyperscale Build-out
The U.S. is in the middle of a major build-out of hyperscale and AI-optimized data centers. Industry trackers report that hundreds of new hyperscale facilities are planned or already under construction through 2030. Many of these campuses are designed specifically for AI training and inference workloads.
Major cloud and social media companies have sharply increased capital spending to support this build-out. Amazon, Google, Microsoft, Meta, and other major platforms, combined spending on AI chips, data centers, and network upgrades reached hundreds of billions of dollars per year in the mid-2020s. These spending levels signal how fast demand is growing.
Some experts track how major technology firms have changed over time. For example, one big cloud provider said its data center electricity use has more than doubled in the last ten years. This increase happened as its global reach grew. This gives a sense of how long-term trends feed current infrastructure pressures.
AI also adds new layers of demand. Training one large AI model can use millions of kilowatt-hours of electricity. Operating a popular chatbot can require many megawatt-hours per day, especially at peak traffic.
Research shows that processing one billion AI queries uses as much electricity as powering tens of thousands of U.S. homes for a day. This varies with the model’s size and efficiency.
Cities and States Move Faster Than Washington
Local governments have acted faster than federal agencies to respond to public concerns. More than 100 counties and cities have passed temporary moratoria, zoning limits, or new environmental rules since 2023. Examples include parts of Georgia, Oregon, Arizona, and Virginia, where communities plan to evaluate energy and water impacts before approving new projects.
Advocacy groups also argue that federal standards have not kept up. The U.S. does not have national energy-efficiency rules for private data centers. It also does not require detailed, mandatory reporting on energy, water, or emissions for the sector. The groups pushing for a moratorium say Congress must update these policies before more sites break ground.
What the Debate Means for 2026 and Beyond
Congress will review the environmental groups’ request in the coming months. Lawmakers are expected to weigh economic benefits against rising tensions around energy, water, and local resources. At the same time, the White House may release its AI executive order, which could shape how states and companies set their own rules.
With rapid AI growth, rising electricity use, and expanding data center construction, both debates are likely to continue through 2026. Many experts say long-term solutions will require national standards, better reporting, and closer coordination between states, utilities, and federal agencies.
The post Environmental Groups Urge U.S. Congress to Pause Data Center Growth as Federal AI Rule Looms appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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