NY state pauses new large data center projects in US first

New York became the first US state to halt construction of new large-scale data centers on Tuesday, with the governor signing an executive order pausing permits for up to one year.

The moratorium, which takes effect immediately, applies to facilities with capacities of at least 50 megawatts -- enough electricity to power tens of thousands of homes -- and will give the state time to develop regulation for the rapidly expanding sector, fired by growing demand for artificial intelligence.

Critics of data centers point to their high electricity consumption, which can strain local grids and inflate energy bills, as well as their heavy water use, noise generation and the relatively small number of jobs they create.

State governors and national politicians -- largely welcoming of the technology sector and the investment it brings -- are increasingly under political pressure from voters who do not want such facilities in their backyard.

"New York has always been at the forefront of innovation and change but we've also always guaranteed that New Yorkers benefit," New York state Governor Kathy Hochul said.

"As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it's my responsibility to take action and lead.

"New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too."

Hochul also said she would pursue legislation to repeal sales tax exemptions for massive data centers in the state.

While dozens of US cities and counties have enacted local restrictions on data centers, New York's is the first statewide pause.

The state's legislature passed its own moratorium bill in June, which would have applied a lower 20-megawatt threshold, but Hochul has not signed it, with her office describing the legislation as needing additional work.

Tech companies and other supporters of data centers argue that blocking construction hurts local job growth and cedes ground to China in the race to dominate AI.

US data center construction spending has surged in recent years, with tech firms pouring tens of billions of dollars into building out infrastructure.

A similar moratorium passed in Maine in April but was vetoed by the state's Democratic governor, Janet Mills, because she said it would have blocked a proposed data center in a town hit by the closure of a local mill.

A June study by Allianz Trade estimated the centers emitted 286 million tonnes of carbon dioxide in 2025.

AI already accounts for between 15 and 20 percent of electricity consumption at data centers, and this share could climb to 40 percent by 2030, the report said.

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© Agence France-Presse