The Environmental and Economic Implications of Data Center Growth

As cloud computing and artificial intelligence expand rapidly, data centers are becoming a large and rapidly growing source of new U.S. electricity demand. This article reviews emerging research on the environmental and electricity-cost consequences of data center growth. Environmental consequences, particularly emissions from electricity generation, depend on how much, where, and when electricity is consumed. We then examine ratepayer incidence: how the costs of serving large, concentrated new loads—through generation, transmission, and distribution investments—are allocated across ratepayer classes. We conclude by reviewing policy responses in tariff design, cost allocation, and utility planning, and identifying key gaps in the literature.