Is there an environmental price to be paid for Ireland's data centre success?

Not that long ago, Ireland’s success in attracting data centres to be built on the island was heralded as a cause for celebration. For example, a section on the Enterprise Ireland website, known as The Irish Advantage, has an article headlined “Data centre investment in Ireland to reach €10bn by 2022”.

The article notes that “inward investment from data centre construction in Ireland has tripled over the past four years, bringing the average annual spend to €1.3 billion”.

It argues this high level of activity has “helped Irish companies to become internationally recognised for excellence in data centre construction in recent years”. Among other achievements, “Ireland’s capability in the delivery of data centre infrastructure has attracted world-leading tech companies” and the country’s “climate, connectivity and excellence in construction have made it an attractive location for data centres”.

But that was then, this is now. The recent IPCC report provided a stark reminder of just how much needs to be done to avoid climate catastrophe and how negligent governments have been in seeking to address the climate crisis. UN Secretary-General António Guterres described the report as “a code red for humanity. The alarm bells are deafening, and the evidence is irrefutable”.

A cause for concern

That’s not to say concerns weren’t already being raised in Ireland about the environmental impacts of its data centre success. The 2019 Transmission Report from EirGrid, the Irish state-owned electric power transmission operator, forecast that if all applicants being processed for data centres were to connect, “the data centre load would equate to approximately 28% of the current all-island system peak demand”.

This year, it launched a public consultation exercise “outlining the different options available to reach a target of 70% of Ireland’s electricity coming from renewable sources by 2030”. The burden placed on the grid by the growth in data centres was a big part of that exercise.

In June, People Before Profit introduced a new bill that sought to ban new data centres, Liquid Natural Gas plants and new fossil fuel-related infrastructure in the country.

TD Brid Smith commented: “Real climate action can’t happen if we are simultaneously planning to have over half of any increase in renewable energy swallowed up by mega data centres by 2030.”

In August, Social Democrats Climate Spokesperson Jennifer Whitmore called for a moratorium on data centres, stating: “Our antiquated electricity grid cannot sustain the uncontrolled proliferation of data centres…The government must introduce an immediate moratorium on the construction of data centres until it investigates the ability of the national grid to sustain new connections into the future.”

She warned that the government’s “blithe attitude to the threat posed by data centres” raised questions over its climate action targets.

A spokesman for Eamon Ryan, Minister for Climate, appeared to signal a change of emphasis when he stated on 16 August: “While data centres play a vital role in a modern, technological society, Minister Ryan is clear that increasing the number of facilities in Ireland cannot jeopardise the State’s target of reducing carbon emissions by 51 per cent by 2030.”

Just a few days earlier, Ryan said: “If we locate [data centres] correctly and have the grid correctly connected to them, we will be able to run data centres efficiently with low carbon.”

What can be done?

The scale of Ireland’s data centre commitment is clear from the latest Host In Ireland Report which states there are 70 operational data centres in Ireland with a total of 900MW of connected power capacity. Construction investment in data centres in Ireland reached €7 billion between 2010 and 2020 but, in a sign of how fast the data centre trend is accelerating, there will be another €7 billion invested by 2025 – of which €1.33 billion will be spent this year and €1.5 billion in 2022 and 2023.

What can be done to ensure data centres do not hinder or jeopardise Ireland’s climate commitments? A simple solution would be to find a way to offset carbon emissions from European data centres based in Ireland to the countries they serve. Sounds good, doesn’t it? Ireland could reduce its carbon burden from hosting data centres by offsetting it to other European countries.

But how could European countries be persuaded to assume those emissions as their own because the carbon was being emitted to provide data and services to their populaces?

The difficulty is that Ireland is not best-placed to make this argument with any conviction to other countries in Europe. Why? Let’s think of one of the main reasons Ireland is such an attractive location for international businesses (and their data centres): the incentives it provides to them, especially its low corporation tax rate. This has a totemic significance for Ireland that tends to overshadow most other factors, to the point where the government is willing to sour relationships with many other countries, including the US, to preserve it.

Opposition to Ireland’s tax system comes from the belief it allows businesses to evade/avoid paying taxes in the countries in Europe – and elsewhere – where the bulk of their business is transacted. Many countries want to put an end to that system and make companies pay taxation on the transactions they make in individual states.

So, to return to that idea of offsetting carbon emissions which, on the face of it, seems eminently sensible and fair. Is Ireland in any position to convince other countries to take a share of the emissions from data centres in Ireland that serve the European market when it is helping companies evade/avoid their taxes in those countries? Especially if, in many instances, the companies building those data centres have done so because they have enjoyed the benefits of Ireland’s favourable tax regime?

Who would have thought that the policy which allowed international companies to funnel tax revenue from other countries through Ireland would play a part in funnelling carbon emissions through this island as well? It might almost make you believe in a law of unintended consequences.