As the spread of artificial intelligence (AI) drives a sharp increase in demand for data centers, regulatory efforts to reduce pressure on electricity and water supplies are expanding. Some parts of the United States and Europe have suspended construction or tightened conditions for connections to power grids, while South Korea has moved to encourage investment by dispersing facilities outside the capital region and easing permitting regulations. Although policy directions vary by region, balancing AI infrastructure expansion with environmental protection and residents' daily lives has emerged as a common challenge.
United States: From construction moratoriums to permanent bans by referendum
According to Reuters, Pennsylvania Governor Josh Shapiro signed an executive order requiring companies establishing AI data centers in the state to meet environmental protection and transparency requirements and secure community consent.
The order, which took effect immediately, excluded all data centers from the state's expedited permitting program. All departments and agencies under Shapiro's authority are now prohibited from entering into nondisclosure agreements with data center developers.
Texas Governor Greg Abbott directed a temporary suspension of approvals for new data center projects through the state power grid's connection process until an audit is completed. The measure followed concerns that rapidly increasing electricity demand could threaten grid stability amid growing public opposition to data centers. Developers must therefore submit additional information on electricity demand, water use, tax incentives, ownership structures and measures to reduce effects on local communities.
New York Governor Kathy Hochul imposed a 1-year construction moratorium on data centers with power consumption of at least 50 megawatts (MW). New York thus became the first US state to impose a blanket construction moratorium on data centers of that size.
During the moratorium, the New York State Department of Environmental Conservation will not issue new permits requiring discretionary decisions. State authorities plan to use this period to establish criteria for assessing data centers' environmental effects.
In Maine, however, a construction moratorium bill did not take effect because of a gubernatorial veto. Governor Janet Mills vetoed bipartisan legislation that would have suspended construction of new data centers consuming more than 20 MW for 18 months. Mills supported a moratorium in principle but objected to the bill's failure to allow an exemption for a particular project in the town of Jay.
In Monterey Park, California, residents voted in June 2026 to ban data centers permanently. The decision followed resident opposition to a planned data center, making Monterey Park the first US city to permanently ban data centers through a referendum.
Amsterdam restricts new facilities and expansion until at least 2030
Amsterdam, the capital of the Netherlands, imposed a 1-year moratorium on new data center development in 2019. In April 2025, it subsequently banned new data centers and expansions of existing facilities within the city until at least 2030.
Separately, the Dutch government restricted large facilities to 2 designated areas nationwide through rules for hyperscale data centers introduced in 2022. Microsoft nevertheless received approval in January 2026 for a project divided into 3 buildings. Each building individually fell below the regulatory threshold.
In Ireland, the power grid operator effectively blocked new data center connections around Dublin from 2021 following warnings about data centers' burden on the grid; the measure ended in December 2025. Data centers now seeking new connections must have generation facilities on their own sites.
Denmark gives data centers the lowest grid connection priority
Denmark introduced legislation giving new data centers the lowest priority for connections to the power grid as grid capacity shortages worsened. The law, which took effect in October 2026, replaces the previous first-come, first-served approach. It allows households, healthcare, industry, transport and renewable energy projects to connect ahead of data centers. Denmark's grid has come under increasing pressure from a surge in electricity demand and connection applications, including those from large data centers.
Australia pursues an AI office as Portugal tightens energy and water requirements
Australia is pursuing an AI regulatory framework that includes data center standards. Prime Minister Anthony Albanese said the government would establish an Office of AI to oversee the development of AI standards. Its remit would include rules governing the location of large data centers and their electricity and water use. Related legislation is expected to be prepared in early 2027. Australia currently addresses these issues through privacy and consumer protection laws and a voluntary AI ethics framework, without separate AI-specific legislation.
Portugal also plans to strengthen environmental requirements for data centers. Maria da Graça Carvalho, the minister responsible for the Ministry of Environment, said new regulations were being prepared to require data centers to run on renewable energy and use cooling systems that do not compete with water supplies for households and businesses.
Portugal has strengthened environmental requirements for energy and water use while attracting investment in data centers and AI infrastructure. At the same time, it is pursuing projects including the 1.2-gigawatt (GW) Start Campus development in Sines, one of Europe's largest planned data center complexes.
South Korea emphasizes investment through regional dispersal and easier permitting
While many countries tighten restrictions on data center development, South Korea is emphasizing faster construction to secure AI competitiveness. The Special Act on the Promotion of the Artificial Intelligence Data Center Industry, promulgated in June 2026, is scheduled to take effect on March 10, 2027. It aims to reduce investment delays through consolidated permitting via the Ministry of Science and ICT and a timeout mechanism under which processing is deemed complete after a specified deadline.
Special provisions have also been established to reduce concentration in the capital region. New construction, expansion or conversion of AI data centers below a specified size outside the capital region will be exempt from power system impact assessments, while installation requirements for elevators, parking facilities and artworks may be relaxed by presidential decree. This is not, however, a blanket regulatory exemption for all data centers.
The government also announced plans to establish large AI data centers across 5 regions, developing 8.4 GW by 2029 and adding 10 GW by 2035. Although the policy emphasizes development speed and regional dispersal, the electricity and water pressures that prompted restrictions overseas suggest a need to address infrastructure expansion, environmental management and cooperation with local communities in South Korea as well.
Data center policies have diverged between development restrictions and investment incentives according to regional conditions. However, managing the pressure that AI infrastructure expansion places on electricity and water supplies and residents' lives remains a shared challenge for both jurisdictions tightening regulation and South Korea.
Original Korean article: esgbusinessreview.kr
English brief by Korea Wind Intelligence, koreawindintel.com
