TLDR: The expansion of generative AI is significantly increasing water and energy demands from California’s data centers. Legislative efforts to mandate transparency in resource usage have met resistance, with one bill vetoed by Governor Newsom due to concerns about business impact, while industry groups cite proprietary information and economic competitiveness. Experts and lawmakers, however, stress the critical need for data to ensure sustainable resource management in the face of escalating AI-driven consumption.
California is confronting a growing challenge as the proliferation of artificial intelligence technologies, particularly generative AI, intensifies the demand for water and energy from the state’s numerous data centers. This surge in consumption has prompted legislative action aimed at increasing transparency, though these efforts have encountered significant hurdles.
Assemblymember Rebecca Bauer-Kahan introduced a bill that would have required data centers to report their energy usage. However, this bill ultimately failed to pass. Bauer-Kahan expressed the foundational need for such data, stating, “As I started to ask questions about what kind of data was going into our understanding around the energy needs of the growing data center industry, it seemed like the answer was there wasn’t great data.”
Similarly, Assemblymember Diane Papan authored legislation designed to track water use by data centers, mandating estimates of expected water use for business licenses and annual reports. This bill successfully passed through the legislature but faced a veto from Governor Gavin Newsom. In his statement, Governor Newsom articulated his “reluctance to impose rigid reporting requirements about operational details on this sector without understanding the full impact on businesses and the consumers of this technology.”
Papan, who was surprised by the veto, countered this perspective, emphasizing the importance of transparency for effective resource management. “To not have that transparency and how much water they’re using so that we can plan, isn’t really helping the industry,” Papan asserted, adding, “We’ve got to balance innovation with sustainability.”
Data centers, which house the servers essential for online services like web searches and video streaming, have seen their energy and water demands escalate dramatically with the advent of generative AI, such as chatbots like ChatGPT. Shaolei Ren, an associate professor of electrical and computer engineering at UC Riverside, highlighted that while discussions about AI’s environmental impact aren’t new, public awareness and concern have grown significantly since 2020.
Ren cited a Lawrence Berkeley National Laboratory report projecting that data centers, which consumed 3% of the nation’s energy in 2020, could account for up to 12% by 2028. He also noted that the timing of resource consumption, such as concentrated water use during hot summer months, can exacerbate stress on local supplies. “I think this will create a lot of tension because we don’t have that many resources available,” Ren warned, “And also because the users [are] starting to use these AI services directly.”
California’s data center landscape is often characterized by ‘co-location’ facilities, where multiple businesses lease server space. Ren observed that these centers tend to be “more conservative, more secretive, compared to Google or Microsoft, which are relatively more transparent” regarding their resource usage.
The Data Center Coalition, an industry advocacy group, opposed the proposed legislation. Dan Diorio, the group’s vice president of state policy, voiced concerns that publicizing proprietary information could jeopardize data centers’ competitive edge and that imposing new efficiency standards might deter the AI industry from investing in California. “It’s going to create a whole separate set of efficiency standards for one industry rather than holistically across the board,” Diorio stated. “This specifically makes it harder to develop data centers in the state of California.”
Despite these setbacks, some legislative efforts have succeeded. California Senator Steve Padilla authored a bill, now law, aimed at assessing the impact of data centers’ energy use on ratepayers. Padilla emphasized the need for concrete data to move beyond speculation: “I think it is important to collect that data. It is important to get an assessment of what the impacts are because then we can stop arguing over some of the basic facts and think about how we’re going to address them.”
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Both Assemblymember Bauer-Kahan and Papan have indicated their intent to reintroduce their respective bills in the upcoming legislative session. Bauer-Kahan expressed surprise at the opposition, believing the industry would support measures to ensure grid stability. “All of us have a shared interest in having a grid that will stand up to the demands that are put on it,” she concluded. Papan echoed this resolve, stating, “We’re going to bring this bill and this issue back because we’ve got to be prepared. California always leads the way. Why wouldn’t we do it with the water usage of data centers?”
