If all announced on-site gas plants proposed for US data centers were built and operated under BNEF's assumptions, they would emit about 345 million metric tons of carbon dioxide equivalent a year. That would be 152 million metric tons more than if the associated data center capacity were supplied by average US grid electricity — an amount equivalent to 10% of US power-sector emissions in 2025. Although many of these projects are intended to supply power while data centers await a grid connection, BNEF finds that once they are online, the economics could encourage them to continue generating energy, creating a longer-term fossil-fuel lock-in risk beyond the annual emissions.
In developed markets such as the US and Europe, ensuring new data centers are grid-connected is the more sustainable option, making faster grid connections important to limiting near-term emissions impacts and fossil-fuel lock-in risk. Continuing to decarbonize the power system in parallel also remains vital. The report reviews policies across 17 markets aimed at accelerating the grid connection process. The policy landscape is still emerging, and while many efforts should reduce waiting times for connections, there is currently limited empirical evidence to demonstrate which will be most effective.
Mark Daly, Head of Data Centers and Emerging Tech at BloombergNEF, said, "The extraordinary economics around AI are making speed to power one of the most important priorities for defining constraints on data center developers. The climate outcome will depend not only on how much electricity these facilities use, but on how quickly grids can connect them and whether power systems add cleaner generation alongside that demand."
In emerging markets, the challenges of mitigating the climate impact of data centers differ. BNEF finds that where power systems remain heavily reliant on coal, grid-connected data centers can be even worse than those powered by on-site gas. This highlights how much more central it is in these markets to enable more clean generation alongside sources of new power demand.
The report examines four emerging markets. In Brazil, BNEF expects almost all incremental generation needed to meet data center demand through 2035 to come from renewables, with large consumers buying directly from renewable generators and new data center demand potentially absorbing some currently curtailed renewable generation, although transmission remains a constraint. In India, data center electricity demand is expected to rise from 11 terawatt-hours in 2025 to 91 terawatt-hours in 2035, with existing coal plants supplying much of the additional electricity in the near term under BNEF's Economic Transition Scenario, though data centers can procure clean power through bilateral and captive projects and companies are already backing new solar and wind capacity. In Indonesia, coal and gas supplied 82% of state utility PLN's on-grid power in 2025, and current rules do not allow data centers to contract directly with independent renewable generators, limiting their ability to link corporate demand clearly to new clean-power capacity. In Malaysia, data center electricity demand is set to rise from 7 terawatt-hours in 2025 to 45 terawatt-hours by 2035, with additional demand expected to increase the use of existing coal and gas plants in the near term while continued growth is likely to result in new gas capacity and coal life extensions over the longer term; data centers can contract with third-party renewable generators and are already supporting new solar projects, although network charges can affect the economics of these contracts.
The report concludes that policies to accelerate grid connections can help limit the near-term emissions impact and fossil-fuel lock-in risk in developed markets, but the challenge differs across markets. Continued power-system decarbonization and frameworks that allow data centers to support additional clean power will also be important as data center electricity demand grows.