Canadians right to be leery of AI data centres

At the beginning of this year, like most Canadians, I would have been unable to explain what a hyperscale AI data centre is — a sprawling, energy-guzzling facility used for AI training and operations.

That changed in March, when Bell announced its plan to construct the largest AI data centre of its kind just outside of Regina, where I live. Public reaction was a mixture of confusion and concern.

But while most Canadians were still wondering how to respond, those in the know were pointing to protests in the United States, where the data-centre building boom was provoking a countrywide community backlash.

Down south, fears that soaring electricity rates, water scarcity and constant noise would leave communities bearing the cost, mixed with a general anxiety about AI and its impacts, were turning communities against data centres.

The backlash was so quick and severe that data centre developers now consider negative public opinion the No. 1 constraint on their continued expansion.

As a policy researcher in Canada, I see important lessons in the U.S. experience. We are in the early stages of our own data centre boom and still have time to shape and limit it — hopefully avoiding mistakes made in the U.S.

This puts Canada in an advantageous public policy position: we can still regulate Canadian data centre development so that it protects, rather than harms, the public interest.

Unfortunately, that’s not happening. As we’ve watched more of these facilities be proposed across the country, often growing in size and scale — and generating public opposition comparable to that in the U.S. — Canadian governments seem determined to repeat many of the same mistakes.

For example, as in the U.S., Canada has embarked on a data-centre building boom without clear regulation. We are also building data centres too close to residential neighbourhoods, and risking a situation in which ratepayers must subsidize power generation and infrastructure.

In the U.S., this was accompanied by tax giveaways to developers that blew giant holes in state budgets, all with minimal transparency or public accountability.

U.S. politicians were too afraid of scaring away multimillion-dollar investments to impose even basic rules on developers, and Canada is making the same mistake.

The recent crop of data centre “playbooks” issued by the provinces and the federal government, which purport to guide responsible data centre development, contain no binding or enforceable rules.

The federal government has merely outlined five toothless “expectations” for data centre development that it hopes industry signatories will follow. This resembles U.S. President Donald Trump’s Ratepayer Protection Pledge, a voluntary self-regulation scheme that has done nothing to regulate data centre development or temper voter anger.

The issue was certainly one of the deciding factors in this week’s midterm elections.

Canada has, so far, avoided some of the worst U.S. mistakes, including lucrative tax breaks and subsidies for developers that many American local and state governments now regret.

We have also avoided the extreme censorship in the form of non-disclosure agreements that shield the industry from public scrutiny.

Some data centre projects in Canada have opted for less water-intensive (but more energy-intensive) cooling systems. But none of these improvements have been the result of policy leadership, which remains sorely lacking.

There is a window of opportunity for Canada to regulate data-centre development in the public interest, but it is closing fast. We have the distinct advantage of learning from the successes and failures of U.S. national and state governments. We may choose to ignore those lessons, but if we do, we cannot be surprised by the consequences.

Simon Enoch is a senior researcher with the Canadian Centre for Policy Alternatives and co-author of the new report Data centre regulation in the public interest: A closing window of opportunity in Canada.

— Troy Media