How Canada can overcome the backlash against AI data centres

Kathleen Kauth is the chief operating officer at Mantle Climate and Tyler Hamilton is the senior director of climate at MaRS Discovery District.

The authors were among the contributors to Data Centres: Sharing the Load, a report examining the economic and energy implications of data centre growth.

Ontario just became the latest jurisdiction to take a hard look at AI data centre development.

The province’s new Data Centre Playbook seeks to offer a framework that can move such projects forward in a way that addresses the concerns of community groups, local municipalities and activists across the country.

Recent months have seen protests against the massive facilities that store and process digital information, including in Toronto, Mississauga, Vancouver, Regina, Saskatoon, Burlington, Ont., and beyond. Stopthedatacentre.ca, which organizes local community members against data centre construction, lists 27 municipalities where its campaigns are currently active. In a recent Angus Reid poll, 68 per cent of Canadians said they would oppose a large AI data centre near their home.

In its National Artificial Intelligence Strategy, the federal government outlines an approach to AI that focuses on data sovereignty, which requires the construction of physical AI infrastructure within the country’s borders. What’s missing from that strategy, however, is a unified approach that gives community members a reason to welcome their construction, or any mechanism to fund research into best practices and requirements.

AI data centres are the future. Canada must overcome the backlash

Without a data centre development strategy, the National AI Strategy will continue to face costly delays and challenges. That’s because Canadians have been given little incentive to accept these large development projects into their backyards.

Their concerns are both practical and psychological. Residents worry that data centres will strain local electrical grids and water resources, drive up electricity rates, increase GHG emissions, generate noise and air pollution and potentially affect property values. And beneath these tangible concerns is something more visceral: Anxiety about the concentration of wealth and control among technology billionaires, which is at historic highs.

To many, the data centre is the physical manifestation of a tech industry that is spinning out of control, pushing toward a future many feel is being forced upon them. Those concerns are translating into picket lines, public hearings and development moratoriums. When these projects stall, however, capital and opportunity are lost, and Canada only gets further from the goals set out in its AI strategy. Countering those concerns will require more than a one-time investment in local construction. Quick fixes won’t cut it.

If governments, developers and AI companies want to get these projects off the ground, they need buy-in from communities, which will require both mitigation of any potential harms, as well as investment in benefits they can deliver to local residents and businesses.

This moment of both ambition and tension provides a unique opportunity to develop community partnerships and standards that, if successful, could come to define the AI era in Canada.

Projects of this size and scale are relatively new for the country, leaving policymakers with limited precedent or best practices to follow, but there have been some innovative solutions in other jurisdictions that are proving effective.

Michigan Governor Gretchen Whitmer, for example, unveiled a pledge for data centre companies that seeks to “ensure that companies pay the full cost of data centre construction and operation, strengthen our electric grid, safeguard our natural resources, and are accountable for their development.” States like Texas and Virginia have also established rules to ensure data centre developers are responsible for any added costs they impose on the grid.

What is happening with AI data centre development in Canada, according to our experts

Such strategies typically tie tax incentives to clear expectations that address community concerns, such as local job creation, infrastructure investments and sustainability requirements.

Ontario’s new playbook offers some suggestions for developers, but we haven’t seen examples of this approach implemented here in Canada yet. That’s why we’re offering recommendations for the federal and provincial governments, local municipalities and developers that could move the data centre conversation from protests and moratoriums to responsible development.

For federal and provincial policymakers

Prioritize projects that offer explicit, site-specific strategies for:

• Ensuring the electricity grid can manage the additional load without increasing rates for surrounding communities;
• Ensuring water resources are managed sustainably and responsibly;
• Creating jobs and procurement opportunities locally;
• Supporting Canadian innovators that are developing novel ways to reduce environmental impacts, such as Extract Energy, Enersion, Cura Climate, Zs2 Technologies, Cence Power, Peak Power and Jule; and
• Transparent reporting of key performance metrics, including annual water and energy use.

These are baseline requirements to ensure data centre projects don’t actively harm communities, while securing the buy-in that developers and municipalities require from residents.

For local municipalities

Communities can and should push for benefits beyond contributions to the tax base. While every municipality has unique needs to prioritize, common benefits could include:

• Upgraded grid infrastructure to improve resilience and lower costs for residents;
• Financial participation opportunities so that local communities can share in the long-term financial benefits that are meaningful to them (rather than a one-time investment);
• Access for local startups and researchers to leverage data centre capabilities to further Canadian innovation;
• Apprenticeship and training opportunities to support the development of local talent; and
• Mitigating noise effectively where necessary.

These lists are intended to be less of a wish list, and more of a conversation starter. Projects of this size and scale are craving community buy-in, and communities are craving a trusted partner they feel is working in good faith to support their needs and interests.

Some of these recommendations come with real costs, but none are higher than the cost of delayed or unfinished projects. That’s why we believe the ambition of developers, AI companies and governments at all levels needs to be paired with social and environmental benefits for local communities.

We can’t afford to miss out on the potential opportunity of AI, but we also can’t plow ahead without seriously considering the net impact of data centres on the surrounding community. To fully embrace this vital technological shift, the governments tasked with regulating it need to ensure that all Canadians will benefit from it, not just the companies that stand to profit.