Op-ed by Márk Vargha, Head of Policy Department at the Institute for Energy Strategy (ESI).
The lawsuits emerging around data centres are no longer about servers or buildings. They are about water, electricity, carbon budgets and ultimately, who bears the environmental cost of the digital economy. From Chile to Ireland, courts are beginning to redefine the legal limits of AI infrastructure. Central Europe should pay close attention.
The emergence of data centre litigation: a new branch of environmental law?
Artificial intelligence has transformed data centres from largely invisible pieces of digital infrastructure into some of the world’s most resource-intensive industrial facilities. Large hyperscale campuses require enormous quantities of electricity, substantial cooling infrastructure and, in many jurisdictions, significant amounts of land and water resources. Unsurprisingly, these facilities have begun attracting legal challenges that would have been unimaginable only five years ago.
The question is whether these disputes constitute merely another category of environmental permitting cases or whether they represent the emergence of a distinct field of environmental litigation.
There is no consensus among legal scholars.
One school of thought argues that “data centre litigation” is simply an application of established environmental law principles to a new industrial sector. This view reflects the classic position of environmental law scholars such as Daniel A. Farber, who has long argued that environmental law evolves primarily by adapting existing legal doctrines to new technologies rather than by creating entirely new legal fields. Environmental impact assessment, precaution, cumulative effects analysis and public participation remain the legal foundations; only the regulated activity has changed.
A more expansive interpretation has emerged from climate litigation scholars. Joana Setzer and Catherine Higham (London School of Economics’ Grantham Research Institute) have documented how climate litigation increasingly targets the infrastructure enabling carbon-intensive economic systems rather than only direct emitters. Recent analyses suggest that data centres represent precisely this next frontier: although they are not major emitters themselves, they induce significant electricity demand, influence grid investment decisions and increasingly shape national decarbonisation pathways.
An even stronger position has recently been advanced by practitioners and scholars observing these cases. According to this emerging perspective, data centre litigation differs from conventional environmental disputes because courts are no longer assessing merely the environmental impacts of a single project. Instead, they are increasingly being asked to evaluate whether digital infrastructure is compatible with broader societal objectives, including national climate targets, electricity system resilience, long-term water security and equitable access to critical resources.
This reflects the fact that data centres are not only technological facilities but also complex socio-economic-environmental systems embedded in wider questions of digitalisation, economic development and sustainability. As highlighted in recent work by the United Nations University, the expansion of digital infrastructure requires balancing technological progress with environmental limits and social considerations. Data centre litigation therefore represents more than a new category of environmental review: it signals the emergence of a broader governance debate over how societies manage the physical foundations of the digital economy.
Regardless of terminology, one conclusion appears increasingly difficult to dispute: environmental litigation has entered the digital economy. Data centres have become the physical manifestation of AI, cloud computing and digital sovereignty, and consequently the environmental costs of digitalisation are now becoming judicial questions.
Two continents, two legal strategies: Chile and Ireland
The Chilean litigation surrounding Google’s proposed Cerrillos data centre has become one of the world’s most influential examples of climate-conscious environmental review.
Originally authorised in 2020, the project encountered opposition from local residents and the Municipality of Cerrillos because of its planned groundwater extraction for cooling in the already water-stressed Santiago aquifer. During the proceedings Google modified the project, proposing air cooling instead of water cooling, leading most claimants to withdraw. Nevertheless, one resident continued the litigation.
In September 2024, Chile’s Second Environmental Court delivered a decision with implications extending well beyond this individual project. Rather than permanently blocking the development, the court ordered environmental authorities to reconsider the project’s assessment by explicitly incorporating the effects of climate change on water availability. In other words, climate change itself became a legally relevant variable in environmental impact assessment rather than merely a contextual background.
The Chilean judgment is significant because it effectively required regulators to evaluate future hydrological conditions instead of relying solely on historical data. It also demonstrated that modifying project technology—in this case replacing water cooling with air cooling—does not automatically cure deficiencies in the original environmental assessment.
Ireland presents a markedly different legal landscape. Here, litigation focuses less on water and more on electricity. Data centres already account for more than one-fifth of national electricity demand, placing increasing pressure on grid capacity and Ireland’s legally binding carbon budgets. Environmental organisations including Friends of the Irish Environment and ClientEarth have challenged regulatory and planning decisions, arguing that further expansion risks locking the country into prolonged fossil fuel dependence while undermining both domestic climate legislation and EU climate obligations.
The legal reasoning is fundamentally different from Chile’s. Rather than asking whether a specific facility adequately protects local environmental resources, Irish litigation asks whether the cumulative growth of an entire economic sector is compatible with national climate governance.
This distinction illustrates two complementary models of data centre litigation. The Chilean approach emphasises local environmental resilience, particularly water security under climate change. The Irish approach treats data centres as systemic energy consumers whose cumulative electricity demand must be assessed within national decarbonisation strategies.
Both approaches nevertheless point towards the same conclusion: courts increasingly reject the assumption that digital infrastructure deserves exceptional regulatory treatment simply because it supports technological innovation.
What Central Europe should really learn
The most important lesson from Chile and Ireland is not that data centres consume electricity or water. That has never been in doubt. What is changing is who ultimately decides whether those resources may be allocated to digital infrastructure.
Traditionally, these choices belonged to governments, regulators and transmission system operators. Courts reviewed whether procedures had been followed correctly but rarely questioned broader policy assumptions. The emerging wave of data centre litigation suggests that this division of responsibilities is beginning to shift.
In both Chile and Ireland, judges were effectively asked to answer questions that are only partly legal. Should scarce groundwater be reserved for digital infrastructure during a changing climate? Can a country’s electricity system accommodate another hyperscale data centre while remaining consistent with its decarbonisation commitments? These are resource-allocation decisions with profound economic consequences.
For Central Europe, this development may prove more significant than either individual case. The region is actively competing for hyperscale investment, while simultaneously pursuing electrification of industry, transport and heating. As electricity networks become increasingly constrained, environmental litigation may evolve into a mechanism through which courts indirectly influence national infrastructure priorities.
This has practical implications for policymakers. Future permitting cannot rely solely on project-level environmental impact assessments. Authorities will increasingly need to demonstrate how individual developments fit within wider energy system planning, climate objectives and resource allocation strategies. Otherwise, these strategic choices may gradually migrate from ministries to courtrooms.
