China ICT running dry? The rise of AI & climate risks amplify existing water risks faced by thirsty data centres

By CWR 24 April, 2024

By 2030 water consumption of China's data centres + AI growth could = usage of >500mn people! Water, climate & power risks are already high but could explode if left unchecked. Get on top the risks for ICT with CWR's recent report

China’s 4.3mn racks use ~1.3bn m3 of water but could 2x by 2030 or surge to 20x with AI = water use of 500mn people!; also power hungry = contribute to global warming
41% of racks in drought-prone regions, 28% in flood-prone & 56% in coastal prone to storm surge & SLR; “Eastern-Data, Western-Computing” doesn’t solve all water problems
China is managing rivers holistically = expect to see tighter regulations & WUE standards for ICT; the time to tackle ICT water risks is now - check out the 5 to-do’s action list!

On April 12th 2024, CWR released a new report, “China ICT running dry? The rise of AI & climate risks amplify existing water risks faced by thirsty data centres”.

The report reveals 4.3mn data centre racks in China consume around 1.3bn m3 of water today; but data centre growth can more than double this to over 3bn m3 by 2030. This will put pressure on already stressed water resources, especially as the rise of generative AI and chatbots could see water use surge by a shocking 20x.

China data centres’ water use today = 1.9x use for households & services of Tianjin, city of 13.7mn people…

…+ surge with AI = jump to water for >500mn people!

For perspective, water consumed by China’s data centres today is 1.9x the water use for households & services in Tianjin, a city of 13.7mn people. So, 3bn m3 by 2030 will provide water for 26mn but the explosion of AI could see this jump to over 500mn people unless strict measures are taken to control ICT sector water usage.

Unfortunately, data centres are not just thirsty but also power hungry – their carbon emissions, if left unchecked, will accelerate global warming which will exacerbate water scarcity, creating a vicious cycle. “Carbon causes climate change but water is how we feel it” said Debra Tan, Head of CWR and lead author of the report.

“Already, we are feeling the impacts – floods, droughts, rising water scarcity and so on. The fact that we have breached year-to-date warming of 1.5°C in 2024 will only accelerate such risks – the power hungry ICT sector must have cohesive strategies to address these” she added. Indeed, temperatures soared in February to an alarming 2°C of warming for four consecutive days.

The report, a first in CWR’s new 2024 “Accelerated Threat Series”, highlights five key areas of water risks faced by data centres in China and provides a “5 to-do’s action list” to rein in ICT water risks.

Corporates, institutional investors and lenders are encouraged to use these to assess the exposure of their portfolios to these accelerating and compounding risks. It’s important they get on top of these because even without the explosion of AI and chatbots, China already faces severe water challenges.

Report can be used to gauge portfolio risks & provides a “5 to-do’s action list”…

…41% of data racks in drought-prone areas & 28% in flood-prone areas…

…water risks can also disrupt power generation

According to Dr. CT Low, CWR’s Geospatial Risk Lead and co-author of the report: “almost half of China’s data centre racks are located in water scarce regions, which are as dry as the Middle East”.

He cautioned that “rising water demand coupled with rising water scarcity due to climate change will increase the competition for water putting ICT at risk as meeting water demand from households and agriculture will be the priority”.

On top of this, the exposure to extreme weather events is significant. CWR’s analyses show that at least 41% of China’s national data centre racks are in regions that are highly prone to drought and at least 28% are in areas that are highly prone to floods; at least a fifth are very prone to both. But it’s not just freshwater threats that pose concerns, “56% of China’s data centre racks are located in coastal regions which are vulnerable to storm surge and sea level rise”, added Dr Low.

Water risks can also disrupt power generation – water is used for cooling in thermal power generation and is essential for hydropower. Floods and droughts have also caused power cuts and rationing. In 2022, power cuts during the Yangtze droughts even affected global supply chains. The report warned that data centres could face double whammy risks (water and power) especially in hydropower reliant provinces such as Sichuan and Chongqing, home to one of the 8 Computing Hubs and 10 Data Centre Clusters.

The “Eastern-Data, Western-Computing” relocated data centres to the west but doesn’t solve all water problems

Clearly, if data centre expansion was powered by coal, this will accelerate climate change and exacerbate water stress. CWR’s earlier report on ICT transition flagged that China data centre emissions can balloon 3.5x in a decade to 340MTCO2 by 2030 – an amount greater than the energy-related CO2 emissions of the UK.

The Chinese government is already acting. In 2020, a new national initiative “Eastern-Data, Western-Computing” (东 数西算) was launched to shift data centres from the populous coastal regions to western regions. Natural cooling, lower electricity tariffs, access to green electricity, and cheaper land costs are some of the key reasons behind this “goingwest” strategy. However, Dr Low pointed out: “Going west doesn’t solve all water problems. The “Eastern & Western Hubs” are spread over 14 regions but 9 of these have around 40% or more of their respective areas facing ‘High’ to ‘Extremely High’ water stress”.

“China is taking active steps to manage rivers holistically from source-to-sea, so expect to see tighter regulations and WUE standards for the ICT sector”

Debra Tan, Lead Report Author

Regulatory and river basin risks are also high. As per the report over three-quarters of China’s data centre racks are located in three river basins – Yellow, Yangtze & Pearl. “China is taking active steps to manage rivers holistically from source-to-sea, so expect to see tighter regulations and WUE standards for the ICT sector” warned Tan. The report noted that Beijing has already proposed water caps for data centres while Shanghai has introduced stricter water efficiency (WUE) guidelines. Plus, various ministries have ruled out some cooling tech as “unsuitable for use in waterscarce areas”.

“CWR helps corporates and the financial sector assess fast-evolving climate & water risks, and curate cohesive climate strategies to survive them. For the ICT sector, the time to tackle water risks is now – we must get on top of these before the explosion of AI” urged Tan.

Time to tackle water risks is now – must get on top before the explosion of AI – go water positive

China’s ICT giants are encouraged by the think tank to take the lead to be “water neutral” or “water positive” like their Silicon Valley counterparts of Meta and Google. Despite daunting water challenges ahead, Tan remains positive: “by working together, the public and private sectors can collaborate to reduce water risks and ensure access to water for all”.

Media

For more information, please contact: Dr. CT Low

Email: ctl@cwrrr.org

Report Link: https://cwrrr.org/notices/new-cwr-report-china-ictrunning-dry-rise-of-ai-climate-risks-amplify-existing-water-risksfaced-by-thirsty-data-centres/

 

 

 

 

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Author: CWR
We believe regardless of whether we care for the environment that water risks affect us all – as investors, businesses and individuals. Water risks are fundamental to future decision making and growth patterns in global economies. Water scarcity has emerged as a critical sustainability issue for China's economy and since water powers the economy, we aim to highlight these risks inherent in each sector. In addition, we write about current trends in the global water industry, analyze changes occurring both regionally and globally, as well as providing explanations on the new technologies that are revolutionizing this industry.
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