The AI Boom and the Energy Burden: It's Time to Talk About Data Centers
Wong Chen
By Wong Chen*
Artificial Intelligence is reshaping our world at a staggering pace. From healthcare diagnostics to climate modeling, AI offers transformative potential for humanity. But behind the dazzling promise lies a growing energy dilemma that we can no longer afford to ignore: the insatiable electricity demand of data centers powering AI technologies.
As a parliamentarian committed to climate justice and a just energy transition, I believe it’s time for governments, especially in the Global South, to confront the rising energy footprint of digital infrastructure. In Southeast Asia and beyond, tech giants are rapidly expanding data center operations lured by cheap land, loose, and energy markets still dominated by fossil fuels.
Let us be clear: this is not just a technological issue. It is a climate, equity, and sovereignty issue. Data centers are the backbone of AI development, requiring immense computational power and constant cooling.
According to the International Energy Agency, global data center electricity consumption could double by 2026. In countries like Malaysia, where over 80% of electricity generation still comes from fossil fuels (primarily natural gas and oil), this digital expansion threatens to derail our national climate commitments under the Paris Agreement and deepens our dependence on fossil fuels. Malaysia is rapidly becoming a data center hotspot in Southeast Asia.
Major global players like NVIDIA, Amazon Web Services (AWS), Microsoft and Google have all announced multibillion-ringgit investments in data infrastructure here. Microsoft alone committed RM9.3 billion in 2024 to build cloud and AI infrastructure in Malaysia; the largest single investment in its 32-year history in the country, whereas the RM29.2 billion investment made by AWS through 2038 is expected to propel Malaysia’s digital transformation and economy.
These developments are certainly positive, but they also raise serious concerns about sustainability and energy justice. Malaysia’s data center market is projected to grow from RM18.9 billion in 2024 to RM63.7 billion by 2030 with a 22.38% annual growth rate.
According to the Malaysian Investment Development Authority (MIDA), Malaysia also recorded over RM278 billion in digital investments, with RM184.7 billion being in data centers and cloud-related projects, between 2021 to 2024, with most facilities concentrated in Selangor and Johor. However, many of these centers are powered by the national grid which is still carbon-intensive.
“What we need is better policy and regulation, international accountability, and public climate finance that supports clean, community-led solutions.”
We need to ensure that, this surge in energy demand is aligned with national development priorities. For example, communities living near these facilities also benefit from this surge. In addition, Malaysia is being asked to transition to clean energy with limited resources.
What we need is better policy and regulation, international accountability, and public climate finance that supports clean, community-led solutions. We must ensure that digital infrastructure does not undermine national sovereignty or other urgent need to decarbonize.
Malaysia has taken steps to diversify its energy mix, including the introduction of the National Energy Transition Roadmap (NETR), which aims to increase the share of renewable energy to 31% by 2025 and 40% by 2035, but it is clear that much more needs to be done to align digital growth with our climate goals.
I urge my government and all other governments to: 1. Mandate full energy transparency from tech companies and data centers; 2. Ban fossil-fueled data centers and require all new facilities to run on 100% renewable energy; and 3. Demand international support through grants, not loans, to accelerate the renewable energy transition of the Global South.
AI should not become the next frontier of fossil fuel expansion. If we allow the digital revolution to proceed without safeguards, we risk locking ourselves into decades of high-carbon infrastructure just as the world must urgently phase it out. The challenge is not to stop innovation, but to power it responsibly. A Fossil-Free Future must be digital, yes, but it must also be just.
*Member of Parliament, Malaysia and Member, Parliamentarians for a Fossil Free Future
