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Queretaro state lets data centers skip environmental

impact

reports

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Data centers also exempt from CO2 tax

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Experts warn of effects on drought-stricken state

By Diana Baptista and Fintan McDonnell

QUERÉTARO, Mexico, Oct 14 (Thomson Reuters Foundation) -

A data center boom is gathering momentum in central Mexico,

where the local government of Queretaro has made it easier for

foreign big tech companies to bypass environmental reporting

requirements and taxes, an investigation has found.

A dozen data centers operate in the semi-desert state of

Queretaro, with most of the massive warehouse-like structures

built in the past three years.

Data centers can house thousands of servers used by big tech

companies like Microsoft ( MSFT ), Google and Amazon ( AMZN ) for their storage

services and the massive amount of data used in generative

artificial intelligence tools such as Copilot and Gemini.

Most data centers in Queretaro, owned by companies such

as U.S.-based Aligned Data Centers and Equinix ( EQIX ), operate in

industrial parks, locations that exempt them from providing

environmental impact reports.

As such, Queretaro residents say when a data center arrives,

they are not informed about the potential effects on the

water-stressed environment.

"This opacity prevents us, as citizens, from the possibility

of having evidence of this industry's specific impact," said

Paola Ricaurte, a professor at the Tecnologico de Monterrey

University.

Communities are responding by demanding greater regulation

and transparency about the water and energy that data centers

consume.

Data centers use a lot of energy to run their servers and a

large amount of water to cool them. In 2023, for example, all of

Google's data centers consumed 6.1 billion gallons of water,

according to the company.

"Without concrete evidence, we cannot defend our rights to

health and information or have transparency on the decisions the

government takes to benefit the industry," said Ricaurte, who is

researching data centers' environmental footprint in Queretaro.

Marco Del Prete, Secretary of Sustainable Development, said

data centers are not classified as an industry but as a service

provider, which is why they are exempt from providing

environmental impact reports.

"The data center is a service company that doesn't process

supplies or generate direct emissions. It doesn't need to obtain

an environmental impact report," said Del Prete in an interview.

A 2022 document issued by the Ministry of Sustainable

Development showed that a data center operated by Microsoft ( MSFT ) in

Queretaro did not need an environmental impact report as its

"activities are not considered fixed sources of emissions."

"THERE IS AN OBLIGATION"

Lawyer Lorenia Trueba, a member of Voceras de la Madre

Tierra, a local environmental group, said all data centers

should issue environmental impact reports due to their high

water and energy use.

"The state's environmental code mentions that any activity

which can cause environmental impact - when there is any risk or

possibility of an impact - there is an obligation to issue an

environmental impact report," Trueba said.

Trueba also said Queretaro is bound by Supreme Court

decisions and international treaties such as the Escazu

Agreement, which establish communities' right to access

environmental information.

"They can't say that the technology used in data centers

doesn't have an environmental impact," Trueba said.

"Where is all the information that should be put on the

table so that people, academics, scientists, authorities and

companies can sit down and discuss it?"

No local or federal law in Mexico regulates the

environmental requirements for data centers.

Gov. Mauricio Kuri is leading the drive to attract big tech

to Queretaro, which already has drawn $12 billion of investment

for new data centers from Microsoft ( MSFT ), Google and Amazon ( AMZN ).

President Claudia Sheinbaum announced in September that U.S.

tech firm CloudHQ will invest $4.8 billion in a project to build

six AI data centers in Queretaro.

Globally, data center construction is being promoted from

Santiago, Chile and Zeewolde in the Netherlands to Ekurhuleni in

South Africa, where governments are offering financial

incentives, according to the UK-based consultancy Computer Says

Maybe.

In the United States and Brazil, local and federal agencies

are cutting regulation, speeding up permitting processes and

making land available for planned data centers.

WATER SHORTAGES

AI is poised to increase the amount of water that data

centers use, as its power-intensive processors have greater

cooling requirements than do conventional servers.

Queretaro has been struggling with water shortages and

strict rationing after four years in which at least one of its

municipalities has been under drought conditions, according to a

federal monitor.

In the past year, residents living near data centers said

their taps run dry and they suffer frequent power cuts.

Without environmental disclosures by data centers, experts

said it is impossible to determine how much water they are using

or where precisely they are getting it.

"We're in a sea of uncertainty... there's no data on data

centers," said Teresa Garcia Gasca, former dean at the

Autonomous University of Queretaro.

"A lack of transparency is always very serious and creates

mistrust," she said.

Data centers built outside the confines of industrial parks,

meanwhile, do provide information on their impact.

Ricaurte said some companies should not be allowed to bypass

environmental requirements and override citizen concerns.

"We as citizens have the right to know exactly how they are

operating and what's the possible impact they may have on

health, on the environment, on the land," she said.

TAX EXEMPTION

Mexico is also making itself an attractive to tech companies

by exempting them from certain gas emission taxes.

Since 2021, Queretaro has levied a tax on companies as

direct and indirect sources of carbon dioxide, methane and other

gases in a bid to reduce greenhouse gases emissions.

But data center companies are exempt because they are not

considered fixed sources of direct emissions, according to Del

Prete.

"The emissions that a data center generates are indirect

emissions that don't come directly from the operations of the

data center," he said.

Critics say the tax exemption for data centers also puts

local communities at a disadvantage.

"Even if they are not the industry that generates the most

polluting emissions, they do have an important impact due to the

energy they require, which is already creating issues for the

population," said Garcia Gasca.

(Reporting by Diana Baptista and Fintan McDonnell; Editing by

Anastasia Moloney and Ellen Wulfhorst. The Thomson Reuters

Foundation is the charitable arm of Thomson Reuters. Visit https://www.context.news/)