WSJ What’s News - How Governments in the U.S. and Europe Are Stalling the AI Buildout

Episode Date: July 19, 2026

Tech companies are spending hundreds of billions on infrastructure to power AI, but they’ve run into a major roadblock: government regulation. From the U.S. to Europe, a growing backlash over zoning, land, and energy use is putting the brakes on data centers. WSJ reporters Will Parker and Yusuf Khan join host Alex Ossola to discuss how governments in the U.S. and Europe are stalling the AI buildout. Further Reading These Cities and States Are Taking Aim at Data Centers Can a Prettier Data Center Curb the Community Backlash?  These Rural Americans Are Trying to Hold Back the Tide of AI  Bring Your Own Power, Ireland Tells Tech Titans Hungry for Data Centers The American Rebellion Against AI Is Gaining Steam  We Tracked the Growing Pushback Against Data Centers  A Data Center Revolt in Missouri  Learn more about your ad choices. Visit megaphone.fm/adchoices

The Hulu original series Furious is coming to Disney Plus, starring Emmy Rossum. Furious follows FBI agent Alice Black on the hunt for a mysterious and calculating serial killer. Both walk their own paths toward justice, and as their lives start to intertwine, the line between right and wrong begins to blur. Don't miss the three-episode premiere of the Hulu original series Furious on July 27th, only on Hulu on Disney Plus. Hey, What's News listeners. It's Sunday, July 19th. I'm Alex Osala for the Wall Street Journal. This is What's News Sunday, the show where we tackle the big questions about the biggest stories in the news.

On the show this week, data centers are being built all over the world to power the artificial intelligence boom. We're looking at efforts across the U.S. and elsewhere to slow their build-out. As AI becomes more embedded in people's lives, there's a growing need for data centers to power it. According to recent Pew Research, there are more than 3,000 operating data centers in the U.S. and another 1,500 in the works. The AI giants are paying a lot to make those happen. Analysts estimate that the capital spending by just five of the hypers, Alphabet, Amazon, META, Microsoft, and Oracle, to be $741 billion this year alone. But the communities where these data centers are being built or proposed have been less enthusiastic. Anybody that's against us, please stand up for this.

for the next minute. Project Blue will be net water positive. It sets a new standard. People are worried about how much water these buildings use, how much electricity they consume. They think they're noisy

and that they're bad for the environment and that having one nearby will make their homes less valuable. A May poll from Gallup shows that seven in 10 Americans oppose data centers being built in their local area. That's not the case everywhere.

But increasingly, people are making their opposition known. They're protesting, joining Facebook groups, and pushing local lawmakers to stop the data center's construction. As of last week, the journal has found that about 240 local governments had moratoriums on building them. Also last week, New York became the first state in the U.S. to issue a temporary ban. Here's New York Governor Kathy Hochel announcing it. These hyperscale AI data centers consume enormous amounts of power. Truly threatening to outpace are grid's capacity, and they drive up costs for local ratepayers. And I refuse to let those costs be passed on to New Yorkers, who already pay too much for

their utility bills. Also last week, Australia's prime minister said his country plans to require data centers to underwrite their electricity and water supplies, with legislation expected early next year. To understand more about how governments are stalling the data center buildout, I'm joined by journal reporter Will Parker, who covers data centers in the U.S. and Yusuf Khan, who's following the story in Europe. Right off the bat, we're talking about opposition and, you know, moves to delay some of these projects. But are all communities approaching it like this or are some sort of welcoming in these projects with open arms? There's a distinction to be made between the local governments in these places and their voters and constituents.

Often what you see is that many of the local governments are extremely supportive, right? I mean, they are the ones that update their zoning codes and try to make their laws amenable to data center developers so they can come in and build these projects. One of the reasons that they're doing it is that the data centers oftentimes produce a lot of revenue for local governments. And there are some that are extremely proud of their track record on this. Loudoun County in Virginia, for example, often touts how robust their finances are now because of the data center boom and what they're able to spend on public infrastructure and schools and so forth.

And among the general public, separate from the local governments, there are people who support the data centers as well, or at least are ambivalent about them. But there's some opposition almost everywhere. You said, do you have anything you want to add to that? It's kind of the same story, really, especially in certain countries like Ireland, a lot of the tax coffers come from these big tech companies. And so, you know, it's a catch-22. I think one of the things that Europe has seen, obviously, for the last few years is very, very high energy prices and a cost of living crisis. And the main things are politicians and companies that when they talk about this is how do you mitigate those things? And then also have this AI development and AI growth.

Can they work in tandem? What's the ways to do that? Interestingly, one of the key things that you see at these community groups is often the questions we'll start with. I understand we need AI. How is the question often that is posed. So Yusuf, the EU has been pushing for this data center sustainability rating. How is that supposed to work and where does that effort stand? If we come in from like a broader view, the EU kind of feels at the moment that it needs to catch up in AI, right? AI has been mostly led out of Silicon Valley, in California, the US, in general.

There aren't really these big AI hyperscaler startups in Europe and most of the investment has come from abroad. So there's this idea, firstly, that we need to catch up. But then you have the idea that Europe has been very climate. friendly, very in focus of the population. How do you then, you know, have these two things match up where you have this sort of sustainable growth within the population economically, also bring in AI, and how do you do those two things together? And so one of those things is, yeah, the EU's looking at this sustainability rating for data centres. And that will be on energy usage, water usage, things like that. And then basically it's sort of like a star rating system or something

akin to that of how sustainable is this data center. Is it renewable energy? Is it gas? Is it other forms of power. And then, like, in the same thing, how is water being used? How is water being conserved? Those sorts of things. Will newer data centers be better for that? You know, a lot of these data centers are quite old at this point that have been coming through the cloud computing boom. They probably will have a slightly worse rating, for example. How do you improve those sorts of things? This is something that the EU is very good at, is setting standards and making sure that everyone meets these minimum requirements. And yet, the effort has seen opposition. Who was pushing back against this and why? At the end of the day, people don't often really

want data centers in their backyard trying to say like, well, actually these ones are more energy efficient or these ones are slightly better because they use less water. You still have a massive data center in your backyard. And for voters within your constituencies, that often is a real problem. And if you're trying to be re-elected or anything like that, and I think we're seeing that in the States as well, where the political messaging around these data centers and how we interact with large tech companies, that's going to be continued to be an issue within Europe and within the EU itself. Coming up, how AI companies are responding to the growing pushback over data centers.

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Peace contact connects Ontario at 1-866-531-2,600 to speak to an advisor, free of charge. BetMGM operates pursuant to an operating agreement with Eye Gaming, Ontario. A growing number of U.S. municipalities and local governments have passed or are considering legislation to rein in data centers. What strategies are they using, and how would that work in practice? The main thing that we see is some sort of temporary ban on their construction. The idea with that oftentimes is that eventually we will allow the data centers to be built once we have more codified rules and expectations of how they're built, what their responsibilities are, what the impact would be to the environment and the electrical grid. Or at least it starts out that way. Over time, we'll see if more locations move towards permanent bans, which is less often seen.

You've also seen state governments and lawmakers at that level attempt to pass statewide bans. there was one that became pretty close in Maine that made it to the governor who ended up vetoing it over a couple of contingent requests that she had made that the legislature didn't fill. But I think we're going to continue to see more and more attempts to restrict just building them at all, at least temporarily. There are other ideas that have been floated, like reducing the tax cuts that data centers receive on the purchases of their servers and equipment, which can be a tremendous amount of tax revenue lost. Those are the main tools that local governments have been tapping to restrict the growth of data centers. Yusuf, over in Ireland, the country is insisting that companies bring their own energy supply to power their data centers. Is it deterring companies from trying to build there? So the regulations actually need come into effect in the last couple of months.

So it's kind of hard to tell, but it was definitely a line in the sand from the Irish government. Ireland is one of the densest areas in terms of data centers. at the moment it's probably too early to see what is happening in terms of the change in behavior, but from the companies I've been speaking to is they're now redrafting all of their plans in terms of how do we build this data center that we were trying to build before? What kind of fuel can we bring in? Can we do bio natural gas, which is a bit more sustainable? Can we add a wind farm? Can we add solar panels? I want to talk a little bit about how companies are responding to these challenges, both from governments and from grassroots organizations and communities. So, Will, because

because these companies are often based in the U.S., I want to talk a little bit about how they've shifted their tactics and how they address some of these challenges to their construction since the start of the AI boom. I don't think it's a uniform response, and there's a lot of different types of companies involved. You have the big hyperscale tech companies, everyone is familiar with, but you also have a lot of real estate development firms that are building data centers and then trying to lease it or sell it. And they're the ones that are really working at the local level and putting themselves in front of it. of the rooms of angry residents. But I think the main thing is that the companies trying to bring data centers are trying to emphasize the economic benefits first and foremost. So the construction jobs will create trying to convey that they'll also create a significant

amount of permanent jobs, which is one of the things that data centers are often criticized for not doing very much of putting up what they call community benefit payments in addition to the tax revenue that they'll give. So that might be money directed to a specific improvement, like a new firehouse or In the case of the metadata center in Louisiana, the local government there is giving bonuses for public school teachers, which it says it's able to do because of the tax revenue. Microsoft, for example, put out a commitment to transparency and to say that they won't use non-disclosure agreements when they begin talks with local governments over data centers, which is something that has upset a lot of people, the feeling that data center developers and governments work in secrecy, at least for a time, and the planning of data centers. Are these companies using a different playbook in Europe? One of the things that a lot of these tech companies are very vocal in climate.

And so one of the things that they've been trying to really push is the idea that AI will help solve a lot of the problems that we're seeing and that the developments in AI will make things more efficient. You know, we'll get better chips that will require less water. And so what we're seeing now will not be what we've seen in a few years' time. Kind of almost like a bear with us for now kind of thing. This will get better. Journal reporters Will Parker and Yusuf Khan.

Thank you both so much. Thank you. Cheers. And that's it for What's New Sunday for July 19th. Today's show was produced by Danny Lewis with supervising producer Melanie Roy. I'm Alex Osala, and we'll be back tomorrow morning with a brand new show. Until then, thanks for listening.