Data Center Backlash Spreads From U.S. to Europe and Asia, Raising AI Investment Risks

Similar tensions are emerging in South Korea, with opposition to data centers near residential areas and proposals for tighter local restrictions even as the national government pushes to accelerate development, CNBC reported.

Public opposition has already affected around $42 billion of data center investments in Europe through delays and cancellations, according to research from STL Partners cited by CNBC. That compares with around $77 billion in the United States.

More than 70 data center projects in Europe were rejected or restricted between January and April, more than in all of 2025, according to the European Data Center Monitor. The monitor found that pushback had snowballed from local town halls to courts, regulators and parliaments.

In Scotland, planning approvals for new hyperscale data centers have been paused after campaigners urged the government to avoid the 'cautionary tale' of Ireland, where overwhelming power demand led to a moratorium. Constraints have also risen in the Nordics, where investors were drawn by large tracts of land and renewable energy. After a surge in power applications, Denmark passed an emergency law that could put data centers at the back of the queue for grid power applications.

Spain proposed new data center rules this summer requiring data centers to source 80% of their electricity from renewables. Projects in the United Kingdom have stalled after pushback from locals.

Much of the concern centers on water usage, power consumption, electricity prices, and the amount of space some centers require. There is also little agreement on how many permanent jobs the sector creates, and no precedent for projecting a center's economic value per megawatt, according to CNBC.

'The gains of AI are very diffused,' Olivier Darmouni, an associate professor at HEC Paris who specializes in the energy transition, told CNBC. He said there is more understanding of the scale and geographical spread of the potential AI build-out, and more information about how much bigger these facilities are. 'They're a little bit more like giant ghost warehouses that consume a lot of resources and can hurt local communities in some ways,' Darmouni said. Europe's denser population and the fact that many data center operators are U.S. companies might mean the backlash hits harder, he added. The pushback could be the 'straw that breaks the camel's back,' Darmouni told CNBC.

South Korea, home to Samsung Electronics and SK Hynix, sits at the heart of the AI supply chain. In June, its government named AI data centers as one of three major investment projects, alongside semiconductors and physical AI. But the push to build needed infrastructure is meeting resistance at the local level.

In the Geumcheon district of southwestern Seoul, residents have called for authorities to revoke the building permit and halt construction of a data center near their homes, according to the local government. In July, officials announced plans to require consent from a majority of residents living within 200 meters of proposed data center sites and to introduce a three-stage system for reviewing projects and mediating disputes.

Residents have also gathered outside the local government office on weekday mornings for months to protest the project. The demonstrations had continued for 172 days as of mid-August, according to local media. In Gwacheon, a city just south of Seoul, a local council member proposed an ordinance aimed at protecting nearby residents from risks associated with data centers operating around the clock, including potential fires involving backup batteries.

Despite the pushback, the AI boom shows little sign of slowing down. A community's ability 'to derail a $10 billion [data center] plan is quite powerful,' said Asya Walters, managing director at Alvarez & Marsal. She told CNBC that the business-friendly environment in the United States has historically made it easier to overcome pushback. But in Europe and Asia, there is some 'hot and coldness' at the country level about where demand is going, Walters said. The 'push and pull' between favorable conditions for data centers and more restrictive regulation can be challenging for investment.

Public backlash can also raise costs for operators, because even if they pull out of a project before construction starts, money will likely already have been spent. Though most capital expenditure happens after permits are in place, operators spend a lot to reach that point. 'So there is some loss that could happen there if they never get the permits,' Walters said.