California Bill Targets Soaring Energy Use of AI Data Centers
SACRAMENTO, CA – Facing the rapidly escalating energy and water demands of artificial intelligence infrastructure, the California State Assembly has taken a decisive step towards regulating the industry’s environmental footprint. On February 10, 2025, Assemblymember David Chen introduced Assembly Bill 789 (AB 789), a piece of landmark legislation designed to impose stringent new energy efficiency standards on artificial intelligence data centers constructed within the state after January 1, 2026. The bill also mandates unprecedented levels of transparency regarding the environmental impact of these facilities, specifically requiring detailed reporting on both water consumption and greenhouse gas emissions.
The introduction of AB 789 signals a growing recognition among California lawmakers of the significant environmental challenges posed by the proliferation of AI technologies. While AI promises transformative advancements across numerous sectors, its underlying computational requirements necessitate vast, energy-intensive data centers. These facilities, often housing thousands of powerful servers and complex cooling systems, consume substantial amounts of electricity and water, raising concerns about their compatibility with California’s ambitious climate targets and its perennial water conservation challenges.
Key Provisions of Assembly Bill 789
AB 789 centers on two primary regulatory pillars: energy efficiency standards and environmental reporting. Under the proposed legislation, any new data center facility explicitly designed and built to support AI computation and constructed within California after the January 1, 2026, deadline would be required to meet state-defined energy efficiency metrics. These standards are expected to be developed and implemented by relevant state agencies, likely building upon existing building codes and energy conservation regulations but specifically tailored to the unique power demands of AI workloads.
Beyond energy consumption, a critical component of AB 789 is its mandate for detailed environmental reporting. The bill compels operators of these new AI data centers to meticulously track and report their water consumption – a resource under increasing strain across California – and their greenhouse gas emissions. This reporting requirement aims to provide policymakers and the public with a clearer understanding of the true environmental cost associated with the growth of AI infrastructure in the state. Proponents argue this data is essential for informed decision-making and for identifying areas where further efficiency gains or mitigation efforts are needed.
Assemblymember Chen emphasized that the bill is a proactive measure. “As California continues to lead the nation in technological innovation, we must ensure that the infrastructure powering this progress aligns with our environmental values and climate goals,” Chen stated upon introducing the bill. “AI data centers are becoming increasingly vital but also increasingly energy and water hungry. AB 789 provides necessary standards and transparency to help us grow this sector sustainably and responsibly.”
Industry Reaction: Concerns Over Compliance and Cost
The proposed legislation has not been met without opposition. Major technology firms operating large data center campuses in California, including industry giants such as Google, Meta, and Microsoft, have voiced significant concerns regarding the potential impacts of AB 789. Representatives from these companies, speaking through industry associations and in preliminary discussions with legislative staff, have pointed to potential compliance costs and the effect on project timelines as primary worries.
Building large-scale data centers is a complex and capital-intensive endeavor, often involving years of planning and construction. Tech companies argue that implementing new, potentially stringent energy efficiency standards could necessitate significant changes to design and construction processes, leading to increased expenses and delays in bringing new capacity online. They also raised questions about the specific nature of the proposed standards and whether they would be technically feasible or economically viable for the cutting-edge demands of AI workloads.
Furthermore, industry representatives have expressed concerns about the scope and burden of the mandated reporting requirements. While many companies already track some environmental metrics, the level of detail and the specific reporting mechanisms required by AB 789 could potentially add administrative complexity and cost. There is apprehension that overly burdensome regulations could discourage future data center investment and development in California, potentially driving infrastructure growth to other states with less stringent environmental oversight.
Environmental Advocacy Supports AB 789
In contrast to industry concerns, environmental advocacy groups have publicly lauded the introduction of AB 789. Organizations such as Sierra Club California have issued statements expressing strong support for the bill, framing it as a crucial piece of legislation for ensuring that the expansion of the AI sector does not derail the state’s progress towards its climate objectives.
Environmental advocates highlight that California has set ambitious targets for reducing greenhouse gas emissions and transitioning to renewable energy sources. The rapid expansion of energy-intensive AI infrastructure, they argue, poses a significant challenge to achieving these goals. Data centers already account for a substantial portion of global energy consumption, and the specialized hardware required for AI training and inference consumes even more power per unit of computation.
Sierra Club California emphasized that AB 789’s focus on new facilities and its reporting requirements are essential steps. “The growth of AI is undeniable, but we cannot allow it to become an unchecked drain on our energy grid and water resources,” stated a spokesperson for the group. “AB 789 provides necessary oversight and pushes the industry towards more sustainable practices from the ground up. Mandating transparency on water use and emissions is critical for accountability and future planning. This bill is important for achieving state climate targets amidst the rapid expansion of energy-intensive AI infrastructure.”
The Path Forward for the Bill
AB 789 is now entering the complex legislative process within the California Assembly. It will undergo review by various committees, including those focused on Energy and Utilities, Natural Resources, and possibly Appropriations. These committee hearings will provide opportunities for further public comment, testimony from industry stakeholders and environmental groups, and potential amendments to the bill’s text. If the bill successfully navigates the Assembly, it will then proceed to the State Senate for consideration.
The debate surrounding AB 789 underscores the tension between fostering technological innovation and addressing the environmental consequences of that progress. As AI continues to evolve and its infrastructure demands grow, legislation like AB 789 is poised to become a key battleground in defining the future of sustainable technology development in California and potentially serving as a model for other jurisdictions grappling with similar challenges.
