Data centres lured to Mexico can avoid environmental reporting

• Querétaro state lets data centres skip environmental impact reports
• Data centres also exempt from CO2 tax
• Experts warn of effects on drought-stricken state

QUERÉTARO, Mexico - A data centre boom is gathering momentum in central Mexico, where the local government of Querétaro has made it easier for foreign big tech companies to bypass environmental reporting requirements and taxes, an investigation by Context has found.

A dozen data centres operate in the semi-desert state of Querétaro, with most of the massive warehouse-like structures built in the past three years.

Data centres can house thousands of servers used by big tech companies like Microsoft, Google and Amazon for their storage services and the massive amount of data used in generative artificial intelligence tools such as Copilot and Gemini.

Most data centres in Querétaro, owned by companies such as U.S.-based Aligned Data Centers and Equinix, operate in industrial parks, locations that exempt them from providing environmental impact reports.

As such, Querétaro residents say when a data centre 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 Tecnológico de Monterrey University.

Communities are responding by demanding greater regulation and transparency about the water and energy that data centres consume.

Data centres 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 centres 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 centres' environmental footprint in Querétaro.

Marco Del Prete, Secretary of Sustainable Development, said data centres are not classified as an industry but as a service provider, which is why they are exempt from providing environmental impact reports.

"The data centre 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 with Context.

A 2022 document issued by the Ministry of Sustainable Development showed that a data centre operated by Microsoft in Querétaro did not need an environmental impact report as its "activities are not considered fixed sources of emissions."

"There is obligation"

Lawyer Lorenia Trueba, a member of Voceras de la Madre Tierra, a local environmental group, said all data centres 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 told Context.

Trueba also said Querétaro is bound by Supreme Court decisions and international treaties such as the Escazú Agreement, which establish communities' right to access environmental information.

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

Gov. Mauricio Kuri is leading the drive to attract big tech to Querétaro, which already has drawn $12 billion of investment for new data centres from Microsoft, Google and Amazon.

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 centres in Querétaro.

Globally, data centre 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 centres. 

Water shortages

AI is poised to increase the amount of water that data centres use, as its power-intensive processors have greater cooling requirements than do conventional servers.

Querétaro 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 centres told Context their taps run dry and they suffer frequent power cuts.

Without environmental disclosures by data centres, 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 centres," said Teresa García Gasca, former dean at the Autonomous University of Querétaro.

"A lack of transparency is always very serious and creates mistrust," she said.

Data centres 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 attractive to tech companies by exempting them from certain gas emission taxes.

Since 2021, Querétaro 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 centre companies are exempt because they are not considered fixed sources of direct emissions, according to Del Prete.

"The emissions that a data centre generates are indirect emissions that don't come directly from the operations of the data centre," he said.

Critics say the tax exemption for data centres 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 García Gasca.

(Reporting by Diana Baptista and Fintan McDonnell; Editing by Anastasia Moloney and Ellen Wulfhorst.)