The AI Herd

Brazilian government sidelines Environmental Ministry and ignores climate risks in its federal data center policy

Lula's administration has already held over 80 meetings on the subject of data centers, but the Environmental Ministry has been conspicuously absent. A study suggests waiving licensing requirements in order to ‘de-bureaucratize.’

Leia em português

Brazil’s federal government is in the midst of talks over a new national policy for data centers–gigantic computing warehouses the size of buildings, with machines responsible for processing everything we do online, from emails to artificial intelligence. The robust inter-ministerial effort aims to seize what the government sees as a "window of opportunity" to attract investments to the sector. But a crucial player has been sidelined: the Environmental Ministry (MMA).

Since the start of Lula's administration, over 80 meetings involving at least 200 federal officials have discussed data centers, according to official government records. The Environmental Ministry attended none. Meanwhile, other ministries have adopted private sector rhetoric in their negotiations.

This absence is concerning given the potential environmental impact of data centers, particularly with regard to water and energy use. It's also the responsibility of the National Environment Council (Conama), chaired by the MMA, to set standards and procedures for evaluating the environmental effects of these facilities. jk

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"The implementation of this infrastructure entails massive socio-environmental and climate impacts: intensive consumption of energy and water, land use, waste generation—all this in a world already facing socio-environmental collapse caused precisely by past decisions that ignored these issues," Julia Catão Dias, coordinator of the Responsible and Sustainable Consumption Program at the Brazilian Institute for Consumer Defense (Idec), told The Intercept Brasil.

According to her, data center implementation cannot be driven solely by economic interests and the logic of attracting investment at any cost.

While the environment takes a back seat, private sector representatives have been frequent participants in federal meetings—over 70% of the sessions have involved private entities.

At one such meeting in January of this year, officials from the Ministry of Industry, Development, and Trade (MDIC) discussed the national data center policy with three representatives from Brasscom, a lobbying group representing the telecom industry, whose associates include tech giants such as Amazon, Microsoft, and IBM.

MDIC informed The Intercept that policy coordination is ultimately defined by the presidential office, with participation from ministries including Finance, Mines and Energy, Telecommunications, Science, Technology and Innovation, and Public Service Management and Innovation, along with the National Development Bank. "Other ministries, like the Environmental Ministry (MMA), may join as debates progress," the statement said.

The MMA, however, stated it "has not, to date, participated in any federal government or ministerial debates aiming to craft a national policy to attract data centers to Brazil," nor has it been "invited to join any such initiative."

They added that Conama hasn’t been approached by civil society, state or municipal environmental bodies, federal agencies, business associations, or council members to discuss the issue.

Per the MMA, environmental assessments for data center installations fall under the National Water Resources Council, linked to the Ministry of Regional Development, and the National Water and Basic Sanitation Agency at the federal level.

When asked, MIDR said the Water Resources Council wasn’t invited to the talks nor asked to assess or grant water use rights for data centers. The National Water Agency also said it hadn’t received requests or been involved in policy discussions.

MMA’s absence is emblematic of a fragmented policy-making model, lacking a systemic view of infrastructure and sustainability, according to Clauber Leite, director of Sustainable Energy and Bioeconomy at Instituto E+.

"Data centers involve factors such as the environment, energy, industry, tech, urban planning, and water security—so you can’t treat this as just an industrial or connectivity policy," Leite said.

The construction of data centers also ties into mining for components like bauxite and iron—requiring separate permits, noted Fábio Takeshi Ishikashi, public policy adviser at Climate Observatory. He also flagged solid and liquid waste generation concerns.

"Regulations in this field must include the Environmental Ministry and oversight bodies, particularly to ensure proper control over such activities," Ishikashi said.

MDIC suggests waiving environmental licenses to “de-bureaucratize”

Data center advocates generally call for waiving environmental permits to speed up investments and cut red tape.

In 2023, the Ministry of Industrial and Commercial Development published a study commissioned by the Brazilian Agency for Industrial Development (ABDI) to support de-bureaucratized national data center policy.

Commissioned in 2020 under former minister Paulo Guedes, the report was produced by Frost & Sullivan and Prospectiva and focused on attracting investment to expand data centers in Brazil. The study cost R$1.1 million, funded through an agreement between the Economic Ministry and ABDI.

One of the study’s key suggestions was to cut red tape by waiving Environmental Ministry licenses. The study claimed data centers are low-impact projects that don't need environmental permits, citing Chile as an example. But Chile, in fact, should serve as a cautionary tale and not an advertisement.

Today, Chile has 22 data centers—16 in the metropolitan region of Santiago. In December, the government announced a plan for 30 new projects, even as the country faces a drought expected to last until 2040.

But the Chilean government and corporations have faced resistance. In 2019, when Google planned a second Santiago data center, activists from the Socio-Environmental Movement for Water and Territory (Mosacat) analyzed the permits and found the center had authorization to extract 7 billion liters of water annually.

Between 2019 and 2023, Mosacat-led protests impelled a Santiago court to review the project. And in early 2024, the court suspended the project until Google reviews its environmental impact.

Asked about the Frost & Sullivan report, MDIC said it was commissioned in 2020 and released in 2023, and that it was only "one of several information sources" used by federal organizations to shape policy. The MDIC added that the report "reflects the contractor's research and doesn’t represent the official stance of public institutions." The Environmental Ministry, meanwhile, said it had not been informed, as of this report’s publication, about the proposed licensing waiver.

Window of opportunity targets “data refineries”

All eyes are on Brazil over the question of data center policy. Compared to the US and Europe, Brazil boasts one of the world’s cleanest energy matrices, with 44.8% renewable sources. President Donald Trump, meanwhile, has floated using coal to meet AI’s increased energy demands.

"Brazil has surplus clean energy, so we can attract investment here," Finance Minister Fernando Haddad said on TV Brazil in late March.

At a 2022 ABDI event, big tech reps compared data storage to "the new oil" and data centers to refineries. "This comparison is as telling as it is absurd: we’re looking at a sector openly following in the footsteps of the fossil fuel industry—the very one that led us to today’s climate emergency threatening life on our planet," Dias explained.

For her, it's urgent that the protection of nature should take center stage in the debate over data centers. "If data centers truly are the 'new refineries,' it's inconceivable that the Environmental Ministry is not only absent but failing to lead and highlight the socio-environmental and climate dimensions of the discussion."

A July 2024 investor report obtained by The Intercept from Santander noted that, alongside its matrix of clean energy, Brazil offers "competitive electricity prices" compared to the US and Europe.

But in the very same report, the bank also acknowledged that expanding Brazil’s energy market for data centers could raise costs for ordinary consumers.

It also highlighted that Brazil is becoming a more attractive investment opportunity as regulatory conditions tighten elsewhere. In the US, new Senate bills could impose stricter zoning laws, mandatory environmental and resource assessments, and water use guidelines for data centers.

"Some US states have struggled to supply power and water for data centers and face local community opposition, as these facilities’ high energy demand can overload local infrastructure," Santander noted.

Benefits for Brazil remain unclear

In Brazil, the government is expected to soon unveil its policy regarding data centers. According to Haddad, Lula reviewed the draft in March. The Ministry of Finance took the lead on the project after Haddad concluded a regulatory framework was needed to seize this "window of opportunity."

Since 2024, the federal government has taken action to channel interest into the sector: in August, it launched the Brazilian AI Plan, earmarking R$23 billion in investments. In September, BNDES announced a R$2 billion credit line specifically for data centers.

Brazil's location is also strategic, able to link the rest of Latin America to Europe and the US via a complex submarine cable network. Additionally, massive amounts of data are being generated and exchanged locally, thanks to widespread tech adoption in Brazil.

In December 2024, as the Senate debated an AI regulation bill, the data center sector issued a letter calling for the removal of a provision that would require paying copyright holders if their content was used for AI training.

According to Industry representatives, concerns over copyright would discourage investment in the development of AI. The Senate-approved bill kept the clause, but there is an  expectation that it may be dropped in the lower house.

Clauber Leite, from Instituto E+, says it's still unclear what Brazil stands to gain from a data center attraction policy, given the sector doesn’t create jobs or tax revenue, while simultaneously consuming vast amounts of water and energy. "We’ve been granting incentives to attract investment without demanding anything back in terms of sustainability or local benefits," he noted.

Translation by Elias Bresnick.