THE rush to build artificial intelligence data centres is a “bubble”, the Scottish Government has been warned amid calls for tighter regulations on the projects.
The bull market that has ballooned around AI data centres – the supercomputer hubs needed to power large language models such as ChatGPT – is at risk of collapse, according to a stark report from the Centre for Public Enterprise, a progressive US think tank.
Holyrood must heed the warning, campaigners told the Sunday National, because Scotland is seen as one of the UK’s prime spots for building energy and water-hungry AI data centres.
The report sets out how companies are at risk of pouring money into infrastructure which may become “stranded” if market conditions turn sour.
It said: “The tech sector’s ballooning growth belies its fragility; a downward correction within the next few years is plausible.”
Growth in AI over the past few years has been immense and the sector has accounted for virtually all US economic growth in the first half of 2025, according to Harvard economist Jason Furman.
Plans for AI data centres are contentious because while they use huge amounts of electricity and water, councils do not require developers to produce environmental impact assessments.
Apatura, which has proposals for 10 AI data centres in Scotland, though none of which have formally been submitted for planning permission, has previously told The National that concerns about both energy and water use are overblown.
However, the Centre for Public Enterprise report “Bubble or Nothing” has reignited the debate, with campaigners saying it makes the case that the powers that be should take a more sceptical view of the promised economic benefits of the sector.
Kat Jones, director of the Action to Protect Rural Scotland pressure group, told the Sunday National: “Scotland is accelerating headlong into becoming collateral damage in this AI bubble as we see data centres queuing up to come to Scotland.
“If we allow this to happen, it will be at the expense of the cost of living, as data centres create negligible permanent jobs and use mind-boggling amounts of energy, driving up electricity prices. For example, there is a moratorium on new housing developments in several London boroughs where data centres are using so much energy.”
More than 20 data centres operate in the Isle of Dogs in east London, where the local council has warned that there was “severe” risk that housebuilding could not proceed for “potentially 10 plus years due to lack of available electricity supply”, London Spy reported in June.
Jones added: “We can only hope that this bubble collapses before the data centres that are planned in Scotland get built.
“It is hard to understand why the Scottish Government is so keen to welcome data centres into Scotland when they use inconceivably large amounts of energy, and water, are extremely noisy, drive up energy prices, and operate on a skeleton staff when in operation.”
Scottish Greens MSP Ariane Burgess added that the growth of the digital economy – which has recently made AI computer chip manufacturer Nvidia the most valuable company in history – was piling pressure on the environment.
She added: “I am concerned that the lack of planning guidance and less than robust environmental assessments for these data centres are committing to developments that totally undermine Scotland’s climate targets while benefitting big, multi-national businesses.
“Like any business, there must be long-term sustainability, and it is worrying that these costly centres will be built without calculated planning and possibly abandoned just as quickly when the boom is over.
“There must be a national strategy that ensures these facilities are located and designed in ways that align with our net-zero ambitions, instead of rash decision-making during planning applications in over-stretched local planning departments.
“We’ve already seen in other areas how communities have been left to endure the noise, pollution, and visual blight of massive industrial buildings with little say in the process. That must not happen here.”
Burgess (above) said that for AI data centres to be considered “truly green”, they must demonstrate “energy efficiency and a commitment to renewable power, heat recovery, and reducing impact on local ecosystems”.
A Scottish Government spokesperson said: “Planning authorities have a responsibility to consider the environmental implications of all developments which require planning permission.
“In cases where a proposal is likely to have a significant environmental effect, these powers are further supplemented by the procedures set out in the Environmental Impact Assessment Regulations.
“All proposed developments need to be considered on their own merits, in order to gauge whether the likely effects on the environment could be considered significant and whether an environmental impact assessment would be required.”
A UK Government spokesperson added: “Data centres are a vital part of our economy and our everyday lives – helping us interact with the services we need, access information at the touch of a button, and driving growth and renewal for communities. The AI Growth Zone announced for north Wales earlier this week will create more than 3400 jobs – highlighting their potential to help transform lives and spark new growth.
“We are, of course, though aware of the energy and water demands of data centres, which is why our AI Energy Council is helping to ensure we are powering our AI future responsibly, never compromising on our clean energy superpower ambitions.”
