ASEAN Beat | Environment | Southeast Asia

Can ASEAN’s Green Goals Survive Its Data Center Boom?

Data centers are critical enablers of ASEAN’s digital economy, but rapid digitalization presents a number of serious sustainability challenges.

With the policy world’s attention fixed on a major defense gathering elsewhere in Southeast Asia, many missed an important announcement from Manila on May 30 that negotiations on ASEAN’s Digital Economy Framework Agreement (DEFA) had finally concluded. DEFA is the world’s first regional digital economy agreement, setting common rules for cross-border data transfers, e-commerce, cybersecurity, AI and talent mobility, among other areas. With Southeast Asia’s digital economy projected to reach $1 trillion by 2030, DEFA is ASEAN’s bid to write the rules for its digital future.

In recent years, the regional organization has also committed to increasingly ambitious sustainability initiatives. For example, the ASEAN Socio-Cultural Community (ASCC) Blueprint 2025 states that ASEAN “envisions the achievement of a sustainable environment in the face of social changes and economic development,” in areas ranging from wildlife conservation to sustainable cities.

These digitalization and sustainability goals are potentially in tension. Take the example of data centers. Reports show that while they currently consume only 1.5 percent of global energy production, increasingly power-hungry server farms account for an ever greater percentage of electricity consumption every year. In Malaysia, for example, estimates suggest that data centers may account for 30 percent of national power consumption by 2030. Globally, the cooling of these centers also consumes up to 1.5 million liters of water per day, with facilities dedicated to artificial intelligence (AI) training projected to increase yearly global carbon emissions by 1.2 percent by 2030.

ASEAN member states recognize that developing digital infrastructure will be necessary if ASEAN’s digital integration goals are to be successful. In particular, data centers have rapidly become the backbone of Southeast Asia’s digital economy, underpinning everything from e-commerce and cloud services to AI and smart governance.

While only 3 percent of global data center capacity is located in Southeast Asia, the data center market is projected to double in size and become a $11.8 billion industry by 2030. These facts make clear that digital infrastructure investment is both strategically and commercially significant for the region; but questions remain whether the region can build the infrastructure needed for the digital economy while remaining consistent with its sustainability goals.

The environmental impact associated with the rapid expansion of data centers is particularly acute in Southeast Asia for several reasons. First, the region’s hot and humid climate significantly increases cooling requirements, making data centers more energy-intensive than in temperate regions.

Second, most ASEAN member states remain heavily reliant on fossil fuels for power generation, meaning that rising electricity demand from digital infrastructure directly translates into higher emissions. As a result, data center-related emissions in ASEAN are projected to continue rising, particularly where grids remain dominated by coal and gas, as they are in Malaysia, Singapore, the Philippines, and Indonesia. These pressures compound the effects of climate change itself, including more intense heat and increasingly volatile monsoon seasons.

Third, the enabling conditions required for renewable energy integration, including grid capacity, financial infrastructure, and proximity to clean energy sources, remain heavily concentrated in major urban centers and special economic zones, reinforcing data center clustering in already energy-hungry urban areas.

Balancing Digital Expansion and Environmental Sustainability

Over the past decade, ASEAN’s legal and policy documents have increasingly recognized the tension between expanding digital infrastructure and meeting environmental goals.

Indeed, at the most recent meeting of ASEAN digital ministers in January, members adopted the Hanoi Declaration on Digital Cooperation, explicitly calling for a “green digital transformation,” including energy-efficient digital infrastructure, greater use of renewable energy for data centers, AI-enabled network optimization, and the integration of ESG principles into digital policy.

The Hanoi Declaration is likely to accelerate a policy shift already underway, as can be seen in the evolution from ASEAN’s 2020–2025 to 2026–2030 energy cooperation plans.

In the ASEAN Plan of Action for Energy Cooperation (APAEC) 2020-2025 policy plan, digitalization is framed primarily as contributing to “cleaner and more efficient energy” production within the energy sector itself, associated with smart grids, big data, AI, and cloud computing to improve regional energy capacity. This plan treats digitalization as largely........

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