Does going ‘digital’ mean going ‘green’ in Singapore’s data centre (DC) industry? Not if the current ramp-up in DCs continue – and potentially undermines wider energy transition efforts.
As DCs expand its carbon-intensive footprint on the environment, the DC industry needs to shift from looking at measures of operating efficiency to a focus on DCs’ material environmental impact across their life cycle and value chain, one that must involve coordinated action between technology innovation, policymakers and regulators, investors, infrastructure developers, and sustainability training providers.
This is the key point made by Singapore Management University Professor of Urban Climate Winston Chow and his collaborators – Dr. Felicia Liu from University of York, Dr. Karen Lai from Durham University, and Mr. Bertrand Seah from Paia from CBRE – in a research paper entitled ‘Decarbonising digital infrastructure and urban sustainability in the case of data centres’, published online by npj Urban Sustainability in April 2025.
Says Professor of Urban Climate Winston: “Typically, governments regulate what’s easiest and visible. Industry avoids risk and cost. Financiers fund what’s measurable and low-friction. This patchwork and piecemeal approach is not enough for real climate impact. A full-system, value chain-wide strategy is needed to green the digital economy.”
Prof Chow is also the Co-Chair for Working Group II of the Intergovernmental Panel on Climate Change (IPCC)’s Seventh Assessment Report (AR7) Cycle Bureau. The IPCC Bureau is the authoritative United Nations body for assessing the science related to climate change. IPCC assessments provide a scientific basis for governments to develop climate-related policies and contribute to global climate action under the United Nations Framework Convention on Climate Change. This research was supported by the Singapore Green Finance Centre, which included field-based data collection and workshops by the research team in Singapore.
Singapore risks losing its edge
In the research article, Prof Chow and his collaborators note that DCs are a highly desirable asset class and the demand for them has accelerated in recent years due to the AI boom. The media has also reported that demand for DCs is growing by up to 20 per cent annually to 2028 across the Association of Southeast Asian Nations (ASEAN) region.
Regarded as critical infrastructure by governments, DCs are highly energy, water, land and carbon-intensive. DCs are often located in financial hubs such as Singapore, London, Dublin, which offer a base of investors and professionals, but also reliable connectivity and energy infrastructure like submarine cables for secure and high-speed international transmission, and a reliable energy grid.
As connectivity infrastructures improve across the region for Indonesian and Malaysian players, Singapore needs to develop credible and reliable renewable energy solutions and infrastructure to stay ahead of the game. There is an opportunity for Singapore to lead as a testbed for sustainable tropical data centres, as the republic invests technologically, financially, and diplomatically into developing an ASEAN renewable energy power grid to enable the import of renewable energy produced in other Southeast Asia countries.
Retrofitting existing data centres
In particular, Singapore needs to do some deep thinking about what it intends to do with brownfield DCs – particularly because investor-owners do not necessarily have a long-term horizon for keeping DC assets in their portfolios and hence have little incentive to dedicate the capital expenditures towards green retrofits.
This is important because the current state- or industry-led sustainable DC standards do not include benchmarks for retrofitting existing DCs (brownfield assets) to facilitate policy incentives and regulatory mandates to reduce the carbon footprint and negative environmental impact of existing DC assets. Although Singapore is one of the first jurisdictions in the world to devise a sustainability strategy for DCs through IMDA’s the Green Growth Pathways Roadmap for Data Centres of 2024, gaps remain in the republic’s regulatory approach.
An example of this gap is Green Mark standard mainly focuses on energy usage as an indicator of sustainability. This focus on operational efficiency overlooks deeper issues such as excessive data use and the uncurbed demand for DC services. “Notably, given that the majority of DC assets in Singapore are ‘brownfield’ assets with at least 15–20 years of lifespan, the current absence of regulatory guidance and incentives for retrofitting is an area to explore new ways to work with the industry to enhance sustainability,” notes Prof Chow.
“We need a deeper conversation on how to balance the building of data centres with our sustainability targets, work with industry to achieve that. We need to come up with more innovative thinking across the whole value chain to elevate the DC industry,” he adds. “Otherwise it is a missed opportunity for Singapore to develop its DC ecosystem through innovative technology, policy, sustainability finance, infrastructure and people development as DC operators simply expand to neighbouring jurisdictions like Johor and Batam to serve the region’s data needs.”
Adopting a systems-approach for the DC value chain
Prof Chow advocates taking a systemic look at the data centre value chain is complex and stretches far beyond the physical building of individual data centres, including supporting sectors and suppliers.
At the construction and design phase, the embodied carbon footprint of building and construction materials is often overlooked. “Newly developing DCs should be built with low-carbon materials, designed to withstand current and projected extreme weather events and be adaptable to changing energy efficiency technologies,” he says.
At the DC operation phase, the industry can look beyond the Green Mark standard mainly focuses on energy usage as an indicator of sustainability. “This focus on operational efficiency still overlooks deeper issues such as excessive data use and the uncurbed demand for DC services,” he cautions.
With growing interest in the climate risks and impact of DCs, a Climate Neutral Data Center Pact has emerged where signatories commit to 100% carbon-free energy, responsible water consumption, energy efficiency, heat recycling, and reusing and repairing servers. “While many tech giants have joined the pact, there is only one Singapore-headquartered signatory,” he notes.
At the retrofitting phase, decommissioning phase – e-waste recycling should be incorporated. “As a DC asset comes to the end of its life, there is a need for an effective e-waste management and decommissioning strategy to optimise the reuse of valuable metals, rare earth elements, while avoiding contamination caused by hazardous substances,” he comments. “We need more conversations on issues related to retrofitting and decommissioning.”
A need to reframe – can we change our thinking?
All this points to a need for a fundamental shift in thinking about how DCs should be built, operated, maintained, upgraded and eventually decommissioned across their decades-long lifespan, as the hunger for DCs ramps up.
Apart from tweaking public policy and regulation to focus on the DC value chain, Prof Chow noted that there is room for financiers to innovate, even as there are no clear sectoral guidance or standard on what constitutes a ‘green’ DC.
“Green bonds and private equity tend to prioritise greenfield DC assets, there are far fewer examples of existing brownfield assets where sustainable investment is deployed to steward low carbon transition. They mostly avoid investing in upgrading existing DCs, which have huge potential for emissions reductions.”
“For financial institutions offering green or sustainable financing, transactions could adopt a more comprehensive value chain approach and incorporate annual interest rate reviews according to sustainability performance,” he says. “They can also implement a ‘step up’ clause, where the interest rate will increase to ‘penalise’ missed sustainability target. This would create a more robust assessment and accountability.”
The role of investors in credible greening of the industry
A key piece of the systemic approach is the need to adopt a more open and innovative outlook by the DC stakeholders.
An example is how DC operators resisted raising data hall temperatures from 18–22°C to 24–31°C, despite strong evidence that it is safe and more energy-efficient for a tropical DC. As a result, the adoption of this practice is not widespread.
“Similarly, the perceived physical constraints to decarbonise tropical DCs have prompted investors to set lower expectations for Singaporean and Southeast Asian DCs. In other words, while DCs internationally aim for a PUE (Power Usage Effectiveness is a metric used to measure the energy efficiency of a data centre – the lower it is the more efficient the DC is) of 1.2 or below, investors only expect a PUE of 1.5 or below for Singaporean and Southeast Asian DCs, due to the tropical environment and the lack of renewable energy resources. This may be a pragmatic and market-friendly strategy, but this undermines investor stewardship towards adopting innovative, cutting-edge solutions in the DC sector.”
For long-term sustainability impact as the DC industry expands, and to enhance Singapore’s edge in the sector, the stakeholders, the sustainable finance and the policymakers and regulators need to go beyond this this patchwork approach. “For real real climate impact, a full-system, value chain-wide strategy is needed for the credible greening of the DC sector.”
Note: The authors would like to thank the Singapore Green Finance Centre for their financial and technical support of this project, including supporting two rounds of field-based data collection and two workshops in Singapore, as well as subsequent stakeholder knowledge dissemination. They would also like to thank the 59 individuals who have shared their time and insights with them, as well as participants at the two workshops.
