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Data centers want to be “green” and are looking to Latin America. Is this good news?

The report “Capturing the Data Center Opportunity in Latin America and the Caribbean” by the Inter-American Development Bank (IDB), authored by García Zaballos, A., Puig Gabarró, P., Iglesias Rodriguez, E., & Pérez Colón, R., and published in October 2025, contains important information for understanding the state of the discussion on data center investment in Latin America and the Caribbean (LAC).

One key finding is that, in the IDB’s view, LAC has a significant opportunity to attract investment due to three interrelated factors:

• AI has broken the historical dependence on physical proximity to major consumer markets (training AI models and processing large volumes of data can tolerate minor transmission delays and do not require low latency), allowing companies to prioritize locations with lower operating and energy costs, regardless of distance from end users. This opens a window of opportunity for countries that were previously considered “remote” to now compete with saturated technology hubs in other regions (the U.S., Europe, and Asia).
• Today, the need for environmental sustainability has taken on greater importance in the data center investment equation, shifting the focus toward a “green” data center industry.
• According to this report, LAC stands out as an extremely attractive destination because of its low-cost, clean, and renewable energy mix (one of the most competitive in the world) and its land availability. Given that AI training is extremely energy-intensive, the region’s ability to provide sustainable energy allows investors to meet their environmental goals while optimizing their financial resources.

Points of concern raised by the report in this regard:

• Renewable energy is treated solely as a competitive opportunity.

The report repeatedly urges decision-makers in the region to prioritize investment in sustainable energy to attract “green” data centers and to comply with international sustainability standards, thereby ensuring a reliable, renewable, and competitively priced electricity supply. But renewable energy production is much more than that; in fact, it involves complex socio-environmental impacts that have been widely discussed in Latin America. Furthermore, the fact that the region’s renewable energy sector counts data centers operated by a handful of transnational corporations driving AI as its most important customers further complicates the discussion of climate justice.

• The Blind Spot of What Is “Green.”

When we talk about energy, we cannot fail to mention land, water, and climate justice, among other socio-environmental impacts of data centers that we at DataCenterBoom! have explored. However, the IDB report does not delve into these issues, which is a clear weakness and blind spot in understanding what is meant by sustainability. Furthermore, it also fails to incorporate critical background information on the very role of AI in greenhouse gas emissions—such as the recent findings by Alpine, W., Geldner, N., Alpine, H., et al. (2026), which show that AI increases net emissions by acting as an amplifier that benefits the fossil fuel sector.

• It is acknowledged that LAC’s role in the AI production chain is, fundamentally, to provide cheap common goods—primarily renewable energy and land.

The arguments regarding the so-called “call effect,” the “employment multiplier effect,” or digital sovereignty do not appear to be taken seriously in the heat of legislative discussions in the region regarding data centers. The push to attract millions in foreign direct investment fails to address the extractive nature of AI in LAC, where data centers are extractive enclave infrastructures that consume common goods without generating local supply chains or boosting local employment: they are merely nodes hyperconnected to the global network but disconnected from the immediate socioeconomic environment—except when it comes to bearing the environmental consequences.

At DataCenterBoom!, we fear that, for now, given the current state of the discussion, attracting data centers powered by our renewable energy is not, by any stretch of the imagination, sustainable for our economies.

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