Report: CO2 from 14 M'sian data centres equal Papua New Guinea emissions

Summary

• Malaysia’s 14 new data centres will generate 9.9 million tonnes of CO₂ equivalent annually, equal to the entire emissions of Papua New Guinea or adding two million cars to the roads.

• RimbaWatch said the massive carbon footprint stems from Malaysia’s heavy reliance on fossil fuels, which constitute 81 percent of the country’s energy grid, with 1.7GW of new data centre capacity having no renewable energy plans.

Malaysia’s push to become a data centre hub could come at a devastating environmental cost, with 14 new facilities set to generate annual carbon emissions equivalent to those of entire countries like Papua New Guinea.

Environmental think-tank RimbaWatch, in a study published yesterday, warned that the country’s data centre boom will increase greenhouse gas emissions by 9.9 million tonnes of CO₂ equivalent per year once all facilities are operational.

To put this staggering figure in perspective, the emissions would be equivalent to adding more than two million passenger vehicles to Malaysia’s roads, according to the “Climate Impacts of Malaysia’s Data Centre Expansion” report.

The 14 data centres examined by RimbaWatch included three completed between 2023 and November 2024, two currently undergoing expansion, five under construction, and four proposed facilities. Together, they represent 2.2GW of new capacity.

Of particular concern is that 1.7GW of the new data centre capacity has no immediate renewable energy plans, meaning these facilities will draw directly from Malaysia’s predominantly fossil fuel-powered grid.

“Taking into account Peninsular Malaysia’s GEF (Grid Emission Factor), these data centres will have a carbon lock-in of 9,992,975 tCO₂e (or 9.9 million tonnes of CO₂ equivalent).

“In comparison, 9.9 million tonnes of additional annual emissions are equivalent to adding more than two million passenger vehicles to the road.

“This is equivalent to the 2023 emissions of entire countries such as Papua New Guinea. It must be noted that one primary reason for this high figure is the high fossil fuel intensity of Malaysia’s energy grid, which in 2022 was estimated to constitute 81 percent of its energy production.

“In June 2025, it was reported that Malaysia plans to increase its gas-fired power plant capacity by 50 percent to meet demands from data centres,” the report stated.

Sustainable resources lacking

In May this year, the Johor government was urged to review the guidelines for data centre development following concerns over its impact on the environment and resource sustainability.

BN’s Kukup assemblyperson, Jefridin Atan, said the main issues are high energy and water requirements to support data centre operations, which could strain existing utility systems, Bernama reported.

Last year, Sahabat Alam Malaysia warned that while water shortages are already a concern due to climate change, wastage, and ageing infrastructure, the water demands of tech companies for cooling data centres could become a flashpoint in the coming years, according to the New Straits Times.

In June the same year, the Singapore Straits Times reported that national electricity company Tenaga Nasional Berhad (TNB) forecast that data centres will consume more than 5,000 megawatts (MW) of power by 2035.

Yet, demand appears to be surging well beyond these estimates. The report stated that TNB has already fielded applications requesting electricity supply of more than 11,000MW, citing research from Affin Hwang Capital.

On Wednesday, Bernama reported Deputy Prime Minister Fadillah Yusof saying that the government, in partnership with state regulatory bodies, is developing targeted water charges for data centres and large-scale industrial operations, while advocating for recycled water usage and district cooling infrastructure to reduce dependency on clean water reserves.

READ MORE: As Johor’s data centre hub grows, so do fears over water supply

Solutions

RimbaWatch director Adam Farhan said Malaysia must first commit to a just and rapid fossil fuel phase-out and embed this in data centre expansion plans.

“Further, Malaysia should join other Global South energy players in calling for a Fossil Fuel Non-Proliferation Treaty, which will establish a global framework for an equitable energy transition.

“Recently, the Investment, Trade, and Industry Ministry announced that a new Investment Incentive Framework for data centres would be developed by 2025, including sustainable development guidelines that would include indicators on carbon emissions and water usage.

“RimbaWatch believes that the ministry should develop a 1.5-degree-aligned sectoral-level carbon budget and decarbonisation pathway for data centres,” Adam added.

He said upcoming guidelines should also ensure that all new data centres conform to this carbon budget, such as limiting the approval of data centres to those committed to 100 percent renewable energy operations, and which will generate additional power to sell back to the grid.

On water use, Adam said the ministry should further develop a near and long-term water budget for the data centre sector, taking into account demand from households, other economic sectors, and climate risks, and ensure that data centres do not exceed this budget.

“All developments are (to be) conducted in transparency, such as requiring Schedule 2 EIAs (Environmental Impact Assessments) for all data centre developments which are open to public consultation and permanent public access,” he said.

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