Data centers consume millions of gallons of water and massive amounts of energy daily. They can cause significant disturbances in the air, water, and noise and light pollution, as well as agricultural impacts, and are largely self-regulated. 

Backup generators used at these facilities, like diesel backups, emit particulate matter, increasing the risk of respiratory and cardiovascular diseases, cancer, and neurological disorders. Children have faster breathing rates than adults, which means they inhale even more toxic fumes; therefore, exposure to diesel pollution can cause stunting in children, potentially having permanent effects on their cognitive and physical development.

The Boston University School of Public Health estimates that “at only 65 decibels, about as loud as a car going by for someone standing on the side of the road, research has shown that people begin experiencing increased risk of hypertension and heart attack.” Research further warns that noise not loud enough, such as the 24/7, low, constant sounds of a data center, also known as low-frequency noise, can still cause hearing damage, stress, anxiety, and even heart disease when continuously exposed to it. In addition to human impacts, this noise can disrupt migration patterns, natural behaviors, and ecological communication.

NIPSCO projects at least 2,600 megawatts (MW) of new data center demand by 2028, rising to 8,600 MW by 2035.

NIPSCO is currently conducting a study to evaluate the feasibility of converting the Michigan City Generating Station (MCGS) coal-burning plant, scheduled for full decommission by 2028, to gas or other energy technologies.

Due to the growth of data centers across Northern Indiana, NIPSCO may keep the MCGS open, thereby continuing to expose communities to health- and climate-harming emissions. 

This concern is already playing out, as NIPSCO recently received rezoning approval to build a massive new combined-cycle gas plant at the Schahfer Generating Station to serve the region's data centers. This is in addition to the site’s proposed peaker plant and the existing coal units. This represents a significant shift from the utility’s prior commitments to transition away from fossil fuels, which NIPSCO projected would save customers approximately $4 billion over 30 years.

The plant is projected to emit the equivalent of 7 million tons of CO2 each year, more than double the pollution from NIPSCO's current coal plants combined, and would become one of the state’s top polluters.

Data centers rely on water-intensive cooling systems that consume millions of gallons of potable drinking water annually. 

According to research, a single data center can consume up to 5 million gallons of drinking water per day, enough to supply thousands of households or farms.

Not only do data centers consume large quantities of drinking water, but they also remove it from the local water cycle. The water used is often treated with chemicals to prevent corrosion and bacterial growth, rendering it unsuitable for human consumption or agricultural use.

Closed-loop systems, though viewed as the greener option, also rely on a myriad of additives. These include those containing known carcinogens, such as corrosion inhibitors, biocides, and antifreeze blends. Because the same water loops repeatedly, anything that does not evaporate or break down simplyaccumulates with salts, metals, and treatment chemicals, resulting in concentrations well beyond established limits. When ultimately discharged in what is known as a blow-down, it can carry nitrite, glycol, and heavy metals at thousands of times the limits set for surface waters.

In 2019, the Indiana General Assembly enacted House Bill 1405, the Indiana Data Center Tax Incentive Act, which provides large data centers with a full sales tax exemption for up to 50 years and allows local governments to enact property tax exemptions. 

In 2025, Indiana passed House Bill 1601, “Quantum Research Tax Incentives,” which exempts from sales tax the sale of qualified data center equipment, quantum computing research tools, advanced computing devices, and defense infrastructure equipment that meet specific qualifying criteria.

These subsidies are expected to total in the tens of billions of dollars in lost tax revenue for the State of Indiana over the coming decades.

Additionally, Indiana's 2025 state property tax law, Senate Bill 1, is the primary driver of current and projected municipal budget shortfalls across the state, lowering tax bills by capping rates and directly reducing city and county revenue without providing replacement funding.

Municipalities are now being presented with massive data center projects as a solution to these state-imposed deficits.

Data centers house server farms that store our information, along with electrical equipment that gets hot, requiring 24/7 air cooling that annually uses millions of gallons of water as a refrigerant.

The average server utilization rate hovers between 12% and 18% of capacity, while an estimated 10 million servers sit completely idle, totaling $30 billion in wasted capital.

Even active services rarely exceed 50% utilization, as the majority of our existing compute infrastructure is essentially burning energy without doing any productive work.

E-waste is another serious waste issue. Servers and graphic processing units, essential to data center operations, are typically replaced every 2–5 years, producing millions of tons of outdated equipment, more than 80% of which is discarded, leading to 1.2-5 million tons more of e-waste.