The Real Cost of US Data Center Growth

Nick Muller, the Lester and Judith Lave Professor of Economics, Engineering, and Public Policy at Carnegie Mellon, joins Emily DeJeu to discuss how the rapid expansion of data centers across the United States is straining power grids and creating major environmental challenges, and the true cost of keeping our digital world running. Muller’s research reveals that U.S. data centers consumed roughly 250 terawatt-hours of electricity in 2025, up to 6% of the nation's total power, and generated a $25 billion in gross environmental and public health damages from air pollution and greenhouse gas emissions. The conversation explores how cheap local electricity rates drive data centers to cluster in states like Virginia and Texas (which alone make up 30 percent of the damage), why some utilities are reviving retired fossil-fuel plants to keep up with demand, and whether the massive potential benefits of artificial intelligence can ultimately outweigh these heavy environmental tolls.

Find the full report, ”Measuring the Impact of Data Centers in the United States Economy: Monetary Damage from Air Pollution and Greenhouse Gas Emissions,” on the National Bureau of Economic Research website: https://www.nber.org/papers/w35100

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The Tepperspectives podcast is supported in part by the MBA Class of 2016 Technology Fund