Forty mayors from cities across four continents have signed a landmark pact that sets out the conditions under which they will allow artificial intelligence data centres to operate. The move comes as urban leaders push back against an industry they say is overwhelming power grids, depleting water supplies, and competing for land needed for housing.
The pact, launched during London Climate Action Week by C40 Cities—an alliance of nearly 100 cities focused on climate action—establishes common standards on clean energy, site selection, water use, and community benefits. It is the first coordinated global effort by city governments to get ahead of data centre expansion before it spirals out of control.
Common Challenges from Phoenix to Melbourne
The agreement grew out of conversations between the mayors of Phoenix and Melbourne, who discovered they faced identical problems: data centres consuming vast amounts of electricity and water, and competing with housing developers for available land. “We found out that the challenges in every region around the world were very similar,” said Cassie Sutherland, a managing director at C40. “Our approach was to say OK, how do we now use a global mayoral voice to come together with the conditions under which they will accept data centres.”
Phoenix is among the top ten data centre markets in North America. Pending permit requests in the metropolitan area alone would double the city’s electricity demand if all were approved. Mayor Kate Gallego said the current wave of investment is worsening climate change and failing local communities. “We understand the importance of this innovation, it’s creating great jobs in our community,” Gallego said. “We just want to make sure that we get it right for our local residents and for the health of our planet.”
In Melbourne, the picture is starker still. If the city follows through on all its current plans, data centres will consume up to 20 billion litres of water annually—around 4% of the drinking water supply, according to Lord Mayor Nicholas Reece. The city’s water supply is already under pressure from population growth, longer dry periods, and intensifying heat.
What the Pact Demands
The standards are specific. Data centres should be built on abandoned or underused land, powered by renewable energy and battery storage, and required to reduce water use, cut emissions, and capture waste heat. They should create local jobs, source goods and services locally, fund their own infrastructure upgrades, and engage meaningfully with communities.
Mayors are limited in what they can do alone. Sutherland said the vision must be translated into local regulations and guidelines, with buy-in from utilities, other government tiers, and the private sector. About half the 40 signatories are US cities, including Seattle, Chicago, Miami, Phoenix, and Palo Alto. European cities from Greece, Spain, Italy, Germany, the UK, and Norway have also signed, alongside cities in Canada, Kenya, South Africa, Sierra Leone, Côte d’Ivoire, India, Australia, and Lebanon.
Southeast Asia’s Conspicuous Absence
None of Southeast Asia’s cities signed the pact, despite the region accounting for a quarter of global energy demand growth. More than 2,000 data centres are already operating across Indonesia, Malaysia, Singapore, Thailand, Vietnam, and the Philippines, according to the think tank Ember. The International Energy Agency says annual energy demand from those facilities will more than double within five years. Malaysia in particular has become a magnet for investment from Microsoft, Google, and Nvidia. Several Southeast Asian cities said they could not sign because of national policies or other complications, C40 said, adding that conversations are continuing.
Data centres gravitate to cities because AI-powered systems require near-instantaneous response times, making proximity to clients essential. They tend to cluster, forming metropolitan ecosystems where the business case outweighs land costs—a dynamic that has only recently begun pushing development into rural areas, according to Andrew Batson, global head of data centre research at JLL.
The pact’s signatories are betting that a unified front changes the calculus. As Gallego put it, without one, developers will simply seek out cities too weak to demand anything better. For European readers, the pact underscores a growing tension between technological progress and urban sustainability—a challenge that cities like Athens, Barcelona, Rome, Berlin, London, and Oslo are now confronting directly. As the continent grapples with its own energy transition and housing crises, the mayors’ initiative offers a template for how local governments can assert control over an industry that often operates beyond their reach.
