RIO DE JANEIRO, May 30 (IPS) – Brazil hopes to soon reap benefits of its largely renewable energy matrix. Data centers, whose demand is growing with the strides made by artificial intelligence, are the new frontier for these still-uncertain investments.
This is even a matter of “digital sovereignty,” not just for Brazil, according to Dora Kaufman, a professor in the program on intelligent technologies and digital design at the Pontifical Catholic University of Sao Paulo.
Nearly 60% of all Brazilian data processing currently takes place in the United States—and the figure continues to rise—posing a serious risk, as a natural disaster or government blockade could paralyze the country, she warned. “The probability of it happening is low, but the impact would be huge,” she told IPS by phone from São Paulo.
The National Data Center Policy is expected to change this scenario, according to the Brazilian government, which has promised to soon unveil the program. Its potential could attract two trillion reais (around US$350 billion) over the next 10 years, claims Finance Minister Fernando Haddad.
Exemptions from federal taxes and reduced import duties on equipment are among the incentives the government will offer investors. These measures anticipate policies already outlined in the recently approved tax reform, which will fully take effect by 2033.
The abundance of renewable energy, water, and land could also serve as a major draw in a world increasingly demanding sustainability in new projects.
High Costs in Brazil
Processing data in Brazil is 25% more expensive than abroad, primarily due to the tax burden, noted Kaufman. Removing this obstacle would pave the way for a surge in data centers, as “we have more than enough renewable energy and water,” she argued.
“Brazil has everything it takes to host many data centers, and the challenges are solvable. We need them not just to develop artificial intelligence but also for the growing digitalization of government and businesses,” she emphasized.
However, the voracious energy and water demands of digital infrastructure—especially for AI—are raising concerns among environmentalists and experts in energy and communications.
“Brazil first needs to implement a real energy transition. So far, we’ve only added renewable sources alongside fossil fuels. A just transition remains a huge challenge, requiring the electrification of transport—a priority due to the climate crisis,” said Alexandre Costa, a professor at the Federal University of Ceará in northeastern Brazil.
TikTok plans to set up a data center in Caucaia, a city of 355,000 residents in Ceará. Just 35 kilometers away, the Pecém port—which includes an industrial zone—has plans for a green hydrogen production hub, another major consumer of water and electricity.
Pecém already hosts a thermoelectric plant and a steel mill, both of which are highly water-intensive.
Fossil Fuels Still Dominate
The Northeast, Brazil’s poorest region, has become an attractive location for projects claiming to be sustainable, as it is already the country’s largest wind power producer and holds vast potential for solar energy.
However, the exploitation of strong, steady winds and abundant sunlight has already sparked criticism and protests from local communities. The expansion of these projects is encroaching on increasing amounts of land, creating conflicts with local populations and small-scale farming, noted Costa, a physicist specializing in meteorology and climate change.
Nationally, renewable sources accounted for 86.1% of electricity consumption in 2022, according to the government’s Energy Research Company. However, fossil fuels still made up 52.7% of Brazil’s total energy matrix, dominated by oil and natural gas, while coal held a small 4.4% share.
This means Brazil, where freight transport is still heavily reliant on diesel trucks, still has a long way to go in reducing fossil fuel consumption. This transition will require even more electricity.
Data centers will bring additional energy demand to an economy already anticipating a surge in consumption—driven by green hydrogen projects, artificial intelligence, and vehicle electrification, Costa warned IPS in a phone interview from Fortaleza, Ceará’s capital.
The same applies to water resources. “There’s no way to meet an infinite demand for these inputs,” he stressed. In his view, Brazil lacks an energy model that balances new demands, priorities, and the need for an increasingly clean energy matrix.
Dependence
“The most serious issue in the government’s program is that it aims to subsidize data centers for Big Techs. We need them for our national networks, yet they’re proposing to bring in data centers for Google, Facebook, Microsoft, etc., with all the benefits,” criticized Carlos Afonso, a communications technology expert and one of the pioneers of the internet in Brazil.
He pointed to the lack of such infrastructure for public entities like Serpro (Data Processing Service) and Dataprev (social security database), which are vital for government operations, as well as the National Research Network that connects universities and other scientific and innovation institutions.
“Will they have to rely on data centers from these Big Techs in Brazil?” he questioned in a conversation with IPS.
It appears that both the government’s program for this sector and its green hydrogen initiative are primarily designed to meet external demands, with the goal of creating exportable goods and services.
This is why Kaufman argues for imposing conditions on data centers established in Brazil, such as sustainability based on renewable energy and zero greenhouse gas emissions, energy efficiency, and allocating at least 10% of installed capacity to the domestic market.
The expert believes that the large data centers to be installed in Brazil will primarily serve AI training, which minimizes latency, the milliseconds of delay in long-distance communication from origin to destination.
But the reality—both in Brazil and globally—in the digital economy is one of deep dependence on the United States, a situation exacerbated by the policies of President Donald Trump, who prioritized the interests of the United States above all else, even international treaties.
“Three Big Tech companies from the United States—AWS/Amazon, Microsoft, and Google—control 63% of global data processing, forming a true oligopoly,” emphasized Kaufman. That dominance is expected to grow to 80%, she added.
According to the global statistics portal Statista, as of March 2025, the United States had 5,426 data centers—more than 10 times the number in Germany (529), the UK (523), or China (449).
The imbalance is even starker in hyperscale data centers, those occupying more than 930 square meters and housing over 5,000 servers. By the end of 2024, the United States accounted for 54% of global processing capacity, compared to 16% for China and 15% for Europe, according to Synergy Research Group.
In 2024 alone, 137 new data centers were built—a 13.7% growth rate—in a trend expected to continue, driven largely by advancements in artificial intelligence, notes the analytics and consulting firm based in the United States.
The infrastructure powering the digital economy, already connecting two-thirds of humanity and expanding rapidly with innovations like cloud computing and AI, remains largely unseen.
While cables, including intercontinental submarine lines, satellites, and telecom networks are well-known, data centers—the “brains” that store, process, and distribute information—operate in relative obscurity. Yet, they have become massive and strategically critical as global data traffic surges exponentially.
© Inter Press Service (2025) — All Rights Reserved. Original source: Inter Press Service
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