Data Centre Boom in Brazil Sparks Concerns Over Water and Energy Use
Brazil’s data centre capacity could triple by 2030, driven by investments from companies in China and the US. The country is already Latin America’s data centre hub, with an installed capacity of around 800 megawatts (MW) and 198 facilities. This surge in demand is linked to the explosion of generative AI chatbots.
In December, ByteDance, the Chinese company behind TikTok, announced a USD 38 billion investment for a data centre in Porto do Pecém, in the eastern coastal state of Ceará. Other Chinese companies interested in Brazil include Huawei and Alibaba. Simultaneously, a US consortium including BlackRock, Microsoft and xAI recently spent USD 40 billion to acquire Aligned Data Centers, which manages facilities in Brazil and owns Odata. The Brazilian government has encouraged these investments through tax breaks.
However, the rapid expansion is raising concerns among Indigenous leaders and environmental and energy experts regarding the potential impacts on local water and electricity availability. Chief Roberto Anacé, an Indigenous leader in Ceará, fears shortages resulting from the ByteDance facility.
Government Initiatives and Stalled Progress
The data centre rush follows efforts by the Brazilian government to attract investment from both the US and China. The finance minister, Fernando Haddad, has promoted a “simultaneously digital and green” economy to US technology investors, while the communications minister, Frederico de Siqueira Filho, engaged with investors in Beijing and other Chinese cities.
In September 2025, the government launched a National Data Centre Policy, including a special tax regime called Redata, designed to promote sustainable development through tax breaks linked to environmental commitments.
However, in late February 2026, the Redata policy stalled due to a lack of congressional approval. A dispute over including natural gas projects within the policy – which originally prioritized renewable energy – contributed to the delay. This has already impacted the data centre plans of major companies.
Despite the setback, Haddad remains committed to passing Redata in Congress, citing a queue of companies eager to invest in Brazil. He emphasized the importance of expanding data centres to strengthen the country’s “digital sovereignty,” as only 40% of Brazilian data is currently processed within the country.
Sustainability Concerns and Local Impacts
While proponents argue that Brazil’s renewables-heavy electricity mix – approximately 88% from renewable sources – will reduce the overall emissions of the sector, others question the country’s ability to meet the increased demand.
Approximately 80% of data centres in Brazil currently use closed-loop cooling systems, which reuse water, with projections reaching 90% by the end of the decade. However, these systems still require significant initial water resources, and the location of these facilities near watercourses is raising concerns.
TikTok and Casa dos Ventos estimate their data centre will use between 20,000 and 30,000 litres of water daily for cooling, equivalent to the consumption of 46-72 households. Closed-loop systems also require more electricity due to their reliance on refrigeration.
Experts also point to a lack of consultation with affected communities. Concerns have been raised regarding the environmental impact assessments and the potential for water and energy shortages. Protests and legal challenges have already emerged, such as the occupation of a state environmental agency and a case filed with the Federal Public Prosecutor’s Office regarding the TikTok project.