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Artificial intelligence is scaling at a speed that is beginning to test the limits of the physical world that supports it. The surge in data-centre construction, driven by generative AI and cloud demand, is no longer just a technology story. It is an energy, water and capital allocation story, with sustainability at its core.
On the Analytics Insight podcast, host Priya Dialani spoke with Vasudha Madhavan, founder and CEO of Ostara Advisors, about what this shift means for businesses and policymakers. Her message was direct: the future of AI will be shaped not only by better models, but by how responsibly the infrastructure behind them is built.
Data centres, once treated as back-end utilities, have become some of the most energy-intensive assets in the digital economy. As computing loads rise, so does heat generation, making cooling systems one of the largest drivers of power consumption. That reality is pushing operators toward renewable energy sourcing, liquid and passive cooling, and new materials that reduce continuous refrigeration.
The definition of a ‘green data centre’ is becoming more rigorous. It is no longer enough to offset emissions or purchase renewable credits. Operators are being judged on measurable efficiency, especially Power Usage Effectiveness (PUE), which reflects how much energy is actually used for computing versus overheads.
The three benchmarks, which need assessment for waste-heat recovery, real-time energy monitoring, and lifecycle impact assessment, have become essential standards. Sustainability needs to move beyond being a communications strategy because it must now become an engineering discipline that should exist within product design from its initial development.
The development process is moving forward because of new legal requirements. Organizations must conduct ongoing system-wide carbon emissions assessments because the new ESG reporting regulations require organizations to disclose their carbon emissions. Day one requirements for infrastructure include built-in sensor systems that create automated data pipelines while providing complete transparency for auditing purposes.
The environmental effects of artificial intelligence (AI) have increased because it now serves as an effective environmental protection instrument. The system helps to predict future renewable energy production while it enhances industrial energy efficiency and develops strong smart grid systems and boosts electric transportation and farming efficiency. The hard-to-decarbonise sectors achieve major emissions reductions through their smallest operational improvements.
For Ostara Advisors CEO, the larger issue is alignment. The expansion of AI technology will happen, but its environmental effects remain unknown. The decisive factor will be whether capital, engineering, and policy move together to ensure that the systems powering the digital economy scale sustainably. The next decade will prove its true challenge through testing AI growth speed together with its responsible infrastructure development.
