The Hidden Environmental Cost of AI Adoption

And the Underlying Opportunity

If you have ever spent any time in the Pacific Northwest, you'll notice a few unique things: First, the vast amount of trees is staggering, particularly the evergreens. When I went to school up there, I was blown away by how much greenery I saw. Not to mention, you can also get a really good beer up there (a huge shoutout to Deschutes -Mirror Pond Pale Ale!).

The other major feature up there are the waterways, particularly the Columbia River. The Columbia has played an important role in human history for a very long time. Ten thousand years ago, the river was a renowned trading route for Native Americans as the river meandered north to south, beginning as a large chain of lakes and estuaries in northern British Columbia, making its way south and then west, ultimately spilling out to the Pacific Ocean in the area that separates Oregon and Washington State.

Today, metros like Portland, Oregon have been established along the river as areas that were initially important fur trading outposts and logging centers that have made the Pacific Northwest the beautiful, thriving area that it is today. Several generations later, it has become the lumberjack/hipster (or both??) mecca that it is…

Of course, that was then.

More recently, about 80 miles east of Portland along the Columbia sits the town of The Dalles, Oregon. This area also once played an important part in Native American history as it was an important trading center.

Today, along the Columbia in The Dalles sits a massive data center that is the size of two football fields and cooling stacks 4 stories tall owned none other than by Google. They have dubbed this data center "Project 02," built to take advantage of the inexpensive hydroelectric power and Oregon's incentives on offer.

And this is just one of 70+ known data centers they own, processing the terabytes of data we as digital users generate daily. With the emergence of AI, this demand will only increase.

I think it's fairly safe to say AI technology is here to stay.

While we are only in the beginning stages of exploring its capabilities, it is an undeniable fact that we will continue to see increased adoption of this technology. The more this technology is used, the more demand we will have for processing this data.

The need for data centers like the one in The Dalles will only continue to grow. In fact, most economists predict that these data centers will double their energy consumption by 2030, driven almost entirely by increased adoption of AI technology. The thing that has really concerned me, and which is the central focus of this post, is the concern of our rapid consumption of resources by these data centers and the risks associated with that.

What most executives either don't realize or won't acknowledge publicly is that data centers' electricity consumption is massive, and it's only going to get worse. According to a Goldman Sachs report, projected energy consumption will double annually from 2022 to 2026. In Virginia alone; home to the world's largest concentration of data centers, water usage jumped by almost two-thirds between 2019 and 2023, from 1.13 billion gallons to 1.85 billion gallons.

Of course, companies have to implement AI into their strategy or they will be left behind. But what is happening with many of these companies is that they are not factoring these projected infrastructure costs into their business models.

The average data center uses 300,000 gallons of water per day to stay cool, roughly equivalent to the water use of 100,000 homes. For context, each AI prompt uses roughly 16 ounces of water at data centers. When you multiply this across enterprise-wide AI adoption, the costs add up fast. A mid-size company implementing comprehensive AI tools could easily see energy and infrastructure costs balloon by 30-50% annually—expenses that weren't in anyone's original ROI calculations.

Meanwhile, more and more consumers are willing to pay a premium for sustainably produced or sourced goods. In addition, stakeholder pressure around ESG performance continues to intensify, holding companies accountable for their polluting. Companies burning through resources for AI gains while ignoring sustainability opportunities are not only missing out on the cost savings but are also risking their own reputations as a company that doesn’t care.

Smart companies, however, are seeing a different path forward.

During my time at Delta Dental, one thing I was very proud of was our digital transformation strategy, which intended to deliver massive savings for our business and our customers by eliminating paper-based processes entirely. As a company, we processed millions of sheets of paper annually before going all in on digital. That effort translated to roughly 250 trees saved and 480 metric tons of CO2 reduced each year.

The financial impact went beyond just printing and postage costs. We saw dramatic reductions in document storage costs and the labor hours spent on case processing.

Most companies today are using a payback period of three years or less for sustainability initiatives, in other words, it takes them three years to recoup their costs based on upfront investments in "going green." The fastest returns come from digital transformations (6-18 months), energy efficiency improvements (12-24 months), and waste reduction programs (3-9 months). For employees working at these companies, these aren't just feel-good initiatives but actual genuine money making centers disguised as environmental programs.

The sustainability market represents a massive revenue opportunity that most companies are underestimating. Companies that invested early in green initiatives are seeing competitive advantages in talent retention, customer loyalty, and operational efficiency. While competitors continue to face rising energy costs, sustainable companies are banking upfront savings and capturing market share.

Data shows that sustainable companies outperform. As Gen Z and Millennials move into higher levels within companies, sustainable businesses attract better talent, command premium pricing models, and build stronger customer relationships. Meanwhile, companies ignoring sustainability are building technical debt—both literal and reputational—that will cost exponentially more to address later.

The largest players in AI like Google, Amazon, and now OpenAI and Anthropic have a unique advantage in achieving ROI from sustainability programs because of their massive scale. A 10% energy efficiency improvement at these companies can deliver billions in annual savings. Supply chain influence means corporate sustainability decisions ripple through entire industries, including sectors like formers of mine in the healthcare and professional services.

For executives ready to capture this opportunity, the framework is straightforward: First, audit your current energy and resource consumption—you can't optimize what you don't measure. Second, identify your highest-impact opportunities, typically starting with digital transformation and energy efficiency. Third, calculate true ROI including environmental benefits and risk mitigation. Fourth, start with quick wins while planning bigger transformations.

Here's the question every executive should be asking: If your company could save millions while building a more sustainable future, what's really stopping you? Is it lack of data, lack of will, or simply not knowing where to start?

The companies that answer this question first will be the ones still thriving when the true cost of ignoring sustainability becomes clear.