Carbon-Neutral Data Center Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Data Center Type (Hyperscale Data Centers, Enterprise Data Centers, Colocation Data Centers, and Others), By Carbon Neutral Solutions (Hardware, Software & Platform and Support Services), By End User (BFSI, Retail, Healthcare, Government and Public Sector, IT and Telecom, Manufacturing and Others), By Region, Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 10.01 Billion
CAGR (2026-2031)	21.83%
Fastest Growing Segment	Hardware
Largest Market	North America
Market Size (2031)	USD 32.73 Billion

Market Overview

The Global Carbon-Neutral Data Center Market will grow from USD 10.01 Billion in 2025 to USD 32.73 Billion by 2031 at a 21.83% CAGR. A carbon-neutral data center is a facility engineered to achieve net-zero carbon dioxide emissions through the integration of energy-efficient infrastructure, renewable power sourcing, and carbon offsetting mechanisms. The primary drivers propelling this market include stringent governmental environmental regulations and the increasing enforcement of corporate Environmental, Social, and Governance (ESG) mandates across global enterprises. Additionally, the volatility of fossil fuel prices compels organizations to transition toward sustainable operations to secure long-term utility cost stability.

However, the sector encounters a substantial challenge in upgrading legacy infrastructure to support modern efficiency requirements. Older facilities frequently lack the technical capacity for necessary cooling and power management systems, which hinders the reduction of energy overhead and complicates the path to neutrality. According to the Uptime Institute, in 2024, the global industry average Power Usage Effectiveness (PUE) remained stagnant at 1.56, highlighting the persistent difficulty operators face in optimizing energy efficiency within existing environments.

Key Market Drivers

The exponential growth in AI and digital workloads constitutes a primary catalyst for the carbon-neutral data center market, fundamentally altering energy consumption profiles. As generative AI models require massive computational power for training and inference, server rack densities are soaring, necessitating infrastructure that can scale sustainably without expanding the carbon footprint. According to Goldman Sachs, September 2025, in the 'GS SUSTAIN: Data Center Power Demand' report, global power demand from data centers is forecast to rise 165% by 2030, driven largely by these intensive workloads. This trajectory forces operators to abandon legacy fossil-fuel reliance in favor of carbon-neutral designs to accommodate the surge in energy intensity.

Simultaneously, the accelerated adoption of renewable energy sources and Power Purchase Agreements (PPAs) acts as a critical mechanism for achieving decarbonization targets. Major operators are aggressively procuring clean energy to offset their growing consumption, stimulating market demand for green power integration. According to the International Energy Agency, in 2025, global data center electricity consumption is projected to potentially reach 945 terawatt-hours by 2030, underscoring the urgency of this transition. Leading the industry's response, according to Amazon, July 2025, in the '2024 Sustainability Report', the company successfully matched 100% of the electricity consumed by its global operations with renewable energy sources. This commitment to green procurement is establishing a new baseline for operational standards across the sector.

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Key Market Challenges

The inability to upgrade legacy infrastructure presents a significant barrier to the expansion of the global carbon-neutral data center market. Many established facilities operate with outdated cooling and power distribution systems that were not designed to support modern sustainability standards or high-density computing. Retrofitting these environments involves high capital expenditure and operational complexity, making it difficult for operators to integrate renewable energy sources or advanced efficiency measures. Consequently, the persistence of inefficient hardware forces organizations to rely on carbon-heavy operations, directly delaying the sector's transition toward net-zero emissions.

This technological deficit also creates a major gap in data visibility and reporting accuracy. Older facilities often lack the instrumentation required to measure resource consumption precisely, which is essential for compliance with environmental mandates. According to the Uptime Institute, in 2024, only 41 percent of data center operators tracked water usage effectiveness, indicating that legacy infrastructure frequently lacks the necessary sensor capabilities to monitor key sustainability metrics. This lack of verifiable data impedes the implementation of effective carbon offsetting strategies and limits the overall growth potential of the market.

Key Market Trends

The adoption of liquid and immersion cooling technologies is accelerating as data centers grapple with the thermal demands of high-density AI workloads. Traditional air cooling is becoming insufficient for modern infrastructure, prompting a strategic shift to liquid-based solutions that offer superior heat rejection and energy efficiency. This migration is crucial for the market, as it enables the sustainable scaling of computational power without proportional increases in carbon emissions or operational costs. According to Schneider Electric, December 2024, in the 'Schneider Electric Announces New Solutions to Address the Energy and Sustainability Challenges Spurred by AI' press release, the company unveiled reference designs specifically engineered to support liquid-cooled AI clusters with densities of up to 132 kilowatts per rack, highlighting the industry's pivot toward high-performance thermal management.

Simultaneously, the sector is actively exploring Small Modular Nuclear Reactors (SMRs) to secure a reliable, carbon-free baseload that overcomes the intermittency limitations of wind and solar power. Unlike standard renewable sources, SMRs provide continuous, high-capacity energy generation essential for maintaining uninterrupted data center operations without reliance on carbon-intensive fossil fuel backup systems. This trend marks a decisive move toward localized, zero-emission power grids dedicated specifically to digital infrastructure. Demonstrating this shift, according to Google, October 2024, in the 'New nuclear clean energy agreement with Kairos Power' blog post, the company signed a corporate agreement to deploy a fleet of advanced small modular reactors that will add up to 500 megawatts of new 24/7 carbon-free power to the electricity grid by 2035.

Segmental Insights

The Hardware segment is recognized as the fastest-growing category in the Global Carbon-Neutral Data Center Market due to the increasing imperative to replace legacy infrastructure with energy-efficient alternatives. Data center operators are heavily investing in specialized cooling systems, low-power servers, and modern power distribution units to optimize energy consumption. This transition is significantly accelerated by rigorous environmental directives from institutions such as the European Commission, which compel facilities to minimize their carbon footprints through tangible asset upgrades. Consequently, the surge in demand for sustainable physical infrastructure underpins the rapid expansion of this market segment.

Regional Insights

North America dominates the global carbon-neutral data center market primarily due to the strong presence of major technology corporations implementing aggressive sustainability targets. The region benefits from established renewable energy infrastructure which facilitates the transition to green operations. Additionally, supportive initiatives from agencies like the United States Department of Energy promote energy efficiency and standardized reporting. This combination of corporate responsibility, accessible renewable power, and favorable regulatory frameworks creates a robust environment for market growth, ensuring North America remains the primary hub for sustainable data infrastructure development.

Recent Developments

• In December 2024, a global leader in energy management and automation unveiled a new suite of AI-ready data center solutions, including a compact, high-density uninterruptible power supply system. The company introduced a reference design co-developed with a premier chip manufacturer to support liquid-cooled, high-density computing clusters utilized for demanding artificial intelligence workloads. These new products were engineered to significantly improve energy efficiency and minimize the carbon footprint of digital infrastructure, directly addressing the urgent sustainability challenges associated with the rapid growth of power-intensive AI applications in the global data center market.
• In November 2024, a global digital infrastructure company entered into its first power purchase agreement in India with a renewable energy provider to develop a 33-megawatt captive power plant. The collaboration involved constructing a hybrid renewable energy facility in Maharashtra, combining 26.4 megawatts of solar and 6.6 megawatts of wind capacity, to supply clean energy to the company's data centers in Mumbai. This project was established to help the company achieve 100% renewable energy coverage for its local operations and address the rising energy demands driven by increased artificial intelligence adoption in the region.
• In May 2024, a multinational technology corporation finalized a massive global renewable energy framework agreement with a major asset management firm to procure 10.5 gigawatts of new renewable generating capacity. This strategic collaboration, valued at over US$10 billion, was described as the largest corporate power purchase agreement ever signed and was designed to support the technology giant's objective of matching all its electricity consumption with zero-carbon energy purchases by 2030. The deal focused on developing substantial wind, solar, and other carbon-free energy projects across the United States and Europe to power the company's rapidly expanding data center infrastructure.
• In May 2024, a major technology company launched its first offsite heat recovery project at its data center in Finland to support the local district heating network. Through a strategic partnership with a municipal energy provider, the company began recovering excess heat generated by its servers to warm households, schools, and public service buildings in the surrounding community. This innovative initiative was part of the company’s broader strategy to operate on 24/7 carbon-free energy by 2030 and demonstrated a practical, sustainable application of circular economy principles to reduce the environmental footprint within the global carbon-neutral data center market.

Key Market Players

• ABB Limited
• Amazon.com, Inc.
• 3M Company
• Alphabet Inc.
• Cisco Systems, Inc.
• Hewlett Packard Enterprise (HPE)
• Eaton Corporation plc
• Fujitsu Ltd.
• IBM Corporation
• Microsoft Corporation

By Data Center Type	By Carbon Neutral Solutions	By End User	By Region
Hyperscale Data Centers Enterprise Data Centers Colocation Data Centers and Others	Hardware Software & Platform and Support Services	BFSI Retail Healthcare Government and Public Sector IT and Telecom Manufacturing and Others	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Carbon-Neutral Data Center Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Carbon-Neutral Data Center Market, By Data Center Type:

• Hyperscale Data Centers
• Enterprise Data Centers
• Colocation Data Centers
• and Others

• Carbon-Neutral Data Center Market, By Carbon Neutral Solutions:

• Hardware
• Software & Platform and Support Services

• Carbon-Neutral Data Center Market, By End User:

• BFSI
• Retail
• Healthcare
• Government and Public Sector
• IT and Telecom
• Manufacturing and Others

• Carbon-Neutral Data Center Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE