This Industry Viewpoint was authored by Jenny Gerson, Senior Director of Sustainability, DataBank

Sustainability has become considerably more complicated for the data center industry heading into 2026. Political shifts, policy changes, and other new market dynamics are creating an environment where progress may become harder to achieve.

Here are five predictions for how new trends and market forces will reshape data center sustainability in 2026.

Prediction #1: Greenhushing Will Replace Transparency

The trend toward greater sustainability and transparency will somewhat reverse in 2026. We’re already seeing cases where companies across many different industries are pulling back from public commitments and reducing visibility into their environmental programs—a trend now known as “greenhushing.”

This isn’t because sustainability efforts are stopping or even slowing down. It’s because the political and legal environment has made too much transparency risky. A large hyperscale cloud provider recently removed its net zero target from its website despite continuing to work toward this goal. In many other cases, terms like “ESG” are being rebranded to avoid too much political scrutiny.

This creates a dilemma for data center operators. Customers’ RFPs still require renewable energy commitments and sustainability certifications, and investors still evaluate ESG performance. Yet, the appetite for public messaging has diminished significantly.

The result is a disconnect where meaningful sustainability work continues behind the scenes while public communication will become more cautious or disappear completely. In response, data centers will need to balance legitimate customer and investor requirements against the risks of visible or perceived ESG-related advocacy in 2026.

Prediction #2: The Renewable Energy Cliff Draws Closer

Federal tax incentives are continuing to drive a surge in solar and wind deployments through mid-2026, but chances are good that the momentum will hit a wall soon after. Projects must either (1) begin construction by mid-2026 and be placed into service by 2030, or (2) be placed into service by the end of 2027 to receive clean energy tax credits.

This compressed timeline is forcing data center operators to accelerate procurement decisions and lock in renewable power agreements now or face a significantly different market landscape to address renewable and clean energy targets.

The consequences may extend beyond individual project timelines. When these incentives disappear, new solar and wind capacity will slow while older coal plants will remain operational longer than planned. Data center operators working toward net zero targets may find few options for new renewable power purchases.

Companies will likely turn to longer-term renewable energy procurement now, while those who don’t may face higher costs and limited supply in a constrained market. The window for taking advantage of current renewable energy economics is closing fast.

Prediction #3: Market Consolidation Follows the Power

The data center boom attracted a flood of new entrants over the past two years. Developers from other sectors recognized opportunity and rushed in, acquiring land and requesting power without always securing the infrastructure or capital needed to execute. This speculative activity is creating artificial scarcity and inflated competition for resources.

Yet, not all these companies will survive 2026. The combination of limited available land, constrained power supply, and substantial capital requirements will force weaker players out. Chances are good that companies that purchased property without confirmed power access will struggle to deliver. Those without deep pockets or committed customers will find themselves unable to compete.

The resulting consolidation will benefit those established operators with proven execution capabilities. As speculative players exit, pressure on land and power resources should ease. The market correction will be painful for some, but it should ultimately push the industry toward more sustainable growth patterns built on real demand instead of speculative bets.

Prediction #4: Cooling Strategies Shift Toward Water Conservation

Data center operators are increasingly adopting waterless cooling technologies and closed-loop systems as part of water-conscious facility design strategies in areas of high water stress. Traditional evaporative cooling remains energy efficient in suitable climates and appropriate in many locations, but operators are recognizing that cooling choices should match local conditions rather than following a one-size-fits-all approach.

Closed-loop chilled water systems are becoming more popular because they recirculate coolant continuously with minimal or no water loss. Some facilities are exploring entirely waterless approaches using advanced air cooling or alternative fluids. However, local water availability is becoming an increasingly important factor in that cost equation. In water-stressed regions or communities particularly concerned about water usage, the economic and reputational costs of evaporative cooling may outweigh its energy efficiency advantages, making closed-loop and waterless systems more attractive.

The key change is strategic thinking about cooling decisions. Rather than defaulting to a single approach across all facilities, operators are evaluating local water availability and community concerns when designing cooling infrastructure. This geographic sensitivity to water resources represents smarter engineering practice as data centers balance energy efficiency against environmental stewardship and community relations.

Prediction #5: Nuclear, Geothermal, and Energy Storage Gain Momentum

While solar and wind incentives face expiration, nuclear power, geothermal energy, and energy storage systems retained their tax credits, creating a policy environment that favors these technologies through 2027 and beyond.

Data center operators are responding accordingly. Nuclear and geothermal power offer the constant baseload capacity that facilities require, without the intermittency challenges of renewables. Energy storage systems provide grid flexibility and backup power while supporting renewable integration. These technologies align with customers’ sustainability requirements while offering operational advantages.

The challenge is getting these technologies deployed quickly enough. Small modular reactors and advanced nuclear technologies show promise but face lengthy development and approval processes. Energy storage supply chains need domestic scaling to meet demand. Despite these hurdles, expect accelerated investment in both technologies as the renewable incentive cliff approaches and operators seek alternative paths to clean energy goals.

Preparing for What Comes Next

Data center operators face a different sustainability situation in 2026 than anyone expected two years ago, but the core business drivers haven’t changed.

The operators who succeed will be those who stay focused on these fundamentals and keep their heads down when necessary, building the right infrastructure for local conditions, and making decisions based on what customers request rather than whatever’s dominating the news cycle. When politics change again, the companies that spent their time executing will be better off than those who spent it talking.

About the Author

Jenny Gerson, Senior Director of Sustainability at DataBank, leads ESG initiatives, aiming for net zero scope 1 and 2 emissions by 2030. With 20+ years in sustainability and 10+ in data centers, she specializes in corporate sustainability, cleantech research, and environmental management.

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