Japan’s AI goldrush faces backlash as data centers sprout up in urban areas

Residents in Inzai, Japan, are suing to stop a 52-meter-tall data center from being built next to their condos, citing concerns over views, noise, heat, and fire risks. The backlash highlights a growing conflict as Japan rapidly expands AI infrastructure without adequate regulations, straining communities and the environment.

INZAI, CHIBA PREF. – When Erin and Munekazu Tanikawa moved into a newly built condo in Inzai, a suburban community east of Tokyo in December 2022, they envisioned an ideal life with a sweeping view from their balcony and easy access to both nature and central Tokyo. They knew that something would be eventually built on the parking lot next to the condo, just a five-minute walk from the nearest train station, but assumed it would be something like a community center or a supermarket. So they were in for a huge surprise in April last year when they spotted a notice stating the plot would be turned into a 52-meter-tall data center, which, if completed as planned, would tower over their own 15-story building. The Tanikawas are concerned that this massive facility would not only ruin their views but also raise environmental and health risks due to noise pollution and excess heat produced by data-processing operations. They also worry about the possibility that heavy oil, stored on-site for backup power generation, could catch fire. In March, 10 residents from the area’s three condos sued a private inspection company that issued a building permit for the project. Japan, which was slow to embrace artificial intelligence, is now rushing to catch up with the West and the rest of Asia in adopting the technology. In its basic plan for AI adopted last December by the Cabinet Office, the government pledged it would “make Japan the world’s most AI-friendly country.” The communications ministry projects the nation’s data center service industry to nearly double its market size from 2023 by 2028 and reach ¥5.08 trillion $31.5 billion . But amid the AI gold rush, laws and regulations have not kept pace with the development, causing friction with communities, mostly in large cities and their outlying suburbs, where a majority of the nation’s data centers are located. Data centers consume massive amounts of electricity and water https://www.japantimes.co.jp/environment/2025/09/28/energy/data-centers-green-goals/ , which could put a strain on public infrastructure. Even a small-scale facility needs about 30 megawatts, equivalent to the total power consumption of around 10,000 households, experts say. In order to cool the servers that power increasingly data-heavy apps, websites and platforms, a 30-MW data center consumes about 700 to 1,500 tons of water every day. The fact that data centers are generally shrouded in secrecy for security reasons has added to the frustration of residents, who increasingly compare them to other unwanted facilities such as waste incinerators and mega-solar projects. “We are not saying data centers are not needed,” Munekazu Tanikawa said on May 19 after the first hearing of the civil suit, which seeks the nullification of the building permit granted by Japan ERI in January. Japan ERI declined to comment on the case. “We’re simply asking them to coexist with us by choosing an appropriate location. We don’t believe data centers should be built in areas where homes are concentrated, directly in front of a train station or at the expense of the natural environment, even if legal loopholes allow it.” Experts say the trend underscores the need for a broader debate about how Japan should balance the expansion of the critical infrastructure powering its economy with the environment and welfare of local communities. From Tokyo Tower to the suburbs Some have dubbed Inzai “the Ginza of data centers” because of the heavy concentration of such facilities in the city, including one owned by Google. But the city of 110,000 people is not the only municipality where data centers are facing backlash from the community. Protests against planned data center developments have intensified in the neighboring city of Shiroi in Chiba Prefecture — where two lawsuits have been filed — as well as the city of Saitama and the Tokyo municipalities of Akishima, Hino, Kodaira and Koto Ward. Even some of Japan’s most famous landmarks are not immune to the industry’s thirst for more server capacity in the digital age. At the foot of the 333-meter Tokyo Tower in the heart of the capital, a 40-meter-high data center is currently under construction in an adjacent plot. “I’m actually kind of worried,” says Billy Guba, 28, a Filipino technical trainee from Chiba Prefecture who was passing through the area earlier this month. He says he had been unaware that a data center was being built there. “Tokyo Tower is one of the most iconic things in Japan, especially in Tokyo. I think it would impact tourism since it’s going to be very, very close.” It’s hard to know how many data centers there are in Japan at the moment, and how many more are in the works. Japan Data Center Council, a long-standing industry group of data center operators, lists about 250 facilities on its website, but even its officials say the list is far from comprehensive. Naohiro Masunaga, an official at the council, says that the list does not include proprietary data centers run by universities or large businesses. If all these computing centers are counted, there could be 5,000 or 6,000 facilities in Japan, he says. Furthermore, the industry structure changed dramatically from around 2015, when demand for cloud services, especially from hyperscalers such as Google, Apple, Facebook, Amazon and Microsoft, as well as Alibaba and Tencent, began to surge, Masunaga says. “These hyperscalers require data capacity beyond their ability to build data centers, so third-party data center service providers, and even real estate developers, often from abroad, have started entering the market,” he says. “We have a data center bubble now. … There’s been a rush of data center construction, but with little clarity on who is really behind them.” These newer entrants don’t make the location of data centers public and don’t reply to the council’s surveys, so the group stopped updating the list, he says. There are even developers who buy properties claiming that they plan to build data centers, but whose long-term plans are unclear, he added. “In Japan, whether you are building a data center, a condominium or an office building, the expectation is that you first obtain the understanding and consent of the local community,” Masunaga says. “But some of the newer developers come with the attitude of, ‘We’re not breaking any laws, so what’s the problem?’ I’m not saying every company behaves that way, and there are responsible operators as well, but there certainly are some developers that have caused conflict with residents.” In response to a recent rise in disputes, the council in May announced community coexistence guidelines to urge operators to not only comply with laws but also take measures to address various environmental concerns by residents, such as landslide and flooding risks; excess heat from the facilities; issues arising from noise, vibrations, exhaust gas and odors; construction noise and dust; the obstruction of views; and threats to animal and plant habitats. At the same time, Masunaga says people should realize that the surge in demand is driven by their own changing lifestyles. “If you get on a packed commuter train, there might be 200 or 300 people there, and everyone is watching a different video,” he says. “Data centers support that. Compared with television broadcasting, the scale of required data is overwhelming. And virtually every service we use every day, like online shopping, is delivered through our smartphones. Data centers are being built to provide all of those services.” Tetsuharu Oba, a professor at Kyoto University and an expert on urban planning, says that creating nonbinding industry guidelines is not enough. “While I think the industry guidelines are meaningful, I think it’s quite difficult to ensure they are observed or reflected in actual projects. Ultimately, it’s up to the government to follow through on these issues.” Global pushback In other parts of the world where large-scale data center projects have been the source of community ire, national and local governments have stepped in. In the U.S., more than 100 moratoriums, including ones calling for permanent construction bans, have been proposed at both local, state and national levels. For example, Seattle, whose metropolitan area is home to Amazon and Microsoft, recently passed a yearlong ban on new AI data centers to protect residents from environmental risks and rising electricity bills. In Europe, the Netherlands and Ireland enforced full moratoriums on data centers, though both countries have recently relaxed restrictions under certain conditions. Oba argues that, as data centers grow larger and more powerful, Japan needs national or regional policies governing their locations. They can also become security targets, as demonstrated by recent conflicts in the Middle East, Oba notes. “Data center locations need to be managed at the scale of broader regions or metropolitan areas, not individual municipalities,” he says. “Otherwise, it will be difficult to comprehensively address issues such as electricity supply, water resources and the various environmental impacts associated with them.” Inzai’s project, called Inzai 5, is undertaken by London-based data services company Colt through a special purpose company, backed by investments from major trading firm Mitsui & Co., Canadian pension fund CPP Investments and U.S.-based asset manager Fidelity Investments. It is a hyperscale facility, meaning that they are designed to handle massive amounts of data, computing and storing needs and are capable of expanding or reducing their resources quickly to meet the demands of users. As the name suggests, it is Colt’s fifth data center in Inzai and it is also the one located closest to people’s homes. In a document obtained through an information disclosure request by residents, Inzai city officials were recorded as having a series of meetings in 2024 and 2025 with the developers over Inzai 5. On one occasion, the city officials asked the businesses to reconsider the project because they foresaw trouble with residents. The city also sounded the businesses out about moving the facility to another location nearby. The developers declined, highlighting the project’s importance as a facility powering AI in Japan and hinting at the possibility of a lawsuit by investors if it experienced any delay. In the end, Mayor Kengo Fujishiro said in December that there was nothing in the city’s legal power to “stop a private-sector development project carried out on privately owned land in accordance with existing laws and regulations.” Satoshi Oikawa, a lawyer representing the plaintiffs in the Inzai suit, says that the biggest issue at stake is how to classify data centers under the law. When data center operators file requests for building permits, they most often list them as “offices” or “others data centers ” under the Building Standards Law. But in reality, their presence is similar to that of a factory or a warehouse and therefore should be treated as such, Oikawa argued. A data center is equipped with servers, networking equipment, high-speed communications lines, cooling systems, large-capacity power supplies, backup generators and fuel tanks for emergency power generation. Employees are stationed on site and data-processing operations are carried out around the clock. “This is, in essence, a factory,” he said at the court hearing. “In today’s information society, data has become at least as valuable as physical goods, if not more so. Accordingly, facilities that produce data, not merely physical products, should also be regarded as factories. “A data center is the modern-day equivalent of a factory.” The next trial hearing date is set for Sept. 1, where Japan ERI, which was a no-show in the first hearing, is expected to make a rebuttal on the case. “People may dismiss our case as just another NIMBY “not in my backyard” dispute,” Munekazu Tanikawa says. But at the pace data centers are being built now, more people are likely to find themselves in similar conflicts in the future, he argued. “If you don’t support other people’s fight, it may be your turn next time.”