Britain has set out to become a leading AI economy, and the physical infrastructure behind that goal is growing at pace. The AI Opportunities Action Plan and the decision to classify data centres as critical national infrastructure have given developers a clearer route to market. Data centres are forecast to add £44 billion to the UK economy by 2035.
The government designated data centres as critical national infrastructure in September 2024 and published the AI Opportunities Action Plan in January 2025, giving the sector a clear place in national policy. The question that followed was how that growth would sit alongside the legally binding target of net zero by 2050.
That picture has become considerably clearer during 2026. Parliament has approved the next carbon budget, and regulators have begun rebuilding the grid connection process with data centres at its centre.
Fresh research also points to AI as a tool for accelerating decarbonisation. Taken together, these developments set out a practical framework for growing the country’s computing infrastructure on clean power.
Room for rising demand
The Seventh Carbon Budget was approved by Parliament on 24 June 2026, after Ed Miliband, the Secretary of State for Energy Security and Net Zero, laid the draft order before the House on 2 June. It caps UK greenhouse gas emissions for the period 2038 to 2042 at 535 MtCO2e, equivalent to a cut of around 87% against 1990 levels. The government adopted the level recommended by the Climate Change Committee in full.
The budget matters for the digital economy because of the assumptions behind it. Electrification and low-carbon electricity supply provide the largest share of emissions reductions in the pathway, at 60% by 2040. Parliamentary scrutiny of the budget noted that NESO’s upper estimate of additional data centre demand, between 30 and 71 TWh by 2050, sits within the overall increase in electricity use the pathway anticipates.
Carbon budgets are set 12 years ahead, which gives investors and businesses time to plan capital spending with confidence. A delivery plan setting out the policies needed to meet the budget is due to follow.
Reforming the grid queue
Access to the grid has become the central practical question for new data centres. Ofgem reports that contracted demand in the connection queue rose from 41GW in November 2024 to 125GW by June 2025, against a peak national demand of 45GW recorded in February 2026. NESO identified around 140 data centre projects in the queue totalling roughly 50GW, of which 71 projects, worth around 20GW, had reached a final investment decision.
The gap between those two figures explains the direction of reform. Ofgem opened its Demand Connections Reform call for input on 13 February 2026, organised around three strands named Curate, Plan and Connect. Proposals include stricter readiness tests to clear speculative applications, greater scope for developers to build their own high voltage connections, and ramped agreements that allow modular facilities to be energised in phases.
Flexibility could offer the quickest route to power. Ofgem is working alongside the AI Energy Council on arrangements under which data centres that reduce non-essential computing loads at peak times could connect sooner. The regulator published a summary of responses on 16 June 2026, with final decisions expected later in 2026.
Priority for strategic projects
The government has proposed a parallel set of measures. A consultation published on 11 March 2026, which closed on 15 April, set out plans to give priority grid access to strategically important demand, including data centres, AI Growth Zones, EV charging hubs and electrified industrial sites. Data centres in some Growth Zone locations could also receive discounts on their electricity bills.
AI Growth Zones are designed around sites with access to at least 500MW of power. Directing investment towards locations that are already power-ready is intended to ease pressure on congested parts of the network and give developers a clearer timetable. The detail remains subject to final decisions, and the measures may yet be refined.
Clean power at the centre
The AI Energy Council was unveiled in January 2025 as part of the government’s response to the AI Opportunities Action Plan. Co-chaired by the Technology and Energy Secretaries, it brings together regulators, energy suppliers and technology groups to align the clean energy mission with the growth of computing infrastructure.
Its remit covers clean sources such as renewables and nuclear, along with advice on the energy efficiency and sustainability of data centres, including water use. The council also considers how AI can be adopted securely across the energy network itself, which places the technology inside the running of the grid as well as on its demand side.
Business leaders back AI
KPMG surveyed more than 1,200 senior leaders from major companies across 20 countries, 157 of them in the UK, for its report AI’s dual promise: Enabling positive climate outcomes and powering the energy transition. Among UK energy and technology leaders, 86% said their organisation would take longer to reach its net zero goals without AI. Almost all UK respondents, at 96%, expect AI to help accelerate the move to renewable energy over the next three years.
Views on the wider climate effect were also largely positive. Two thirds of respondents expect AI to have a positive overall impact on the climate over the same period, and a further 24% anticipate a neutral effect. Leanne Allen, Head of AI at KPMG in the UK, acknowledged the energy question directly, observing that “It is no secret that AI consumes a lot of energy,” particularly during model development and deployment.
The survey also shows where that energy is expected to come from. Just over a third of respondents, 35%, have a strong preference for clean energy to support their growth plans, and a further 14% regard it as non-negotiable. Some 47% of energy consumers expect more than half of their needs to be met by renewables within three years, despite rising demand.
Smarter net zero planning
The Tony Blair Institute for Global Change approached the question from the other side in its March 2026 report, AI for Climate: Redesigning the UK’s Net-Zero Planning. The report notes that clean energy projects, EV charging, heat networks and industrial decarbonisation schemes are being commissioned and built at a steady pace. Overall progress has been slowed by planning that operates sector by sector, using tools designed for individual projects.
The institute proposes an AI-enabled planning system that is integrated and anticipatory, able to manage interdependence, spatial trade-offs and the sequencing of projects at scale. Its authors are clear that the technology would support the judgement of planners, policymakers and regulators by giving them a shared view of the whole system. They argue this can be delivered through existing mechanisms, including targeted capacity funding, shared tools and centrally provided data services.
A lead in both fields
The UK was the first major economy to write a net zero target into law, a step that helped encourage more than 140 other countries to set their own. The same early action is now visible in digital infrastructure, where connection rules are being redesigned around strategic demand and clean supply.
With the Seventh Carbon Budget in law and the grid queue under reform, the framework for building AI capacity on low-carbon power is taking shape. The final decisions from Ofgem and the government will set the pace at which new data centres connect.