This case study examines the strategic tension between Singapore’s ambition to become a global artificial intelligence (AI) hub and its inherent physical and environmental constraints. While AI and its necessary data centre infrastructure are viewed as foundational for future economic competitiveness, their high energy and water demands conflict with Singapore’s net-zero 2050 climate targets, limited land mass and tropical climate. The study details the government’s multifaceted response, including the 2019–2022 data centre moratorium, the subsequent implementation of strict "Call for Applications" (CFA) exercises with rigorous energy efficiency standards and the 2024 Green Data Centre Roadmap. By contrasting Singapore’s proactive regulatory framework with international approaches in the European Union, United States and Australia; the case explores how the city-state leverages regulatory innovation to turn resource scarcity into a competitive advantage, aiming to set global benchmarks for sustainable digital infrastructure.