June 23, 2024

Michigan Democrats are poised to pass legislation aimed at attracting big-tech data centers, but opponents say the bills would destroy nation-leading climate laws the same legislators approved in November because the centers consume massive amounts of electricity.

The November climate bills included an “offramp” that would keep gas or coal plants running if renewable sources could not handle the energy grid’s load, and the stipulation would almost certainly be triggered, opponents say.

That would put an end to Michigan’s climate legislation that requires 100% renewable energy by 2040, and dramatically increase electric rates for residential customers, critics say. Meanwhile, the centers would potentially consume millions of gallons of water daily, an unprecedented draw from the Great Lakes, which hold 95% of the nation’s freshwater.

The “sheer volume of electricity required by these things is almost unfathomable”, said Christy McGillivray, legislative director for the Sierra Club of Michigan, which is lobbying against the bills.

“These are very clearly a nightmare, because they use so much energy and water that without mandatory protections for ratepayers and guardrails that require renewable energy buildout, we are not going to be able to cut emissions like we want to,” McGillivray said.

The data-center bills would provide tax incentives to tech companies lobbying for them, including Google, Amazon and Microsoft.

Democratic leadership recently pushed the bills through the house and senate, both controlled by Democrats, without environmental or consumer protections called for by progressive lawmakers. But environmental groups mobilized in May and peeled off enough support to stall the bills in reconciliation in the house.

Progressive lawmakers are now in a last-ditch stand to add environmental protections to the bills. Big tech’s lobbyists are pushing legislators to quickly move the legislation, said Rosemary Bayer, a senator demanding the addition of environmental and consumer protections.

“It’s very hard to stand up to pressure from big companies like that,” she said, noting the tech industry makes campaign contributions at the state level, though she said she did not see anything “transactional”.

Michigan isn’t alone, as data centers are quickly emerging as a serious threat to the nation’s climate goals. Tech companies use them to store servers and networking equipment that process the world’s digital traffic, and artificial intelligence is driving a boom.

The facilities demand up to 50 times more energy than the typical office building and the Department of Energy labeled them one of the most “energy-intensive building types”. Data centers worldwide may use more electricity than Japan by 2026.

Similar centers have already derailed Virginia’s climate goals, Wisconsin is considering keeping fossil-fuel plants online to accommodate them and Omaha ratepayers are funding a gas plant being built largely to keep up with data-center-driven demand.

Even without data centers factored into electric-use forecasts, Michigan’s largest utilities have claimed energy use will be so high in the coming years that fossil-fuel plants will need to stay open.

Environmental groups and their allies in the Michigan legislature say simple amendments would address their concerns. One would require tech companies to either build their own renewable-generation sources or use clean-energy programs in place with local utilities.

Progressives are also demanding protections for electric rate payers. Michigan in 2016 rewrote its energy laws and shifted the grid’s cost burden from industrial to residential customers, and consumer advocates fear a scenario in which residents are forced to subsidize tech companies’ electricity use and infrastructure buildout.

“Our concerns are pretty valid, and we absolutely have to have ratepayer protection, renewable-energy generation and water conservation attached to it,” McGillivray said.

Data centers can draw up to 5m gallons of water daily because most use evaporative cooling systems to cool their operations. In 2016, a Nestlé bottled-water facility in Michigan ignited an acrimonious controversy when it proposed pulling just 576,000 gallons daily from the Great Lakes basin.

Alternative systems that do not require high levels of water are cost-effective and environmental groups are pushing for stipulations that prohibit evaporative cooling.

Negotiations are continuing this week, Bayer, the senator, said, and Democratic leadership is eager to pass the bills before the June summer break. It is unclear why some Democrats have resisted including environmental and consumer protections. Kevin Hertel, a senator and one of the bills’ sponsors, did not respond to a request for comment.

“The big companies that want to come here can afford to pay a little of the bill and we have to make sure we protect ratepayers and the state’s resources – that is critical,” Bayer said.

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