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Bill Requires Data Centers, Crypto Miners to Match Energy Goals

In Oregon, data centers and cryptocurrency miners would have to adhere to the same standards as big private utilities. If the bill passes, violation of the rules would result in hefty penalties and withheld tax breaks.

power lines heading towards an Amazon data center
Power lines stretch to an Amazon data center near Boardman. Regional carbon emissions have soared since the tech company began expanding in eastern Oregon a decade ago. (Dave Killen/TNS)
(TNS) — Data centers and cryptocurrency miners would have to conform to Oregon’s new clean energy goals under a bill before the Legislature, which would levy hefty penalties and withhold tax breaks for companies that fail to comply.

“We’re in a climate emergency. We have to act. And big data centers that are using an excessive amount of energy really need to be on board,” said Rep. Pam Marsh, D- Ashland, one of three sponsors of House Bill 2816. She said it would hold data centers to the same standards Oregon set for big private utilities two years ago.

Amazon, Apple, Google, Facebook and Twitter all operate large data centers in Oregon. They’re here because the state has ready access to water, relatively cheap electricity and, primarily, because Oregon offers some of the nation’s biggest tax breaks for server farms.

The big tech companies saved more than $170 million in local property taxes last year alone, according to a tally by The Oregonian/OregonLive. They have cumulatively saved more than $820 million since the data center industry arrived in Oregon 15 years ago.

All the tech companies have their own clean energy goals that appear consistent with Oregon’s objectives, according to Marsh. Apple and Facebook, for example, have funded Oregon clean energy projects to help power their data centers in Prineville.

But Amazon, Oregon’s largest operator of data centers, doesn’t appear to have done anything to provide clean energy to its growing operations in Morrow and Umatilla counties.

An investigation last year by The Oregonian/OregonLive found carbon emissions per megawatt hour have increased 543 percent since Amazon’s arrival in the Umatilla Electric Cooperative’s service territory in 2010.

“We’re not asking the data centers to do anything different than we’re asking from the rest of the state,” Marsh said.

Amazon did not respond to a request for comment about the Legislation. Umatilla Electric said it has reviewed the draft bill but declined to weigh in until it has a better understanding of its potential impact on the cooperative and its members.

The climate legislation Oregon’s Legislature passed in 2021 required the state’s major electric utilities, Portland General Electric and PacifiCorp, to make huge reductions in greenhouse gas emissions beginning in 2030 and to totally eliminate them by 2040. But most of those rules don’t apply to smaller, public utilities in other parts of the state.

That’s partly because many of these smaller utilities have access to federal hydropower, which doesn’t emit carbon.

Since data centers use huge amounts of electricity to power and cool their computers, though, the utilities in the small communities where they operate have had to buy power on the open market to meet the tremendous new energy demand. And most of that power is from gas-fired generators, which are major contributors to climate change.

“Data centers are a good thing. We can’t do most of our work these days without them. But data center operators should be good corporate citizens, just like everybody else,” said Joshua Basofin of Climate Solutions Oregon, which championed the 2021 power bill and is helping rally support for the new data center legislation.

The new bill broadly follows the targets set by the prior legislation, requiring data centers eliminate carbon emissions by 2040. But it would require data centers to begin the reductions sooner, cutting carbon emissions by 60 percent by 2027.

The requirements also apply to computers mining bitcoin and other cryptocurrencies. Crypto miners earn currency by instructing computers to perform complex mathematical tasks. That heavy workload uses large volumes of electricity.

Relatively inexpensive power attracted large numbers of crypto mines to rural parts of Washington several years ago, straining utility capacity in some small communities. Oregon utilities say they haven’t seen that level of influx, probably because their power rates are a little more expensive than in Washington. Small differences in pricing can make a big difference in crypto miners’ profit margins since the volume of electricity used is so large.

HB 2816′s backers say their proposed legislation covers crypto mining to guard against Oregon ever becoming a destination for large, carbon-emitting mining operations.

Companies that don’t comply with the new rules would lose their enterprise zone tax breaks, which are worth tens of millions of dollars annually to Oregon’s large data center operators. They would also pay big fines — $12,000 per megawatt hour, per day. That could cost a large data center operation tens of millions more each year, depending on its power mix.

Since some large tech companies are worth more than $1 trillion, Basofin said big penalties are necessary to ensure they comply.

“Most data center operators are already in compliance or will be by 2030,” Basofin said. “The penalties function as a backstop and should be consequential enough to drive change.”

Bob Jenks tracks Oregon energy policy as executive director of the Citizens’ Utility Board, a nonprofit established by voters in 1984 to advocate for residential power customers. He said the new legislation is a logical extension of the new climate change protections the state established two years ago.

“I think the idea of not creating a loophole where data centers can get around Oregon’s clean energy goals makes some sense,” Jenks said.

The bill’s prospects in the Legislature may depend on how the public utilities that serve the data center industry respond, according to Jenks. But he said tech companies may be open to climate legislation — if it conforms with their own goals around carbon emissions.

“Most of the big data centers are owned by companies that say they want to go to clean energy,” Jenks said.

©2023 Advance Local Media LLC. Distributed by Tribune Content Agency, LLC.
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