Michigan House OK’s data center tax break that advocates say threatens climate goals.
The Michigan House passed one of two data center tax breaks on Wednesday over advocates’ concerns that the incentives could derail the state’s climate goal and increase residential utility costs.
The House passed Senate Bill 237 by a vote of 56 to 41. This bill exempts large data centers operated by companies like Google and Microsoft from use taxes on equipment through at least 2050, with a sunset of 2065 for data centers built on brownfields. This bill will now be sent back to the Senate.
A companion bill, HB 4906, which provides data centers with sales tax exemptions, was pulled from voting after twice failing to garner enough votes.
State Rep. Joey Andrews (D-Saint Joseph), primary sponsor for the second bill, said he plans to bring it back during the “lame duck” session following the general election.
The House vote could attract more large data facilities to Michigan, which environmental advocates say threatens the state’s 2023 renewable energy legislation. The legislation sets a goal of achieving 100% renewable generation by 2040, but it contains an “offramp” provision that allows coal or gas plants to stay online if there’s inadequate generation to meet demand.
Data centers could also impact the state’s water resources by using millions of gallons of groundwater per day to cool servers, potentially increasing rates for residential customers if utilities need to build out new infrastructure to serve the facilities.
Chris Hill, policy associate with the Michigan Environmental Justice Coalition, told Planet Detroit that passing the tax breaks “completely undermines” the state’s renewable energy legislation. He pointed out that data centers in other states have kept coal generation online, led to proposals for new gas plants and required dirty diesel generators for backup power. It was recently announced that Three Mile Island, site of the worst commercial nuclear accident in U.S. history, will reopen to supply power for Microsoft data centers.
Hill said of impacts from data centers:
It’s just a complete retrogression on a bunch of states’ climate goals.
However, Andrews has said the legislation could be transformational for his district, which includes Benton Harbor. The district could see an estimated $21 million in annual property taxes.
In an email shared with Planet Detroit, Andrews replied to a letter from the Environmental Justice Caucus, signed by groups like MEJC and the Ecology Center, where he accused them of being “fanatical” for trying to block developments that could bring jobs and investment to a majority Black community.
“I leave it to your therapists to deal with your collective narcissism,” he wrote.
Hill said he had, “never seen a Democrat address a part of the broader (Democratic) coalition like that in an official correspondence.”
READ the latest news shaping the data centre market at Data Centre Central
Michigan House OK’s data center tax break that advocates say threatens climate goals. source