Oregon could tighten climate regulations for data centers, cryptocurrency farms

Lawmakers are trying to close a loophole for data centers and force some of Oregon’s biggest carbon emitters to move to cleaner sources of power.

House Bill 2816, scheduled for a committee vote on March 27, would require every carbon emitter to follow the same rules as major utilities. A 2021 law set ambitious timelines for utilities, including the state’s two biggest electrical providers, Portland General Electric and Pacific Power, to lower their carbon emissions and switch to non-carbon-emitting power sources by 2040.

But that law exempted local publicly-owned and co-op power utilities, which are common in eastern Oregon – and some of the state’s largest and fastest-growing energy users.

An increasing share of the power from these local utilities goes to large industrial data centers for companies including Facebook, Apple and Google, as well as to cryptocurrency farms, where banks of thousands of computers run complex math problems to virtually “mine” for cryptocurrencies like bitcoin.

Data centers have flocked to Oregon for its relatively cheap hydropower and favorable tax incentives. Cryptocurrency farms are less common in Oregon but have been a major roadblock to decarbonization in other states. In New York, for example, such facilities repurposed old fossil fuel power plants to provide their energy, setting back the state’s climate goals and resulting in a two-year moratorium passed late last year.

Supporters of House Bill 2816 say it will make every carbon emitter play by the same rules as major utilities. Critics argue that the bill adds unnecessary regulation and threatens economic development in the least developed regions of the state.

Rep. Pam Marsh, an Ashland Democrat and one of the bill’s sponsors, told the House Committee on Climate, Energy, and Environment during a public hearing Monday that a large data center can use as much electricity as 80,000 homes, several times the usage of an entire rural community.

When their demand goes beyond what their local utilities can produce, as they increasingly have in recent years, utilities have to buy more power from elsewhere. These outside purchases often contain carbon-intensive power sources like coal and gas.

“We realized that we have these very large operators who are huge electricity users, way outside anybody else,” Marsh said. “So what we’re saying is, if you are one of these outsized users, we’d like you to look at your electric power use and align with us on our 2021 goals.”

The bill faces strong opposition from many industry groups and eastern Oregonians, who claim it unfairly targets one region of the state while threatening thousands of high-paying jobs in rural areas. State Sen. Daniel Bonham, R-The Dalles, said businesses in his district were being targeted and could choose to leave for a state with less regulation.

“I can’t think of another statewide energy policy that so narrowly calls out a specific industry or industries,” Bonham said. “It’s clear that this proposed policy isn’t considering the long-term ramifications of sending businesses to other states. We need to look no further than Intel to know that these organizations have options.” Intel, Oregon’s largest private employer, last year picked Ohio over Oregon for a $20 billion computer chip manufacturing facility.

Sharla Moffett, senior policy director for Oregon Business and Industry, the state’s largest business policy advocacy group, framed targeting eastern Oregon as an economic equity issue.

“Eastern Oregon is already disadvantaged as opposed to the more populous west side,” Moffett said. “We cannot imagine why policymakers would choose to restrict economic opportunities for one region of the state that does not enjoy the same economic privilege as another region does when so much policy discussion is focused on addressing the needs of underserved communities.”

Lawmakers plan to remove one especially controversial part of the proposal. Under the bill’s original wording, violators faced removal from the state’s enterprise zone tax benefits, which include some of the most generous incentives in the country.

A 2022 Business Oregon report estimated that enterprise zones deferred $2.5 billion in property taxes from affected businesses between 2007 and 2020. A proposed amendment removing that penalty reduced opposition to the bill, including from the League of Oregon Cities, an advocacy group representing all 241 cities in the state.

Not all rural Oregonians oppose the bill. Alan Journet of Jacksonville, representing the nonprofit advocacy group Southern Oregon Climate Action Now, testified in favor of the bill, citing the impact climate change related disasters have on Oregon’s smaller communities.

“Those of us living in rural southern Oregon are offended that businesses are attempting to bypass the requirements for HB 2021 and thereby increase our risk of suffering reduced snowpack, drought, wildfire and heat waves,” Journet said.

Supporters and opponents both acknowledged that many data centers are already making plans that meet or exceed Oregon’s climate goals. One exception may be Amazon, which reportedly plans to run at least one of its Oregon centers on gas-powered fuel cells, a move that would likely increase its carbon emissions.

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