Briefing 02/13/2025

Feb 13

This week's roundup: In Washington state a study could tighten tax breaks and impose energy efficiency mandates, threatening its status as a data center hub. Reno’s proposed moratorium on data centers reflects rising activist pressure that could slow approvals in water-stressed regions. Meanwhile, Trump’s BLM pick signals a fossil fuel-friendly shift, potentially lowering energy costs but sidelining renewables—raising risks for sustainability-focused data center operators.

Washington Governor Orders Study on Data Centers’ Impact on Energy, Jobs, and Taxes

Washington state Gov. Bob Ferguson signed an executive order forming a workgroup to evaluate the impact of data centers on the state’s energy consumption, tax revenue, and job creation. This comes after investigative reporting raised concerns about the industry’s strain on Washington’s power grid and the effectiveness of its tax incentives. The workgroup will include state officials and industry representatives and will deliver recommendations by December.

Why it matters:

Regulatory Scrutiny on Energy Use: With AI-driven demand increasing data center electricity consumption, this study could lead to stricter regulations on energy efficiency and sustainability requirements.
Potential Changes to Tax Incentives: Washington has been a hub for data centers due to generous tax breaks, but the review could result in adjustments that impact future investment decisions.

Bottom line:

Washington’s reassessment of its data center industry signals growing state-level oversight on energy use and tax incentives. The findings could shape future policies, potentially influencing data center expansion and sustainability practices nationwide.

Trump Nominates Oil and Gas Advocate Kathleen Sgamma to Lead Bureau of Land Management

President Donald Trump nominated Kathleen Sgamma, head of the Western Energy Alliance, to lead the Bureau of Land Management (BLM). Sgamma is a long-time advocate for the oil and gas industry and has opposed environmental regulations that limit energy development on federal lands.

Her nomination is drawing sharp criticism from environmental groups while gaining support from Republican lawmakers.

Why it matters:

Lower Energy Costs: A pro-fossil fuel BLM could slow renewable energy projects but stabilize or lower energy prices, benefiting power-hungry data centers.
Faster Permitting: Deregulation may streamline approvals for data centers on federal land by cutting environmental reviews, accelerating construction timelines.
Renewable Energy Challenges: A shift away from Biden-era conservation policies could delay solar and wind project approvals, limiting clean energy options for data centers. That could raise scrutiny on sustainability goals and opposition from environmentalists.
Expanded Federal Land Access: A pro-business BLM may open more federal land for industrial use, enabling data center growth in energy-rich areas but fueling sustainability concerns.

Big Picture:

Kathleen Sgamma, will be under Leslie Beyer’s supervision, as we mentioned last week, both appointments align with a pro-industry use land policy of the new administration. This could streamline data center expansion, especially near traditional energy hubs, but may slow federal support for renewables, challenging clean energy-focused companies.

Reno Planning Commission Recommends Pause on Data Center Permits

The Reno Planning Commission voted 4-2 to recommend a temporary halt on new data center permits, following opposition from the Sierra Club Toiyabe Chapter. The environmental group filed an appeal in January 2025 against the approval of the Webb Data Center, citing concerns over energy and water consumption, as well as transparency issues.

Commissioner Manny Becerra proposed the resolution to give the city time to assess the economic and environmental impacts of data centers. Some commissioners also raised concerns over the lack of clear policies and guidelines for approving these projects. The resolution now moves to the City Council for review.

Why it matters:

Activist Pressure: The move by Reno’s Planning Commission signals the growing impact of anti-data center activists on shaping local regulations and increased scrutiny of data center development.
Growing concern: Local authorities are weighing the trade-offs between economic benefits and resource consumption of data centers, particularly energy and water use, which could lead to stricter sustainability requirements for future projects.
Regulatory Uncertainty: Reno’s potential moratorium signals a broader trend of local governments tightening scrutiny on data centers, slowing approvals, and introducing new regulations.

What’s next?

Reno’s City Council will have to decide on the moratorium, likely under pressure from anti-data center activists, as seen in other cities. If adopted, the moratorium could set a precedent for other municipalities to re-evaluate their policies, potentially slowing data center expansion in Nevada.