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Data centers pit industry against environmentalists

By Dave Williams, Bureau Chief

Capitol Beat News Service

ATLANTA – The debate over a tax break the data center industry has enjoyed in Georgia for the last six years has moved from the General Assembly to the governor’s office.

The legislature passed a bill during this year’s session suspending for two years a state sales tax exemption on purchases of data center equipment aimed at attracting more data centers to Georgia.

The measure also would create a 14-member state commission to study how the tax break has been affecting the state’s existing electric grid and energy supply and make recommendations by June 30, 2026, on how those impacts should be addressed.

While environmental advocates are urging Gov. Brian Kemp to sign the bill, representatives of the data center industry are asking him to veto it. Kemp has until Tuesday, May 7, to sign or veto legislation the General Assembly passed this year.

Republican legislative leaders got behind House Bill 1192, arguing for the need to slow the rush of data centers lured to Georgia by the tax break. Since the sales tax exemption was approved in 2018, such high-profile companies as Microsoft, Meta, and Google have set up data-center operations in the Peach State.

The bill’s supporters said the industry’s rapid growth is putting a strain on the state’s capacity to supply enough electricity for the power-hungry data centers. That point was driven home when executives with Georgia Power said the industry accounted for 80% of the additional electrical generating capacity the utility was seeking from the state Public Service Commission.

With that concern in mind, nine environmental organizations – including Environment Georgia, the Southern Environmental Law Center, and the state chapter of the Sierra Club – sent a letter late last month urging Kemp to sign the bill. The letter raised concerns about how unchecked growth of data centers could affect residential electric bills.

“Georgia Power customers already have seen steady increases in their bills in recent years,” the letter stated. “There is no guarantee that data centers will shoulder expanded electricity demand alone.”

The letter went on to warn that the higher demand for electricity data centers pose would result in greater reliance on fossil fuels, hurting air quality and increasing carbon emissions.

Besides the stress data centers put on electricity, they also require a great deal of water to cool servers and other computing equipment, the environmental groups wrote.

“By signing HB1192, you will move forward reasonable steps that will help Georgia understand and plan for the large environmental and financial impacts data centers bring to our state,” the letter suggested to the governor.

But advocates for the industry say ending the tax break for the next two years would send the wrong message to an industry that relies on certainty and predictability.

Josh Levi, president of the Virginia-based Data Center Coalition, cited a recent PricewaterhouseCoopers report that Georgia’s data center industry provided 22,760 jobs in 2021.

“The abrupt suspension of the High-Tech Data Center Equipment Tax Incentive Program in HB1192 would create tremendous uncertainty around many data center projects planned and actively under development across the state,” Levi said.

“Additionally, there is risk of data center customers migrating to the more than 25 other states that maintain tax policies similar to the program HB1192 would suspend.”

The bill’s supporters counter that the suspension of the sales tax exemption would only apply to new data center projects, not those already in the pipeline.

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