The electrical utility serving Morrow County once had some of the cleanest power in the state.
Drawing mostly on nearby hydroelectric projects on the Columbia River, power sold by the Umatilla Electric Cooperative emitted just 3% as much carbon as the statewide average.
Then Amazon came to town.
The company built a succession of large data centers in Morrow and Umatilla counties, financed partly by local tax breaks, and industrial power use in the region quadrupled. While Amazon isn’t solely responsible for the increase, the additional power use matches the annual household power consumption of 200,000 homes.
Even as carbon emissions have soared along with power use, Amazon has accumulated tax breaks worth more than $160 million for its data centers in eastern Oregon. That’s created a disconnect between state policies designed to encourage clean energy and tax breaks that set no such requirements for major energy consumers.
“There’s really no room for a tech giant to be contradicting that and holding up that goal,” said Joshua Basonfin of Climate Solutions Oregon, which helped lead the campaign for landmark climate legislation Oregon lawmakers passed last year.
What’s happened to Umatilla Electric’s carbon profile is striking.
Carbon emissions per megawatt hour are up 543% since 2010, shortly before Amazon’s arrival. So not only is power consumption way up — each megawatt of electricity has a far greater climate impact than before Amazon arrived.
The reason the power mix is so much dirtier, the utility says, is because electricity demand is now much higher than Umatilla Electric’s federal allocation of clean hydropower.
The Bonneville Power Administration allocates energy generated by Columbia River dams to utilities throughout the region based on historical demand and other factors. Umatilla Electric, a tiny cooperative, receives approximately 1.6% of that output.
Beyond that, Umatilla Electric must buy whatever is available on the open market to meet the data centers’ growing power demand. That market power has a carbon profile that resembles natural gas, a major contributor to climate change.
The inherent tension between the local tax breaks and wider climate goals have largely escaped notice. But environmental advocates say they may seek legislation that would require tech companies to power large server farms with clean power.
POLICIES AT ODDS
Oregon lawmakers set ambitious climate goals last year with landmark legislation that sought to shift the state’s utilities to clean energy by 2040.
The legislation is among the nation’s most aggressive, banning new fossil fuel power plants and requiring existing generators to begin cleaning up their electricity almost immediately.
As Oregon moves forward on the climate mandates, though, some of the state’s biggest tax breaks are eroding its progress.
Data centers run by many of the nation’s largest technology companies — among them Amazon, Apple, Google and Facebook — receive property tax breaks collectively worth several hundred million dollars.
The incentives come from two state programs that exempt them from the property taxes other businesses pay — the enterprise zone and strategic investment programs.
Local authorities, typically city and county governments, negotiate the deals in exchange for jobs, capital investment and offsetting payments. The state sets few boundaries on the deals, autonomy that local governments generally welcome.
As a result, Oregon has long had some of the nation’s biggest tax breaks for data centers. And that’s a big part of the reason why many of the world’s largest tech companies have server farms in far-flung corners of the state.
But the state can’t use the enormous tax breaks to encourage big energy hogs to use cleaner power because the incentive programs — which date to the Reagan administration — set no environmental targets whatsoever.
Some companies, notably Apple and Facebook, have voluntarily financed solar or wind projects in Oregon to compensate for the energy their data centers use.
Amazon’s energy use in eastern Oregon is a very different story.
Umatilla Electric says its industrial power sales have grown from 1.1 billion kilowatt hours in 2016 to 4.1 billion last year, a period of rapid growth in Amazon’s local footprint. Residential and agricultural power consumption increased little during that time among Umatilla’s customers.
Amazon has built large clean energy projects in Canada and the Southeast U.S. but not in Oregon, Washington or Idaho.
The Seattle-based company declined to discuss its Oregon energy consumption, but said it has set ambitious clean energy goals worldwide.
“Amazon is the world’s largest corporate purchaser of renewable energy, and we are on a path to procure 100% renewable energy to power our operations by 2025,” the company said in a written statement.
The company said its data centers are 88% more efficient than those companies use to store their own data, and it says it recycles 96% of the water it uses to cool its data centers. Amazon didn’t say, though, how it will obtain the renewable energy for its operations in eastern Oregon. And in 2014, as it began its rapid expansion in Morrow County, the company successfully lobbied Oregon lawmakers to ease clean air standards.
CALLS FOR CLEAN POWER
Bob Jenks is executive director of the Citizens Utility Board, which monitors state energy policy on behalf of residential power users. He said the rising carbon emissions at Umatilla Electric reflect the Western electrical grid’s reliance on natural gas, a carbon-intensive form of electricity.
Since Oregon tax breaks play a big role in attracting Amazon to the region, and since the state is aggressively pursuing cleaner energy, Jenks said it stands to reason that policymakers should be pushing for data centers to use cleaner power.
“People ought to be pressuring Amazon,” Jenks said. “Amazon ought to have an interest in having those plants, those server farms served by renewable energy.”
While Oregon’s tax breaks have attracted some major energy consumers, they have also helped finance major clean energy projects — including massive wind farms and solar projects in Morrow County.
So it’s not the tax breaks themselves that are generating carbon emissions — it’s the absence of any guidelines to ensure the incentives’ recipients are complying with Oregon’s broader climate goals. To Basonfin, that’s an obvious failing in state policy.
“If a tech company with all of its resources is still having really high levels of emissions, then we shouldn’t be rewarding that with tax breaks,” he said.
Given the huge amount of energy data centers use, and the resources available to big companies like Amazon, Basonfin said Oregon should make sure tax break recipients aren’t working against the state’s climate goals.
“A trillion-dollar company would have the wherewithal to do that if they were serious about it,” he said.