Environmental advocates say Virginia data center tax doesn't go far enough
Virginia's recently approved state budget includes a new electricity use tax on data centers. Environmental advocates, while acknowledging it as a step, contend it's insufficient to address broader concerns related to the industry's rapid growth, such as increased electricity demand, infrastructure costs, and environmental impacts like noise and water competition. State leaders are expected to continue discussions on data center growth and cost allocation later this year.
Virginia's General Assembly recently approved a state budget that introduces a new electricity use tax specifically targeting data centers. This measure, while welcomed by some environmental advocates as a preliminary step, is criticized for not fully addressing the comprehensive challenges presented by the data center industry's rapid expansion across the state. Christopher Miller, president of the Piedmont Environmental Council, stated that the budget's approach, which caps the excise tax at $600 million, fails to send a clear signal regarding the sustainability of 70 gigawatts of energy consumption and is merely an "interim solution."
The Piedmont Environmental Council advocates for policymakers to thoroughly assess who will bear the costs of future infrastructure investments required to support the escalating electricity demand. Utilities project substantial increases in power consumption, potentially necessitating new power generation facilities, transmission lines, and substations throughout Virginia. Miller highlighted that the impacts extend beyond the physical facilities, encompassing community concerns about noise, air pollution, competition for drinkable water, and the statewide implications of constructing an energy system three to five times larger than current capacity. The Council is not seeking to halt data center development but rather insists that companies should contribute a larger share to the costs of future infrastructure and energy expansion.
Discussions concerning data center growth, electricity demand, and the allocation of associated costs are anticipated to resume among state leaders later in the year. The Data Center Coalition of Virginia was contacted for comment but did not respond by the publication's deadline.