Data centers: Alaska lawmakers gauge bans or tax incentives with just weeks left in the session

With just three weeks remaining in the legislative session, Alaska lawmakers are at a crossroads, weighing whether to attract data centers with tax incentives or impose a temporary ban. Rep. Kevin McCabe, R-Big Lake, highlights Alaska's cool climate as a natural advantage for data center cooling, potentially reducing water usage. However, a University of Alaska Fairbanks analysis indicates that while appealing, high electricity costs and reliance on fossil fuels present major obstacles, and natural cooling may not be as significant a draw as often advertised. The National Conference of State Legislatures informed lawmakers that 34 states offer incentives, but Alaska is not among them. While incentives could generate jobs and tax revenue, nationwide community opposition has emerged, driven by concerns about environmental pollution, noise, substantial energy demands, and the cost of incentives. Nicholas Miller of NCSL noted that states often consider moratoriums alongside impact studies, though no state has enacted a permanent ban, and Maine's legislative moratorium was vetoed by Gov. Janet Mills. Addressing these concerns, Sen. Löki Tobin, D-Anchorage, introduced Senate Bill 250. This legislation proposes to safeguard Alaskans by ensuring data center power supply costs do not inflate general utility rates and by mandating legally binding community benefit agreements with developers. The bill's sponsor statement acknowledges that similar community and ratepayer concerns have stalled billions in investments elsewhere, and aims to balance the benefits of new investment with local protections. SB 250 has been referred to the Senate Labor and Commerce Committee but awaits a hearing.