Why Amazon quashed an Oregon bill that aimed to curb data center emissions

In January, Oregon lawmakers submitted a bill to the state's legislature that sought to curb the carbon output of new data centers and cryptocurrency miners — facilities that have rapidly sprung up across Oregon due to the relatively low cost of power and favorable tax incentives. It would have required new data center and crypto mining facilities to run entirely on clean energy sources by 2040, in line with the state's climate targets established in 2021.

On Monday, the bill, known as HB 2816, died in a legislative committee. Proponents of the measure are pointing to aggressive lobbying efforts by Amazon, which operates several data centers in the state, as a major culprit behind the bill's demise.

Amazon's opposition to the clean energy measure is at odds with its broader push to improve its environmental impact. The company has committed to being carbon neutral by 2040 as part of its Climate Pledge launched in 2019. Amazon says it's on a path to using 100% renewable energy across its business by 2025, and is the largest corporate buyer of renewable energy.

"From the very first moment we started talking about this bill, Amazon started organizing against it," said Oregon state Rep. Pam Marsh, a co-sponsor of HB2816, in an interview.

Representatives from Oxley & Associates, a lobbying firm hired by Amazon, were spotted in the halls of the capitol building, speaking with members of the state legislature committee who would eventually hear the bill, said Marsh, who is a Democrat representing Oregon's District 5.

Amazon Web Services spokesperson David Ward declined to comment on the company's lobbying efforts related to the bill, but acknowledged Amazon's opposition to the measure, saying it failed to address the build-out of infrastructure that's needed to bring more clean energy to the U.S. electricity grid.

"Building new renewable projects requires infrastructure investments in the grid and today there are hurdles in key areas like permitting and interconnection," Ward said in a statement. "Accelerating energy infrastructure permitting and interconnections for renewables like solar and wind would have a greater impact on reducing emissions, bringing more clean energy to the grid, and helping achieve our goal of accessing more clean energy in Oregon."

Experts have said the nation's out-of-date electrical grid remains a barrier to accelerating the transition to clean energy sources. Today, more than 70% of U.S. transmission lines are more than 25 years old, according to the White House. Building new transmission lines is a lengthy and arduous process, as it requires agreement from multiple stakeholders involved, from utility companies and regulators to landowners.

See also: Wind and solar generators wait years to put electricity on the grid, then face massive fees

Data centers are extremely energy intensive. In 2014, U.S. data centers consumed an estimated 70 billion kilowatt hours, or about 1.8% of total U.S. electricity consumption in that year, according to the Department of Energy.

Amazon relies on huge server farms to power its sprawling cloud computing service, which is the main profit engine of the company. Amazon has pledged to get all of its data centers running on renewable energy, but it has yet to divest completely from fossil fuels.

On Tuesday, Amazon announced it reached an agreement with Umatilla Electric Cooperative, the utility company serving its operations in Oregon's Umatilla and Morrow counties, to select the energy supply that powers its data centers, including from renewable sources. Amazon says the deal will help the company power its Oregon region with at least 95% renewable energy.

Amazon also argues that lawmakers didn't engage data center operators and owners in Oregon when they crafted the bill.

But Marsh disputes that contention.

The committee removed a clause that would levy penalties against companies that couldn't meet the clean energy targets, and added a provision that would let them opt out of the bill. Both actions were an attempt at generating goodwill, Marsh said.

"We said, 'OK, if it gets to be 2030 and there's been some major world disruption and you can't meet your clean energy goals, you can submit this paperwork and you can opt out because something might have happened beyond your control," Marsh said. "So we made good, strong changes to the bill, but it didn't change Amazon's opposition whatsoever."

Marsh said she became increasingly skeptical of Amazon's "commitment to clean energy" when it said it planned to power some of its data center operations in the state with natural gas fuel cells made by Bloom Energy.

Amazon said the fuel cells will serve a small portion of its data center operations in the state. The hope is to power the fuel cells with renewable energies like hydrogen or biogas.

Amazon Employees for Climate Justice, a group of Amazon tech workers who have previously pressured the company to address its climate record, said they were disappointed the bill stalled. The group supported the measure, and Sarah Tracy, an AECJ member and former Amazon software developer, testified at a public hearing for the bill.

AECJ created a petition in 2019 to push then-CEO Jeff Bezos to rethink its environmental impact. After Bezos announced the Climate Pledge, the group still walked out because they felt the pledge wasn't strong enough. Two employees who were heavily involved in the group, Maren Costa and Emily Cunningham, were fired after they repeatedly spoke out about Amazon's climate and workplace record. Amazon later settled with Costa and Cunningham after a federal labor agency determined Amazon illegally fired them for their activism.

A spokesperson for AECJ told CNBC: "The level of hypocrisy here would be hilarious if it weren't so disturbing — naming a sports arena after your 'Climate Pledge' for clout while lobbying to bypass the basic clean energy requirements that public utilities are held to. It makes me feel bad for the sustainability team here — they're working their butts off because they know better than anyone how little time we have to switch Amazon and the rest of the economy to renewables before catastrophe hits. But then the company undercuts that mission by building new dirty energy infrastructure."

While the bill is dead for now, Marsh said conversations continue around compelling data center and crypto facilities to comply with Oregon's clean energy targets. The bill may come back in a different form in the future, she added.