Transition Finance Weekly - December 19, 2024
NC Clean Energy Boom, Clean Power for Google Data Centers, Exxon’s Tricks
1. Roy Cooper’s On Board the Clean Energy Train
“Once you become known as a hub for clean energy, everybody wants to be a part of it,” says North Carolina’s governor.
North Carolina is rapidly becoming a hub for clean energy investment, attracting major corporations and creating thousands of jobs. Randolph County, where Toyota is building a $13.9 billion battery plant; Chatham County, where Wolfspeed is putting a $5 billion materials factory; Edgecombe County, where Natron will be building sodium-ion batteries; Durham, the headquarters of new EV charging network consortium IONNA: these places are just some of the many winners.
On the generation side, Apex Clean Energy's Timbermill Wind turbines began turning this week in Chowan County, supplying renewable energy to power Google data centers in the region. This will help the state meet the 2050 carbon-neutral generation goal outlined in its Clean Energy Plan.
Governor Cooper's administration has been instrumental in fostering this growth, implementing policies that attract clean energy investments and promote economic development — and the jobs, long-term stability, and energy resilience they create.|
Gov. Cooper: “Progress isn’t promised. We have to work for it, we have to earn it. The urgency of the climate crisis is real, and we in North Carolina unfortunately have had a front-row seat…. Doing nothing is not an option.”
2. Incentives for Data Centers, Backsliding on Clean Energy Ambition
In Michigan, Big Tech wins tax breaks for huge energy-hogging server farms, with no requirement that they use clean energy.
The Michigan Legislature has approved a projected $90 million in tax breaks for tech giants like Google, Meta, and Microsoft that build so-called “hyperscale” data centers in the state — without requiring they colocate themselves alongside clean power generation or ratepayer protection guarantees. Governor Gretchen Whitmer is expected to sign; exemptions run through 2065.
A year ago, Whitmer signed aggressive statewide clean energy goals into law, a victory for a state that still depends upon polluting coal for ~30% of their power. But data center incentives will send energy consumption spiking, and with no clean energy mandate, it could trigger a provision that allows utilities to delay cleaning up the grid in the face of unanticipated load growth.
Chris Hill of the Michigan Environmental Justice Coalition says it “completely undermines” Michigan’s renewable energy legislation and reverses climate progress.
3. Google Takes a “Power-First” Approach
For its own data centers, new announcements show Google focusing on new wind and solar.
Google’s betting on clean energy as it expands its data center capacity: it’s investing $20 billion in a clean energy development partnership so it can locate new data centers alongside new wind and solar farms.
By bypassing the traditional power grid — which is still too heavily reliant on fossil fuels — Google not only avoids raising its emissions but also reduces strain on aging grid infrastructure, so it won’t impact other customers’ reliability. It also bypasses interconnection delays so it can get up and running faster.
Google’s on-site plans also have the potential to help protect ratepayers, who would otherwise be on the hook for rising energy prices and grid buildouts.
4. Meanwhile, Exxon’s Building New Fossil Fuel Plants
Big Oil is fueling AI data centers with fossil gas — while playing word games about the climate impact.
To power a data center, ExxonMobil proposes to build a new natural gas plant, but with a twist. The company says it will offset the 90% of the emissions impact through carbon capture, yielding what it calls “low carbon intensity” power. But this level of capture is unproven, costly, and — even if successful — incomplete, building new polluting resources communities can’t afford.
These plants don’t connect to the grid and won’t at any point help power homes — they’ll only contribute power to keep the servers running in datacenters. But they will pump out millions of tons of CO2 over their lifetimes. Solar-battery energy parks make a better solution for quickly ramping up localized energy capacity for industrial development; they’re renewable and can serve the public via the grid, too.
Thanks to spiking AI needs, the U.S. power demand forecast is expected to rise by more than 450% over the next five years, and in just the past month, GE’s gas turbine subsidiary has pre-sold 9 GW worth of equipment capacity.
5. San Francisco Pension System Steps Up Its Climate Commitments
The $36.6 billion fund shifts funds away from high-risk fossil fuel investments.
In an annual review, the San Francisco City & County Employees’ Retirement System added several new oil, gas, and thermal coal companies to its “restricted investment list” due to the companies’ overexposure to volatile revenues and material risk factors. The fund maintains revenue-based criteria for its restricted investments list: companies on its restricted list either derive 50% of revenues from coal or have no transition plan in place to reduce their reliance on volatile and dangerous revenue streams.
As noted in the pension fund’s memo, coal — and other fossil fuels — remain a highly risky and volatile sector. The investment staff also notes that the coal industry in particular faces high regulatory uncertainty and is in competition with more efficient, and increasingly cheaper, clean sources of energy like wind and solar.
Publicly traded oil and gas companies represent about 0.6% of SFERS’ total portfolio, but the fund takes every dollar seriously; dozens of companies are rated as “high risk” due to their significant exposure to high-risk industries.
6. Indiana Pension Dumps BlackRock, Citing Treasurer’s Watchlist
Right-wing culture warriors have engineered lower returns for Indiana pension holders, higher costs for taxpayers.
The board of Indiana’s pension system is replacing BlackRock as an asset manager, after State Treasurer Dan Elliott blacklisted the investment giant for allegedly “boycotting” fossil fuels. The board approved a shift to Northern Trust, State Street, or UBS, but these same firms have been blacklisted by anti-ESG crusaders in other states, making clear this is all culture-war political theater.
The state’s anti-ESG efforts don’t come cheap. In addition to severing pension ties with BlackRock, Indiana previously hired Vivek Ramaswamy’s Strive Asset Management — an “anti-woke” investment firm — with Ramaswamy’s rate set at $4,000 per hour to advise on pension policies. An early legislative proposal in Indiana anticipated $6.7 billion in lost returns, before a related but less stringent bill was passed into law, underscoring the high financial risk of prioritizing political ideology over retirees’ financial security.
Tim Hill, Alliance for Prosperity and a Secure Retirement: “Unfortunately, political considerations superseded INPRS’ fiduciary duty, which sets a concerning precedent for Hoosier retirees and taxpayers who will ultimately bear the cost of this decision.”
