State-level climate targets don't make sense. By Matthew Yglesias

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State-level climate targets don't make sense

State policy matters, state-specific emissions don't

Data centers use a lot of electricity, and it’s very important to their customers to avoid service outages. As a result, the facilities are normally built with backup power generators that might burn natural gas or more frequently diesel, which is dirtier. This is not a unique attribute of data centers — a hospital has exactly the same issue — but data center construction is booming in a way that hospital construction is not.

Which brings us to Maryland, where Governor Wes Moore’s administration is supporting legislation to streamline permitting of high-energy facilities that require backup generators.

The consensus seems to be that the primary intended beneficiaries of this legislation are would-be builders of data centers, a market that Maryland hopes will bolster its high wage economy. For this, Moore has attracted the ire of the state’s environmental groups, who raise a host of concerns that are largely focused on the implications for Maryland’s state-level greenhouse gas emission targets. Notably, according to Inside Climate News’ account of the groups’ objections, they are not primarily focused on the idea that the backup generators are too polluting. The governor’s position is that the existing review process for the generators is essentially just a pretextual barrier to construction, and he wants to eliminate it. But the groups say pretextual barriers to data center construction are good, because data centers use a lot of electricity:

In their testimonies, the environmental groups reminded committee members that data center concentration in Maryland will put enormous strain on the state’s energy demand and grid capacity, which will have consequences for Maryland’s ability to meet its statutory climate and clean energy targets. 

To the groups’ credit, what they are saying here is literally true: It is much easier for Maryland to meet Maryland’s statutory climate and clean energy targets if nobody builds any data centers in Maryland.

But who cares?

Climate change isn’t mitigated in the slightest if a data center is built in West Virginia or Pennsylvania rather than Maryland. The murder rate in Baltimore fell pretty dramatically last year, which on its face is good news. While suburban Maryland is tightly constrained by bad land use rules, Baltimore City has room to grow. If crime keeps falling, more people may want to live there. And if they live there rather than in Philadelphia or Phoenix, they will want to have electricity and home heat. And just like having a data center in Maryland rather than some other state makes it harder to hit Maryland’s statutory climate and clean energy targets, having people live in Baltimore rather than Boise makes it harder to hit Maryland’s statutory climate and clean energy targets.

Again, though: This has no implications for global atmospheric CO2 concentrations or global climate change.

I don’t have any particular brief for the data center industry, but the critiques of Moore’s position just show that the idea of state-level emissions targets is poorly conceived. Some states are more progressive than others, so it makes a lot of sense to push states like Maryland to pass more aggressive climate policies than would fly in Michigan or in the United States congress. But precisely because there are unique opportunities for blue states to lead on critical progressive issues, it’s important to lead in ways that make sense.

State-level aggregates aren’t what matters

According to the US Energy Information Agency, across the United States we created 50.2 kilograms of carbon dioxide for every million BTUs of energy in 2021.

That’s a 20 percent decline since 1970, but obviously still well above zero and well above our ability to cost-effectively remove CO2 from the atmosphere. Maryland was almost exactly average at 50.8 tons, and the lowest emissions states are mostly ones with a lot of hydropower (Oregon, Washington) — including hydro power imported from Canada (Vermont) — but also South Carolina, where a majority of electricity comes from nuclear plants.1

Because electricity is bought and sold across state lines, but many decisions related to the citing of electricity generation are made at a state or local level, state policy can influence the national energy mix.

Maryland, for example, saw an offshore wind production deal collapse in January, but leaders in the state legislature are working to get that back on track. Generating more zero-emission energy would be useful, both because energy is useful and because pollution is bad. The fact that this project would be physically located in Maryland is not important for climate outcomes, but it is important in the sense that the Maryland state legislature has authority over it and they care about climate change, so they can do something useful by boosting wind. Similarly, this project to turn a former coal mine into a solar farm seems great. What’s less great is that a bunch of Maryland local government entities have enacted rules to block the construction of solar farms — a potent reminder that there’s nothing NIMBYs can’t ruin.

Right now, of course, Maryland also gets a lot of electricity from burning natural gas.

And the reality is that if you want to minimize state-level emissions in a world where renewables growth faces various constraints, the easiest way to achieve that is to just push activity out of your state. New York State has had incredibly slow population growth for the past 25 years. That slow population growth has helped keep aggregate emissions low. But it’s made national emissions higher, since New York has (by far) the country’s lowest per capita emissions level. The most useful thing New York could do for climate change would be to dramatically upzone everywhere there is spare subway capacity and around every LIRR and MetroNorth station. The state’s aggregate emissions would go up, since even low-emissions New Yorkers have nonzero emissions. But American emissions would go down. And crucially, they’d go down in a way that boosts economic growth.

The specter of degrowth

The Maryland environmental groups who want the state to prevent new data centers from being built aren’t stupid. They are aware that the climate doesn’t care about the geographical location of the data centers. It turns out, per the Inside Climate News article, that they just don’t like the whole idea of a data center industry because it uses a lot of electricity:

Currently, data centers use around 9.7 gigawatts of power nationally and their energy demand is expected to increase threefold, to 27 GW, within the next few years, according to a 2023 analysis. That would outpace the entire amount of offshore wind generation the Biden Administration currently aims to install nationally. Energy demand for data centers in Virginia is projected to grow from about 2.67 GW in 2022 to 10 GW by 2035, Dominion Energy has estimated. 

“Maryland should establish and affirm clear regulatory safeguards to regulate the growth and impact of this rapidly growing industry,” the Sierra Club said in its testimony. “Maryland has the chance to get it right from the start, rather than playing catchup like neighboring Virginia, which is facing the prospect of skyrocketing electricity rates, new power plants, and massive public unrest.” 

This is a reminder that the whole notion of degrowth occupies an odd status in American politics. It’s not something that Joe Biden supports. Nor is it something that Wes Moore supports. It’s not something that any of the big umbrella organizations formulating major progressive agenda items support. You can read the big ideas people of the progressive movement writing their big-think articles about middle-out economics and the return of industrial policy, and none of them are saying that we shouldn’t have economic growth.

But the environmental movement and its major groups are important elements in the progressive coalition; good Democrats and fellow members of the coalition are supposed to incorporate environmentalist movement priorities into their big tent. And the environmental movement itself is deeply ambivalent at best about the whole idea of growth.

When you put the choice squarely, mainstream Democrats say that they do want economic growth — thus Governor Moore working to remove impediments to the data center industry. The Sierra Club isn’t wrong that trying to grow the industry is inconsistent with Moore’s state-level climate pledges. But the correct way to resolve that is for Moore to note that those pledges aren’t consistent with his own ideas about politics and government. He wants to take the scientific understanding of pollution and climate change seriously and make policy choices that account for the downsides of industrial activity. But just pushing activity out of Maryland and into other states and vaguely hoping that maybe some day all states will decide they don’t care about growth isn’t that.

I am, personally, not that fired up by the data center aspect of this. But the same basic logic about state-level targets applies to housing, to immigration, and to infrastructure. If your focus is on emissions in some particular geographical area, the easiest way to achieve targets is just to minimize activity inside the area. But there’s no scientific basis for caring about that.

State policy can make a difference

To be clear, I am not saying that state-level policy can’t make a difference on the climate issue.

In the case of New York, for example, a more growth-friendly housing policy would raise America’s GDP per capita, while reducing our per capita emissions. The same is true of other relatively low-emissions jurisdictions like DC and the entire west coast. The point isn’t that state policy doesn’t matter, and it’s not that state-level targets are imperfect guides. The state-level targets can be genuinely harmful precisely because state policy does matter.

On the flip side, even though New York’s per capita emissions are low by American standards, they’re higher than they used to be because the state closed a nuclear plant a few years ago at the behest of RFK Jr. and a bunch of local environmental groups. By the same token, back when Martin O’Malley was governor of Maryland, there was a proposal to add an additional reactor to the Calvert Cliffs nuclear plant. This was, of course, opposed by the Sierra Club. They eventually got their way because American regulators decided that a reactor project wholly owned by a foreign company (in this case France’s EDF) was a national security risk. That seems really dumb on its face (the US and France are in a military alliance), and I’m not sure if it was purely pretextual. But the point is, those things make a difference.

Maryland can do more or less to generate wind, solar, and nuclear power at home, and because electricity is sold across state lines, that makes a difference to the big picture. Maryland has lower gasoline taxes than Virginia or Pennsylvania and could raise them and use the revenue to finance an offsetting cut in some other tax. Maryland (and any other state) could do a bunch of stuff that’s aimed at either reducing per capita consumption of fossil fuels or else at generating more emissions-free energy. But state-level emissions targets aren’t only beside the point for achieving that, they are often counterproductive. Anchoring yourself to them as a policy goal is going to lead to bad outcomes.

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