The Citizens Action Coalition (CAC), Indiana’s oldest and largest consumer and environmental advocacy organization, just called on the Indiana General Assembly (IGA) to enact a moratorium on the construction of new “hyperscaler” data centers in Indiana. This temporary halt on specific construction activities is enacted by governments to reflect and evaluate the impacts of unmitigated growth.
Ben Inskeep, the Program Director at CAC, sat down with Indianapolis Liberation Center volunteers to speak more about why we must urge the IGA to restrict hyperscaler data centers before more damage can be done.
What are data centers?
Data centers are the physical locations in which “the cloud” resides. “Hyperscaler” data centers, which are larger than traditional data centers can sometimes be as big as 60,000 square feet and contain thousands of servers. This specific type of data center is used mainly to power artificial intelligence (AI).
Inskeep warned that by 2030, the proposed hyperscaler centers that the IGA approved in Indiana are projected to consume more electricity than all the energy consumed by Hoosiers in their homes. The reason for this rise is because data centers by design are always consuming energy, and they require massive amounts of water in the summer to maintain the optimal temperature for operations. The tradeoff for erecting these centers means that local consumers would not only front the bill for that energy consumption, but would also be subjected to the overwhelming emissions that endanger our climate.
Data centers look like industrial, windowless warehouses from the outside, but contain highly expensive computer equipment that stores all types of cloud-based data. This appearance works in the favor of the data center industry because unlike smokestacks, there is less of a visual indication of their environmental damage. That is not to say that Northwest Indiana residents will not be disturbed by their presence–data centers are noisy, due to the millions of gallons of water that are required to temper the site. They emit heat from the constant operations and cause light pollution for every hour that they are on, which is at all times.
If these data centers have so many drawbacks, what ostensible reasons to lawmakers provide for their construction? “Supporters of these hyperscaler data centers argue that this technology strengthens the national defense and beats China in development of advanced technology”, Inskeep noted. These arguments benefit the companies that build data centers in other ways as well, since these companies also have sectors of their business that are tied to the military and defense industries. The military is the single largest culprit of carbon emissions on the planet, and fear-mongering about other countries’ technological advancement serves to boost this industry that is causing planetary collapse.
How did this happen?
CAC initially became aware of the proposed development of the hyperscaler data centers for Northwest Indiana through the respective meetings led by utilities NIPSCO and I&M in their June 2024 meetings that insighted that both of these utilities could double or triple their usage due to the data centers.
In 2019, the IGA enacted a sales tax exemption for all data centers with the hope that AI will be the “next big thing” and bring economic development to the region. This meant that any utility bills incurred by data centers would not have a 7% tax on their bill for up to 50 years. Due to the amount of energy needed for these hyperscaler centers, this could amount to billions of dollars not paid by large corporations. It’s clear that without this sales tax, the IGA’s strategy to cover the costs was to pass the burden onto consumers.
If the utility providers like Indiana Michigan Power (I&M) do not rapidly increase the amount of energy entering the grid, household consumers could end up paying a much larger amount than they have in the past. Since the utility providers operate within a traditional supply-demand economy, the high demand and low supply would incentivize these companies to charge the rates that will earn them the most profits.
This is a striking example of the IGA enacting a bad policy with the hope of making Indiana more appealing to businesses and profit. Policies and decisions like this favor economic gains against the ecological and sociological needs of the state. CAC believes a better use of our resources would be to decarbonize our primary electric grid, clean up one of the last four remaining aluminum smelters in the country, and retire the coal plants that run our steel industry.
More than we signed up for
To Inskeep, the most egregious aspect of these data centers are the immeasurable subsidies handed out to the billion dollar companies that operate them. The IGA essentially gave data centers large portions of taxpayer money without knowing what they signed up for. The sales tax exemption that allows this to occur was enacted before hyperscaler data centers even existed, yet lawmakers have not rectified this decision although new information has come to light. It is deplorable that this type of tax exemption does not exist for our most vulnerable neighbors, but is extended graciously to entities who will ultimately harm our communities.
“It’s not too late,” Inskeep assured. If the IGA were to pass a moratorium before the development of these data centers, it would help protect our environment, the state, and our communities from losing billions of dollars. But without public support, the IGA has shown no indication to follow CAC’s request as it stands.
The changes brought on by energy providers I&M have been insufficient, lacking transparency in information regarding energy and water usage. But CAC is glad that changes were brought to the table. If I&M were to separate the energy consumption of the data centers and residential energy portfolios that would be a step in the right direction.
CAC recommends that citizens keep up with CAC reporting for the most up to date information, call legislators to inform and urge them to make the right decision, and organize to meet your representative in person to discuss hyperscaler data centers.
Lebanon’s LEAP district – December 5, 2024
Since the original publication of this article on November 18th, Meta has struck a deal with Lebanon, Indiana to develop a 1,500 acre data center in the southern part of its LEAP district, which is located west of the county’s border. The deal with Meta, which was actively sought out by Lebanon’s local government through “incentives”, includes a 50% property tax exemption for ten years and a complete property tax exemption for 35 years.
“Alarmingly, the LEAP boondoggle is expanding to now include Meta, the trillion-dollar parent company of Facebook, which will require incomprehensibly large quantities of energy and water to serve its wasteful data centers” Ben Inskeep, Program Director for the Citizens Action Coalition said. Lebanon Mayor Matt Gentry claims that the data center could lead to Meta investing $4.8 billion in Lebanon, but it seems that all residents can count on for this enormous, resource-consumptive data center is employment of “up to” 50 people.
“We continue to call on the General Assembly to pass a moratorium on new hyperscaler data centers and ensure that Hoosier taxpayers, utility ratepayers, and the environment are protected from this risky and resource-intensive Big Tech gamble.”
Featured image: Indiana University’s data center located in Bloomington, IN. Credit: Wikimedia Commons
