Recently, Governor Gretchen Whitmer has approved new laws that encourage tech giants like Google and Microsoft to build data centers in Michigan. In today’s world, data centers play a crucial role in managing AI, cryptocurrency, and cloud computing. However, environmental groups are voicing concerns about their energy use and pollution.
Data centers are facilities that store and manage vast amounts of data essential for daily online activities. Microsoft, for example, has recently purchased land in Kent County and Allegan County, planning potential future data centers there.
While Michigan does have existing data centers, they are generally smaller and less intensive than larger ones being developed in places like Virginia and Arizona, according to Charlotte Jameson from the Michigan Environmental Council. She states we are at a critical point, as Michigan has yet to host any of these massive data centers. This gives the state a chance to approach their development wisely and minimize their negative impacts.
Last month, Whitmer signed House Bill 4906, allowing qualified businesses to benefit from a tax break on data center equipment sales. This exemption applies to companies that create over 1,000 related jobs within the data center industry from January 2016 to January 2026. The bill received bipartisan support in both the House and Senate.
According to a Whitmer administration press release, this law is expected to create jobs and attract talent, potentially providing substantial tax revenue for local communities.
Whitmer also signed Senate Bill 237 on December 30, which exempts the sale of data center equipment from taxes for qualified centers or businesses involved in their construction.
Michigan Senator Kevin Hertel (D-St. Clair Shores), who introduced the bill, stated in a statement that more data centers can lead to significant investments in local communities. He emphasized that these centers power essential services like email, social media, and online banking, while also driving long-term community growth.
However, the benefits of data centers have not gone unnoticed by environmental advocates. They raise valid concerns about the environmental impact these facilities can have.
Data centers depend on backup generators and batteries to ensure they run smoothly during power outages. These generators, often powered by fossil fuels, can cloud local air quality with pollutants. Christy McGillivray, from the Sierra Club’s Michigan chapter, explained that the extensive use of these generators could lead to worsening air pollution and higher water and electricity costs for nearby residents.
According to projections by the World Economic Forum, electricity demand from data centers is expected to rise from 1% of global energy consumption in 2022 to more than 3% by 2030, creating stress on electrical grids nationwide.
McGillivray also noted that the growth of data centers often leads to traditional energy sources, like coal and natural gas, remaining in use longer than necessary rather than shifting to renewable energy sources to meet climate goals.
Jameson pointed out that Michigan’s recent legislation doesn’t adequately address the broader community impacts of data centers. She emphasized that big tech companies should bear the costs of their infrastructure without passing these expenses to local residents.
