Meta, Exxon Pour Fuel On Natural Gas Data Center Pipeline Despite Climate Concerns

Social media behemoth Meta on Dec. 4 announced plans to build its largest-ever data center campus in Richland Parish, Louisiana, an agricultural region in the northeast part of the state.

The $10B project is planned for more than 4M SF of data centers across 2,250 acres — the latest in a trillion-dollar wave of megacampuses being developed to support the enormous computing needs of artificial intelligence. 

But data centers aren’t the only thing slated to rise on the site.

A new 1.5-gigawatt, gas-fueled power plant is also slated to rise on the property as part of a $3.2B partnership between Meta and New Orleans-based energy firm Entergy. The firms are planning two other new gas plants totaling 754 megawatts elsewhere in the state to provide electricity to the campus’s future data centers. 

The idea that one of the world’s largest tech companies would codevelop a new fossil fuel power plant at one of its properties would have seemed outlandish just one year ago to most industry observers.

But today, Meta and Entergy’s plans in Louisiana are part of a rising flood of planned natural gas generation projects that have emerged over the past four months to power an AI building boom expected to more than double data centers’ electricity consumption by 2030. 

As data centers add the energy equivalent of New York City to regional power grids each year, around 60% of that new electricity will be produced by burning natural gas, according to S&P Global. That means as much as 6 billion new cubic feet of gas will be traveling through U.S. pipelines daily. 

Data centers’ growing reliance on natural gas has led to concerns that the rush to build out AI infrastructure is stalling efforts to reduce power-related emissions and is slowing the pace of grid decarbonization. Data center emissions could nearly double by 2030, according to S&P Global — a jump that would have pushed up total U.S. emissions last year by 4%.  

This anticipated increase in emissions is also raising questions about the much-publicized climate goals set out by the major tech firms leading the unprecedented wave of data center construction.

Meta, Amazon, Microsoft and Google — the hyperscalers who are by far the world’s largest data center users — have all set ambitious decarbonization goals and are widely considered leaders in corporate sustainability. But their growing reliance on electricity from natural gas looks to some experts like a big step in the wrong direction that will make hitting their emissions targets far more difficult and calls the sincerity of their sustainability PR efforts into question. 

Still, many in the data center industry say that, for now, natural gas remains the only viable option for meeting the sector’s skyrocketing energy needs and that the industry’s appetite for natural gas is only going to grow in the months ahead.  

“You can’t build these turbines fast enough,” said Doug Recker, president of Duos Edge AI, a Florida-based firm that announced plans last month to operate mobile gas power plants for data center customers. “It's the gold rush for power right now, and everybody’s looking for their fix until there’s greener energy available.”

The presidential election has also poured fuel on the fire of natural gas data centers. While these projects were underway and likely could have proceeded if the Democrats held the White House, the election of Donald Trump is expected to spur a greater push toward fossil fuel generation. 

"I think a Trump administration is going to just allow that at a much faster rate with less regulations and really push for it,” said DLA Piper partner Michael Rechtin. “The industry is going to be happy about that.” 

Beyond Meta’s Louisiana campus, other data centers powered by on-site gas generation are being planned in places like Kenilworth, New Jersey and Pittsylvania County, Virginia, where a developer has proposed a data center campus and 3.5-gigawatt power plant connected directly to a major regional gas pipeline. 

More such projects are coming, particularly as fossil fuel giants have set their sites on the data center industry.

Exxon Mobil said last week it is designing a large-scale natural gas-fueled power plant to directly supply electricity to data centers — the first time the country’s largest oil and gas company is building a power plant that doesn't serve its own operations. Days later, Chevron CEO Mike Wirth told the Atlantic Council that his firm is also planning gas plants for data centers that could be built on its vast real estate holdings across the U.S.

Smaller operators at various points along the natural gas supply chain are also turning to data centers as an unprecedented demand and growth opportunity. In the past three months, firms like Washington Gas, Expand Energy, Range Power and Diamondback Energy have all reported being in talks with data center firms looking to build gas-powered facilities or considering deals to develop data centers on their own land holdings. 

This kind of on-site or “behind-the-meter” generation represents just a fraction of the rapidly expanding demand picture from data centers. The bulk of the anticipated natural gas growth is expected to come from utilities, which are scrambling to contend with the unexpected spike in power requests from data centers that have shot up as much as 700% in less than a year. 

In Virginia, a study commissioned by the state legislature found that projected energy demand from data centers in the state would require a new 1,500-megawatt natural gas plant to be added to the grid every two years for 15 years. Meanwhile, PJM Interconnection, the country’s largest grid operator, intends to accelerate the development of natural gas generation relative to renewables to meet data centers’ energy needs — a plan that would allow gas projects to “jump the queue” ahead of solar and wind projects that have been waiting for years for grid connections. 

According to S&P Global, data center growth could add 50 gigawatts of new gas generation to U.S. grids by 2030, single-handedly raising power sector gas demand in the U.S. by almost 17%. 

“The demand we see and the conversations we're having entail existing utilities, the data centers themselves and the independent power producers — all the different ways of getting power to data centers quickly,” said Allan Schurr, chief commercial officer at on-site power firm Enchanted Rock. “There's multiple ways you can skin that cat.”

But why is natural gas the overwhelming choice to meet data centers’ growing energy needs and not wind, solar or other carbon-free forms of generation? 

The scale of fossil fuel expansion to serve data has been challenged by groups like the Sierra Club and the Natural Resources Defense Council, who have called PJM’s gas initiative “unjust and unreasonable” in a letter to federal regulators.

Environmental groups point to studies showing an imminent increase in carbon emissions from data center power. They say the industry is playing an outsized role in derailing carbon reduction goals for the companies fueling the data center boom, the utilities providing power to them and state governments in major data center markets. 

Growing buildout of gas generation to serve data centers is a “huge threat,” according to Gudrun Thompson, senior attorney and energy program leader at the Southern Environmental Law Center.

She says utilities in major data center markets like Duke Energy and Dominion Energy are starting to backtrack on climate commitments or pledges to comply with state environmental goals, while Virginia’s legislative report suggests it will be nearly impossible to build enough new generation for data centers while complying with the state’s clean energy act.

According to Thompson, it’s hard to see how the growing use of fossil fuels and the emergence of projects like Meta’s planned campus in Louisiana jibe with tech giants’ professed commitments to sustainability. 

“The big four hyperscaler tech companies that are behind a lot of the growth in data centers don't necessarily seem to be operating in accordance with their own corporate clean energy or decarbonization commitments,” she said.

Indeed, Meta, Amazon, Microsoft and Google have all made pledges within the past five years to hit aggressive carbon reduction goals and have been widely regarded as leaders when it comes to sustainability practices and investments in clean energy initiatives. Meta promised to reduce data center emissions by 42% from 2021 levels within ten years, while the other three major tech companies have also set targets for reducing power-related emissions between 25% and 50% in the years ahead. 

The tech giants have gone to great lengths to publicize these efforts, but even critics acknowledge their climate rhetoric is not all talk. Hyperscalers have invested heavily in low-carbon technologies and are by far the largest buyers when it comes to renewable energy procurement, according to S&P Global. 

This is largely because these firms reliably match new fossil fuel generation needed for their data centers with carbon offsets: financing the development of renewable energy that does not directly supply its facilities equivalent to the fossil fuel generation that does. In Louisiana, for example, Meta has pledged to work with Entergy to bring at least 1,500 new megawatts of carbon-free energy to Louisiana’s grid in the coming years. 

A study published by KPMG last month also indicated that access to renewable energy remains a top development consideration for hyperscalers, who are willing to pay as much as double their current power prices if it means they can get low-carbon electricity. 

Still, while industry analysts acknowledge that the tech giants driving the data center building boom have been proactive in advancing climate goals and willing to deploy significant capital toward achieving them, they also say that their rising use of fossil fuels is making hitting those climate targets less likely and could damage their reputation as leaders on sustainability. 

“The combination of bullish growth projections and ambitious decarbonization goals means tech companies have mapped out a challenging path that will increasingly draw attention from customers, investors, and global regulators,” wrote the authors of a S&P Global report on data center sustainability last month. “We expect that short-term constraints on low-carbon power will require greater innovation and more aggressive efforts to deliver solutions if tech companies are to meet their 2030 decarbonization goals."

But within the data center industry, there is a broad consensus that the rapid expansion of natural gas generation is the only way utilities and developers are going to be able to meet skyrocketing electricity demand from data centers. Experts say renewables just wouldn’t be able to meet the industry’s energy requirements, even if solar farms and offshore wind projects — as well as the transmission lines to connect them to data centers — could be developed as fast as the industry needs. 

The way data centers use power is a bad fit for renewable energy, said Jay Dietrich, head of sustainability at data center think tank Uptime Institute.

The problem is that wind and solar farms stop producing energy when the wind isn’t blowing or the sun isn’t shining. Data centers, on the other hand, use massive amounts of energy 24 hours a day and have no ability to curtail their electricity consumption without significant financial consequences. 

Because of this, data centers and the utilities that serve them need the grid to have enough so-called baseload power to meet the data center’s needs regardless of environmental conditions. And for now, with rare exceptions, new baseload power for data centers means fossil fuels. 

“The reality is that to maintain a reliable grid you need to have a reliable supply to underpin the renewables,” Dietrich said. “So, what’s happening here with gas generation is, frankly, quite logical.”

While carbon-free and low-carbon generation alternatives for baseload do exist, none can currently be deployed at a scale that would meet the data center industry’s unprecedented energy needs. Emerging technologies like hydrogen fuel cells or utility-scale batteries to store energy from renewables have seen limited adoption but are not yet commercially viable at the scale the industry requires. 

Increasingly, Big Tech and data center firms are looking to nuclear power as the long-term emissions-free solution to its power woes. Companies like Amazon and Microsoft are signing deals to buy power directly from legacy nuclear plants or bring retired reactors back online, while others are betting on the development of small modular nuclear reactors, similar to what power nuclear submarines, that can be built much faster and at less expense than traditional utility nuclear power stations.

In a statement to Bisnow, Meta indicated that it is considering advanced nuclear options as part of its offset efforts in Louisiana. 

“Meta is committed to minimizing the environmental impact of our data centers, including our Richland Parish Data Center,” a spokesperson said. “We will work with Entergy to identify other solutions to reduce the impact of our energy needs.”

But there are only so many aging nuclear reactors with extra energy, and SMRs are still years away from commercial viability by even the most optimistic estimates. In the near term, experts say, fossil fuels like natural gas remain the only option. 

“There’s no other alternative,” said Enchanted Rock’s Schurr. “We don't have another scalable, commercially ready energy source that can deliver gigawatts of power.”

Tech companies, data center operators and gas providers often talk about the ongoing expansion of natural gas generation in the jargon of sustainability. They are quick to cite the fact that carbon dioxide emissions from natural gas are significantly lower than other fossil fuels like coal and that some gas-powered data centers will have a better emissions profile than their local electric grid, although environmental activists say these benefits are negated somewhat by methane emitted in the natural gas extraction process.

The firms behind gas-powered data center projects have also gone to great lengths to tout new technologies that they say further reduce their carbon impact. Exxon Mobil’s announcement of its planned data center power plant focused largely on the use of carbon capture technology that the company says can remove more than 90% of the facility’s carbon dioxide emissions.

Press releases from both Meta and Entergy about their joint development in Louisiana highlighted the planned use of “combined cycle” turbines that reuse waste heat to be less pollutive than traditional gas plants. They also emphasized the plant’s ability to run on 30% hydrogen to reduce emissions, with the potential to eventually run the system entirely on hydrogen “through future upgrades.” 

Many in the data center and energy sectors frame natural gas as a “transitional fuel” that’s needed to overcome the power challenges facing data center development today but can be replaced or supplemented with carbon-free baseload power options as they become viable. 

Environmental groups, however, are skeptical of this framing, which SELC’s Thompson says is far from a certainty and ignores the immediacy of the climate crisis. She says the same level of urgency tech firms are showing when it comes to getting new data centers built as fast as possible needs to be applied to the transition away from fossil fuels.   

“Every time a utility or some other entity invests capital in a fossil fuel-fired generator that is likely going to have a 20-year useful life, we’re continuing to dig ourselves into a hole, even if we’re now digging with a smaller shovel,” Thompson said. “The reality is that we need to be transitioning away from fossil fuels as quickly as possible.”