Power, Proximity, Policy: The Legal Landscape of Siting Data Centers Near Natural Gas Resources – POWER Magazine

Report on Data Center Siting and its Alignment with Sustainable Development Goals

Introduction: Digital Infrastructure and the Sustainable Development Challenge

The rapid expansion of the digital economy, driven by cloud computing and artificial intelligence, has established data centers as critical infrastructure, directly supporting SDG 9 (Industry, Innovation, and Infrastructure). However, their significant and continuous electricity consumption presents a major challenge to achieving SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). This report analyzes the trend of siting data centers near natural gas resources and evaluates the strategy’s implications for global sustainability targets.

Strategic Siting Near Natural Gas: A Transitional Approach to SDG 7

Rationale for Natural Gas Proximity

The strategic decision to locate data centers near natural gas reserves is primarily driven by the need for reliable and scalable energy, a key component of SDG 7. While not a zero-emission source, natural gas is often viewed as a transitional fuel that balances developmental needs with environmental responsibilities.

• Energy Security and Reliability: Natural gas provides the firm, 24/7 baseload power essential for data center operations, a level of reliability that intermittent renewables cannot yet consistently guarantee, thus ensuring progress toward universal access to reliable energy (Target 7.1).
• Infrastructure Efficiency: Co-locating with existing pipeline and transmission infrastructure minimizes new construction, reducing environmental disruption and costs, which aligns with the principles of sustainable infrastructure development under SDG 9.
• Transitional Sustainability: By producing approximately half the carbon emissions of coal, natural gas allows operators to advance decarbonization objectives in line with SDG 13 while maintaining operational integrity.

Regional Analysis of Development Hubs and SDG Implications

Several regions in the U.S. have become hubs for data center development, each presenting a unique balance of opportunities and challenges in the context of the SDGs.

1. Texas and the Gulf Coast: The region’s abundant natural gas and flexible energy market under ERCOT facilitate large-scale development. However, this reliance on fossil fuels, despite its efficiency, poses long-term challenges to achieving the clean energy targets of SDG 7 and requires careful management of climate risks under SDG 13.
2. Appalachian Basin: This area offers extensive infrastructure and brownfield sites, promoting responsible land use consistent with SDG 11 (Sustainable Cities and Communities). Nevertheless, development is subject to a complex web of state-level environmental permits, highlighting the need for strong institutional frameworks to protect air and water quality.
3. Midcontinent and Great Plains: Favorable zoning and low land costs create an attractive environment for building resilient infrastructure (SDG 9). Operators must navigate state utility regulations, which can impact the integration of renewable energy sources and progress toward SDG 7.
4. Rockies and Mountain West: This region is attracting specialized computing facilities with incentives for “energy-adjacent” infrastructure. Heightened environmental scrutiny, particularly concerning public lands, underscores the importance of protecting biodiversity and ecosystems as part of a holistic sustainable development strategy.
5. Gulf South and Southeastern Corridors: Proximity to LNG terminals offers reliable power but also entrenches fossil fuel infrastructure. This presents a direct conflict with the goals of SDG 13, requiring developers to integrate robust carbon mitigation strategies.

Navigating Legal and ESG Frameworks for Sustainable Outcomes

Regulatory Compliance and its Role in Advancing SDGs

The legal landscape for data center siting is a critical mechanism for enforcing sustainable practices. Federal and state regulations, including Clean Air Act permits and water quality certifications, compel developers to address their environmental impact, contributing to SDG 12 (Responsible Consumption and Production). Local zoning and land-use rules further ensure that industrial development is compatible with community well-being, a core tenet of SDG 11.

Evolving ESG Policy and Alignment with SDG 13

Growing pressure from investors and regulators is pushing the industry toward greater transparency and commitment to Environmental, Social, and Governance (ESG) principles. This trend directly supports SDG 13 (Climate Action).

• Hybrid Energy Strategies: Many developers are incorporating on-site solar, battery storage, and Renewable Energy Credits to mitigate their carbon footprint.
• Carbon Accounting: Participation in voluntary carbon markets and compliance with emerging climate disclosure rules are becoming standard practices, enhancing accountability.
• Risk Mitigation: Legal and contractual structures are evolving to manage risks associated with climate policy, ensuring that corporate sustainability goals are aligned with operational realities.

Conclusion: The Path Forward for Sustainable Digital Infrastructure

The practice of siting data centers near natural gas resources highlights the central tension between building the infrastructure for the digital age (SDG 9) and fulfilling commitments to climate action and clean energy (SDG 7 and SDG 13). While natural gas offers a pragmatic solution for ensuring energy reliability, it remains a transitional strategy. The future of sustainable digital infrastructure depends on a concerted effort to navigate complex regulatory environments, innovate with hybrid and renewable energy solutions, and fully integrate the principles of the Sustainable Development Goals into long-term investment and operational planning. Policy frameworks, such as the Inflation Reduction Act, are accelerating this shift, but sustained legal and technical diligence is required to balance industrial growth with planetary health.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy

   • The article’s central theme is the energy demand of data centers. It discusses the reliance on natural gas for “stable, dispatchable energy,” its cost-effectiveness, and its role as a “transitional” fuel. It also mentions the integration of renewable sources like “on-site solar or battery storage,” directly connecting to the goal of ensuring access to affordable, reliable, and modern energy.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Data centers are explicitly identified as “the critical infrastructure of the digital economy.” The article details the development of these facilities, the leveraging of “existing pipeline and transmission infrastructure,” and innovative energy solutions like “microgrids and combined heat and power (CHP) systems,” which aligns with the goal of building resilient infrastructure and fostering innovation.

3. SDG 13: Climate Action

   • The article extensively discusses the environmental impact of energy choices. It highlights that natural gas produces “roughly half the carbon emissions of coal” and notes that developers are pursuing “decarbonization goals.” It also refers to “proposed SEC climate disclosure rules,” “carbon intensity,” “Renewable Energy Credits,” and “carbon offsets,” all of which are measures directly related to combating climate change.

4. SDG 8: Decent Work and Economic Growth

   • The text describes the “explosive growth of cloud computing, artificial intelligence, and enterprise data storage” as driving the digital economy. The competition for development sites in regions like Texas and the Appalachian Basin, fueled by economic incentives, points to the role of the data center industry in promoting economic growth.

5. SDG 11: Sustainable Cities and Communities

   • The article touches upon land use and planning for large industrial facilities. It mentions “land use” compliance, “local zoning rules,” “special-use permitting,” and the strategic use of “abundant brownfield sites” in the Appalachian Basin, which relates to sustainable planning and management of industrial development in regions and communities.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. SDG 7: Affordable and Clean Energy

   • Target 7.1: Ensure universal access to affordable, reliable and modern energy services. The article’s focus on securing “firm, 24/7 baseload generation” for data centers—critical modern infrastructure—directly relates to this target’s emphasis on reliability.
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix. The mention of developers incorporating “hybrid energy strategies” including “on-site solar or battery storage” and federal incentives from the “Inflation Reduction Act” accelerating investment in renewables points directly to efforts to increase the share of renewable energy.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure. The entire article is about building and powering data centers, which are defined as “critical infrastructure.” The emphasis on energy security and reliability to ensure uptime speaks to the quality and resilience of this infrastructure.
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable. The discussion of “combined heat and power (CHP) systems” for efficiency, integrating renewable energy, and managing carbon exposure reflects the goal of upgrading industrial processes to be more sustainable and environmentally sound.

3. SDG 13: Climate Action

   • Target 13.2: Integrate climate change measures into national policies, strategies and planning. The article provides clear examples of this, citing “decarbonization policy,” states like Oregon and Virginia “considering restrictions on fossil-fueled generation,” and “federal incentives under the Inflation Reduction Act” as policies influencing infrastructure investment and energy choices.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicators for SDG 7 (Affordable and Clean Energy)

   • Indicator: Percentage of energy from renewable sources. The article implies this indicator by discussing the use of “on-site solar or battery storage” and the purchase of “Renewable Energy Credits” as part of a data center’s energy portfolio.
   • Indicator: Reliability of power supply (e.g., uptime percentage). The article’s repeated emphasis on the need for “uninterrupted, high-density energy loads” and “firm, 24/7 baseload generation” implies that uptime and power reliability are critical metrics for success.

2. Indicators for SDG 9 (Industry, Innovation, and Infrastructure)

   • Indicator: Investment in infrastructure. The article describes “intense competition for development sites” and significant investment in data centers with demands “exceeding 100 megawatts per site,” which can be measured as total capital investment or total megawatt capacity built.

3. Indicators for SDG 13 (Climate Action)

   • Indicator: Carbon dioxide emissions per unit of value added (Carbon Intensity). The article directly mentions operators being pushed toward “greater transparency around carbon intensity” and the need to manage “emissions-related claims,” making this a key implied metric.
   • Indicator: Amount of carbon offsets purchased. The text explicitly states that “carbon offsets” are now a “standard component” of many facility portfolios, making their volume a measurable indicator of climate action efforts.

4. Table of SDGs, Targets, and Indicators

Source: powermag.com