Massachusetts Governor Maura Healey has implemented new, rigorous guidelines for data center developers, effectively pausing tax incentives until these stronger protections are in place. These measures aim to ensure that the economic benefits of data centers don't compromise the state's ambitious climate targets, which include a 50% reduction in greenhouse gas emissions by 2030 and net-zero emissions by 2050, nor lead to increased utility costs for residents. The core of Healey's framework shifts the financial burden of energy and infrastructure onto corporations.
A key requirement is that developers must supply or procure 100% clean energy under the state’s Clean Energy Standard. This is intended to prevent data centers from driving up electricity costs for local residents. Additionally, developers will be responsible for the full financial cost of any necessary upgrades to the electric grid and water infrastructure to qualify for future tax exemptions. They must also demonstrate sufficient water availability and detail their compliance with drought measures.
The new guidance also addresses community and environmental health. Developers are instructed to use alternatives to diesel-based backup generation, minimize noise and localized air pollution, and utilize the MassEnviroScreen tool to assess the cumulative impacts of their projects. Furthermore, state financial incentives will be contingent on the establishment of community benefit plans, coordinated with the Office of Environmental Justice and Equity and the Executive Office of Energy and Environmental Affairs. This framework supplements all existing state and local permitting and regulatory requirements.
While Massachusetts enacted a Qualified Data Center Sales and Use Tax Exemption in 2024, no applications for these tax credits had been filed prior to Healey's announcement to halt them. This move follows actions by various municipalities, with Lowell enacting the state's first moratorium on data center development in March, followed by Mansfield passing a near-total ban in May, and Holyoke prohibiting new data centers last week. These local actions highlight growing concerns among residents regarding water consumption, electrical grid strain, noise pollution, and potential increases in utility bills caused by data center operations.
Healey emphasized that data centers can foster innovation and economic growth, but developers must prove they can operate without increasing costs or harming communities. Her administration will use this guidance to evaluate existing regulations and permitting processes, identifying areas where legislative authority may be needed to align with the framework's objectives. With high energy costs and strict environmental regulations, Massachusetts has not been a significant hub for data centers, and this new guidance further solidifies the state's commitment to environmental protection and community well-being.
