Recently, data centers have rapidly become a topic that advocates and policymakers need to reckon with in the clean energy space. Mostly, we’ve seen the data center discussion take place in other parts of the country, where electricity prices are lower and it’s more attractive for data center developers to build. But recently, the discussion arrived in Massachusetts with a discussion of data centers and sales tax exemptions. If you’re a Massachusetts resident, you have an opportunity to make your voice heard until August 25, 2025. 

What’s up in Massachusetts?

In November 2024, the Massachusetts legislature passed and Governor Maura Healey signed a bill stating that the owner or operator of a qualified data center may apply for a sales tax exemption covering 100% of all purchases of computers and other equipment supporting the data center’s computing, networking, data processing, and data storage functions. If the data center is certified as qualified by the Executive Office of Economic Development in consultation with the Department of Revenue, the exemption also extends to computer software and electricity purchased for use or consumption in the data center, as well as building and construction costs. 

The legislation is framed as a matter of economic development, but data centers have environmental and consumer impacts that need to be addressed. That’s why we submitted comments on the proposed regulations to determine what data centers are considered “qualified” for this tax exemption.

Why are data centers important with respect to energy?

Data centers use enormous amounts of electricity to power processors that support the computing needs of the internet and run cooling systems to keep the hardware safe. With the explosion of AI and cryptocurrencies, new data centers have been popping up all over the country – usually in places with relatively low electricity rates. Location is still a consideration, though, since the closer a data center is to its customers, the faster and more reliable the data transmission will be.  Customers in Massachusetts can include banking and investing, hospitals, biotech, government, education, telecommunications, and AI.  The energy needs of these data centers have already delayed the retirement of coal power plants across the country, and increasing development is threatening to prompt more fossil fuel power plants to be built, with dramatic greenhouse gas emission impacts and potential bill impacts for all ratepayers. In addition, data centers have public health impacts, since the facilities’ back-up power often comes in the form of diesel generators.

That’s why we submitted these comments after the August 21st hearing: 

Robert McGovern
Executive Office of Economic Development
1 Ashburton Place, Room 2101
Boston, MA  02108 

Dear Mr. McGovern, 

I am the Executive Director of the Green Energy Consumers Alliance, a nonprofit based in Boston with a mission to empower consumers and communities to speed a just transition to a zero-carbon world. Here are comments on the proposed regulation concerning qualified data centers. 

First of all, we were disappointed in the scheduling of just one hour for a public hearing and for such a limited time for written comments. 

Secondly, we understand that the sales tax exemption was authorized by statute. But for the record, we question the public interest in providing such generous tax relief to data centers, especially given concerns about the state budget, tax equity, and the impacts of data centers on electricity ratepayers and the Commonwealth’s obligations to reduce emissions.  

Regarding the proposed regulations, in the last several months, we have all seen a great deal of news and commentary about the potential growth of data centers as an industry in the United States. Key questions have been raised about the impact of data centers on the electricity grid, on ratepayers, and on emissions – both greenhouse gas emissions and localized emissions that harm human health. However, as a member of the Grid Modernization Advisory Council (GMAC) which made recommendations to the Department of Public Utilities (DPU) on the Electric Sector Modernization Plans (ESMPs) in November 2023, I can tell you that data centers were not a topic of discussion in the months leading up to the submission of the ESMPs to DPU. And to this date, data centers have not been on the agenda at GMAC. I will be requesting that the GMAC invite Executive Office of Economic Development (EOED) to a future meeting. To me, the administration must do better at coordinating activities of EOED and Executive Office of Energy and Environmental Affairs (EOEEA) with respect to data centers and related issues. 

Green Energy Consumers Alliance is especially concerned about the draft regulations in Section 9.03.  In particular, while we are pleased that EOHD has listed important areas for data center owners to report on, we are astounded that EOHD would make reporting on these items voluntary.  Reporting on these points should be mandatory and public.  

Furthermore, before certifying the site for a tax exemption, the applicant should be required to make a presentation at a public hearing chaired by EOED personnel. The secretary of EOEEA should also attest that the data center will not increase emissions and costs to other ratepayers.  

At a minimum, state tax dollars should not subsidize the construction, operation and maintenance of fossil fuel equipment or fuel. It would be perverse to make the absolute value of the sales tax exemption proportional to the amount of electricity or fossil fuel energy and equipment purchased by the data center. 

Finally, in return for any tax relief, data centers must be constructed with project labor agreements that ensure decent working conditions and compensation. 

Thank you. 

Larry Chretien, Executive Director
Green Energy Consumers Alliance 

Submit your comments! 

If you’d like to submit your own comments, you can do so until 5:00 pm on August 25, 2025.

Simply email datacentertaxexemption@mass.gov. Copies of the proposed regulations may be obtained from the EOED website available at mass.gov/info-details/400-cmr-900-qualified-data-centers.