Legal Intricacies of Sustainable Energy

Mitigating the risks associated with PPAs, RECs and ESG measures | By Dale Mullen, Trent Zivkovich and Steve Luttrell of Whiteford, Taylor & Preston, LLP

According to Cisco’s Annual Internet Report: “Nearly two-thirds of the global population will have Internet access by 2023. There will be 5.3 billion total Internet users (66 percent of the global population) by 2023. The number of devices connected to IP networks will be more than three times the global population by 2023.” As broadband Internet access and reliance on that access increases, the need for data centers, internet infrastructure and the energy that powers them will increase.

Data centers utilize incredible amounts of electrical power. In just one county in one state (Virginia), the daily demand for energy has topped one gigawatt (GW). In comparison, the Union of Concerned Scientists reports that in 2012, the total capacity of all US. electricity generating plants was only 1,100 GW. Some models project that data center energy usage may exceed 10 percent of the worldwide energy supply by 2030.

In light of these energy demands, environmental considerations are very important for developers, investors, clients, and neighbors of existing and planned data centers. A leading issue is the carbon footprint for such centers.

Carbon Footprint

Gases that trap heat in the atmosphere are called “greenhouse gases.” These gases consist of Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), and a variety of fluorinated gases. The US. EPA estimates that about 80 percent of total US. emissions of greenhouse gases are Carbon dioxide. The term “carbon footprint” is used to describe the total amount of greenhouse gases generated from a person, activity or business.

Regulatory and Market Demand for Reducing the Carbon Footprint

Regulatory enforcement and market demand will drive the need for renewable energy alternatives, on-site reduction of fossil fuel generators (primarily diesel). New opportunities will be created for innovative energy procurement by data center industry participants who will be forced to reduce their carbon footprint.

Data Centers, connectivity providers and businesses of every description are in search of innovative ways to reduce their carbon footprint and differentiate their brand from competitors. However, understanding exactly how to implement sustainability strategies means understanding an increasingly complex world of practical and regulatory concerns.

Green Power Purchases and Greenhouse Gas Reduction

According to National Conference of State Legislatures (NCSL): “In the United States, power generation is still the nation’s single largest source of industrial air pollution and is a major contributor to greenhouse gas emissions, despite advances in pollution controls over the last 30 years. Since 2018, 15 states, two territories and Washington, D.C. have passed legislation to increase or expand their renewable or clean energy targets.” These public policy mandates, federal and state financial incentives and market demand have resulted in the development of new opportunities to participate in purchasing renewable energy (green power) up to and beyond those purchases mandated.

The option of purchasing electricity generated from renewable resources (solar, wind, geothermal, hydropower and biomass) can serve as one step toward environmental sustainability. Purchases of green power can be scaled to fit each business need from partial replacement to exceeding the electricity usage of the business.

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About the Author

Dale Mullen leads the firm’s Administrative Law, Regulatory Compliance & Enforcement practice. Mr. Mullen focuses his practice on helping clients develop innovative solutions for regulatory compliance and government relations. He counsels clients, including data centers, connectivity providers, and Fortune 500 companies, in the use of innovative technologies that add efficiency, effectiveness, and economy to business operations.

Trent Zivkovich leads the firm’s environmental law practice. He provides comprehensive environmental law services in transactional, compliance counseling and litigation matters. A former professional geologist, environmental consultant, and project manager for a land development and construction firm, he utilizes his practical knowledge and experience to help clients navigate federal and state environmental and energy-related permitting requirements in light of project development and transactional needs.Steve Luttrell leads the firm’s clean and renewable energy practice. Mr. Luttrell focuses his practice on counseling clients through all stages of solar project development from initial site control, development and feasibility studies, equipment procurement and construction contracts, application of federal and state tax and renewable energy incentives, regulatory approvals, project financing, and negotiating power purchase agreements and subscription services. In this role, he often serves as a strategic advisor and outside general counsel to solar developers, particularly those seeking to expand their footprint in the marketplace.