As 20 lucky cities advance to the final round of the Amazon HQ2 pageant, it’s worth considering what might tip the balance in any one place’s favor. Traffic? Access to talent? Affordable housing? Favorable tax incentives?
All of those considerations will surely be important, but cities looking to lure the tech giant’s new headquarters might also want to pay special attention to energy. On Page 4 of the HQ2 Request for Proposals, discreetly tucked under an “additional information” heading, Amazon talks about its preference for salvaged wood—and renewable energy.
That’s not just lip service. Amazon was the largest corporate purchaser of renewable energy in 2016, and it has committed to a target of 100 percent renewables. In the near term, that means outfitting 50 of its fulfilment centers across the country (there are more than 70 in the United States, according to Amazon) with rooftop solar by 2020 and adding 1 million megawatts of wind power in Texas. In 2016, the company filed an amicus brief in support of the Clean Power Plan, along with Apple, Google, and Microsoft.
At the same time, Amazon’s operations are electricity-intensive and require reliable, secure, affordable, and high-quality power. Both grid modernity (i.e., generation, transmission, and distribution of electricity that is improved with new policies, business practices, materials, and technologies, such as sensors and automation, in a secure way) and renewable energy should be important considerations for the company in looking at these 20 finalists.
So, how do the finalists stack up, in energy terms?
The Bold Choice: Boston, Los Angeles, and New York City are in states with very aggressive clean energy and climate change targets and plans. Not coincidentally, they also have some of the highest electricity prices in the nation and a high number of power outages, according to Eaton’s annual Blackout Tracker. Amazon’s investments in solar and wind projects are a valuable gesture, but they simply don’t scale the way government policy does. It would arguably be far more meaningful to locate in one of these states than to build another wind farm (even a really big one).
Of these three cities, Los Angeles may have the edge. California is No. 1 in the Grid Modernization Index and No. 2 on the Energy Efficiency Scorecard, and Los Angeles has taken specific, measurable steps to lower greenhouse gas emissions, including phasing out coal in its energy mix and budgeting $120 billion (albeit over 40 years) for new transit options. Toronto likely falls in this category, too, given the difficult decision Ontario made in 2005 to completely eliminate coal-fired generation.
The Safe Choice: Beyond the four Cadillac—or perhaps Tesla is more apropos—cities, there’s no one locale that is head and shoulders above the rest when it comes to clean energy, grid reliability, and affordability. Chicago; Montgomery County, Maryland; Nashville, Tennessee; Northern Virginia; Philadelphia; Pittsburgh; and Washington, all have pros and cons. Tennessee has some of the cheapest electricity prices in the nation, but also a very low rating in the Grid Modernization Index, for example. Chicago has ambitious climate and renewables targets (though it’s hard to find progress reports), but Illinois remains a major consumer and producer of coal.
One city that is arguably at the front of the pack is Philadelphia. Electricity generation in Pennsylvania is diverse; nuclear is first, followed closely by natural gas and then coal, with a renewable portfolio standard. Pennsylvania is one of the few states under consideration with both high ratings in the Grid Modernization Index and electricity prices close to the national average.
Philadelphia has a target of 80 percent reduction of greenhouse gas emissions by 2050, with an energy master plan for improving efficiency and increasing use of renewables, including targets that exceed the state’s renewable portfolio standard and apply to all energy use in the city (i.e., not just municipal energy use). Pittsburgh has similar advantages, with lower electricity prices and less ambitious and clear climate and energy targets.
The Bad Choice: This all depends on whether corporate values or the bottom line is more important to Amazon. If the company is serious about renewables and stands by its support for the Clean Power Plan, then it should arguably reject any city in a state that joined the lawsuit against the Clean Power Plan. That would include Atlanta; Austin, Texas; Columbus, Ohio; Dallas; Denver; Indianapolis; Miami; Newark, New Jersey; and Raleigh, North Carolina.
Some of these cities have other strengths or strikes against them. Atlanta, for example, has crazy ambitious climate change targets, but it’s still in Georgia, which seems hostile on the subject. Austin and Dallas have very forward-leaning renewable energy policies, but Texas is also a leading hydrocarbon producer and consumer. Miami is highly vulnerable to climate change. But one city clearly stands alone at the bottom.
If Amazon’s clean energy pledges are anything other than greenwash, they won’t pick Indianapolis. Don’t get me wrong: The city looks to be a strong contender in every other category, as a friendly, livable place with a strong industrial and cultural base. But the state is both a top consumer and producer of coal and opposed to the Clean Power Plan. There is a statewide clean energy target, but it’s voluntary and rather modest. Both the state and the city rank near the bottom in the Energy Efficiency Scorecard. Indiana gets middling ratings (No. 28 of all the states) in the Grid Modernization Index, though electricity prices are below the national average. Last year, the state voted to phase out “net metering,” a move seen as hostile to solar power.
On the other hand, if Amazon is at all evangelical about clean energy, and the amicus brief suggests that’s the case, Indianapolis (and other cities in this category) might be able to woo the company by seeing the light and committing to clean energy goals. That might also be a practical way for the state to create new employment opportunities for coal workers being displaced by cheap natural gas.
How seriously will Amazon really take energy in choosing a site for the HQ2? It’s tough to say. The company has made a significant and prominent investment in sustainability and renewable energy, and yet, Amazon has already committed to building 12 data centers in Ohio, which has a dodgy energy record, reportedly cutting deals there for discounted power. If that’s a harbinger of Amazon’s actual priorities, then the finalists can safely focus on other criteria. Salvaged wood, anyone?
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