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What City Has the Power to Woo Amazon?

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As 20 lucky cities advance to the聽, it鈥檚 worth considering what might tip the balance in any one place鈥檚 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鈥檚 new headquarters might also want to pay special attention to energy. On Page 4 of the HQ2聽, discreetly tucked under an 鈥渁dditional information鈥 heading, Amazon talks about its preference for salvaged wood鈥攁nd renewable energy.

That鈥檚 not just lip service. Amazon was the聽聽in 2016, and it has聽聽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聽聽in the United States, according to Amazon) with rooftop solar by 2020 and adding 1聽聽megawatts of wind power in Texas. In 2016, the company filed an聽, along with Apple, Google, and Microsoft.

At the same time, Amazon鈥檚 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)聽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聽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鈥檚 annual聽. Amazon鈥檚 investments in solar and wind projects are a valuable gesture, but they simply don鈥檛 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聽聽and No. 2 on the聽, 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.聽Toronto likely falls in this category, too, given the difficult decision Ontario made in 2005 to聽.

The Safe Choice:聽Beyond the four Cadillac鈥攐r perhaps Tesla is more apropos鈥攃ities, there鈥檚 no one locale that is head and shoulders above the rest when it comes to clean energy, grid reliability, and affordability.聽Chicago; Montgomery County, Maryland;聽Nashville, Tennessee; Northern Virginia;聽Philadelphia; Pittsburgh; and Washington,听all have pros and cons. Tennessee has some of the cheapest electricity prices in the nation, but also a very low rating in the聽, for example. Chicago has ambitious climate and renewables targets (though it鈥檚 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聽Philadelphia.聽Electricity generation in聽聽is diverse; nuclear is first, followed closely by natural gas and then coal, with a聽. Pennsylvania is one of the few states under consideration with both high ratings in the聽聽and electricity prices close to the national average.
Philadelphia has a target of 80 percent reduction of greenhouse gas emissions by 2050, with an聽聽for improving efficiency and increasing use of renewables, including targets that exceed the state鈥檚 renewable portfolio standard and apply to all energy use in the city (i.e., not just municipal energy use).聽Pittsburgh聽has similar advantages, with lower electricity prices and less ambitious and clear climate and energy targets.

The Bad Choice:聽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聽. That would include聽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鈥檚 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聽Amazon鈥檚 clean energy pledges are anything other than greenwash, they won鈥檛 pick聽Indianapolis. Don鈥檛 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聽聽to the Clean Power Plan. There is a statewide聽, but it鈥檚 voluntary and rather modest. Both the state and the city rank near the bottom in the聽. Indiana gets middling ratings (No. 28 of all the states) in the聽, though electricity prices are below the national average. Last year, the state聽聽to phase out 鈥渘et metering,鈥 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鈥檚 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鈥檚 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聽聽there for discounted power. If that鈥檚 a harbinger of Amazon鈥檚 actual priorities, then the finalists can safely focus on other criteria. Salvaged wood, anyone?

This 聽originally appeared聽in聽, a collaboration among聽,听, and聽.

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Sharon Burke
What City Has the Power to Woo Amazon?