A troubling trend is unfolding in Texas: data center operators are actively exploiting loopholes in the permitting system to build their own power plants without public oversight. This involves a simplified procedure originally intended for small pollution sources, but now being applied to large-scale energy projects.
The key tool is obtaining permits for individual turbines and generators, bypassing mandatory public hearings and environmental reviews required for large facilities. Since 2024, at least 38 data centers have already received approval for self-generation under this scheme. Moreover, half of the studied projects artificially understate their reported nitrogen oxide emissions, teetering on the edge of the 100-ton-per-year threshold, beyond which public procedures kick in. For example, the Vantage center near San Antonio received a permit for 99.8 tons.
The "Small First, Big Later" Strategy
Former employees of the Texas Commission on Environmental Quality (TCEQ) have revealed the essence of this practice: companies break a single project into many small applications, then combine the installations into a full-scale industrial power plant. Bruce Buckheit, a former director of EPA enforcement, stated outright that this approach contradicts the principles of comprehensive assessment of interconnected facilities.
The most striking example is the Stargate data center in Abilene, part of the infrastructure initiative by OpenAI, SoftBank, and Oracle with announced investments of up to $500 billion. In 2024, developers received simplified permits for 10 gas turbines and 62 diesel generators capable of emitting over 1.6 million tons of greenhouse gases annually. A year later, they applied for a main permit for an additional 41 turbines and 18 generators. If the project is realized, its capacity would be enough to power over 1 million homes, and its annual pollution would be comparable to emissions from nearly 2 million cars.
Scale of the Problem: 40 GW of Gas Capacity at Risk
Texas already has about 300 operating data centers, with another 200 in development. According to Global Energy Monitor, 80.6 GW of new gas-fired power plants have been announced in the state, nearly half of which (40 GW) is intended for direct power supply to data centers. This places Texas second in the world for the volume of gas capacity under development, behind only China. Analysts at Cleanview identified 59 data centers in the U.S. with plans to build their own power plants totaling about 90 GW, but only 2 GW have been brought into operation.
Floodlight reviewed documents for nine data center-related gas plants in Texas. Their permitted emissions could exceed 130 million tons of greenhouse gases annually. The TCEQ regulator, for its part, does not respond to specific questions, citing a high level of compliance and a large number of inspections.
My analysis: This situation is a classic example of the conflict between the rapid growth of the AI industry and environmental safety. The use of simplified permits is not an accident but a systemic problem that could lead to catastrophic consequences for the energy system and the environment. Texas, as a leader in data center development, risks becoming a testing ground for "gray" schemes that could then spread to other regions. Investors and regulators urgently need to reconsider the rules of the game, or we will face uncontrolled emissions growth and grid overload.