Chevron is seeking a massive Texas tax break for a new gas-fired power plant in West Texas — one that could be built to serve a Microsoft data center, not homes or the broader electric grid. 

As Mother Jones reported in collaboration with Wired, the proposed plant could qualify for more than $227 million in tax savings over 10 years while emitting more planet-heating pollution each year than the entire country of Jamaica did in 2024.

What's happening?

A Chevron subsidiary called Energy Forge One has applied for a tax abatement under Texas' Jobs, Energy, Technology, and Innovation Act, a program designed to attract large projects to the state.

The application says the plant would create "over 25 permanent, full-time jobs," though, according to Wired, that electricity-generation designation means it does not have a formal jobs requirement.

What makes the proposal especially notable is that the plant would not supply power to the grid. Instead, it would function as a "behind-the-meter" gas plant, generating electricity directly for a data center. In other words, it would be built to serve one of the most energy-intensive corners of the digital economy while sidestepping the normal grid connection.

Chevron told Wired that the tax incentives being considered apply only to the power plant, not to any future data center facilities. The company also said there is "no definitive agreement" with Microsoft. Microsoft likewise told Wired that talks with Chevron are ongoing and that the business terms have not been finalized. Even so, Wired reported that Chevron said in March it had signed an exclusivity deal tied to the project with Microsoft and the investment fund Engine 1.

The potential pollution is enormous. According to Wired's analysis, the Energy Forge plant by itself could emit more than 11.5 million tons of carbon dioxide equivalent annually. 

The project is also part of a larger shift. Developers are increasingly pursuing gas plants built specifically for data centers because connecting to the grid can take years. Global Energy Monitor found that the U.S. started the year with roughly 100 gigawatts of gas-fired power being developed just for data centers.

Why is Chevron's tax break request concerning?

There are two major issues here: pollution and public cost.

First, building a giant gas plant to power a data center would lock in more fossil fuel use at a time when communities are already facing worsening heat, drought, wildfires, flooding, and other disasters intensified by rising global temperatures. A project that emits more polluting gases each year than an entire country would only deepen that crisis.

And the harm from fossil fuels extends well beyond carbon pollution. Oil and gas extraction, processing, and combustion contribute to the extreme weather that destroys homes, livelihoods, and local economies. 

Meanwhile, many households are left with high energy bills even as these companies report enormous profits and lobby against the cleaner, cheaper energy solutions that could reduce costs and protect public health.

Second, taxpayers could end up subsidizing infrastructure that primarily supports private tech expansion. Data centers are already facing scrutiny over their massive electricity demand, water use, and reliance on tax incentives. As Wired cited from Good Jobs First, several states, including Texas, are forgoing more than $1 billion a year in revenue because of data center sales tax abatements.

Texas lawmakers have begun taking a closer look. As Wired reported, in March, Lt. Gov. Dan Patrick told the legislature to examine the costs and effects of the state's data center sales tax exemption, which Texas projects could reach $3 billion by 2029.

There is also a basic fairness question. Microsoft said earlier this year that it wants to be a "good neighbor" and pay a "full and fair share of local property taxes" where it builds data centers. But Good Jobs First pointed out that those kinds of statements do not necessarily preclude tax abatements, which can significantly reduce a project's taxable value even if the tax rate stays the same.

And while Texas excludes data centers themselves from JETI eligibility, this project could still qualify because it is being presented as a power plant. That creates a potential loophole, because even if the data center cannot receive the incentive directly, the fossil fuel infrastructure built to support it might.

What's being done about data center power plants?

There are at least some signs of pushback.

Texas officials are starting to revisit how much public money is being used to support data center growth. Nathan Jensen of UT Austin's government department told Wired that earlier versions of Texas incentive programs often handed out large tax breaks with too little oversight, though JETI includes more guardrails than its predecessor.

Policy experts are also pointing to better alternatives. 

Jane Flegal, who served in the Biden administration on climate and is now a senior fellow at the Searchlight Institute, has argued that tax incentives should be redesigned so data center developers are encouraged to connect to the grid instead of building their own gas plants. She has also called for faster permitting for clean energy and transmission, which could help bring more renewable power online more quickly and reduce the appeal of fossil-fueled backup infrastructure.

For people who want to respond, the most meaningful tools are civic ones. Supporting stronger oversight of tax abatements, backing clean energy and grid modernization policies, and paying attention to local and state permitting decisions can all make a difference. 

Communities can also push leaders to prioritize projects that cut pollution, improve reliability, and lower household costs rather than subsidizing private build-outs for the AI boom.

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