[00:00:00] Welcome to the Powering America podcast. I'm Bryan Hyde, and today I'm joined by Paul Gessing. He is president of the Rio Grande Foundation, and Paul, congratulations. I understand you're celebrating your 20th year in that position. Yes, uh, been here 20 years at the Rio Grande Foundation, and, uh, love New Mexico. Intensely frustrated by the politics of the state that predominate, but, um, i- you know, we're gonna keep fighting right here in the Land of Enchantment. Well, we're gonna talk a little bit about, uh, uh, the, about data centers. A, a, a discussion that's being had in a lot of states, New Mexico is, is also one of those states. But before we delve into that, talk to us a little bit about, uh, your background. Talk to us a little bit about your foundation and, and what you do. Yeah. I, uh, grew up in Ohio, had family ties to New Mexico. Spent eight and a half years in the DC area predominantly working at the National Taxpayers Union. Really enjoyed the work, but didn't wanna be a, a swamp [00:01:00] creature, as, uh, they say about DC, although this, this was 20 years ago, so that term wasn't as commonly used back then. Uh, was looking for opportunities outside the DC area, and the idea of getting involved in state, uh, policy and think tank work was very attractive. Uh, they did not have a going think tank in New Mexico. Uh, so I sat down with some folks in New Mexico that had kind of the rudimentary outlines of a think tank that hadn't got any leadership, moved, uh, to Albuquerque in March of 20- uh, 2006. And while Rio Grande Foundation remains one of the smaller SPN state think tanks, uh, because New Mexico's only got 2.1 million people, because we're a pretty blue state that's getting bluer it seems over time, um, you know, we're, we're fighting a, a challenging uphill battle. [00:02:00] But, uh, I will say that there is no state with more potential, uh, if we get our political house in order. If anybody's been to New Mexico, it is one of the most beautiful places in the country. We also are blessed with incredible natural resources. People, of course, probably saw Oppenheimer. They know about the nuclear history of New Mexico. We also, um, you know, whether you are philosophically, philosophically supportive o- or subsidies for wind and solar, we obviously have those two sources of energy as well. And, you know, we're, we're pretty much a multi-tool player when it comes to energy. Uh, oil and natural gas, we're the second biggest producer of oil in the entire country. So i- it's an incredible state for people who are interested in energy, uh, but also- Beautiful outdoor spaces, blue skies, 300 plus days of sun a year, uh, all that stuff. So, uh, come and check it out if you haven't been to New Mexico. Let's [00:03:00] talk about data centers. I mean, you, you mentioned energy, and data centers and energy are conversations that go hand-in-hand. This is, uh, this is a kind of a controversial topic for some reason. Talk to me about the situation in New Mexico relating to, to data centers. So how, how does the state shape up? Well, uh, I'll, I'll preface all this by saying that the Rio Grande Foundation supports free market, uh, policies. Our absolute preference is that our politicians, Democrat, Republican, mostly Democrat in New Mexico , uh, support free markets and, you know, lower taxes, lower regulations, and that they use those tools to grow the state's economy and improve it. And we have such an opportunity right now in multiple ways. Uh, the, the oil and gas revenue, we could be cutting taxes, doing all these things. Uh, but we're- Controlled by Democrats right now, with Michelle [00:04:00] Lujan Grisham having served nearly her eighth year now in office and term limited out. Uh, she's been pretty much opposed to the ideas that we espouse and, uh, has not really done anything significant on taxes and reforms. So, uh, on the flip side, she has been a supporter of data centers, which is controversial, especially in her own party. But I would say that here in New Mexico at least, uh, it's not just the environmentalists or the progressive Democrats that don't care for data centers and don't wanna necessarily see them around. Although, of course, the Democrats and especially the environmentalists are the most organized groups fighting them. Um, there, there's kind of some concerns all across the board. Uh, but our governor's been supportive of them. Uh, the most notable one is, uh, called Project Jupiter. Uh, it's an Oracle project down close to the border near Las Cruces in a town called Santa Teresa, which has a [00:05:00] border crossing. But there's three or four other data centers, one of which is completed, been in, uh, going for a while, um, at Meta or Facebook, of course, uh, in a town called Los Lunas, south of Albuquerque, and they're looking to expand that. But, uh, this state has a lot to offer for data centers because, uh, among many, many charms New Mexico has is a lack of earthquakes, hurricanes, tornadoes, and all those nasty, uh, weather and, uh, geological phenomena that can really do a number on any kind of development, especially one that needs to be kind of, uh, going on a 24/7 basis like data centers. So let's talk a little bit about h- how, how data centers, uh, affect energy, 'cause it seems like that seems to be the number one concern I hear. Regardless of, of where someone lives, no matter what state the data center's going into, people are concerned, "Oh, boy. This is gonna make my cost for electricity go up." Um, how does this... How is this situation in New Mexico? Is it, is it [00:06:00] considered a controversial thing for, for these data centers to be coming in? Yes and no. Uh, if you know things like I know, and I'm not- Being, uh, disparaging about our, uh, fellow New Mexicans, but if you kind of understand the legal framework and what's going on, uh, in New Mexico, you, you should be, uh, pretty sanguine about that whole situation. Back in, uh, the twenty twenty-five legislative session, uh, we had a bill that was quite frankly not on my radar screen, 'cause we were off fighting other battles, uh, at the time. But the, uh, uh, legislature passed and the governor signed, uh, a microgrid bill. Uh, and that was, to me, something that really makes a lot of sense for data center folks across the entire country. A microgrid is simply a self-contained grid unit, uh, with a power source [00:07:00] associated directly with whatever data center, or it could be, uh, I, I assume, another development. And so it's separated off from the grid, so that means that average citizens are not impacted in any way, shape, or form on the energy front from these, uh, th- these microgrids and the data centers associated with them. Now, the, the data centers are big consumers of electricity. There's no getting around that. Uh, the qu-- And we have a law in place that's, uh, from twenty nineteen called the Energy Transition Act that, uh, Lujan Grisham pushed, and I consider it the worst bill, worst law that she got passed during her time in office. But it's basically setting New Mexico on a crash course for total wind and solar combined with battery to support the entire grid. So my view is that if the data centers had to operate under that Energy Transition Act, they would never come to New Mexico, uh, simply put, [00:08:00] period. So the governor's kind of got a case of cognitive dissonance, where she supports the data centers and the microgrids, but she also supported and, uh, you know, continues to kind of promote this Energy Transition Act. Uh, a- as you can probably imagine, the environmental groups are fans of the Energy Transition Act and would like to see that applied to the data centers, which in my estimation would kill the data centers and force them out of New Mexico. So that's kind of the, the state of play right now is that the environmentalists are pushing back, uh, and that's the number one kind of tool at their disposal. I just don't think the en- environmentalists want economic development, certainly not energy-intensive economic development. So, um, it, it's going to be very interesting to see how that conversation, uh, plays itself out in the, in the future. But, uh, [00:09:00] to me, the microgrid bill was Genius, truly. It, uh, created a situation where, uh, they can have this reliable energy source right there associated with that data center so that the rest of us don't have to worry about electricity prices going up a- as a result. I'm looking at a, a commentary that was, uh, published on your, your foundation's website, and you talk about the... One of the unique things about these data centers is they need uninterrupted electricity. Talk to me a little bit about, about why that is so essential for them to, to perform what they do. Well, it's pretty simple. Wind and solar are intermittent sources of electricity. Obviously, they can be better with batteries, but batteries are expensive and, uh, you know, that- that's a form of backup electricity, essentially. It's obviously provided by the wind and solar theor- theoretically. Uh, and I think it's just... it gets very expensive when you have to create wind turbines and solar panels, [00:10:00] and the amount of land you have to put all those on, and then you have to include with them, uh, some pretty massive battery installations. And given the amount of electricity we're talking about, I, I just don't think that's gonna be an attractive proposition. And quite frankly, while the environmentalists are, uh, just opposed right now to the natural gas plants, which are kind of the way that things have been settled at this point, or that seems to be the path that they're moving along with these data centers, uh, once you start talking about putting solar panels on large swaths of desert here in New Mexico, either those environmental groups or some other NIMBY or environmental groups will, rightfully in my estimation, push back against those. So, you know, it's the old, uh, economics line, there's no such thing as a free lunch, and the environmentalists, I think, are really just using whatever tools are at their [00:11:00] disposal to, uh, try to crush, uh, this economic development and these data centers. Paul, you mentioned, of course, the, the natural resources in New Mexico have to be attractive, um, you know, for, for these data centers. I'm curious. There, there's, there is a surplus of, uh, incredible scientific, uh, research being done, you know, in, in the state. You know, Sandia Labs, uh, Los Alamos and so forth. Do, does that kind of, of, uh, scientific, uh, activity also, uh, you know, provide some strong incentive for, for these data centers to, to be there? In other words, do, do they help with, with some of the research that's being conducted? That's an excellent question. Quite honestly, I don't know. Uh, you know, these are two national nuclear labs, uh, Los Alamos and Sandia, and one of the things that we've watched just on a broader economic basis here in New Mexico is the challenge of taking Often highly sensitive [00:12:00] national security-oriented research and information, and applying that or pushing that into the real world, so to speak, for commercial application. And so there may be some of that. Uh, certainly you would think and hope that that level of knowledge and experience with nuclear energy, uh, a- and that's obviously kind of down the road, uh, potentially how some of these data centers or all of these data centers might be fueled, is by transitioning from natural gas to nuclear. But, uh, New Mexico is certainly, broadly speaking, no more advanced or no more inclined towards nuclear than, uh, it is towards any other source of electricity that the environmentalists dislike. In fact, uh, there is uranium. Among all the other things we have here, a lot of uranium was dug in the area west of Albuquerque, [00:13:00] uh, a town called Grants, um, heavily Native American, a lot of Navajo-uh, oriented towns, and they suffered from... You know, you put yourself back in the 1940s when... Imagine the lax, uh, you know, conditions, the lack of knowledge of what some of these elements could do to people, uh, the socioeconomic challenges. Unfortunately, it was a bad experience, just saying that. And so there's a lot of opposition to anything nuclear oriented among certain groups. And, um, you know, un- unfortunately, getting over that and understanding that today's modern nuclear energy and mining for uranium is not what we're, we were doing during the Cold... uh, not during the Cold War, during the hot war, during the middle of World War II as they were developing the Manhattan Project and nuclear weapons, uh, it- it just, it's night and day. It's a totally different equation. But again, [00:14:00] the environmentalists use any tool in their arsenal, and so, uh, getting some of these groups that have been negatively impacted by uranium mining in the past, uh, and they, they play a outsized role, unfortunately, here in New Mexico. Is it safe to say that, uh, many of the environmentalist groups would, would rather see these data centers locate somewhere else? Somewhere else or not at all. I, I don't know what their ultimate goal is, but, um, uh, my experience with a lot of these radical environmental organizations is that they just don't like economic development. So maybe, maybe China, um, maybe not at all. I, I don't know where... They, they seem to be pretty oriented towards out of sight, out of mind, because, uh, they don't talk much about coal plants in China or what other, other countries are doing, CO2 and environmentally speaking. It's really only what they can stop in their particular geographical area, [00:15:00] which if we're concerned about global warming, we should be concerned on a global basis. But they, they... What happens in China stays in China, in the, uh... to take a turn of phrase. No, that's, I think that's a fair assessment. Um, talk to me about, uh, your, your foundation, the Rio Grande Foundation. What is its stance? Do you have an official take on, on data centers? Yeah, we're generally supportive of data centers. We have concerns about some of the economic development incentives that have been given, especially given what I think is a slam dunk for New Mexico with all the, uh, components that really fit for data centers in terms of geological and environmental stability. Uh, but overall, we're, we're supportive of them, which does put us on the side of a governor that we've, uh, crossed swords with many, many times. Uh, and it is great that she's taken a pro-data center stance. The [00:16:00] legislature's been tougher to deal with. Um, but there's, generally speaking, a agreement that this is a great opportunity for New Mexico. I do wanna mention, uh, real quick that of course energy is a component, but we are living in a desert, the high desert of the American Southwest, and water is a factor in the data centers. It's overblown, in my estimation, and it's yet another tool that the environmentalists use, uh, so-called environmentalists. I mean, we could, we could parse all these words out. But, you know, um, the, the so-called environmentalists talk about the water issue here in New Mexico, but when presented with a relatively simple solution, uh, they oppose that and are the leading op- opponents to it. What am I talking about? Well, I mentioned oil and gas, and if you're familiar with that process, at least here in New Mexico, which is where I got my baptism of fire, uh, in l- [00:17:00] learning about oil and gas, uh, we have... There's a lot of produced water that comes out of the ground as part of the extraction process, and that water, for obvious reasons, as you can imagine in a desert, there's a lot of, uh, thought going into how we- Treat that water and bring it into economic use, um, you know, not necessarily throwing it on crops right away, although, uh, there's certainly people who say that, uh... and I've talked to them, that believe that the, uh, water produced out of the oil and gas industry will, i- is, you know, would be distilled and it would become very, very clean. Uh, could be used for treaty obligations and sating, satis- satisfying those with other neighboring states like Texas or used in data centers. And so, um, unfortunately, uh, you know, while you would think, oh, environmentalists, water shortage, drought, no, they, they don't [00:18:00] support any of this. They're leading the charge fighting, uh, against it. And, uh, th- this whole issue of water and produced water is kind of a, a related issue that may not be necessarily on the table in other states that don't struggle so much with, uh, with the water issue as we do here in New Mexico. Okay, one final question, Paul. Where can people access your organization's website? Yeah, riograndefoundation.org or errorsofenchantment.com. And, uh, you know, I've got a lot of great information on this and other issues, and, um, I've got a podcast called Tipping Point New Mexico, and I talk to folks about the water issue specifically on that. And yeah, we're, uh, very interested to see how this debate plays out and, uh, trying to support good policies when it comes to data centers and other forms of economic development here in the Land of Enchantment. Again, we're talking with Paul Gessing. He's president of the Rio Grande Foundation. Paul, thank you so [00:19:00] much for joining us on the Powering America podcast. Thanks, Brian. Happy to do it.