Chevron Seeks $227M Tax Break in Texas

Chevron subsidiary Energy Forge One applied for a tax abatement in Texas to build a gas plant for a data center, potentially serving Microsoft. The company seeks over $227 million in savings over ten years through the state’s Jobs, Energy, Technology, and Innovation (JETI) Act. The Pecos-Barstow-Toyah school board approved the application, with the state covering the cost of the abatement so the district won’t lose funding.

The plant, designed for “direct consumption” by a data center, bypasses the traditional power grid. This behind-the-meter approach is gaining traction as developers face grid connection delays. However, the plant could emit over 11.5 million tons of CO2 annually—more than the country of Jamaica.

While Microsoft has an “exclusivity agreement” with Chevron and pledged to be a good neighbor regarding taxes, no final agreement exists. Experts note that Microsoft's pledges may not extend to tax abatements, and tracking these incentives across states remains difficult. The program's guardrails are an improvement over earlier versions, but still allow for significant tax breaks with limited oversight.