xAI commits $2.8 billion to gas turbines amid pollution lawsuit and SpaceX IPO

Elon Musk’s xAI has disclosed plans to acquire $2.8 billion worth of natural gas turbines over the next three years, a move detailed in SpaceX’s initial public offering filing. The announcement coincides with a legal challenge from the NAACP, which seeks an injunction against xAI’s operation of unregulated gas turbines at its data centre near Memphis, Tennessee. The NAACP alleges that the turbines, which emit significant nitrogen oxide pollution, worsen local air quality and contribute to asthma-inducing smog.

The $2.8 billion purchase includes a specific $2 billion deal for “mobile gas turbines,” the same type of equipment currently subject to legal challenge. xAI currently holds permits for 15 turbines but was operating 46 as of a few weeks ago. The NAACP has sought an injunction to halt the use of these turbines, citing their contribution to air pollution and asthma-inducing smog.

xAI argues that its turbines are exempt from certain permitting requirements because they are classified as “mobile,” remaining on the trailers they were shipped on. This classification creates a discrepancy between state and federal regulations: Mississippi does not require permits for mobile generators, whereas federal regulations state that turbines of this size are subject to air-pollution controls regardless of mobility.

The Environmental Protection Agency (EPA) ruled earlier this year that xAI’s operation of these turbines violates federal law. Each type of turbine xAI operates has the potential to emit more than 2,000 tons of nitrogen oxide (NOx) pollution annually. The legal status of the NAACP’s lawsuit and whether the injunction will be granted remains unresolved, as does the final outcome of the regulatory dispute between Mississippi state law and federal EPA rulings.

SpaceX acknowledged in its filing that reliance on gas turbine technology poses risks to its AI business if permits are rescinded or injunctions are granted. “We currently rely significantly on natural gas and gas turbine technology to power our data center operations,” the company wrote, noting that such legal outcomes would adversely affect its AI business. The disclosure occurs as SpaceX prepares for a historic IPO, valued at approximately $1.75 trillion, with plans to list on the Nasdaq exchange under the ticker symbol “SPCX”.