Enacting effective data center regulations has been a key priority for climate and energy advocates in 2025. Without meaningful policy guardrails, unchecked data center development threatens water resources, energy affordability, grid reliability, and public health. Each state faces its own unique landscape of challenges, requiring advocates and policymakers to prioritize different factors in their legislative approaches to regulating these facilities.
We brought together speakers from Climate XChange and Resources for the Future for a deep dive into the impacts data centers have on communities, where those impacts might be felt most deeply across the country, and what policy mechanisms are available to regulate these issues. Our expert panelists included:
- Kristin Hayes, Senior Director for Research and Policy Engagement at Resources for the Future
- Jacqueline Adams, Senior Policy and Research Associate at Climate XChange
- Jordan Gerow, Policy & Research Director at Climate XChange
Data Center Impacts: Energy, Emissions, Water, and Electricity Prices
Kristin Hayes, RFF
Learn more by watching the webinar at 04:12
Kristin provided an overview of the environmental and energy impacts of data centers. Her presentation covered the following topics:
- Electricity demand in the U.S. is projected to increase drastically in the coming years, largely driven by data center energy use. Within the next three years, data centers are projected to consume between six to 12 percent of total U.S. electricity consumption, compared to two percent in 2018.
- Note: lack of transparency in data center energy use, as well as uncertainty in both how many data centers will come online in coming years and how much energy they will need, means that experts have limited confidence in projected load growth from this sector.
- In the U.S., increased electricity demand from data centers is largely being met by natural gas, and the carbon intensity of electricity consumed by data centers is 48% higher than the national average. This means that data centers are contributing to increased emissions of carbon dioxide as well as other air pollutants.
- Total annual on-site water consumption by U.S. data centers is projected to double or even quadruple the 2023 level by 2028.
- Note: water consumption is generally less studied and even less transparent than the energy consumption of data centers.
- Without effective regulations, the costs of the vast energy infrastructure needed to deliver electricity to data centers will be passed onto ratepayers. To date, Wood Mackenzie and PJM have reported that, in some cases, data centers are driving electricity rate hikes.
For more information on the data used to frame these impacts, see Kristin’s references on Slide 26 of the above slide deck.
State Policy Priorities for Mitigating Data Center Impacts
Jordan Gerow and Jacqueline Adams, Climate XChange
Learn more by watching the webinar at 31:14
Jordan and Jacqueline reviewed an analysis of which states might be majorly impacted by various environmental and energy impacts of data centers, and what state-level policy mechanisms exist to address them. Note: The bills cited in this presentation below are not an endorsement or indication of best practice. In this evolving space, they are highlighted for containing some useful element or terms to further future policy development.
Their presentation covered the following topics:
- In 2025 state legislative sessions, at least 149 bills were introduced across 34 states to address data centers and their energy, environmental, and economic impacts. The most common themes relate to rates and energy affordability, grid planning and reliability, and tax incentives.
- Climate XChange conducted an analysis of state-specific vulnerabilities to data center impacts on emissions, water stress, energy affordability, grid reliability, and tax revenue and employment.
- Texas, Virginia, and Georgia are especially likely to see increased emissions from data centers, given current and projected data center electricity demand, state-specific carbon intensity of electricity, and proposed fossil fuel and renewable buildout.
- State policy mechanisms to mitigate these emissions include:
- Power efficiency requirements, e.g., MD SB 903 and CT SB 1292
- Renewable energy purchase requirements, e.g., MN HF 2928 and S.6394
- On-site batteries, waste heat recovery, geothermal, and solar incentives and requirements, e.g., VA HB 2578 and CA AB 1095
- Back-up generator emissions regulations, e.g., MD SB 903
- State policy mechanisms to mitigate these emissions include:
- Iowa and Oklahoma are especially likely to experience heightened water stress from data centers, given current and projected data center electricity demand, data center water usage, and drought vulnerability.
- State policy mechanisms to address this water use include:
- Texas, Louisiana, and Indiana are especially likely to experience disruptions to grid reliability from data centers, given current and projected data center electricity demand and current electricity reliability concerns.
- State policy mechanisms to address grid reliability include:
- Wyoming, Iowa, Pennsylvania, New Jersey, and Louisiana are especially likely to experience increased electricity rates from data centers, given current and projected data center electricity demand, current electricity prices, energy burden, and short term electricity price hikes.
- Texas, Virginia, Minnesota, Tennessee, Nevada, and North Dakota are at risk for outsized spending to attract data centers, with limited employment gains, given current and projected data center demand, existing tax incentives for data centers and related subsidy disclosures, and data center employment.
- State policy mechanisms to address tax and economic justice include:
- States with the highest number of data center bills introduced this year include Virginia (at least 30 bills), Minnesota (15), Maryland (10), Texas (9), and New Jersey (8).
For more information on the data used to determine states of concern, see links in the slide deck. For more information on Climate XChange’s ongoing data center policy work, including a list of all relevant state bills we’re tracking from 2025 sessions, reach out to kristen@climate-xchange.org.
