Since President Trump returned to office, his administration's energy policies have sparked immediate and far-reaching consequences. Executive orders and legislation have weakened federal agencies, put billions in clean energy investments at risk, and created uncertainty through tariffs, all while undercutting programs meant to ease energy burdens. The result has been a surge in home energy costs, with three-quarters of Americans reporting higher bills this year, and gas prices hitting record highs amid ongoing conflict in Iran.
In response, states are becoming the primary arenas for pragmatic energy policy. Governors from both parties are forming task forces, implementing pricing reforms, and exploring new technologies to counteract federal inaction. This state-led approach is not new—Massachusetts and New York created energy authorities in the 1970s after oil shocks—but the current crisis demands even more innovative solutions.
States target data center costs
A key focus is holding data centers accountable for their massive energy consumption. States like Arizona, Colorado, Michigan, New Jersey, North Carolina, Pennsylvania, and Virginia are designing or implementing rules to ensure these large users pay their fair share, preventing residential customers from subsidizing their costs. In Pennsylvania, Governor Josh Shapiro has intervened to block rate hikes while pushing for broader reforms. Meanwhile, governors in Massachusetts, Arizona, North Carolina, and Maine have established expert panels to improve utility oversight, streamline permitting, and develop strategies to prevent cost shifting.
These efforts are not just about regulation; they also aim to attract investment and jobs. The administration's deregulation push has left a vacuum that states are eager to fill, with innovators and investors looking to partner with state governments. For example, North Carolina is exploring enhanced rock weathering, a technique that boosts crop yields and sequesters carbon, with input from state agencies, universities, and local businesses.
Permitting and innovation
Beyond data centers, states are working to streamline permitting for new energy projects, a critical step to expand generation and transmission. They are also fostering innovation in clean energy technologies, recognizing that long-term solutions require both policy and market-driven advances. The Massachusetts Clean Energy Center and New York's energy authority serve as models, but today's challenges—global conflict, rising demand, and aging infrastructure—require even greater agility.
State leaders are convening utilities, developers, labor groups, and environmental organizations to craft durable policies. This collaborative approach is yielding results, as seen in the bipartisan support for measures that protect ratepayers while encouraging investment. As one official noted, "States are rising to the moment and keeping their energy economies humming."
With Congress gridlocked and the White House dismissive of affordability concerns, states are the most viable path to relief. Advocacy groups like Third Way are working directly with governors' offices to share best practices and amplify successful policies. As Jonathan Lane, Francesca Hsie, and Nicholas Yoon of Third Way argue, waiting for federal action is not an option; states must lead now.
The stakes are high for voters, who are feeling the pinch of higher energy costs. By taking decisive action, states can demonstrate that responsible energy policy is possible, even in the face of federal retreat. Whether through pricing reforms, permitting improvements, or support for new technologies, the states are proving to be the laboratories of democracy in action.
