Policymakers focus on AI datacenter regulation and decarbonization as key legislative priorities.

Nationwide demand for electricity is increasing dramatically, driven in part by significant investments in new data centers designed to serve AI functions. As policymakers investigate legislative responses to this demand increase, representatives from across the energy and technology sectors are advocating for favorable policies to support AI infrastructure development.

Industry stakeholders have proposed varied approaches to managing AI's energy demands. Leading trade associations argue that lawmakers should focus their efforts on removing barriers to expanding the electric grid and more rapidly bringing electric generation sources online, particularly by improving the permitting and siting process for electricity transmission. Some energy providers have flagged concerns about renewable energy goals; for instance, Dominion Energy recently suggested it will be forced to supplement its renewable energy with investments in nonrenewable sources like natural gas to meet demand from new data centers. Data center developers have pushed for greater federal investments in clean energy development, while large tech companies express similar sentiments. Microsoft announced a multi-billion dollar deal to power data centers with low- or zero-emission energy, and Google recently announced a similar partnership with Nevada utility NV Energy to procure power via a "clean transition tariff," which would require Google to pay a higher rate to power its datacenters with carbon-free energy. Market researchers have found data center providers contracted 40 gigawatts (GW) of wind and solar energy in 2023 as companies balance reaching their growing energy needs with renewable energy commitments.

Federal policymakers have introduced multiple proposals to regulate AI's impact on power demand. Senate AI Working Group member Martin Heinrich (D-NM), Sen. Ed Markey (D-MA), House AI Caucus Co-Chair Anna Eshoo (D-CA), and Vice-Chair Don Beyer (D-VA) introduced the Artificial Intelligence Environmental Impacts Act of 2024 (S. 3732/H.R. 7197), legislation that would require the National Institutes of Standards and Technology (NIST) to develop standards for evaluating the environmental impact of AI models and require a study of the positive and negative environmental implications of AI. Senate Majority Leader Chuck Schumer (D-NY) encouraged relevant committees, in conjunction with the private sector, to "address and mitigate" the energy costs associated with AI models to promote innovation competitiveness with China in his May 2024 roadmap for federal AI policy. The White House convened stakeholders from across the AI, data center operations, and energy utility spaces for a roundtable discussion and subsequently announced the creation of a Task Force on AI Datacenter Infrastructure to coordinate federal policies. The Biden administration further underscored the importance of AI-enabling energy infrastructure in an October national security memorandum (NSM) on AI, directing the White House Chief of Staff, Department of Energy, and other relevant agencies to streamline permitting processes for clean energy generation, transmission lines, and fiber data links.

The Harris campaign recently published a memo detailing its economic policy priorities, including a new "America Forward" tax credit that would incentivize domestic investment in the development of AI data centers and clean manufacturing, among others. The credit would feature bonus amounts tied to investments in "longstanding manufacturing, farming, and energy communities" and the use of union labor, similar to the bonus credits associated with many of the Inflation Reduction Act's (P.L. 117-169) green energy incentives, including the Section 45Y clean energy production tax credit. The Harris campaign's reluctance to tie credits for investments in AI and data centers to green energy in initial messaging may reflect the administration's willingness to support computing infrastructure projects powered by nonrenewable energy. These proposed credits may prove contentious as the 2017 Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) expires in 2025, with extension projected to add $4.6 trillion to the federal deficit over 10 years, adding mounting pressure on Republicans and Democrats to cut spending as the federal deficit balloons.