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Plus, Google and Amazon report on what hyperscaling has done to their emissions.

There’s an interesting new report out today from the progressive think tank Groundwork Collaborative that makes a case for how Democrats can harness the artificial intelligence and data center boom to help the power grid — while also cutting costs for electricity customers.
But first, some news. We’ve known for some time now that artificial intelligence is transforming America’s biggest technology companies, turning them into major energy consumers and even quasi-industrial firms. Now we have even more evidence that it’s driving up their carbon emissions, too.
Google and Amazon released their annual sustainability reports yesterday, and both show huge surges in their energy use and climate pollution. Google’s greenhouse gas pollution grew by 18% last year, its largest year-over-year jump on record, and its energy use leapt by 37%. The company’s energy use rose by more than a quarter last year; it now uses roughly 3.5 times as much energy as it did before the pandemic.
Amazon’s climate pollution, meanwhile, increased by more than 16%, surging by the equivalent of more than 10 million metric tons of carbon dioxide. Emissions from its purchased electricity increased 34% since last year. If you feel like you’re seeing more Rivian-made Amazon delivery vans on the road, you’re not wrong: The company claims it deployed an additional 21,000 last year.
What’s driving this surge? The AI boom, of course. “Our AI infrastructure buildout is currently accelerating faster than the grid is decarbonizing,” Kate Brandt, Google’s chief sustainability officer, said in a statement.
What to do about it? That’s what Groundwork’s report is about.
“How do we bring down costs now? How do we bring down costs in the long term? And how can we make those two things mutually reinforcing?” Grayson Flood, the report’s author and a former policy adviser to Representative Alexandria Ocasio-Cortez, told me. “We wanted to be pretty direct about addressing what we see as a broken incentive structure within the system, particularly for interregional transmission.”
The report outlines a few novel ideas about how to lower prices immediately, in part to get through a coming multi-year “crunch,” during which the power grid in some regions will be maximally constrained while utilities work to bring new power plants online:
The report also imagines several policy ideas to help build out the grid. One of them is a Grid Trust Fund, a new federal bank account funded through an excise tax on data centers and other large electricity loads.
The government has often turned to funds like these to support infrastructure that creates a natural monopoly at national scale, Flood said. “The interstate highway is the most notorious example, but you can look at airports, you can look at seaports — they have these types of trust funds. There’s a lot of precedent for this in the tax code, and they tend to be financed with excise taxes on some sort of corresponding usage of the infrastructure.”
Under his scheme, the new excise tax would fall on big power users like data centers or crypto miners that don’t generate many permanent local jobs — in other words, aluminum smelters, steel mills, and semiconductor fabs would be exempt from it. But even just taxing electricity for large loads at 1 or 1.5 cents per kilowatt-hour, he said, could throw off more than $100 billion in a decade. That money could then be used to fund new transmission projects, technical assistance for utilities, ratepayer relief, or economic development.
That trust fund would be partly overseen by a National Power Authority, a new government corporation modeled on the Tennessee Valley Authority or the Energy Department’s existing power marketing administrations. This authority would have limited powers and would be partly inspired by Texas’ successful effort to centrally plan transmission lines in order to expand its electricity market.
The new authority would plan and develop interregional transmission, linking far-flung regions of the country to create new power markets. It would also have the power to build new 24/7 zero-carbon electricity power plants with high up-front capital costs, such as new geothermal projects, offshore wind farms, or nuclear plants.
“People talk about the power grid as a platform,” Flood said. But “right now, the grid is not functioning as a backbone and platform, it’s functioning as a bottleneck.”
The goal of the report, he said, is to ask: “How do we build [the power grid] as a backbone to support the growth of private markets, whether that’s in renewable energy generation, or an AI data center, or a new hospital that’s showing up?”
It’s an interesting document. Many energy wonks have proposed plans to shift some of the costs of expanding the electricity system out of the ratebase — that is, out of customers’ power bills — and onto the tax base, which is funded in a more progressive way. (I recently argued for a national, publicly funded grid buildout in The New York Times.) The new Groundwork report, in essence, tries to reframe those ideas for an era of populist politics — and one in which Americans are suspicious of data centers, as Heatmap’s polling has shown.
In its fusion of populist and pro-growth attitudes, this new set of proposals reminds me of New York City Mayor Zohran Mamdani’s attempt to freeze the rent for some tenants while passing major supply-side reforms allowing new housing construction. That effort has won Mamdani praise from many housing advocates in New York (even as some remain dubious about his de facto rent freeze). Whether that kind of politics works at a national level remains to be seen.
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The president has paid $4 billion to kill projects that were already dying or dead.
At a certain level, it defies belief: The Trump administration is spending nearly $4 billion … for nothing.
It’s paid something for nothing at least five times now. Last week, the administration reached a $1.2 billion deal with the German energy company RWE to not build three wind farms, including a large installation off the coast of New Jersey. The Chicago-based developer Invenergy signed a separate deal in June. It’s not clear these deals are legal, yet they keep happening.
These agreements mark the formal end of the first American offshore wind boom, which began in the late 2010s and stepped up during the Biden administration. This buildout, alas, never quite found its sea legs. As recently as February 2022, you could squint at the horizon and imagine that 14 gigawatts of turbines might soon spin along the East Coast. Now, we’ll be lucky to get more than six gigawatts by the end of the decade.
That’s a lot of lost generation capacity — and as I’ve repeatedly written, its absence is going to be a problem for the northeastern United States. The Mid-Atlantic and New England, which were set to receive some of the largest offshore facilities, will still need a lot more new electricity in the years to come, especially during winters. (New York City, for instance, now avoids blackouts by relying on two aging barge-mounted power plants parked in the East River.) And while many of the developers who received President Trump’s payouts pointed to fossil fuel investments in their press releases — as if to imply that those other projects were “replacing” the lost wind farms — relatively few of the power plants mentioned will be built in the Northeast.
Yet there’s another weird aspect of these offshore deals that I haven’t focused on as much: Why are they happening in the first place? That’s the subject of a helpful new article published today by James Sallee, an economics professor at UC Berkeley. He observes that many of the offshore wind projects that the Trump administration has now paid to “cancel” were struggling financially long before January 20, 2025. Few of the farms, if any, would have been built under any administration. So why, exactly, is Trump paying off their developers?
Let’s roll the tape. More than four years ago, the Biden administration held the country’s largest offshore auction ever for a set of promising offshore-wind sites along the Atlantic coast. That brought in more than $4 billion; as part of it, a German company named RWE placed a record-shattering bid for a particularly promising area off New Jersey’s coast. The date? February 25, 2022.
As it turned out, that auction was not the most important thing that happened that week in global energy markets — or world history. A day earlier, Russian troops began their full-scale invasion of Ukraine, igniting a geopolitical firestorm that ultimately ushered in an era of tighter energy supplies, rampant inflation, and higher interest rates. Although the offshore developers could not have known it then, those three trends would reshape the economics of their projects. That’s because offshore wind farms — far more than solar, battery, or gas plants — require titanic upfront investment, as Sallee writes:
Offshore wind is extremely capital intensive: enormous costs come up front, while revenue arrives over decades. Inflation raised the cost of steel, turbines, vessels, and labor. Higher interest rates reduced the present value of future revenue and raised financing costs. Where developers signed fixed-price contracts, developers were left holding the capital cost risk when conditions changed.
Unit economics started to deteriorate, and costs ballooned. Projects started to fail as early as October 2023, when Orsted canceled its Ocean Wind 1 and 2 projects slated for the New Jersey coast. I remember talking to an energy expert at the time who mused that for the same per-megawatt cost as an offshore wind farm, the state might as well just build a new Westinghouse nuclear reactor. (Its governor Mikie Sherrill is now exploring doing just that.)
By the time President Trump took office, in other words, many offshore wind projects were already on financial life support, if not deceased. Given the real underlying shift in project economics, that should have decreased the value of developers’ offshore leases — which are, as Sallee writes, more of an option than a permit, because they give a developer the right to study an area but do not authorize construction per se.
Yet over the past year, the Trump administration has reimbursed five developers largely in full, and it hasn’t gotten much in return. Perhaps that’s what the administration needed to do in order to fully kill these projects without risk of future legal sanction. Yet it is … strange. “The deals relate to development rights that look uneconomic today, even before the buyouts,” Sallee says. “The buyouts may limit how quickly offshore wind could rebound in a future economic and policy environment, but as of today it seems as though the government just spent $3.9 billion of taxpayer dollars spent to shoot a corpse.”
I wonder if that description undersells it. In a certain light, the government isn’t really shooting the corpse so much as handing it big wads of cash. Since the first of these deals were announced, I’ve struggled with what to call them — buyouts? payouts? — but Sallee’s post (which you should go read in full) made me wonder if bailout is the best option. After all, imagine if a hypothetical President Kamala Harris had reimbursed this same set of companies for the full value of their failed offshore wind bets — and used the Justice Department’s permanent and technically unlimited Judgement Fund to do it. What would journalists say then? How would Republicans respond?
Or to make the analogy truly work, I suppose, imagine that a President Harris had bailed out oil companies for some overly exuberant bet made during an earlier Republican administration, then claimed (with dubious evidence) that they would use the refunds to build renewables. That would still be an enormous waste of public money, but it would scramble the politics somewhat, perhaps evoking astonished embarrassment from her allies and delighted confusion from her opponents. Which might — to return to our world — mirror some of the response we’re seeing to Trump’s wind payouts.
As electricity prices rise, the stakes for the leaders of states like Virginia, Pennsylvania, and Indiana are only getting higher.
Governors are increasingly throwing their weight around in the technocratic and often obscure utility ratemaking process. The latest example is Virginia Governor Abigail Spanberger, who last week published a Washington Post op-ed announcing that she would intervene in the attempted acquisition of the state’s dominant utility, Dominion, by Florida utility and energy development company NextEra Energy.
Spanberger is “deeply skeptical about whether selling our primary state-regulated utility to an out-of-state company is good for the commonwealth,” she wrote. While she didn’t go so far as to oppose the merger, she did insist that NextEra maintain jobs in the state, comply with Virginia’s clean energy goals, and come up with cost savings for Virginians. And while the state’s utility regulators will make the ultimate decision themselves, she said, she wanted to use her leverage as the state’s highest ranking and most visible elected official “to make sure Virginians have a voice in the process.”
It’s not unheard of for a governor to try to influence utility regulators by picking members of state utility commissions — or simply by haranguing them. But as electricity bills rise to their highest level ever, according to Heatmap and MIT’s Electricity Price Hub, governors in particular have started responding to pressure from voters to do something — anything — about it.
In New Jersey, Governor Mikie Sherrill won office in part by promising to freeze electricity rates — then used her influence over the utility regulators to make it happen.
In Indiana, Governor Mike Braun replaced the head of the state utility regulator after his predecessor agreed to a rate increase from the utility AES Indiana.
In North Carolina, Governor Josh Stein publicly called on the state’s dominant utility, Duke Energy, to reduce a rate increase request.
And the whole PJM Interconnection market, which includes Indiana, Virginia, and New Jersey, exists under a capacity price cap worked out in litigation initiated by Pennsylvania Governor Josh Shapiro, who has also led an effort alongside the White House to procure more generation and pressured the utility PECO to withdraw a rate case.
“Governor Shapiro is maybe the pioneer of this,” Eric Miller, the interim vice president of the states program at Evergreen Action and a former climate and energy official under former New Jersey Governor Phil Murphy, told me. “Legislators, they hear from their constituents about utility issues, whether it’s shut-offs or high prices. They go to their elected officials, and those elected officials engage with the governor’s office,” he said.
Utility regulation and ratemaking exists in a netherworld between public policy and private business. Most customers in the U.S. are served by investor-owned electric utilities, but the prices they pay are set by boards whose members are typically appointed by governors after a long, quasi-judicial process.
The process by which rates are set is wonky by design, with thousands of pages of filings and analysis explaining what costs need to be recovered at what rate paid by ratepayers. “Intervening” in a public service commission decision typically involves quietly slipping a document into a large docket, to be seen solely by utility regulators and lawyers (plus a few enterprising reporters.) To the extent the public or elected officials get to weigh in, it’s often through non-governmental advocacy groups or state officials designated as advocates for the public.
That governors are now openly taking responsibility for such a painfully bureaucratic process is “an indication of just how central utility rates are to overall energy affordability concerns that governors are hearing,” Jeff Dennis, executive director of the Electricity Customer Alliance and a former Department of Energy and Federal Energy Regulatory Commission official, told me.
With prices as high as they are, “the stakes are higher, and so the governors feel like in order to fulfill their campaign promises or their job as the top elected official in the state, that they’ve got to be directly heard,” he said. In Virginia, for example, typical bills have grown over 45% in the past five years, and by almost 12% in the past year alone.
When it comes to assigning responsibility for high electricity prices, Americans are most likely to blame their state government and their utility (and, increasingly, data centers), according to Heatmap polling.
Governors, who have a direct mandate from the public, can exert a unique countervailing force in a process that many critics argue is weighted towards utility interests. “Despite a lot of fences to prevent regulatory capture and rent seeking, it happens,” Miller said, “and having an executive weigh in directly can shake that up.”
There are risks, however, to governors getting more directly involved in the ratemaking process. One is that it could encourage short-term thinking, leading to measures that hold down prices at the expense of potentially necessary investments to maintain reliability or building out the infrastructure necessary to bring on new sources of power like wind and solar.
On top of that, “There’s certainly always a risk that the proceedings get more political,” Dennis told me. But he noted that ultimately, it’s utility commissions making the decisions, and they’re obligated to provide a record of filings and data to support their decisions.
Governors getting involved more formally could also have upsides, Dennis said, by shining a spotlight on the process that ultimately affects every resident and business in the state. “It brings a lot more spotlight to how utilities are making decisions about investments and how customers are impacted by those decisions, and I don’t think that that’s necessarily a bad thing.”
Governors also have a different set of mandates and responsibilities than the utilities do. While utilities have a mandate to provide reliable electric service — and thus spend whatever they can convince their regulators is necessary to do so — Miller argued that governors have to balance reliability and affordability for their constituents.
“The regulatory monopoly that utilities have is a political creation made by the elected officials in that jurisdiction.” Miller told me. “It is well within the authority of those same elected officials to decide to take a very hard look at whether that model is delivering the type of outcome that they want.”
A proposed change in how the agency implements an obscure Cold War-era law would impose onerous reporting requirements on renewables and pipelines.
Democrats in Congress claim that a new Trump administration proposal will have a chilling effect on the energy sector by subjecting renewables and fossil fuel pipelines alike to an obscure, rarely cited Cold War-era law requiring detailed information on foreign farmland ownership be submitted to the Agriculture Department.
In late June, the Agriculture Department released a proposal to change implementation of the Agricultural Foreign Investment Disclosure Act of 1978, which requires companies to provide information to the federal government on foreign investors in farmland holdings, acquisitions, and sales. If finalized, the new rule would expand the definition of “agricultural land” in regulation to include all renewable energy facilities and pipeline corridors by explicitly tying the term to those industries’ formal codes under the North American Industry Classification System.
Top Senate Democrats on Monday argued that taken together with expanded investor reporting thresholds and land boundary mapping requirements, this rule change “may exceed what is necessary” to deal with national security issues around farmland ownership.
One of the letter’s signatories, Pennsylvania’s John Fetterman, has previously joined the GOP in railing against foreign companies purchasing U.S. farmland as a potential national security concern. And indeed, there certainly exists a broader bipartisan anxiety around Chinese influence on essential industries, e.g. mining and critical minerals. That Fetterman is now joining climate hawks Martin Heinrich and Sheldon Whitehouse in opposing the administration’s move is a striking moment of unity, especially as Fetterman bats away beltway rumors that he’ll flip parties.
The letter demands a briefing from the Agriculture Department that includes the proposal’s “anticipated impacts on the energy, infrastructure, and agricultural sectors,” as well as the legal basis for changing its definition of “agricultural land.”
“[W]e are concerned that USDA’s proposed rule may exceed what is necessary to address those objectives, have unintended national security consequences, and may create substantial compliance burdens on agricultural producers, landowners, infrastructure operators, energy developers, and investors that could undermine efforts to address rising energy and food prices without a corresponding national security benefit,” the letter reads.
As I have previously written, the USDA is an increasingly vital organ in the Trump administration’s war on renewable energy projects, and focusing its laser beam at project development on what it calls “prime” farmland. Trump also recently tapped country music star John Rich to be his “special envoy for American landowners,” which directly led to the USDA working with people fighting solar on farmland in upstate New York.
The Trump change goes after pipelines as well as renewable energy, although logic suggests that solar development could be more vulnerable due to the sheer acreage often required for utility-scale project construction and property setbacks.
The Agriculture Department responded to my request for comment with a statement: “As Secretary [Brooke] Rollins has noted before, the regulations governing the Agricultural Foreign Investment Disclosure Act of 1978 are extremely outdated and need to be updated to better reflect today’s conditions. USDA looks forward to considering all public comments before finalizing the rule.”
Editor’s note: This story has been updated to include the statement from USDA.