A scramble to keep pace with energy-hungry data centers as electricity prices soar.
A rush to build renewable energy projects, under attack from the White House, before federal subsidies get cut off.
And a looming midterm election that will test President Donald Trump’s fossil fuel agenda as well as Democrats’ appetite for opposing it.
The outlines of this year’s biggest climate fights are taking shape as states, industry and the public grapple with a political and economic landscape that has transformed over Trump’s first year back in office.
If 2025 was the year that Trump upended federal climate policy — dismantling agencies, uprooting subsidies, rolling back regulations — then 2026 looks to be the year that the full weight of those moves begins to fall on states.
And with 36 governors’ mansions up for election, along with some statehouses close enough to potentially flip, the stakes will be high as policymakers navigate a host of energy issues and the second year of Trump’s second term.
“What I’ve heard from legislators is that [energy] is going to be huge — it is going to be the No. 1 issue,” said Tim Storey, CEO of the National Conference of State Legislatures.
Campaign season sometimes can smother policymaking. But with electricity prices continuing to spike — and another rate hike for the PJM Interconnection region scheduled just a few months before Election Day — this year’s calendar could end up pushing states to act faster and more aggressively before voters head to the polls, Storey added.
“They’re going to do the classic: search all of the above options to keep costs down,” Storey said.
In statehouses and on the campaign trail, Democrats plan to repeat a playbook they credit with overperforming in 2025’s Virginia and New Jersey elections: hammer affordability as their top priority, emphasizing the potential for renewable energy to lower costs — without taking fossil fuels off the table.
Democrats are especially eager to blame electricity costs on Trump after his attacks on renewables.
The president’s One Big Beautiful Bill Act slashed most of the clean energy tax credits passed by former President Joe Biden, setting up short deadlines for developers to tap the subsidies. And in late December, the Trump administration suspended leases for every offshore wind project on the East Coast — a sweeping move that could take so much electricity offline, it even drew Republican pushback.
Trump officials say they are restoring “common sense” to U.S. energy policy, increasing fossil fuel supplies to lower costs and boost growth. The president and other officials pointed to the end of the year’s surprisingly strong economic results to argue his policies are working.
“President Trump has been clear: he will not jeopardize our country’s economic and national security to pursue vague climate goals that are killing other countries,” White House spokesperson Taylor Rogers said in a statement.
Trump himself has rejected arguments that the U.S. needs offshore wind and other renewables in order to power artificial intelligence — another priority of his administration — by claiming tech companies are building enough new generation themselves.
“Every AI plant being built in the United States is building its own Electric Generating Facilities,” Trump wrote in December on social media. “In other words, AI has far more Electricity than they will ever need.”
In reality, energy regulators are grappling with how to meet data centers’ staggering energy demand. PJM’s market monitor has warned that large loads like data centers are driving the nation’s largest grid operator toward blackouts and price hikes.
Those issues helped Democrats win elections last year in New Jersey and Virginia. Now, those same states will test whether Democrats can deliver on their campaign rhetoric.
Two states to watch: Virginia and New Jersey
With a fresh Democratic trifecta in Richmond, Gov.-elect Abigail Spanberger is looking to shift more electricity costs onto data centers.
She also is pitching expansions of battery storage and residential energy efficiency programs — efforts that could see major funding boosts as the state rejoins the Regional Greenhouse Gas Initiative, the cap-and-trade system for the Northeast’s electricity sector.
Lawmakers also have introduced legislation to boost solar installations and expand the offshore wind workforce.
In New Jersey, Democrats and climate advocates are looking to accelerate renewable energy permitting while making data centers shoulder more costs of the electric grid. But with Gov.-elect Mikie Sherrill succeeding a governor of her own party, Democrats have less low-hanging fruit to boost renewable energy — so the party is considering more creative options.
Lawmakers are expected to revisit legislation on a climate superfund program, which would seek billions of dollars from fossil fuel companies to offset the costs of climate change. New York and Vermont already have passed their own versions, which have drawn fierce pushback from industry, the Trump administration and Republican attorneys general. New Jersey’s proposal stalled this month during the lame-duck session, but supporters say it will pass if Democratic leaders allow the bill to reach the floor.
Then there’s Sherrill’s signature campaign pledge of freezing utility rates on her first day in office — a plan she says would draw on the governor’s emergency powers, even as some other Democrats have expressed skepticism.
For her attorney general, who will likely defend any attempt to freeze rates, Sherrill tapped Jennifer Davenport, who most recently worked as a top attorney for PSEG, the state’s biggest electric utility. The incoming governor said Davenport would challenge PJM policies that raise costs.
Managing expectations
Some Democrats — aware of how some members of the public have soured on Trump after he promised and failed to curb inflation — are wary of repeating the same overcommitments.
Maryland Gov. Wes Moore, a Democrat up for reelection this year, has downplayed the possibility of states curbing electricity rates anytime soon.
“There is no governor who can turn around and say, ‘Energy prices are down,’ because there is no governor who is forcing energy prices to spike,” Moore said in December when signing an executive order aimed at attracting new generation to the state.
“No governor can lower prices,” Moore said. “But here in Maryland, we will do everything in our power to bring relief to the people.”
States do have the power to curb energy prices a decade or two in the future, said Peter Gardett, a managing partner at Noreva, a firm that tracks and forecasts energy markets. But governors can do “very little” to lower electricity costs over the coming year.
Getting offshore wind projects completed is one of the rare things a governor could do to lower prices in the short term, he said. “This is kind of the only lever they have.”
The Trump administration’s halt on five offshore wind projects included Vineyard Wind, which was already 70 percent operational, as well as Revolution Wind and the Coastal Virginia Offshore Wind Project, which were scheduled to begin generating power in 2026. A court has already overturned the stop-work order on Revolution Wind, and lawsuits are pending on three others.
Because it’s so difficult to build new power generation, Gardett said, industries are increasingly looking to move to states where energy already exists — such as West Texas, which has extensive and underutilized gas infrastructure.
Louisiana, Pennsylvania and Wyoming also are using their ready supplies of gas to attract massive data center plans.
“It’s essentially moving industry to the energy, rather than the reverse,” Gardett said.
But even those states are seeing energy prices rise. Climate advocates hope the economic pressure of the electricity crunch, coupled with the political pressure of the midterms, pushes Republicans to relent on clean energy.
One place to watch for that possibility is Pennsylvania. Democratic Gov. Josh Shapiro is running for reelection this year while defending Democrats’ single-seat House majority. Democrats are less optimistic about gaining the two seats necessary to flip the 50-member state Senate from Republican control.
But that could change if voters continue to blame Republicans for rising electricity prices, said David Masur, executive director of PennEnvironment.
Republicans had refused to negotiate over energy policy while Pennsylvania was poised to join the Regional Greenhouse Gas Initiative. Shapiro agreed to drop that effort last year in a budget deal, saying now Republicans couldn’t use that as an “excuse” to oppose the governor’s other energy plans, including a bid to expand renewable energy.
Pennsylvania is one hub of data center development. As a member of the PJM region, the state expects to see its electricity rates spike next June after capacity auction prices set a new record high.
For Republican opponents of renewables, “there could be a breaking point,” Masur said, “because the pain is significant.”
