Not since the Interstate Highway System has the United States faced a physical infrastructure issue as complex and consequential as data centers.
As we saw with the unintended consequences of that policy, policymakers must consider not just short-term gain, but the long-term consequences of their choices, and understand how little they can predict.
We believe Gov. Josh Shapiro’s Governor’s Responsible Infrastructure Development standards, or GRID, strikes an effective balance between deploying Pennsylvania’s advantages in the AI race and protecting the long-term well-being of Pennsylvania’s communities and natural environment.
In particular, the requirement that, to receive support from the Commonwealth, data center developers produce their own on-site power keeps the state open for business while minimizing the economic and social risk of higher electricity bills.
At the same time, we’d like to see the governor and legislature consider a revision to a tax credit passed in 2021 to attract data centers to the Commonwealth.
Economic and technological conditions have changed dramatically in the intervening years.
Specifically, the drive to build data centers is so intense, and Pennsylvania’s other advantages so notable, that the state likely does not need to give up potentially $2 billion in tax revenue over the next half-decade to be competitive.
All of this is occurring at a moment when the future of artificial intelligence remains very cloudy.
While the technology itself has visibly advanced just in the past month, its economic viability remains questionable.
Policymakers must consider the possibility that data centers, either due to the bursting of an AI bubble or the development of new and better computing methods, might become white elephants — and not long from now.
Enthusiasm, no matter how seemingly justified, is not a sound basis for responsible policymaking.
They’re coming
There are, according to the informal Pennsylvania Data Center Proposal Tracker, more than 50 data center concepts on the table in the Commonwealth at this time.
Of them, eight are in the state’s southwestern corner, including the massive Homer City complex on the site of the former coal-powered generating station, as well as proposals for the valleys of all three major rivers.
All of the Pittsburgh-area proposals are on former industrial sites, including riverfront brownfields and retired mines, potentially offering a second life to blighted land.
This demonstrates the particular suitability of Western Pennsylvania to data center developments: The region has numerous industrial sites with access to power (particularly by way of natural gas), to water and to some of the brightest minds and most celebrated institutions in AI.
But this does not mean that Pennsylvania should throw itself headlong into the data center bonanza.
Addressing the impact of these projects on communities and the environment is essential.
Shapiro’s GRID approach would make state tax credits and favorable permitting contingent on meeting four requirements: 1) generating enough power to run the data center without drawing on the grid; 2) direct engagement with affected communities; 3) hiring and training local workers, including signing a community benefits agreement; and 4) commitment to “the highest standards of environmental protection, especially water conservation.”
We’d like to see more details on the last point — for instance, how these “highest standards” are different from those already in state law.
As for water conservation, this is primarily an issue when using water from municipal or limited underground sources, not a large river.
The largest current data centers, for instance, use about 10 seconds of the flow of the Ohio River at the Point each day.
BYOElectricity
The most important aspect of GRID is the insistence that data center sites generate their own power.
This is essential to avoiding the most obvious short-term impact of data center proliferation: straining the electricity grid and pushing utility prices for households and businesses much higher.
The amount of electricity data centers consume is staggering.
According to Pew Research Center last October, at 183 terawatt-hours, data centers already accounted for 4% of America’s power consumption.
That projects to more than double in just the next four years. In northern Virginia, the country’s computing heartland, data centers consume enough power to account for a whole quarter of the state’s usage.
The current largest data centers, Pew reports, use power equivalent to about 100,000 homes.
Newer, bigger projects — like one planned for Homer City — could use closer to 2 million homes’ worth of power.
It doesn’t take more than a rudimentary understanding of economics to realize that adding this much demand, without matching supply, will cause prices to skyrocket.
Everyday people must not foot the bill for hyperscalers’ ambitions.
Bringing their own power to the game must be the rule, and any exceptions must be considered very carefully.
A balanced approach
Shapiro announced his GRID standards for a state that already has a generous data center tax credit on the books.
In 2021, in an attempt to attract computing investments, the General Assembly voted to eliminate sales tax on products developers need to build or maintain their projects.
The Shapiro administration now estimates that will cost the state $2 billion through 2031.
AI models are improving week-by-week.
A tax credit passed five years ago is dreadfully out of date.
Corporations are desperate to build up their computing power. Pennsylvania doesn’t need to lure them with giveaways.
The legislature needs to update the law with more stringent regulations to receive tax breaks — or maybe even repeal the credit entirely.
Policymaking for technological revolutions always includes a great deal of uncertainty. Anyone who tells you they know exactly how AI, and its related infrastructure, will play out a decade from now (or even 18 months from now) is trying to sell you something.
That means leaders need to exercise humility and seek balance — including remembering that this boom, like others through history, may become a bust. Data centers, including huge ones, will come.
But there’s every reason for the Commonwealth to enforce strict standards to protect its communities and environment, both of which will outlast the data center bonanza.
Unless AI kills us all.
(Photo: Proposed Homer City 4.5 GW natural gas power plant to feed data center campus.)
NewsClips:
-- Pittsburgh Post-Gazette Editorial: PA Doesn’t Need To Bend Over Backward For Data Center Developers [PDF of Article]
-- TribLive Editorial: State Making Fiscal Commitments In The Dark On Tax Exemption For Data Center Equipment
Resource Link:
-- In Case You Missed It: A.I./Data Center Articles - NewClips From Last Week - February 16 & 23 [PaEN]
[Posted: February 22, 2026] PA Environment Digest
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