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As conflict in the Middle East raises fears of new shocks to global oil markets, one lesson should already be clear: the United States needs as much reliable energy production as it can get.
Artificial intelligence, massive data centers, advanced manufacturing and the electrification of industry are driving electricity demand sharply upward. According to analysis from Cleanview, nearly 680 data centers are currently planned in the United States, requiring electricity equivalent to roughly 186 large nuclear reactors. The nation that can generate abundant electricity at reasonable cost will have a decisive advantage in the technological competition with China, which is rapidly expanding its own energy infrastructure.
President Donald Trump and congressional Republicans are beginning to align America’s energy policy with this strategic reality. They are restoring a simple principle that Washington had largely forgotten: Energy demand should dictate energy policy.
In recent years, driven by climate ideology, federal policy moved in the opposite direction. The Biden administration tried to engineer the nation’s energy system through mandates, regulations and subsidies favoring specific technologies, rather than asking how much electricity the country would need and how best to produce it.
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The results were predictable. Electricity costs rose, permitting slowed and concerns about grid reliability grew. At precisely the moment the United States needed to expand energy production, federal policy made it harder to build new power generation. In a world where geopolitical shocks — from Iran to Russia — can disrupt energy markets overnight, limiting domestic supply is a strategic mistake.
We are now reversing this approach by focusing on the conditions that allow every reliable domestic energy source to expand. The Trump administration has moved aggressively to expand domestic oil and natural gas production and directed agencies to prioritize permitting for power infrastructure and streamline environmental reviews.
Trump also instructed the Nuclear Regulatory Commission and Department of Energy to accelerate licensing and demonstration projects for next-generation nuclear reactors, particularly small modular nuclear reactors — factory-built units designed to be deployed faster and at lower cost than traditional reactors.
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The most significant policy shift, however, may come from the Working Families Tax Cut Act, which Republicans in Congress passed, and the president signed on July 4. Rather than creating new subsidies for specific power sources, the law improves the tax treatment of capital investment across the economy. By restoring 100% bonus depreciation, companies can deduct the full cost of major investments immediately.
This dramatically improves the economics of building new facilities — factories and industrial plants and the power generation and grid infrastructure needed to support them. Companies building large data centers can more easily justify investing in the electricity generation needed for their operations. Several major developers recently joined Trump at the White House to pledge they would cover the cost of the electricity needed for their facilities so local communities would not bear the burden of rising demand.
The same policies encourage companies to build manufacturing capacity, including facilities that produce components for energy systems. That matters because the United States has become heavily dependent on foreign supply chains, particularly Chinese manufacturing, for many energy technologies. A tax environment that rewards domestic production is one of the most effective ways to reverse this dependence.
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Expanding domestic energy production also strengthens national security. America’s abundant natural gas resources already provide a reliable foundation for affordable electricity, and growth in nuclear and domestic solar manufacturing can further reduce the nation’s vulnerability to foreign disruption.
Critics argue the Working Families Tax Cut Act is hostile to renewable energy because it rolls back many mandates and subsidies created by the Biden administration’s Inflation Reduction Act. But this misreads the policy change. The law simply shifts to a source-neutral approach that depoliticizes energy generation. We should let the market decide the best path for powering our future — not give preferential treatment to some sources over others. This means supporting traditional power sources, nuclear energy, wind generation, hydroelectric dams, solar power, and battery storage technology — all of the above.
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In fact, renewable energy is well positioned to grow in this environment. The Energy Information Administration projects that most new generation coming online soon will be solar installations — a reflection of deployment speed and construction costs rather than political mandates. When electricity demand rises quickly, developers naturally gravitate toward technologies that can be deployed fastest while larger projects move forward.
The stakes could not be higher. Leadership in artificial intelligence will depend on software and semiconductors — and enormous amounts of electricity. China understands this and is building energy infrastructure at a staggering pace. The United States must respond with the same urgency but with a better model.
Instead of dictating the nation’s energy mix from Washington, policymakers should focus on encouraging investment, expanding supply and protecting consumers from rising electricity costs. The emerging approach under President Trump and congressional Republicans moves in that direction by allowing something far more reliable than ideology to guide the system: demand for electricity itself.
In an era defined by rising electricity demand and volatile global energy markets, the most effective energy policy is the simplest one. Let demand lead — and let American innovation deliver the supply.
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