WASHINGTON—What a difference just two years can make.
When we wrote our analysis of the 2024 election, today’s crises could hardly have been imagined. The future of a nationwide data center buildout was barely addressed in any campaigns. Likewise, national average gasoline prices hovered just above three dollars per gallon as US President Joe Biden left office, with global crude oil markets having broadly stabilized after the shocks of 2022.
The 2026 midterm elections arrive in starkly different circumstances. “Energy affordability” is now a top voter consideration. Data centers have grown deeply unpopular. Gasoline prices have soared to an average of $4.40 per gallon, while diesel prices have reached historic highs of more than six dollars per gallon. Some of the underlying causes lie in decades of standing policy or lack of policy changes, while others have been compounded by the Trump administration’s choices, particularly the war with Iran.
How will the upcoming midterm elections affect US energy policy? With power increasingly concentrated in the executive branch, what is Congress’s role? Will it, for example, reassert its power by addressing tariffs, limiting appropriations for war, accelerating infrastructure development, or putting guardrails on data center construction?
To be sure, there are significant areas of energy policy that fall largely outside of Congress’s control. Most notably, Congress has shown limited ability to influence the eight-month-old Iran conflict. Moreover, the Trump administration will retain control of key agencies and will direct their regulatory actions accordingly. Individual states, too, retain control over many significant policies, such as those governing fuel mixes or data centers. Finally, the federal debt will loom large over the next Congress. As a result, any new spending Congress might contemplate will necessarily be limited.
Nevertheless, there are four major areas where the next Congress could be poised to act, particularly if one or both chambers shift from a Republican to a Democratic majority.
1. Advance permitting reform
Comprehensive national permitting reform is the unicorn of energy policy: theoretically pursued by all stakeholders, yet seemingly impossible to achieve. Reforming the byzantine legal and regulatory hurdles that have increased costs and risks for energy infrastructure for decades has become even more urgent as energy demand (especially for electricity) is expected to grow rapidly.
Fortunately, a robust bipartisan reform package is making progress in the US Senate. Among its provisions, the Bipartisan American Affordability and Jobs Act includes a 150-day limit for most challenges to federal permitting decisions, hardens timeframe limits for federal environmental reviews, sharpens rules around the Clean Water Act, and clarifies the state authorities therein. It also includes enhanced federal authorities to expedite interstate transmission, as well as new requirements that data centers fairly pay for transmission and other costs associated with their construction.
But the politics of its passage are difficult. There remains a large and growing trust gap between congressional Democrats and the Trump administration. The former wants to secure equivalent benefits and project certainty for renewable energy to those given to conventional and fossil fuels. The latter has rescinded permits and clawed back funding for various clean energy projects.
If the Democrats fare especially well in this election, then they may consider reworking the legislation outright in a new Congress. Even if they were to gain a majority in one or both chambers, Democrats still cannot pass permitting reform by a simple majority vote (as in budget reconciliation processes) or overcome a presidential veto. Republican votes would therefore be needed, and thus the current bipartisan Senate proposal will probably remain the baseline.
However, if the politics allow, this may be the most important legislative act to enable a stronger, more agile, lower-cost, more efficient, and more secure US grid and wider energy system.
2. Act on affordability
“Affordability” was the defining issue of last year’s elections, catapulting multiple Democratic governors, state legislators, and mayors into office. Since then, the Iran war has made the issue even more urgent for Americans. If Congress is unlikely to influence the outcome of the Iran conflict, what can it potentially do at home to bring relief to citizens?
While Congress has limited influence over prices at the pump, it does have more influence over the state of power and electricity markets. Today, an increasingly diverse mix of fossil fuels (led by natural gas), nuclear, hydropower, and renewable energy power the US grid. But costs have climbed in nearly every major regional power market in recent years. Residential electricity costs, for example, have risen 40 percent since 2021. The problem is set to worsen: a recent report found $9.4 billion in utility rate-increase requests in the first quarter of this year alone. There are multiple reasons for these increases, including capital costs and interest rates, aging grid infrastructure, and volatile prices for fuels such as natural gas. But the crux of the problem is skyrocketing power demand within the US, which is driving the need for more generation, more power lines, more transformers, more everything.
The rise of artificial intelligence (AI) and the corresponding nationwide data center buildout has emerged as a factor that could exacerbate the rise in power prices, especially as the newest and most powerful facilities require vast investments in expanded generation, transmission, and grid improvements. S&P Global recently estimated that data center power demand increased 25 percent last year alone, to over 64 gigawatts, and it has nearly tripled since 2020. Data center demand for grid power could triple again, to over 183 gigawatts, by 2030—double the record peak load earlier this summer for the entire state of Texas. US data centers are today still a small source of power demand, but their share is fast growing. While the impact of existing data centers on current power cost inflation is thus debatable, their potential for a growing impact over time as a major demand source is not.
Congress is thus considering the Ratepayer Protection Act, which advises utility companies to consider adopting standards for large-load customers, such as data centers, and insulate other stakeholders from rate increases. But many Democrats and some Republicans see the act’s voluntary nature as insufficient to address rapidly rising costs.
One way to speculate on how a Democrat-controlled Congress would approach data center regulation is to look at what some Democratic state governors have recently done. Should the Democrats gain control of the House of Representatives, for example, they might mirror the recent executive actions on data centers taken in Pennsylvania by Governor Josh Shapiro and in Virginia by Governor Abigail Spanberger. In line with those and other similar state-level executive orders, Democrats on the Hill could call for new reviews of the impacts of data centers on energy costs by key federal agencies as well as mandated utility intervention to fairly distribute costs. They might require preventative measures to discourage speculative projects or pursue efficiency monitoring and transparency improvements. They could likewise set limits for natural gas and diesel generation on site or incentivize project developers to use renewable energy. Such legislation might struggle in a divided Congress, but should Democrats gain control of both chambers there may be enough anxious Republicans willing to join them on efforts to rein in Big Tech.
But the data center question is just one facet of the affordability conversation, as the recent Democratic Thriving Economy Project, produced by the Sustainable Energy and Environment Coalition (SEEC), with input from dozens of Democratic legislators, confirms. Published in September, the report highlights several areas of Democratic action on affordable energy. These include providing new authorities for agencies (like the Federal Energy Regulatory Commission, or FERC) to rein in utilities and expedite grid modernization. It also includes a Strategic Energy Affordability Reserve, which could be used to mitigate energy cost increases during emergencies. The report also details ideas to set new transmission standards for the existing grid, revamp federal energy efficiency programs, and even leverage AI (where appropriate) to expedite interconnection at lower costs.
It may even be possible for a new Congress to address affordability for oil products in a limited fashion. Significant amendments to the Jones Act, for example, could reduce costs for these products paid by Americans at the pump by reducing shipping costs between two US ports. Notably, the Trump administration has repeatedly waived Jones Act requirements throughout this conflict. Likewise, there could be a bipartisan coalition developed around federal gasoline taxes, perhaps to redesign them in ways that could provide at least temporary relief (for example, a gas tax holiday), as some states are already pursuing. Of course, such options also have significant drawbacks, which a new Congress must carefully weigh against the need for more immediate relief.
3. Prioritize adding energy supply
When the 2022 midterms rolled around, Congress had just passed the Inflation Reduction Act (IRA), a historic piece of legislation for US energy. Chief among its provisions were the expansions of investment and production tax credits, which had helped drive US renewable energy deployment well before their codification in the IRA. However, the One Big Beautiful Bill Act, passed in the summer of 2025, saw the Republican-controlled Congress largely curtail these incentives, including new sunset provisions and foreign content controls.
Even if the Democrats retake both the House and the Senate, reviving all the elements of the original IRA is unlikely for several reasons.
Most prominently, Democrats will face a profound fiscal crisis. With the national debt now more than forty trillion dollars, and with raising taxes a difficult prospect in the best of times, Congress must carefully consider its spending priorities. Of course, any new spending or new taxation must either be acceptable to the president or garner enough congressional support to pass with a veto-proof majority.
There has also been a shift in priorities among many Democrats: clean energy benefits and incentives are simply less important now. Many clean energy technologies, especially solar and utility-scale batteries, are competitive on a cost basis alone. The need for extra federal support appears less urgent; indeed, it can be argued that comprehensive permitting reform would do far more to advance these and other technologies’ deployment than another tax break.
Moreover, with affordability an urgent issue for voters, many Democrats are, at least in the short term, likely to prioritize plugging as much new power into the grid as possible rather than focusing on an energy transition. It may be possible to more subtly encourage the adoption of clean energy by some major investors, including companies that build and operate data centers. But the focus has turned to energy addition rather than to replacing one fuel for another.
More targeted measures, such as electric vehicle or domestic battery production incentives, could make a modest reappearance in a budget package and be advertised as a way to lower US fossil fuel dependency over time. Critical minerals, the key inputs for these energy technologies, are another area where Congress could act. There may be considerable bipartisan ground to use a budgetary package to support domestic critical minerals programs that underpin battery and electric vehicle production and to further empower agencies such as the US International Development Finance Corporation to partner with other minerals producers. A more robust critical minerals supply chain is essential for renewable energy expansion; furthermore, it is increasingly important for multiple sectors of the US economy (notably, the defense sector). The White House might even welcome moves in that direction, particularly as a way to compete with China and create diversified supply chains. Democrats can thus support less mature areas of clean energy development without committing to vast new spending.
4. Ramp up oversight
Congressional oversight—especially in terms of foreign policy and trade—has been limited since January 2025, when the new Congress convened with Republican majorities. Should Republicans retain control of both chambers, the president’s supporters will likely continue to offer him wide latitude on the use of executive authorities.
Democrats take a much dimmer view of these matters, however, and the implications for the energy world and its major players could be significant. Retaking the House gavel alone would enable Democrats to determine committee priorities and direct investigations. It would also allow them to initiate working groups, demand testimony, and subpoena witnesses.
Leading Democrats have already begun framing revamped oversight as part of a wider accountability and affordability mission. In September, Senator Chuck Schumer (D-NY) and Senator Sheldon Whitehouse (D-RI) released their Anticorruption Working Group’s report, which has the unsubtle title of “The Billion Dollar Deal: How the Fossil Fuel Industry Bought the Trump Administration, Cashed In, and Left Americans to Pay the Price.” That report could foreshadow the scrutiny ahead.
For example, major companies that made large donations to President Donald Trump’s inauguration or the proposed White House ballroom, or that co-invested with members of the Trump family, could be called to account. Energy-based deals and investment plans resulting from bilateral deals could also come under closer examination, such as the opaque arrangements in Venezuela and Greenland. The ongoing war with Iran, and extraordinary costs to the United States and US allies to increase oil flows through the Strait of Hormuz, may raise similar questions.
The administration’s approach to trade, including its application of tariffs on key metal and energy infrastructure inputs, is another area where congressional oversight could pressure the White House to end or amend some existing duties. Democrats might, for example, want to investigate the costs of tariffs and broadcast how these exacerbate the affordability crisis.
In this environment, Big Tech may experience unprecedented scrutiny from the Hill. If anything, the Trump administration’s close relationship with the “hyperscalers” leading the US AI buildout will only fuel oversight efforts. A new report from Senator Elizabeth Warren (D-MA), Senator Chris Van Hollen (D-MD), and Senator Richard Blumenthal (D-CT) illustrates potential priority areas. These include pushing for greater transparency around energy consumption, the use of nondisclosure agreements, and the health and environmental impacts of AI infrastructure. Future legislation might be informed by additional investigations and hearings into these facets of the AI revolution, especially if committees are unsatisfied with the answers they receive. If oversight and accountability are on the way back for the fossil fuel industry, then they are likely on the way back for Big Tech as well.
Laying the groundwork for the future
Many of the problems impacting energy politics in the United States in 2026 are likely to remain salient through 2027 and 2028. The difference in effective power between the legislative and executive branches over energy policy confirms that the 2028 election will ultimately be more important than this year’s vote.
But if the US energy system is at a potentially generational inflection point, facing a surge in energy demand and a transformation of its existing assets toward a more diversified mix, then every step Congress takes now matters over the longer term. By making the difficult but necessary changes to the permitting system and by setting the parameters for how future large energy users are governed—including how they might even become grid resources themselves—Congress can actively shape an energy system that benefits consumers and businesses alike while ensuring future economic agility and competitiveness for the United States.
In short, Congress cannot fix every problem. But it can lay the groundwork for an energy system that better serves all Americans. Voters deserve nothing less.