Texas is becoming America’s top destination for technology companies, but the same policies attracting them are driving an energy boom that threatens to undo key environmental gains.
What Is Driving The Move?
Over the past five years, Texas has led the United States in corporate relocations. For example, as research from CBRE shows, since 2018, 465 company headquarters have moved states, with 209 choosing Texas. Firms ranging from Oracle and Hewlett Packard Enterprise to Tesla and GAF Energy have made the jump, citing lower costs, fewer regulations, and access to talent.
Unlike California, Texas has no corporate or personal income tax, fewer environmental restrictions, and a comparatively low cost of living. The Dallas–Fort Worth region now ranks among the fastest-growing business hubs in the world, offering an international airport network and a deepening talent pool supported by major universities. For many technology companies struggling with California’s high energy prices and stricter labour laws, the switch appears to make economic sense.
The Case Of GAF Energy
One clear example came this month (October 2025) when GAF Energy, a solar shingle manufacturer, confirmed it would close its San Jose site and move operations to Georgetown, Texas, cutting 138 jobs in the Bay Area. The company said it was aligning its business with markets where solar is most compelling for builders and homeowners.
California’s recent cuts to solar subsidies and tightening regulation have made it harder for solar installers to maintain margins. Texas, by contrast, offers an expanding housing market, lower costs, and an open regulatory environment. The relocation follows similar moves by major names such as Oracle, Verily Life Sciences, Realtor.com, and Tesla, each seeking the same business-friendly advantages.
Energy, Power, And Expansion
Energy reliability and price are the key factors at the heart of Texas’s appeal. For example, the state produces more electricity than any other, driven by a mix of natural gas, wind, and increasingly, solar power. Data from the Electric Reliability Council of Texas (ERCOT) shows electricity demand could almost double by 2034, with half of all new industrial demand expected to come from data centres.
These facilities, which host servers for artificial intelligence (AI), cryptocurrency, and cloud computing, require enormous and continuous energy supplies. Texas is one of the few places capable of meeting this demand at scale. Its grid is largely self-contained, allowing developers to negotiate directly with utilities and local governments for new capacity.
For example, Cognigy, a Germany-based AI firm, announced earlier this year that it would relocate its US headquarters from San Francisco to Plano, north of Dallas, citing Texas’s business-friendly environment and access to talent. The company says it plans to grow its workforce to 200 within three years.
The Cost Of Growth
However, it should be noted here that the same power abundance that draws IT firms is driving a rapid buildout of fossil-fuel generation. For example, according to the Environmental Integrity Project, developers have announced 130 new natural gas power plants in Texas, capable of producing 58 gigawatts of electricity, which is enough to power more than 14 million homes.
If all are built, the clear downside is that they could emit 115 million metric tonnes of greenhouse gases each year, equivalent to the annual emissions of nearly 30 coal-fired plants or 27 million vehicles. Many of these projects are being approved under what campaigners call weakened permits, allowing construction to proceed more quickly but with fewer pollution controls.
Environmental groups argue that some applications are being approved in record time, sometimes within days of filing. They have urged the Environmental Protection Agency to intervene, warning that this pace risks breaching clean air standards.
The Trump Factor
It’s impossible to ignore the fact that President Donald Trump’s new energy policies are helping to drive this expansion. For example, in May 2025, he signed four executive orders aimed at dramatically increasing US nuclear capacity and accelerating fossil fuel permitting. One order instructs the Nuclear Regulatory Commission to cut licensing timelines to 18 months. Another sets a long-term goal of adding between 300 and 400 gigawatts of nuclear capacity by 2050.
Supporters argue that Trump’s plan will strengthen energy independence and support power-hungry sectors such as AI and manufacturing. Critics, however, note that it has come alongside funding cuts for renewables. Federal incentives for solar and wind have been reduced, while the Texas Energy Fund, backed by up to $7.2 billion in taxpayer loans and grants, excludes renewable projects from receiving support.
The Rise Of The “Trump Energy Campus”
Perhaps the most striking example of this change is Fermi America’s proposed “President Donald J. Trump Advanced Energy and Intelligence Campus” near Amarillo. The project, co-founded by former Energy Secretary Rick Perry, would combine four Westinghouse AP1000 nuclear reactors with one of the largest gas-fired plants in the country to power an 18 million square foot data centre.
Fermi claims the combined “hypergrid” could generate up to 11 gigawatts of electricity, roughly equal to the entire output of Manhattan. However, local residents and environmental groups are questioning how it will secure enough cooling water in a drought-prone area that receives only around 20 inches of rain per year.
Officials have suggested that treated wastewater from a nearby nuclear weapons facility could be used, though some farmers remain concerned about groundwater depletion. Others have noted that the site sits near a long-standing Superfund cleanup zone, raising questions about environmental safety and oversight.
Air Quality And Water Pressure
Beyond the carbon emissions, new power plants are expected to worsen local air quality. For example, gas facilities release nitrogen oxides, sulphur dioxide, and fine particulate matter that can trigger asthma and heart disease. Fourteen of the 54 planned sites are located in areas already failing to meet national air-quality standards for ozone and particulate matter.
Water scarcity is another well-documented and growing concern. For example, some large-scale data centres can use millions of litres of water per day for cooling. However, Texas has no statewide requirement for companies to report their consumption, making it difficult to track the full environmental impact of the sector’s expansion. Analysts warn that unchecked data-centre growth could strain local water supplies, particularly across central and western Texas.
A Balancing Act Between Growth And Sustainability
For now, it’s obvious why Texas is so appealing to the tech sector. Low taxes, vast land, and abundant power have created a pro-business environment that few other states can match. However, the state’s heavy reliance on gas-fired power and the water-intensive nature of data-centre development are creating a sustainability paradox.
ERCOT’s chief executive, Pablo Vegas, has publicly stated that treating renewables as a problem is misleading and that Texas’s long-term energy stability depends on keeping a balanced mix of energy sources. His comments reflect a wider recognition that growth built solely on fossil generation could expose the grid to both environmental and operational risk.
Why This Matters Beyond Texas
For UK and European businesses with operations or supply-chain links in the US, these developments matter. Texas’s growing dominance as a technology and manufacturing hub is reshaping the energy and sustainability landscape that underpins global digital infrastructure. The tension between low-cost growth and long-term environmental responsibility is likely to define how the next decade of US industrial policy unfolds.
What Does This Mean For Your Organisation?
What is happening in Texas is a clear example of the tension between economic opportunity and environmental responsibility. The state’s low costs, deregulated markets, and vast energy resources have created a magnet for technology investment, yet this same combination risks locking the region into higher emissions and heavier water use at a time when sustainability should be at the centre of long-term planning.
The growth of data centres and AI facilities will almost certainly strengthen Texas’s position as a global digital hub, but their reliance on fossil-fuel power could undermine both state and national climate targets. For UK companies supplying technology, engineering, or energy solutions into the US market, this presents both a challenge and an opportunity. Those offering cleaner technologies, efficient cooling systems, or renewable integration expertise may find growing demand as American firms face pressure to offset their environmental impact.
The state’s current approach also offers a wider lesson for policymakers and corporate leaders. Economic incentives alone cannot deliver a sustainable industrial future unless they are balanced with transparency, environmental safeguards, and credible emissions reductions. If Texas manages to align its economic momentum with clean energy growth, it could become a model for responsible expansion. If it fails, it risks becoming a cautionary tale of unchecked development driven by short-term gains.
For investors, regulators, and businesses alike, the outcome will be significant. The decisions being made in Texas today will shape the carbon footprint of the next generation of global technology infrastructure, influencing where companies build, how they power their operations, and how international partners view the sustainability of America’s digital economy.