New York, New York - New York will stop issuing permits for new large-scale data centers in the state for one year, according to an order signed by the governor on Tuesday.

The pause will give the state time to develop regulations for the rapidly expanding sector, fired by growing demand for artificial intelligence.

Critics of data centers point to their high electricity consumption, which can strain local grids and inflate energy bills, as well as their heavy water use, noise generation and the relatively small number of jobs they create.

"New York has always been at the forefront of innovation and change, but we've also always guaranteed that New Yorkers benefit," New York state Governor Kathy Hochul said.

"As data center development threatens to hike up utility bills, deplete our natural resources, and create uncertainty for New Yorkers, it's my responsibility to take action and lead.

"New York will lead the way in creating the strongest standards in the nation for data center development, ensuring that when companies succeed because of New York, New Yorkers succeed too."

US data center construction spending has surged in recent years, with tech firms pouring tens of billions of dollars into building out infrastructure.

A similar measure passed in Maine in April but was ultimately vetoed by the state's governor.

A June study by Allianz Trade estimated the centers emitted 286 million tonnes of carbon dioxide in 2025.

AI already accounts for between 15 and 20% of electricity consumption at data centers, and this share could climb to 40% by 2030, the report said.