According to the International Energy Agency (IEA), the US is in a strong position to deliver a reliable, affordable and environmentally sustainable energy system. To do so, however, the country must establish a more stable and coordinated strategic approach for the energy sector than has been the case in the past.
A new IEA report on US energy policy highlighted a number of strategic initiatives that have contributed to the emergence of a new policy framework over the past six years. Among them, the Quadrennial Energy Review and the Climate Action Plan were emphasises as mechanisms that can guide the US economy away from its reliance on fossil fuels and towards greater sustainability.
IEA Executive Director Maria van der Hoeven said: “Developments in the US energy sector in recent years have bolstered the country’s energy security, sustainability and economic competitiveness, but challenges remain. Long term development of a sustainable electricity sector requires clarity. This means predictable, effective national policies to encourage investment , greater coordination to encourage the integration of renewables, and a common understanding of the future of nuclear power”.
The report said the US natural gas boom has resulted in a stable wholesale electricity prices, lower greenhouse gas emissions and greater system flexibility. But it also noted that the entire system is in need of significant investment if the US is to meet its electricity demand growth forecasts and strengthen resilience to climate change. Specifically, there is a concern that competitive electricity markets may not trigger investments in large, high fixed cost investments with long lead times, such as nuclear, carbon capture and storage and large renewable projects.
The US must develop effective, coordinated national policies to reduce the uncertainties that impede investments in secure electricity supply. The report also highlighted the growth in renewable energy production but emphasised the persistent uncertainty around the durability of federal tax incentives and around the Renewable Fuel Standard programme.
The report noted the impact of unconventional gas production, alongside increased output of light, tight oil, and the substantial contribution it has made to economic activity and competitiveness. Nonetheless, the IEA also emphasised that ‘this expansion in energy production is also raising unease on environmental and safety grounds, concerns which must be addressed appropriately’.
In the report, Energy Policies of IEA Countries: United States – 2014, the IEA praised US progress in implementing energy efficiency policies and noted that the country is a leader in facilitating private sector energy efficiency investments. Nonetheless, the IEA is concerned about whether spending on energy efficiency can be sustained and if the sector can keep up with ambitious targets for savings and efficiency improvements.
Among its key recommended policy actions, the IEA report calls for:
- Completion of the process leading to Quadrennial Energy Review, and the utilisation of its outcomes to re-establish a stable and coordinated strategic outlook for the energy sector.
- Support for the development and implementation of demand said measures and energy efficiency policies with an emphasis on the transport and building sectors.
- Greater durability and predictability of fiscal incentives for renewable energy in order to maintain investor confidence.
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