United States must grasp opportunity to build sustainable energy system
IEA review credits US energy successes but sees need for significant investment in electricity sector
18 December 2014 Washington
The United States is in a strong position to deliver a reliable, affordable and environmentally sustainable energy system, the International Energy Agency (IEA) said today as it released a review of U.S. energy policy. To do so, however, the country must establish a more stable and co-ordinated strategic approach for the energy sector than has been the case in the past.
The IEA report 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 emphasised as mechanisms that can guide the US economy away from its reliance on fossil fuels and towards greater sustainability.
"Developments in the US energy sector in recent years have bolstered the country’s energy security, sustainability and economic competitiveness, but challenges remain," IEA Executive Director Maria van der Hoeven said as she released the report, which features a special focus on electricity. "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 on the future of nuclear power."
The report said the US natural gas boom has resulted in 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 United States 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 portfolio projects.
The United States must develop effective, co-ordinated 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 U.S. 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 the Quadrennial Energy Review, and the utilisation of its outcomes to re-establish a stable and co-ordinated strategic outlook for the energy sector.
- Support for the development and implementation of demand-side 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.
Energy Policies of IEA Countries: United States – 2014, available for free download, provides analysis of the energy policy challenges facing the United States and provides recommendations for further improvements. It is intended to help guide the country towards a more secure, sustainable and affordable energy future. The recommendations build on the lessons learned and progress made since the previous IEA in-depth review of the United States was published in 2008.
To download a factsheet on US energy, please click here.
To read the Executive Director's speech at the launch, please click here.
To see the presentation, please click here.
To view a videorecording of the launch, please click here.
About the IEA
The International Energy Agency is an autonomous organisation that works to ensure reliable, affordable and clean energy for its 29 member countries and beyond. Founded in response to the 1973/4 oil crisis, the IEA's initial role was to help countries co-ordinate a collective response to major disruptions in oil supply. While this remains a key aspect of its work, the IEA has evolved and expanded. It is at the heart of global dialogue on energy, providing authoritative research, statistics, analysis and recommendations.
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