EnergyUnited States must seize opportunity to build sustainable energy system: IEA

The United States is in a strong position to deliver a reliable, affordable, and environmentally sustainable energy system, the International Energy Agency (IEA) said, as it released a review of U.S. energy policy. 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.

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 emphasized as mechanisms that can guide the U.S. economy away from its reliance on fossil fuels and towards greater sustainability.

“Developments in the U.S. 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 U.S. natural gas boom has resulted in stable wholesale electricity prices, lower greenhouse gas emissions and greater system flexibility. It also noted, however, 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, 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 emphasized the persistent uncertainty around the durability of federal tax incentives and around the Renewable Fuel Standard program.

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 emphasized 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 utilization of its outcomes to re-establish a stable and coordinated 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.

The IEA says that Energy Policies of IEA Countries: United States – 2014 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 the report’s executive summary, please click here.
• To download a factsheet on US energy, please click here.
• To read Executive Director Maria van der Hoeven’s speech at the launch, please click here.
• To see Executive Director Maria van der Hoeven’s presentation at the launch, please click here.
• To view a videorecording of the launch, please click here.

— Read more in Energy Policies of IEA Countries - The United States — 2014 Review (IEA, 2014)