Energy policies serve three general objectives: national security, environmental impacts and economic outcomes. Governments implement energy policies through various strategies including supporting renewables, regulating energy markets and setting carbon pricing schemes.
Sustainable energy technologies are key to combatting climate change and decreasing our reliance on fossil fuels, with governments often providing financial incentives in the form of tax credits or loan guarantees to attract investments into these emerging fields.
Energy Security
As energy transitions advance, energy security becomes a growing concern for the United States. From war and natural disasters to climate change and government policies, disruptions to supply can pose threats that threaten both its economy and national security.
Countries develop and implement energy policies tailored to their national interests, reflecting both international agreements as well as national considerations. While international agreements provide some direction on topics like decarbonization, reliability improvement and resource diversification as goals to pursue while domestic factors determine country decisions.
An increased diversity of oil and gas suppliers reduces the risk of supply disruption by lessening reliance on any single provider, while investing more in resilient infrastructure can protect from sudden demand spikes or extreme weather events that disrupt power outages. Furthermore, hedge strategies and cost stability mechanisms can mitigate price volatility for consumers, while governments can develop strategic or auxiliary energy reserves to safeguard against short-term supply interruptions.
Environmental Impacts
Energy development, consumption and disposal has an adverse impact on the environment in various ways. From greenhouse gas emissions that contribute to climate change to strip mining which destroys biological communities and wildlife habitat to air pollution from fossil fuel production and combustion; energy sectors have many ill-effects on their surroundings.
A sound energy policy must aim to minimize these impacts. A carbon pricing system could help curb greenhouse gas (GHG), particulate matter (PM) emissions and other forms of air pollution; support research into renewable and nuclear technologies which reduce reliance on fossil fuels; as well as funding retrofitting efforts which improve energy efficiency while simultaneously cutting costs.
Economic Impacts
Energy production and consumption economies influence many of the decisions regarding its development. At every level of government, policies to control prices or lower production and consumption costs (such as tax credits, investment funding, building energy codes or environmental standards) can have significant effect on long-term costs associated with producing and consuming energy have been employed as policy tools to achieve this objective.
Energy efficiency improvements reduce the amount of energy necessary for manufacturing and transport of goods, leading to lower production and transport costs for consumers over time. Other policies may increase access to renewables in developing nations or protect against disaster risks associated with coal mining or oil drilling by mitigating risk with investments that help bring outdated technologies back into commercial operation.
The United States is in the midst of one of its most profound energy transitions in history. Coal-fired power plants are being replaced with cleaner-burning natural gas facilities, while renewable sources such as solar and wind become more economically competitive as technology improves.
Policy Options
Policy options exist to further energy development goals in the US, such as measures that decrease demand for oil, diversify energy supplies, strengthen infrastructure transmission capacity, and increase air quality without substantially raising consumer costs.
Today’s decisions will have an enormous impact on future greenhouse gas (GHG) emissions from the United States and will also determine their cost-effective implementation in any climate policies that may emerge later on.
Energy and environmental objectives often seem in conflict; however, substantial convergence exists on many issues related to climate change and energy use. For instance, many Americans who prioritize limiting carbon footprints or who expect direct impacts of climate change support rules to dramatically boost electric vehicle sales while those placing lesser importance on these issues tend not to support such policies as often.