The energy policy of the United States is determined by federal, state, and local entities. Federal Energy policy is principally led by the U.S. Department of Energy. Energy policy intersects closely with decarbonization, climate policy, and environmental policy.
Energy policy spans issues of decarbonization, energy production, distribution, consumption, and modes of use, such as building codes, mileage standards, and commuting policies. U.S. energy policy may be addressed via legislation, regulation, court decisions, public participation, and other techniques.
Major federal energy policy acts were passed in 1974, 1992, 2005, 2007, 2008, 2009, 2020, 2021, and 2022, although energy-related policies have appeared in many other bills. The most significant recent bills include the Biden Administration Inflation Reduction Act as well as the Bipartisan Infrastructure Law.
State and local energy policies typically relate to efficiency standards and/or transportation.
Federal energy policies since the 1973 oil crisis have been criticized for having an alleged crisis-mentality, promoting expensive quick fixes and single-shot solutions that ignore market and technology realities.Hamilton, Michael S. 2013. Energy Policy Analysis: A Conceptual Framework. Armonk, NY: M.E. Sharpe, Inc.
Americans constitute less than 5% of the world's population but consume 26% of the world's energy to produce 26% of the world's industrial output. Technologies such as fracking and horizontal drilling allowed the United States to become the world's top oil fossil fuel producer in 2014. In 2018, US exports of coal, natural gas, crude oil and petroleum products exceeded imports, achieving a degree of energy independence for the first time in decades. In the second half of 2019, the US was the world's top producer of oil and gas. This energy surplus ended in 2020.
Various multinational groups have attempted to establish goals and timetables for energy and other climate-related policies, such as the 1997 Kyoto Protocol and the 2015 Paris Agreement.
History
In the early days of the Republic, energy policy allowed free use of standing timber for heating and industry. Wind and water provided energy for tasks such as milling grain. In the 19th century, coal became widely used. Whales were rendered into lamp oil. Coal gas was fractionated for use as lighting and town gas. Natural gas was first used in America for lighting in 1816. Since then, natural gas has grown in importance, especially for electricity generation. US natural gas production peaked in 1973, and the price has risen significantly since then.
Coal provided the bulk of US energy needs well into the 20th century. Most urban homes had a coal bin and a coal-fired furnace. Over the years these were replaced with oil furnaces that were easier and safer to operate.
From the early 1940s, the US government and the oil industry entered into a mutually beneficial collaboration to control global oil resources. By 1950, oil consumption exceeded that of coal. Abundant oil in California, Texas, Oklahoma, as well as in Canada and Mexico, coupled with its low cost, ease of transportation, high energy density, and use in internal combustion engines, led to its increasing use.
Following World War II, oil heating boilers replaced coal burners along the Eastern Seaboard; diesel locomotives replaced coal-fired steam engines; oil-fired power plants dominated; petroleum-burning buses replaced electric streetcars, and citizens bought gasoline-powered cars. Interstate Highways helped make cars the major means of personal transportation. As oil imports increased, US foreign policy was drawn into Middle Eastern politics, seeking to maintain a steady supply via actions such as protecting Persian Gulf sea lanes.
Hydroelectricity was the basis of Nikola Tesla's introduction of the US electricity grid, which started at Niagara Falls, New York, in 1883. Electricity generated by major dams, such as the TVA Project, Grand Coulee Dam and Hoover Dam, still produce some of the cheapest ($0.08/kWh) electricity. Rural electrification strung power lines to many more areas.
A National Maximum Speed Limit of 55 mph (88 km/h) was imposed in 1974 (and repealed in 1995) to help reduce energy consumption. With the Energy Policy and Conservation Act, Corporate Average Fuel Economy (aka CAFE) standards were enacted in 1975 and progressively tightened over time to compel manufacturers to improve vehicle mileage. Year-round Daylight Saving Time was imposed in 1974 and repealed in 1975. The EPCA also created the Strategic Petroleum Reserve and banned exports of American-made oil from 1977 until a repeal effort in 2015.
The Weatherization Assistance Program was enacted in 1977. On average, low-cost weatherization reduces heating bills by 31% and overall energy bills by $358 per year at 2012 prices. Increased energy efficiency and weatherization spending has a high return on investment.
On August 4, 1977, President Jimmy Carter signed into law the Department of Energy Organization Act of 1977 (), which created the United States Department of Energy (DOE). The new agency, which began operations on October 1, 1977, consolidated the Federal Energy Administration, the Energy Research and Development Administration, the Federal Power Commission, and programs of various other agencies. Former Secretary of Defense James Schlesinger, who served under Presidents Nixon and Ford during the Vietnam War, was appointed as its first secretary.
On June 30, 1980, Congress passed the Energy Security Act, which reauthorized the Defense Production Act of 1950 and enabled it to cover domestic energy supplies. It also obligated the federal government to promote and reform the Strategic Petroleum Reserve, biofuels, geothermal power, acid rain prevention, solar power, and synthetic fuel commercialization. The Defense Production Act was further reauthorized in 2009, with modifications requiring the federal government to promote renewable energy, energy efficiency, and improved grid and grid storage installations with its defense procurements.
The federal government provided substantially larger subsidies to fossil fuels than to renewables in the 2002–2008 period. Subsidies to fossil fuels totaled approximately $72 billion, a direct cost to taxpayers, over the study period. Subsidies for renewable fuels totaled $29 billion over the same period, this was also a direct cost to taxpayers.
In some cases, the US used energy policy to pursue other international goals. Richard Heinberg claimed that a declassified CIA document showed that, during the Reagan administration, the US used oil prices as leverage against the Soviet Union economy by working with Saudi Arabia to keep oil prices low, thus decreasing the value of the USSR's petroleum export industry.
The 2005 Energy Policy Act (EPA) addressed (1) energy efficiency; (2) renewable energy; (3) oil and gas; (4) coal; (5) tribal energy; (6) nuclear matters; (7) vehicles and motor fuels, including ethanol; (8) hydrogen; (9) electricity; (10) energy tax incentives; (11) hydropower and geothermal energy; and (12) climate change technology. The Act also started the Department of Energy's Loan Guarantee Program. It represented an overhaul of the Energy Policy Act of 1992 and previous Acts.
The Energy Independence and Security Act of 2007 provided funding to help improve building codes and outlawed the sale of incandescent light bulbs in favor of fluorescents and LEDs. The act included a solar air conditioning program and funding to increase photovoltaics. The act also created the Energy Efficiency and Conservation Block Grant and set the CAFE standard to 35 mpg by 2020.
In February 2009, the American Recovery and Reinvestment Act was passed, with an initial projection of $45 billion in funding levels going to energy. $11 billion went to the Weatherization Assistance Program, the Energy Efficiency and Conservation Block Grant, and the State Energy Program; $11 billion went to federal buildings and vehicles; $8 billion went to research and development programs; $2.4 billion went to new technology and facility development projects; $14 billion went to the electric grid; and $21 billion was projected to go to tax credits for renewable energy and electric vehicles, among other things. Due in part to the design of the tax credits, the final amount of energy spending and incentives reached over $90 billion, leveraged $150 billion in private investment, funded 180 advanced manufacturing projects, and created more than 900,000 job-years.
In December 2009, the United States Patent and Trademark Office announced the Green Patent Pilot Program. The program was initiated to accelerate the examination of patent applications relating to certain green technologies, including the energy sector. The pilot program was initially designed to accommodate 3,000 applications related to certain green technology categories, and the program was originally set to expire on December 8, 2010. In May 2010, the USPTO announced that it would expand the pilot program.
In 2016, federal government energy-specific subsidies and support for renewables, fossil fuels, and nuclear energy amounted to $6,682 million, $489 million and $365 million, respectively.
On June 1, 2017, then-President Donald Trump announced that the U.S. would cease participation in the 2015 Paris Agreement on climate change mitigation, agreed to under the President Barack Obama administration. On November 3, 2020, incoming President Joe Biden announced that the U.S. would resume its participation.
The Energy Information Administration (EIA) predicted that the reduction in energy consumption in 2020 due to the COVID-19 pandemic would take many years to recover. For many decades, the US imported much of its oil, but in 2020 it became a net exporter.
In December 2020, Trump signed the Consolidated Appropriations Act, 2021, which contained the Energy Act of 2020 and was the first major revision package to U.S. energy policy in over a decade. The bill contains increased incentives for energy efficiency (particularly in federal government buildings), improved funding for weatherization assistance, standards to phase out the use of hydrofluorocarbons, plans to rebuild the nation's energy research sector including fossil fuel research, and $7 billion in demonstration projects for carbon capture and storage.
Under President Joe Biden, one-third of the Strategic Petroleum Reserve was tapped to reduce energy prices during the COVID-19 pandemic. He also invoked the Defense Production Act to boost manufacturing of solar cells, renewable energy generators, fuel cells, electricity-dependent clean fuel equipment, building insulation, heat pumps, critical power grid infrastructure, and electric vehicle batteries.
Biden also signed the Infrastructure Investment and Jobs Act to invest $73 billion in the energy sector. $11 billion of that amount will be invested in power grid infrastructure, with the first selected recipients for $3.46 billion announced in October 2023. This is the largest investment in the grid since the Recovery Act. $6 billion will go to domestic nuclear power. From the $73 billion, the IIJA will invest $45 billion in innovation and industrial policy for key emerging technologies in energy; $430 million to $21 billion in new demonstration projects at the DOE; and nearly $24 billion in onshoring, supply chain resilience, and bolstering competitive advantages in energy, divided into an $8.6 billion investment in carbon capture and storage, $3 billion in battery material reprocessing, $3 billion in battery recycling, $1 billion in rare-earth minerals stockpiling, and $8 billion in new research hubs for green hydrogen. $4.7 billion will go to plugging orphan wells abandoned by oil and gas companies.