Energy Transition: Affordability, Emissions, and Security

Energy Transition: Affordability, Emissions, and Security

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December 15, 2022
Energy Transition: Affordability, Emissions, and Security
Overview
fuel for electricity production, while petroleum demand—
The United States is undergoing a transition in the energy
mostly for transportation—has declined somewhat. (See
sector, with a shift in energy supplies and production over
Figure 1.)
relatively short periods of time. Over the last 20 years,
natural gas has surpassed coal as the dominant fuel for
Over the same time period, greenhouse gas emissions from
electricity generation, and the proportion of renewable
U.S. electric power plants have steadily decreased.
energy employed has roughly doubled. During this time, the
Emissions from transportation have declined at a slower
United States became a net exporter of both petroleum and
rate, and in 2017 transportation emissions exceeded those
natural gas. This ongoing energy transition, both in fossil
of electricity for the first time. (Figure 2.)
fuels and renewable energy, has led to continuing energy
policy discussion at all levels.
Affordability
In general, U.S. energy policy has sought to ensure supplies
U.S. energy policy has often focused on three major goals:
of inexpensive, abundant energy to support the U.S.
keeping energy costs low, protecting the environment, and
economy and consumers. Policies such as establishing the
assuring a secure supply of energy. Sometimes, these goals
Strategic Petroleum Reserve (SPR) are aimed at preventing
have been competing, sometimes complementary. In pursuit
price shocks. Policies promoting oil, natural gas, and
of these goals, government programs have been developed
renewable energy production on federal lands aim at
to improve the efficiency with which energy is utilized; to
increasing domestic energy supply. Historically, the United
mitigate the detrimental effects of energy supply and use; to
States has also promoted nuclear power through a range of
promote the domestic production of an array of energy
policies to reduce its costs (e.g., nuclear liability insurance,
sources; and to develop new sources.
incentive payments). The United States has also enacted a
range of tax credits and research programs over time to
Implementing federal energy programs is often
promote various energy sources. Most recently, the 117th
controversial because varying stakeholders have different
Congress enacted a suite of tax incentives, rebates, and
energy policy priorities. For some, having inexpensive,
research, development, demonstration, and deployment
abundant energy to supply the U.S. economy is the key
(RDD&D) programs aimed at reducing the cost of new
policy objective. For others, the continued use of fossil
energy supplies for producers and consumers.
fuels, whatever their origin, in the face of their
environmental impacts, may be most important. Still others
Residential, commercial, and industrial customers’
view U.S. (or allied) dependence on foreign energy,
exposure to high and volatile prices has been in evidence in
particularly from adversaries, as a primary concern.
recent years. Events include high gasoline prices in 2022, as
well as weather-related spikes in electricity and natural gas
Figure 1. Share of U.S. Primary Energy Consumption
prices in Texas in 2021. The extent to which policy tools
by Fuel Type, 2005-2020
can address price volatility varies, as prices are driven by a
range of factors, including domestic and international
energy supplies, trade policies, emissions requirements,
state and local taxes, and other regulations, many of which
vary by fuel type and end use.
Greenhouse Gas Emissions
Carbon dioxide (CO2) from combustion of fossil fuels
(petroleum, natural gas, and coal) represents the single
largest source of U.S. greenhouse gas (GHG) emissions
(73% in 2020). Other GHGs include methane and
fluorinated gases, which may also be emitted from energy
Source: Energy Information Administration, Annual Energy Review,
systems. The transportation sector and electric power sector
November 2022.
each represent roughly one-third of U.S. GHG emissions
Since 2005, U.S. primary energy consumption has held
from fossil fuel use, and each represent roughly one-quarter
relatively steady while the economy has generally grown
of total U.S. GHG emissions.
(except for occasional dips related to major world events—
e.g., in 2009 due to the great recession, and in 2020 due to
U.S. GHG emissions have been declining. Total GHG
the COVID-19 pandemic). During that time, the U.S.
emissions dropped 12% between 2005 and 2019. The
economy has become more efficient at using energy.
electricity sector has led emissions reductions. CO2
Natural gas and renewable energy sources (mostly wind and
emissions from fossil fuel combustion, a subset of total U.S.
solar) have replaced coal in the energy mix, primarily as
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Energy Transition: Affordability, Emissions, and Security
emissions, dropped by 16% over the same time. The Biden
Following the invasion of Ukraine in February 2022, there
Administration has made international commitments
is increased commitment to supplying U.S. liquefied natural
regarding GHG reduction. These declines are insufficient
gas (LNG) to U.S. allies in the region. U.S. capacity to
by themselves to meet these commitments or the levels
liquefy and transport natural gas, and Europe’s capacity to
many scientists assert are necessary to prevent the most
receive that fuel, is insufficient to completely replace
drastic effects of climate change.
Russian supply. In 2022, a shift in U.S. LNG shipments to
Europe largely came with reduced shipments to other allies,
Figure 2. Share of Fossil Fuel Combustion CO2
as opposed to an overall increase in LNG exports.
Emissions by Sector, 2005-2020
Actions in the 117th Congress
The 117th Congress enacted three major laws to promote the
transition from conventional fossil fuels—the predominant
energy source in the 20th century and into the 21st century—
to newer energy sources, both fossil and non-fossil.
 The Infrastructure Investment and Jobs Act (IIJA, P.L.
117-58) appropriated roughly $80 billion for various
energy-related programs, including efficiency, electric

grid modernization, vehicle electrification, hydrogen,
Source: Environmental Protection Agency, Inventory of U.S.
nuclear energy, and CCS.
Greenhouse Gas Emissions and Sinks 1990-2020, April 2022.
Note: Total CO

2 emissions from fossil fuel combustion reduced 16%
P.L. 117-167 (often referred to as the CHIPS and
from 2005 to 2019 and 24% through 2020 (onset of the COVID-19
Science Act) authorized roughly $68 billion for basic
pandemic).
science, advanced nuclear, low-emissions steel
production, and critical minerals research, development,
Policies enacted that directly or indirectly reduce GHG
and demonstration, among other topics. Funding has not
emissions from energy supply and use include efficiency
been appropriated for these authorizations.
standards; incentives and other policies directed at
increasing renewable energy; nuclear power initiatives;
 P.L. 117-169 (often referred to as the Inflation
hydrogen research, development, and demonstration;
Reduction Act, or IRA) established or expanded an
funding to advance carbon capture and storage (CCS); and
estimated nearly $400 billion in tax credits for
policies to promote vehicle electrification and charging
renewable electricity production, alternative fuels, and
infrastructure.
low-emission vehicles; home energy rebate programs;
and Department of Energy loans and loan guarantees,
Security
among other provisions.
Energy security can have many facets. For some
stakeholders, the primary aim of energy policy is to limit
Issues for the 118th Congress
imports of energy, particularly petroleum, in support of
Key issues that may be raised in the 118th Congress,
U.S. jobs and economic development. For others,
particularly related to oversight, include:
guaranteeing a reliable supply of energy from diverse
sources, be those domestic or foreign, is a priority. For still
 the effectiveness of programs established, expanded,
others, energy security is viewed as a geopolitical tool to
and/or funded in the 117th Congress;
protect the national interests of the United States and its
allies against its adversaries. Some stakeholders see
 the effect of newer energy sources on the economics
reductions in fossil fuel use as key to promoting U.S.
(including consumer affordability and employment,
security. Other potential concerns are the reliance on
among others) of U.S. energy supply;
critical mineral imports for renewable energy, battery, and
other technologies, as well as the domestic and international
 the effect of the energy transition on U.S. greenhouse
supply of critical infrastructure equipment, such as electric
gas and other emissions, and the sufficiency of new
transformers.
technology and policy to meet U.S. emission targets;
Over time, U.S. policies on energy security have shifted.
 options to use U.S. resources to foster energy security
For example, the relative importance of U.S. fuel stockpiles
among its allies, particularly in Europe; and
has waxed and waned. U.S. crude oil production increased
starting around 2010. Responding to that increase, along
 the extent to which a transition from traditional to new
with a mismatch between the specifications of U.S.-
energy sources will promote the interconnected goals of
produced crude oil and refineries along the Gulf of Mexico,
affordability, environment, and security.
in 2015 Congress lifted the ban on U.S. crude oil exports.
U.S. crude oil or refined products (e.g., gasoline and diesel
Brent D. Yacobucci, Section Research Manager
fuel) may be freely exported; exports of natural gas to non-
Corrie E. Clark, Specialist in Energy Policy
Free Trade Agreement nations must be deemed in the
Ashley J. Lawson, Analyst in Energy Policy
national interest before they are approved.
IF12288
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Energy Transition: Affordability, Emissions, and Security

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