United States

Making progress despite policy gridlock

The United States has created a “messy but useful” combination of incentives, regulation, persuasion, and innovation at the federal and state level, which has contributed to a recent decline in emissions. Sustaining and escalating this emissions decline while creating more cost-effective policy in the face of tightened government spending is the next challenge.

sectorIndustry

These graphs show the changes in emissions, emissions drivers, and policy in the Power sector in the US

 
 
 

Emissions Industry emissions


Industrial emissions declined before the recession even as industrial production rose

     
     
     
     

    Emissions Drivers Energy intensity by sector


    As manufacturing grew, industrial sectors generally improved their energy intensity, but in some cases performance declined. Structural changes to U.S. industry led to lower emissions intensity.

       
       
       
       

      Policy State incentive programs for industrial technology improvement


      There was little cohesive industrial policy. Participation in the federal industrial assessment program declined, while state level programs grew.

         
        • Utilities began exploring integrated resource planning in a time of high energy prices and fixed retail prices. The 1980s also marked the beginning of federal involvement in knowledge-transfer to industry.

          • Policy Barriers

            • Industrial Assessment Centers (IAC) Program, 1976
              Environmental, energy, and productivity audits of facilities by trained engineers
            • Integrated Resource Planning (IRP) by public utilities responding to high energy prices and fixed retail prices
            • Demand-side management (DSM) programs began
              Explored by utilities in response to high energy prices and stranded nuclear costs
          • Underlying changes

            • Rising imports of finished goods (FRBNY 1991)
            • Falling relative share of manufacturing (Sachs et al. 1994)
            • Rise in manufacturing productivity
            • Shift from integrated mills to minimills in steel sector
        • The continued deregulation of the power sector spurred a reduction in funding towards demand-side management programs. There was increased attention on appliance standards with the Energy Policy Act.

          • Policy Barriers

            • Policy shifted to partnership programs between EPA, DOE, and industry
              Energy Star voluntary energy efficiency labeling program began, 1992
              Increased use of IAC audits
            • Deregulation of utilities after 1994 led to a decrease in demand-side management spending (RFF 2004), (ACEEE 2006)
            • Utility market transformation programs initiated in mid-1990s (RFF 2004), (ACEEE 2006)
            • Energy Policy Act of 1992 required states to consider DSM programs
          • Underlying changes

            • Industrial sectors declined in GDP contribution, but increased gross value-add
            • 1995-2000 saw increases in durable-goods manufacturing, driven in part by IT equipment (BEA 2004)
            • Elimination of trade restrictions
              End of trade restrictions protecting U.S. steel industry in 1992 (CRS 2003)
            • Declining use of basic oxygen furnaces (BOF); increasing use of electric arc furnaces (EAF) (CRS 2003)
        • States began implementing energy efficiency resource standards and utilizing public benefit charges to fund energy efficiency programs, which saw a funding resurgence throughout the decade.

          • Policy Barriers

            • States began enacting Energy Efficiency Resource Standards (EERS)
              First is Texas in 1999
              By 2011, 24 states (including California, Texas, and New York) had EERSs (ACEEE 2011)
            • Energy Policy Act, 2005
              Provided loan guarantees for new energy efficient technologies
            • Use of Public Benefit Funds for energy efficiency, renewable energy, and research and development increased (RFF 2004)
              Rise in demand-side management spending in 2000s
          • Underlying changes

            • Rise in steel industry bankruptcies due to rising energy prices, financial crises, and legacy costs (RFF 2004)
            • Return to high energy prices
            • Unconventional gas emerged and domestic exploration rose
            • Recession 2008-2009