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.

sectorPower

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

 
 
 

Emissions Emissions and generation


There was steady emissions and generation growth through the mid-2000s. Until recently, emissions grew in tandem with increasing electricity demand.

     
     
     
     

    Emissions Drivers Power sector variables and impact on average emissions factor


    The expansion and increased availability of nuclear in the 1980s and 1990s offset growing emissions from coal. In the 2000s, most factors were aligned to improve emissions intensity, including increasing renewables output and gas replacing coal.

       
       
       
       

      Policy Federal renewable energy incentives


      Both state and federal governments created policies to support renewable energy. The two most prominent of these were federal renewable energy tax incentives and state level renewable portfolio standards.

         
        • Power industry deregulation led to independent power producers and the beginning of natural gas generation. The nuclear buildout of prior decades ended, but nuclear generation increased significantly due to increased availability.

          • Policy Barriers

            • Natural Gas Policy Act (1978)
              Deregulation of natural gas supplies
              Continued deregulation of oil and natural gas throughout the decade
            • PURPA (1978)
              Creation of independent power producers
              Ability to sell at avoided cost for qualifying facilities
            • Modified Accelerated Cost Recovery System (MACRS) adopted under Tax Reform Act, 1986
            • Clean Air Act Amendments of 1977 established New Source Review (NSR) preconstruction permitting program
            • Natural Gas Policy Act (1978)
              Deregulation of natural gas supplies
              Continued deregulation of oil and natural gas throughout the decade
            • PURPA (1978)
              Creation of independent power producers
              Ability to sell at avoided cost for qualifying facilities
            • Modified Accelerated Cost Recovery System (MACRS) adopted under Tax Reform Act, 1986
            • Clean Air Act Amendments of 1977 established New Source Review (NSR) preconstruction permitting program
          • Underlying changes

            • Restrictions on gas for power generation changed
            • End of nuclear build out, but increased nuclear utilization
            • High oil prices, and the beginning of the phase out of oil-fired generation
        • The government implemented federal tax incentives for renewable energy. The fuel mix composition changed with increasing nuclear availability and improvements in natural gas generation.

          • Policy Barriers

            • Power sector deregulation throughout decade
            • Clean Air Act Amendments, 1990
              Acid Rain Program
              Established cap and trade system to limit SOx emissions from coal-fired EGUs.
              Limited NOx emissions from EGUs
            • Energy Policy Act 1992
              Wholesale transmission access guidelines
              Production tax credit for renewable energy
          • Underlying changes

            • Increased nuclear availability
            • Emergence of Combined Cycle Gas Turbine CCGT) plants
            • Coal-powered plants greater than 40 years old proved still competitive (Joskow 2001)
            • Stable energy prices
        • The 2000s marked the beginning of state involvement in renewable energy policy with renewable portfolio standards and a rise in federal tax expenditures towards renewable energy. The global market for renewable energy components led to cost reductions, while new technology and higher gas prices unlocked new natural gas reserves.

          • Policy Barriers

            • State renewable portfolio standards implemented, increasing goals over decade
            • Federal tax expenditures grew throughout decade
              Residential Renewable Energy Tax Credit, 2005
              Investment Tax Credit, 2005
              MACRS + 50% Bonus Depreciation, 2008
            • Energy Independence and Security Act, 2007
              Required states to consider integrated resource planning and rate modifications to promote energy effciency
            • Failure to identify long-term nuclear storage site
          • Underlying changes

            • Reduction in levelized costs of renewables (particularly wind and solar)
            • Unconventional gas emerged and very cheap natural gas
            • High oil prices