Energy Policies of IEA Countries In-depth Review of the United States 2014 IEA Executive Director Maria van der Hoeven Washington, 18 December 2014 © OECD/IEA 2014 A much changed landscape….  A co-ordinated energy policy framework  Supply side • Resurgence of oil and gas production where output had previously been assumed to be in decline • Growth in unconventional gas production has been a game-changing development in North American markets & beyond  Demand side • Strong energy efficiency measures, most notably in transport, are set to curb fossil fuel consumption • Emissions regulations for new and existing power plants  Far-reaching consequences for energy markets, economic competitiveness, geopolitics and the global economy © OECD/IEA 2014 Expansion of energy production 2 000 Oil 1 800 Coal 1 600 Natural gas 1 400 Biofuels and waste Mtoe 1 200 1 000 Nuclear 800 Hydro* 600 Solar* 400 Geothermal* 200 Wind* 0 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 Domestic production of all petroleum liquids was 11.7% higher in 2013 v 2012; 30% higher than in 2003 * Source: IEA analysis, 2014 © OECD/IEA 2014 Towards a cleaner energy sector  Increased engagement and leadership opportunities: • US-China Joint Announcement on Climate Change and Clean Energy Cooperation • Lima COP 20 and Paris COP 21  Climate Action Plan of June 2013: EPA called on to develop regulations to control CO₂ emissions from power plants.  Clean Power Plan of June 2014: • State-specific, rate-based goals for CO₂ emissions from the power sector and guidelines for states to follow • This rule, to be in place by 30 June 2016, builds on existing measures to reduce CO₂ emissions  The confluence of market and regulatory pressures is likely to result in a gradual evolution towards cleaner electricity generation in the US © OECD/IEA 2014 Strong progress on Energy Efficiency and RES  Strong improvement in energy intensity  USD 12 billion investment in EE programmes: • Weatherization of over 1million low-income homes to improve the energy efficiency of less well-off families • New regulations for the transport sector  A goal to double renewable production from wind, geothermal and solar sources by 2020  State-level RPS policies are a significant driver and have largely held up against recent political challenges  Durability of federal tax incentives and RFS remains a persistent uncertainty © OECD/IEA 2014 Miles per Gallon (gasoline) New fuel economy standards 65 60 55 US-LDV Solid lines: historical performance Dashed lines: enacted targets Dotted lines: proposed targets or targets under study CanadaLDV EU 50 Japan 45 China 40 S. Korea 35 30 Australia 25 India 20 2000 2005 2010 2015 2020 2025 MexicoLDV Projected savings of 6.3 billion barrels of oil, equivalent to almost one-half of US oil imports in 2012 * Source: ICCT, 2013. © OECD/IEA 2014 Leading the way on RD&D, CCS 8 Energy efficiency 7 Fossil fuels USD billion 6 5 Renewables 4 Nuclear 3 Hydrogen and fuel cells 2 Other power and storage technologies Other 1 0 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 The federal government is the largest funding entity for energy technology research, development and demonstration in the IEA * Source: IEA analysis, 2014 © OECD/IEA 2014 Electricity markets and resiliency  Integrating markets beyond state borders • Benefits of RTOs and ISOs : efficient use of existing assets, minimisation of electricity costs • Elsewhere, the system remains fragmented, with less efficient use of existing assets • Trade of electricity across the borders of utilities remains difficult: need a balance between consolidation of system operators and co-ordination between systems  Building a 21st century power system • Climate: System resiliency, especially in response to weather-related reliability events, has become a priority • Cybersecurity: New threats have emerged, technology contains vulnerabilities that may be exploited • Industry, in collaboration with DOE, must continue to advance cybersecurity and resilience capabilities © OECD/IEA 2014 Investing in the electricity system  Improve consistency between the operation of the gas pipeline system and the power transmission system  Cost-effective policies for planning and siting, cost allocation and cost recovery  Deployment of renewables; managing variability will require access to balancing and flexibility resources over wider geographic areas  Build smarter grids, offer consumers choice, greater demand participation  Maintain diversity of power supply: the future of nuclear, clean coal © OECD/IEA 2014 IEA key recommendations  Complete the process leading to the Quadrennial Energy Review (QER) and utilise its outcomes to re-establish a stable and co-ordinated strategic outlook for the energy sector  Maintain its path towards a secure sustainable energy system by:  Supporting the development and implementation of demand-side measures and energy efficiency policies with an emphasis on the transportation and buildings sectors  Offer greater durability and predictability of fiscal incentives for renewable energy in order to maintain investor confidence  Consistent and predictable regulatory frameworks for CCS © OECD/IEA 2014 IEA key recommendations  Enhance the long-term sustainability of the electricity sector by:  Developing effective, co-ordinated, national policies to reduce the uncertainties which impede investments in secure electricity infrastructure including transmission, distribution, smart grids, renewable energy integration and climate resilience  Introducing measures to deliver greater co-ordination between different grid operators in order to facilitate the integration of greater shares of variable renewables and optimise regional transmission investments  Articulating a clear strategy for the future diversity of the power sector including a statement of how the federal government will provide long-term support for nuclear power © OECD/IEA 2014