Energy Policy

U.S. Policy

Early federal energy policy involved major subsidies for oil, natural gas, and electric power production; delegation of retail service regulation to the states via the 1935 Public Utility Holding Company Act; and extension of electricity supply to all sectors of society through the Rural Electrification Act of 1936. It also supported new sources, as through the Federal Water Power Act of 1920, licensing nonfederal hydro projects, and the Price-Anderson Act of 1957, providing accident liability limits for nuclear power providers. Subsequent legislation addressed environmental concerns (e.g., the 1970 Clean Air Act and the 1982 Nuclear Waste Policy Act) and energy efficiency (e.g., the 1978 National Energy Conservation Policy Act).

Historically, U.S. energy policy has tended to be event and crisis driven, as with the 1950s “Atoms for Peace” program for nuclear power, the belated creation of the North American Electric Reliability Council to coordinate grid connection following the November 1965 northeast blackout, major changes in nuclear facility licensing following the March 1979 Three Mile Island accident, and President Richard Nixon's Project Independence to bolster domestic supply and reduce foreign dependence following the 1973 oil [Page 900]embargo by Arab members of the Organization of the Petroleum Exporting Countries (OPEC). While most of the 1970s policy initiatives failed, one notable success was approval of Corporate Average Fuel Economy (CAFE) standards for cars and light trucks under the Energy Policy and Conservation Act of 1975, though these were not raised beyond 1985 levels until 2007.

With just 4.5% of the world's population, the United States consumes a quarter of the world's nonrenewable fossil fuel energy and, by extension, contributes a similar amount to global greenhouse gas (GHG) emissions. Energy-generated carbon dioxide alone is responsible for 82% of total U.S. GHG emissions, principally through electric generation (41%) and transportation (33%). An abundant domestic supply allows coal to be used for over half of all electricity production. However, with combustion causing air pollution, coal policy since the 1970s has focused on a reduction in particulates and in nitrogen oxide and sulfur dioxide emissions (the latter causing acid rain). Belated acknowledgment of coal's major contribution to global warming led to federal support during the George W. Bush administration for carbon dioxide capture and geologic storage. Modeled after the successful sulfur dioxide trading program under the 1990 Clean Air Act Amendments, a market-based approach to carbon reduction through emission cap and trade undertaken by the European Union (EU) to meet its obligations under the Kyoto Protocol is slowly gaining political acceptance in the United States.

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