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shale production growth due to permitting setbacks, local opposition and court challenges. Timely siting of gas pipelines will also benefit efforts to reduce associated gas flaring rates from oil production.

Innovation

The United States is a global leader in energy-related research, development and demonstration (RD&D), and places a high value on innovation in the energy space. Federal government efforts to finance and support energy innovation are largely led by the DOE, including through its 17 national labs, which are considered world-class energy research and development centres. Current focus areas for DOE research include battery storage, small modular nuclear reactors, and carbon capture, utilisation and storage. With the growth in variable renewable electricity generation, greater deployment of electric vehicles, and increased extreme weather events and cyberthreats, research into modernising and strengthening the power grid is also becoming a more important focus area. The United States is also engaged in energy RD&D internationally, including by participating in most of the IEA Technology Collaboration Programmes and as a founding member of the Clean Energy Ministerial. In line with US global leadership in clean energy technology innovation, these and other international collaborations are expected to receive continued support.

Power sector transition

The fuel mix of US power generation is undergoing a considerable transition. Coal power, which produced nearly half of total electricity generation in 2008, has declined in the last decade to less than a third of the power mix in 2018. One of the main drivers for this development has been the shale gas boom, which has made natural gas-fired generators more cost-competitive than coal power plants. Natural gas-fired electricity production increased by over 60% in ten years, and now exceeds coal’s share in the power mix. Meanwhile, renewable electricity has seen rapid growth as well, driven by reduced costs and policy support. Nuclear, which has been the most stable power source over the last decade, is challenged by cheap gas power and new renewable sources in some markets, and it struggles to remain costcompetitive.

As the US power mix shifts, and as more variable renewables are introduced into the system, bolstered by state policy goals, the question of smoothly and cost-effectively connecting new generation sources to the grid has already become more salient, and will grow increasingly pressing in the coming years.

Considering that the United States has a complex electricity system with a mix of competitive markets, vertically integrated markets, and private and publicly owned assets, regulatory responses to ensure a smooth transition of the power sector will vary across US regions. In particular, grid operators are increasingly integrating flexibility resources such as storage, demand response, transmission planning and capacity markets into market designs to safely accommodate larger shares of variable renewable sources such as wind and solar into the electricity system.

At the same time that renewable power is expanding, the other major source of lowcarbon electricity – nuclear power – is facing growing economic pressure, prompting

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several plants to prematurely shut down. Looking ahead, the value of nuclear power as a stable, low-carbon generation source for overall power system resilience should be considered more closely.

Policy co-ordination

Under the US federal system of government, individual states also have considerable scope to establish energy and climate change policy, though they are required to be in compliance with federal policies.

Twenty-two US states plus the District of Columbia have adopted greenhouse gas reduction targets (though not all have been legislated), with policy tools ranging from carbon pricing to efficiency mandates and support for clean energy. Nine Northeastern states participate in the Regional Greenhouse Gas Initiative cap-and-trade programme, while California runs a separate cap-and-trade programme for CO2 emissions. The disparities among state targets can lead to diverging regional outcomes for emissions reduction, and they can have implications for electricity markets that span several states.

A number of US states have in place renewable portfolio standards (RPS), which require retail electricity providers to source a certain share of supply from qualified renewable sources. While emissions reduction goals are a driver of state RPS policies, they are also enacted to harness local energy resources, diversify the fuel mix and support local economic activity. Twenty-nine states plus the District of Columbia currently have mandatory RPS policies in place, and they have been an important driver of renewables expansion in the United States. In addition to renewables targets, states are considering support to nuclear power in the form of zero emissions credits, which have passed in states such as New York and Illinois.

Energy security

Globally, the United States has been a cornerstone of energy security through its participation in the IEA as a founding member. The United States has participated in global oil stock releases through reserves held in the Strategic Petroleum Reserve (SPR), which is the world’s largest stock of emergency crude oil. US oil stockholdings are well in excess of its obligation to hold 90 days of net oil imports, though the government in recent years has authorised sales from the SPR over the coming decade. After the authorised sales, the SPR will still be well above the IEA’s 90-day obligation. As the United States quickly becomes a net exporter of petroleum liquids by the early 2020s, however, its IEA stockholding obligation will rapidly decline towards zero. Should the United States further draw down its SPR levels, there could be a challenge to the future effectiveness of the IEA stock system, particularly in the case of a large collective action, if the US no longer holds a substantial level of SPR.

For natural gas, the US president is authorised to declare and respond to a natural gas supply emergency. Provisions include authorities for emergency purchases and emergency allocations to protect high-priority users of natural gas. The shale revolution has significantly changed the role of natural gas in the country’s energy mix, especially increasing its share in electricity generation. In this context, co-ordination between

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the electricity and the natural gas systems takes on special importance when dealing with gas supply disruptions, but also electricity blackouts.

The United States has for many years maintained a robust system that assesses and manages grid reliability to avoid power shortages. Yet in the face of rising extreme weather events, new cybersecurity threats, a growing share of variable generation, and retirement of older coal and nuclear plants (due in part to lower wholesale natural gas power prices), the United States has recently entered into a renewed debate on power sector reliability and resilience.

Energy systems resilience

The United States continues to strengthen its preparedness and response mechanisms to threats, such as natural disasters, extreme weather, climate change, cyberattacks and accidents, in a move to reduce risks and bolster resilience as a matter of national security.

While emergency response mechanisms are strong in the United States, preparedness is becoming even more important. Energy resilience does not just address the ability to withstand and recover from disruptions, but also emphasises prevention of and preparation for a potential crisis, flexible adaptation, and efficient recovery. The regular assessment of vulnerabilities is vital in this context and needs to encompass the entire energy sector, notably oil, gas and electricity.

Since the last IEA review, the US government has adopted a suite of policies and mechanisms that have reinforced preparedness. The energy sector is one of the 16 sectors classified for critical infrastructure security and resilience. Interagency co-ordination was strengthened under the 2015 Fixing America’s Surface Transportation Act and by the National Response Framework under the Federal Emergency Management Agency and the Department of Homeland Security. Moreover, the creation of the Office of Cybersecurity, Energy Security, and Emergency Response (CESER) in the DOE in 2018 marked strong progress towards building resilience capabilities. CESER, which acts as the sector-specific agency for energy in emergency situations, is responsible for leading sector co-ordination and enabling sector-specific technical assessments and assistance. Notably, with the creation of CESER, there is an excellent opportunity to strengthen effective collaboration to foster preparedness and response to cybersecurity threats. Furthermore, the Office of Electricity leads the department’s efforts

– in partnership with industry, academia, national laboratories, and other government agencies – in developing next-generation technologies and tools that will improve the security and resilience of the nation’s critical energy infrastructure.

Key recommendations

Set effective and streamlined regulations to enable the United States to remain a global leader in emissions reduction and clean technologies.

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