2. GENERAL ENERGY POLICY

“Energy dominance” strategy

The shale oil and gas boom has transformed the US approach to energy policy making. The shale revolution has made the United States not only a major producer of oil and gas, but also a major exporter. As a result, the US approach to energy policy making has shifted from a scarcity mindset that emphasised energy security to one that is attempting to maximise the benefits of energy abundance.

Under the current administration, US government policy is centred on the concept of “energy dominance”, which reflects a strategy to maximise energy production, play a larger role in energy exports and be a global leader in energy technologies (White House, 2017a).

The government’s National Security Strategy (NSS), released in December 2017, outlines the role that energy dominance will play in US national security plans, as part of the Promote American Prosperity pillar (White House, 2017b). Specifically, the NSS describes five goals related to energy dominance, which are:

Reduce barriers to promote clean and safe energy development.

Promote exports to help allies and partners diversify their energy sources.

Ensure energy security, including by protecting global energy infrastructure from physical and cyberattacks.

Attain universal energy access, including from highly efficient fossil fuels, nuclear and renewables to reduce poverty and promote economic growth and prosperity.

Further America’s technological edge, including in areas of nuclear, batteries and carbon capture.

A central implementing plank of the “energy dominance” strategy is to eliminate regulatory hurdles to expanding US energy production and boosting the competitiveness of the US energy industry. To this end, the administration has undertaken a strategy to revisit or rescind a number of environmental regulations applicable to broad segments of the energy sector, including the power, transport and upstream sectors. Specifically, under Executive Order 13783 from March 2017, the White House directed the EPA to review all existing rules, a process the agency is still undertaking.

Beyond environmental deregulation, the energy dominance strategy also involves opening up more public acreage to energy production and lowering royalty rates.

Among the early steps that the administration highlights as part of its efforts to promote energy dominance are:

Withdrawing the United States from the Paris Agreement.

Directing the EPA to rescind the Clean Power Plan to cut carbon dioxide (CO2) emissions from the power sector.

Accelerating federal approval of the Keystone XL oil pipeline.

Ending a moratorium on new coal leases on federal lands.

Rescinding the Stream Protection Rule that restricted coal companies from placing debris from mountaintop coal mining into streams.

Directing the Department of the Interior to reconsider regulations for hydraulic fracturing on federal lands.

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2. GENERAL ENERGY POLICY

The energy dominance agenda also includes a focus on expanding US energy exports. Since the last IEA in-depth review, Congress lifted a ban on crude oil exports at the end of 2015. Moreover, the DOE streamlined the government’s approach to LNG export approvals in 2014, helping to support the United States’ becoming a major global supplier of LNG and a net exporter of natural gas. The administration is also supportive of coal exports, though coal export infrastructure is limited, especially from the West Coast.

In a similar vein, the United States remains committed to an integrated approach to the North American energy system, ensuring the smooth flow of energy trade and investment across borders (DOE, 2019b). The NSS reaffirms this tenet of North American energy integration. The DOE’s Office of International Affairs oversees energy co-operation among the United States, Mexico and Canada, on both a bilateral and trilateral basis. The DOE collaborates with Mexico’s Secretariat of Energy and Natural Resources Canada in this regard. Areas of co-operation include energy data sharing, unconventional oil and gas development, CCUS, electricity grid reliability and resilience, and a North American Renewable Integration Study.

Globally, the United States has been a cornerstone of energy security through its participation in the IEA as a founding member. The Energy Policy and Conservation Act of 1975 allowed US participation in the International Energy Program. The United States participates in global oil stock releases through reserves held in the SPR, managed by the DOE. 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 United States no longer holds a substantial level in its SPR.

The US administration also embraces an “all of the above” energy strategy – which promotes all forms of energy, including coal, gas, nuclear and renewables – in an effort to ensure reliable and affordable supply to consumers. As outlined in the NSS, the US government is advancing “an approach that balances energy security, economic development, and environmental protection” (White House, 2017b).

In this regard, as the administration looks to longer-term growth of low-emissions energy sources such as nuclear, CCUS and variable renewables, the issue of grid reliability and resilience is becoming more salient, which will require policy consideration.

The United States also 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, development and deployment (RD&D) centres (see Chapter 6, “Energy Technology Research, Development and Demonstration”). In fact, DOE-led research helped unlock key advances in the US energy space, including technologies that enabled the shale revolution. Current focus areas for DOE research include small modular reactors and CCUS.

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