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Sunday, January 17, 2010

CRS Issue Statement on Energy Sector Transformation

Gene Whitney, Coordinator
Section Research Manager

Anthony Andrews
Specialist in Energy and Energy Infrastructure Policy

Richard J. Campbell
Specialist in Energy Policy

Robert Bamberger
Specialist in Energy Policy

Stan Mark Kaplan
Specialist in Energy and Environmental Policy

The U.S. energy portfolio may be transformed in response to economic signals and global competition for fossil fuel resources, as well as concerns about national security and climate change. This energy sector transformation will be driven or advanced by existing and emerging policies, and will require development of new technologies for the extraction and use of energy, the diversification of energy sources, and more efficient ways of gathering, transporting, and using energy. 

A partial framework for this transformation has been established through the Energy Policy Act of 2005 (P.L. 109-58), the Energy Independence and Security Act of 2007 (P.L. 110-140), and the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). New legislation that has been introduced during the first session of the 111th Congress would advance several aspects of energy transformation while focusing more on reducing carbon emissions and providing new jobs in the energy sector. 

Diversification of U.S. energy supply is already supported through policies that encourage expanded development and use of renewable energy sources, biofuels and biomass, and other reduced-carbon fuels. Currently, 40% of U.S. energy consumption is oil, and the U.S. transportation system is 96% reliant on oil. Reducing oil consumption would help satisfy both economic and national security concerns arising from the import of almost 60% of the oil used by the U.S. Policies are being considered that would expand the production of oil and natural gas within the United States while minimizing the impact of such development on the environment. Growing concerns about the impact of fossil fuel combustion on the Earth's climate via accumulations of CO2 in the atmosphere will serve as an additional driver for further development of low-carbon energy technologies. 

The U.S. seeks economical ways to generate electricity while reducing carbon emissions. Transformation of the nation's electrical generating capacity from high-carbon fuels like coal, which currently provides approximately 50% of U.S. electricity, may involve further changes in the policies related to renewable energy technologies, nuclear energy, and natural gas production and use. Carbon capture and storage provisions have been included in recent legislation, and Congress will face additional decisions regarding this set of technologies as demonstration plants test the practicality and effectiveness of the capture and sequestration processes. 

Energy efficiency and conservation continue to be targeted as a cost-effective way to make significant gains in energy savings. The efficiency of buildings, industry, agriculture, and transportation may be improved substantially through the adoption of modern methods, materials, and technologies to reduce the amount of energy required to perform a task or to maintain a facility. Developing new policies or expanding existing policies to encourage the adoption of energy efficient practices will likely continue to be fruitful. 

Improvements in energy efficiency and the diversification of energy sources rely on a foundation of new technologies developed in a climate that rewards innovation. In addition, these new technologies must be viable at large scales, so the inclusion of demonstration and deployment provisions for certain technologies is essential. Incentives for developing and deploying new energy technologies may be provided through a variety of policy tools. 

Date of Report: January 12, 2010
Number of Pages: 3
Order Number: IS41014
Price: $29.95

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