Although it consists of just 5 percent of the world's human population, the United States consumes the greatest share, 25 percent, of the world's energy. More than 80 percent of this is derived from fossil fuel sources such as oil, coal, and natural gas (International Energy Agency, 2008). At the center of energy issues in the United States is the growing realization that in order to sustain this level of energy consumption, a transition away from fossil fuels to more reliable and sustainable sources is needed. Due to a concern about the finite quality of fossil fuels, the negative environmental effects associated with fossil fuel use, and U.S. dependence on foreign oil from regions of great political instability, advocates argue that a transition to alternative energy is the answer. Alternative energy includes renewable energy sources such as solar, wind, biomass, geothermal, hydro, tidal, ocean thermal, and waves. Additionally, it includes nonrenewable energy from nuclear and hydrogen that are considered by some to be more abundant and cleaner than fossil fuels. Alternative energy makes up about 15 percent of the total energy consumed in the United States (International Energy Agency, 2008). With the exception of hydropower and nuclear energy, policies addressing alternative energy sources have been scarce for the first decade of the twenty-first century. The U.S. government has most often chosen to let the private market drive their development. However, when it is addressed, energy policy is often created by the executive branch.
The first major policy to divert from this practice of non-intervention was the Federal Water Power Act of 1901, which provided standards for regulating the development of hydropower in the United States. The next year the Bureau of Reclamation was created and became responsible for commissioning hundreds of federal dams, the first of which was the Minidoka Dam on the Snake River in Idaho, built in 1909. In 1914, the O'Shaughnessy Dam was built, and Hetch Hetchy Valley, the sister valley to Yosemite, was flooded and used as a reservoir. It was met with protest from John Muir, one of the original founders of the Sierra Club and one of the most well-known environmentalists in U.S. history (Righter, 2005). The Boulder Dam, later renamed the Hoover Dam, was built in 1943 and was met with much less resistance. Large-scale hydropower projects fell into disfavor in the 1950s and 1960s when environmentalists staged large-scale protests against the Echo Park Dam, Glen Canyon Dam, and a proposed dam in the Grand Canyon (Sale, 1993). The U.S. government has subsequently taken a less ambitious approach to building large-scale dams.
Nuclear energy policies have been in effect since 1946 after the Manhattan Project successfully created a sustained nuclear reaction. The Atomic Energy Act of 1946 regulated the production of nuclear power for civilian use. The Act created the Atomic Energy Commission (AEC) to perform this function, which was the agency from which the Department of Energy was later derived. The act was amended in 1956 after the AEC began selling nuclear power commercially in 1955. The AEC was thus given the contradictory duty of both regulating and encouraging growth of the nascent nuclear power industry. It was quickly realized that the costs of building nuclear power plants and insuring them against accidents was prohibitive to private industry. The Price-Anderson Act of 1957 was passed to address this issue and provided the nuclear industry with protection from the excessive costs of insuring against accidents by making the government liable for the major costs of a nuclear accident. By 1974, concern for the conflicting role of the AEC resulted in the passage of the 1974 Energy Reorganization Act under President Richard Nixon. The act split the AEC into two agencies, one responsible for regulation and one responsible for facilitating growth. In 1979, the Three Mile Island nuclear reactor accident severely shook public confidence in nuclear power, resulting in a drastic reduction in nuclear power development. This new sentiment of U.S. citizen rejection toward nuclear power has continued into the twenty-first century (Hays, 1987).
Shortly after the AEC was transformed into two agencies, the Department of Energy Organization Act of 1977 created the Department of Energy. The act was a response to the repercussions of the Arab oil embargo of 1973 and 1974. This latter issue was also a major part of President Jimmy Carter's political platform (Soden and Steel, 1999). While in office, he attempted to create the first national comprehensive energy plan with the National Energy Act of 1978. The act was controversial and, though it passed the House and Senate, it was subjected to serious revisions (Melosi, 1985).
The National Energy Act (NEA) of 1978 was comprised of a combination of acts that intended to reduce oil dependency by improving energy efficiency, increasing the ratio of coal into the energy mix by two-thirds, and facilitating the development of renewable energy like solar power. The plan included the Public Utility Regulatory Policies Act (PURPA), which was the first piece of significant legislation pertaining to renewables. PURPA, an electricity feed-in law, was the first attempt by the government to intervene in the renewable energy market. It did this by creating a market specifically for nonutility electric power producers by requiring utility companies to buy the power produced by smaller-scale producers at an “avoided cost rate” (Beck and Martinot, 2004). Avoided cost is equal to the amount that electrical utility companies would have paid to get the energy from another source. By requiring utilities to pay higher prices for electricity produced by renewable and alternative energy companies, the government helps to stimulate investment into renewable energy technologies. In addition to PURPA, the government used financial incentives to stimulate individual production and consumption of renewable energy through the Energy Tax Act of 1978. This act included a tax credit for individuals investing in home solar or wind technology. These incentives were not renewed and were left to expire in 1985, though additional incentives were passed during the following decade.
Besides those under the NEA, policies up to this point had addressed the regulation of use for renewable energy exploration and development and investment into research and development of nascent technologies like those used to harness wind and ocean energy from waves. The Geothermal Steam Act of 1970 gave the Secretary of the Interior the power to lease public lands for geothermal exploration and development. In 1980, the Crude Oil Windfalls Profits Tax Act included a feature that increased tax credits for businesses using renewable energy to increase the shares of renewable energy on the energy market. President Ronald Reagan repealed the act in 1988.
After oil and gas prices began to fall, President Reagan repealed most of President Carter's renewable energy program, believing instead that energy was best governed by the private market with as little government intervention as possible. Reagan's plan involved deregulation and the “removal of unnecessary environmental restrictions upon the production, delivery, and use of energy” (Reagan, 1981). Besides the cuts to the Carter renewable energy program, very little was done related to renewable energy during President Reagan's two terms. Many environmentalists believe that the stagnation of renewable energy development during this time was a direct effect of President Reagan's policies (“A Look Back,” 2004; Shabecoff, 2000).
Renewable energy policy throughout most of the 1990s focused mainly on research and tax credits. In 1991, President George H. W. Bush redesignated the U.S. Department of Energy's Solar Energy Research Institution and it became the National Renewable Energy Laboratory (NREL). NREL includes the National Center for Photovoltaics, the National Wind Technology Center, the National Bioenergy Center, and the Hydrogen Technologies and Systems Center. Less-prevalent technologies like ocean energy are being developed in conjunction with the private sector in the technology-transfer office of the NREL. A year later, the 1992 Energy Policy Act was passed. The act reformed PURPA by redefining the different classes of electricity producers and essentially circumventing the requirements under PURPA that new utility producers buy energy produced from renewable sources. The intention of the act was to increase the share of natural gas in the energy market and did little to encourage renewable energy production, with the exception of the production tax credits for wind energy and certain biomass technologies.
Beginning in 1997, the federal government under President Bill Clinton's administration took a more active role in promoting renewable energy, and states began enacting policies that went even further. For example, the Million Solar Roofs Initiative, enacted in 1997, has overseen the outfitting of more than 300,000 homes and buildings with solar power energy systems. The goal of this initiative is to have one million homes and buildings using solar power by 2010. In 1999, the Wind Powering America Initiative was established. Its goal is to meet 5 percent of the nation's energy needs with wind energy by 2020 and to triple the amount of wind energy generated in states with a high wind capacity, more than 20 megawatts. The main feature of this initiative is the support of public-private partnerships in wind energy development. Also during this time, the federal government extended tax credits again for renewable energy production to encourage development.
In conjunction with these new federal programs, many states were deregulating and restructuring their energy markets. Deregulation involves reducing government regulations on electricity production in order to stimulate competition in the private market. It has been argued that true deregulation is impossible because there will always be a need for government intervention, especially where environmental and health issues are concerned. Restructuring of the market is, therefore, a more appropriate term. Although competition and privatization of wholesale and retail electricity markets is encouraged in a restructured market, it is still regulated to a degree. It is a mix of government intervention and increased use of markets to facilitate competition of energy prices. Restructuring has involved the passage of several policies across various states to encourage renewable energy production.
The most popular state renewable energy policy is net metering. Net metering requires power companies to buy surplus electricity produced by residential renewable energy systems. Almost all 50 states have passed a type of net metering policy. Also growing in popularity is the renewable portfolio standard, which has been passed in 37 states and requires that renewable energy provide for a certain percentage of the state's energy mix. The public benefit fund is a less widespread policy and has been passed in only 20 states. Public benefit fund policies place a surcharge on energy to create revenue for renewable energy development. They have been used to pay for subsidies on solar energy development in California, for example. Many state policies to build green energy markets also have been passed. These laws require utilities to offer renewable energy as an option for consumers to buy in to. Additionally, many state and local governments have passed financial incentives in the forms of tax credits, rebates, and low-interest loans (Database of State Incentives for Renewables and Efficiency, 2009).
The U.S. government has continued the trend of the 1990s of more government involvement in the energy market into the twenty-first century. Under President George W. Bush, the Energy Act of 2005 was the first comprehensive energy act signed since the 1992 Energy Act. It focused on assessing the renewable energy capacity of the United States, extended production tax credits, and set aside funds for research and development of renewable energy technologies. It also resulted in the Renewable Fuel Standard, which requires that biofuels like ethanol and biodiesel offset gasoline by 20 percent by 2017. That standard was modified in 2007 with passage of the Energy Independence and Security Act, making biofuels the cornerstone of the Bush administration's renewable energy programs (EPA, 2007). President Bush also increased funding by 22 percent for clean energy technology with his 2006 Advanced Energy Initiative. Part of the Advanced Energy Initiative includes the Solar America Initiative to help solar technology become competitive in the energy market. Although the Bush administration did not neglect renewable energy to the extent that past administrations have, the major focus of energy policy during this time was exploration and development of domestic fossil fuel resources like those found offshore and in the Alaskan National Wildlife Refuge (ANWR).
With the election of President Barack Obama, renewable energy is being addressed through economic incentives and changes in administrative interpretation of existing laws. The American Recovery and Reinvestment Act of 2009, a major economic policy, set aside significant funds for capital investment into renewable energy. On April 22, 2009, President Obama announced that he was starting a program, implemented by the Department of the Interior, to lease federal coastal waters for wind and ocean energy development (the White House—Office of the Press Secretary 2009). At the time of this writing, the U.S. Senate was debating legislation to mitigate the risks of climate change by setting a national renewable portfolio standard.
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