US Clean Energy Investment Surge Highlights Progress And Challenges, Report Shows

The United States has made substantial strides towards energy security, affordability, and decarbonisation goals, driven by major energy and climate initiatives that spurred a boom in clean energy investments. According to the latest review by the International Energy Agency (IEA) on US energy policies, these efforts have positioned the nation as a leader in clean technology manufacturing while bolstering its clean energy economy.

Published today, the “United States 2024: Energy Policy Review” evaluates US policies and their impacts on national energy and climate objectives. It underscores the expansion of the clean energy sector as a result of federal initiatives aimed at diversifying and fortifying energy supply chains to bolster resilience and establish global leadership in clean technologies. However, achieving these ambitious and navigating emerging risks necessitates robust policy implementation.

Over the past four years, the United States has witnessed a nearly 60% surge in clean energy investments, catalyzing the creation of over 310,000 jobs in the sector, the report reveals. The country has become a hub for technological innovation, particularly in renewables, batteries, and electric vehicles, while also achieving notable gains in energy efficiency. In 2023 alone, US energy efficiency improvements reached 4%, contributing significantly towards global targets set at the COP28 climate conference to double energy efficiency improvements by 2030.

Simultaneously, the United States continues to play a critical role in global energy security as the world’s largest producer of oil and gas. The growth in oil and gas exports has alleviated global market pressures following geopolitical events such as Russia’s invasion of Ukraine. The Strategic Petroleum Reserve (SPR) remains pivotal in both domestic and global oil security strategies, underpinning the IEA’s oil stockholding system.

As part of its peer review process, the IEA offers key recommendations to enhance member countries’ energy policies, fostering policy development and international best practice exchange. The latest review highlights that US net greenhouse gas emissions decreased by 18% between 2005 and 2022, reflecting robust improvements in energy efficiency and substantial investments in renewables and energy storage.

The enactment of the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) in recent years has accelerated the decarbonisation of the US energy system. These legislative frameworks are anticipated to yield significant greenhouse gas reductions, aligning with US targets to cut emissions by 50-52% from 2005 levels by 2030 and achieve a net-zero energy system by 2050. While roadmaps and milestones are visible across all sectors, the report underscores the need for comprehensive policies to support their implementation, funding, and execution.

Government energy policies prioritize affordability, equity, and high-quality job creation, with initiatives under the BIL and IRA specifically targeting disadvantaged communities and workforce development.

In the power sector, the report identifies recent policy advancements, including clean electricity tax credits and streamlined renewable energy project approvals. These reforms are projected to increase the share of renewable energy in the US power mix from 22% in 2023 to 34% by 2028, although additional efforts are required to achieve the goal of 100% carbon-free electricity generation by 2035.

Moreover, the United States is ramping up investments in nuclear power, low-carbon fuels, and battery storage capacity, reflecting a sixfold increase in battery storage over the past four years alone.

In its recommendations, the IEA underscores the critical need for policy clarity to maintain investor confidence and advocates for bolstering federal programmes that enhance affordability, clean energy manufacturing, energy security, and innovation. The report also urges increased collaboration with international partners to address emerging risks related to critical minerals, clean energy supply chains, nuclear fuel, and the resilience of energy infrastructure to extreme weather events and climate hazards.

Related