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4.128. In November 2021, the U.S. Administration released a report regarding the Long-Term Strategy of the United States, which lays out pathways to reach the net-zero emissions 2050 goal and identifies the clean energy deployment and scale up needed to meet this target. Pursuant to Article 4.19 of the Paris Agreement, the report serves to communicate the Long-Term Strategy to the international community, and shows how current and near-term policies and actions across the country deliver a pathway through the 2030s and 2040s to reach the 2050 net-zero goal. The analysis finds that mobilizing to achieve net-zero will reduce distributional inequities of environmental pollution and climate vulnerability, improve public health, and promote economic growth. The report also states that all viable routes to net-zero involve five key transformations: decarbonize electricity; electrify end uses and switch to other clean fuels; reduce energy waste; reduce methane, hydrofluorocarbons, and other non-CO2 greenhouse gas emissions; and scale up CO2 removal, including through land carbon sinks and engineered strategies.

4.129. The United States is a global leader in energy-related research, development, and demonstration. In 2017, some USD 7.3 billion in federal funds were allocated to basic energy research (31%), energy efficiency (24%), renewable energy (16%), nuclear energy (11%), fossil fuels (6%), and electric power systems (5%).

4.136. Environmental regulations have significant impact on coal-fired power generation. Older, smaller, and less efficient production units have closed, and further retirements may be expected in the coming years. Moreover, as market conditions remain unfavorable, no new coal plants are being considered. The combustion of coal generates greenhouse gases and other pollutants (e.g. mercury, sulphur dioxide, and nitrogen oxides) in larger quantities relative to other sources of fuel. The issue is being addressed through, inter alia, the funding of research on carbon capture, utilization, and storage technologies. The American Jobs Creation Act of 2004 established a tax credit for the production of refined coal, i.e. coal that has been treated to lower emissions during combustion.

4.137. About 12.6% of the production of primary energy was derived from renewable sources in 2021, compared to 9.3% in 2005. Among renewables, biomass (including renewable waste) has for many years accounted for 50% (or more) of the energy output, but its share is slowly declining. Solid biomass is used in electricity generation as well as in certain industries, in particular pulp and paper. Another important bio-component is ethanol, mainly produced from maize, which is blended to make transport biofuel. The Energy Policy Act of 2005 established a Renewable Fuel Standard (RFS), further expanded by the Energy Independence and Security Act of 2007. The RFS mandates the incorporation of renewable fuels into the domestic transportation fuel supply. Each year, the U.S. Environmental Protection Agency (EPA) issues RFS rulemakings with increasing volume requirements specific to certain renewable fuel categories. For example, the RFS sets a target of 36 billion gallons per year of renewable fuel by 2022, with conventional (maize) ethanol accounted for in the RFS limited to 15 billion gallons per year.

4.138. The United States does not have a national target for renewable energy nor an explicit federal support mechanism. However, the Public Utilities Regulatory Policies Act of 1978 requires regulated utilities to purchase power from alternative energy sources produced by "qualified facilities" at rates that cover their costs of such production. Incentives are also provided in the form of investment tax credits for the installation of solar panels, and production tax credits for power generated by wind turbines. Although wind and solar power still accounted for 3.4% and 1.5%, respectively, of primary energy production in 2021, their growth rates have been high, and generation from wind power has in general exceeded that from hydroelectric sources since August 2019. Renewable portfolio standards have been enacted by 31 states and the District of Columbia, each with their own specific policies, eligible sources and technologies, trading rules, and targets.

4.141. Facing competition from shale gas and subsidized wind power, several nuclear plants have shut down before the end of their operating licenses in recent years. High costs for repair and refurbishment, and compliance with stricter environmental requirements, have also been contributing factors. Three states (New York, Illinois, and New Jersey) have introduced zero emissions credit programs to provide subsidies to their nuclear energy producers and thereby secure the long-term operation of the reactors. The Nuclear Waste Policy Act of 1982 made the final repository of such waste a federal responsibility, and a charge is levied on all generated nuclear power for the benefit of the Nuclear Waste Fund. More than USD 44 billion has been accumulated in the fund to date. As no central repository is available, nuclear waste continues to be stored on-site, and nuclear utilities receive some USD 800 million per year in compensation for their storage costs.

4.143. During the review period, the use of natural gas increased, from 32% in 2017 to 38% of electricity generation in 2021. [129] Similarly, renewable energy sources (including wind, hydroelectric, solar, biomass, and geothermal energy) generated a record 826 billion kWh of electricity, corresponding to 20% of all the electricity generated in the country (17% in 2017). Excluding hydropower, renewable energy sources represent nearly 14% of total U.S. generation, and their capacity has increased by 10% between 2020 and 2021. Generation from renewable sources has surpassed nuclear (19%) (Chart 4.5). In general, generation from non-renewable sources has been losing share: coal-fired power plants delivered 899 billion kWh in 2021, 55% less than its peak production observed in 2007. Petroleum accounted for less than 0.5% of the electricity generated in 2021. The increase in renewable energy has partly resulted from the swift deployment of wind and solar energy installations since 2015. Reflecting this, wind energy production almost doubled between 2015 and 2021, surpassing hydroelectric generation as the largest source among renewables in 2019. Solar energy has increased almost five fold its share in electricity generation since 2015 and contributed nearly 3% of the electricity generated nationwide in 2021. (...)
[129] However, U.S. EIA expects a decline in the share of natural gas in electricity generation in coming years, replaced by renewables, in particular wind and solar energy. U.S. EIA, Short Term Energy Outlook, February 2022. Viewed at: https://www.eia.gov/outlooks/steo/report/electricity.php.

4.144. Federal tax credit programs play a key role in new generation capacity. These programs include the Renewable Electricity Production Tax Credit (PTC), the Investment Tax Credit (ITC), and the Residential Energy-Efficient Property Credit (REEPC). Renewable energy developers may choose to benefit from the PTC or the ITC but cannot receive the two benefits. The PTC provides eligible generation facilities with a tax credit per kWh for the first 10 years a facility is in operation. The Further Consolidated Appropriations Act of 2020 (P.L. 116 94) and the Consolidated Appropriations Act of 2021 extended the PTC tax benefit for wind and other renewables facilities that began construction before the end of 2021. Similarly, the ITC, introduced in 2005, has been extended several times since then. Solar and geothermal energy has a permanent 10% ITC; however, the Bipartisan Budget Act of 2018 (P.L. 115-123) and the Consolidated Appropriations Act of 2021 increased the ITC temporarily to 30% through 2021. [132] The REEPC is a tax credit for residential owners for qualifying properties, such as, inter alia, solar electric property, solar water heaters, geothermal heat pumps, small wind turbines, and fuel cell property. Estimated revenue losses related to these tax provisions amounted to USD 13.2 billion and USD 12.6 billion in FY2020 and FY2021, respectively.
[132] The ITC credit rate is reduced to 26% and 22% for facilities commencing construction in 2022 and 2023, respectively. The tax credit rate for offshore wind facilities is 30% until 2025 and does not phase out. CRS (2021), The Energy Credit or Energy Investment Tax Credit (ITC), 23 April. Viewed at: https://crsreports.congress.gov/product/pdf/IF/IF10479.

4.145. In addition to federal regulation, the electricity industry is subject to regulatory regimes at municipal and state levels. State Public Utility Commissions deal with regulatory issues, including the regulation of retail sales to customers, the approval of generation facilities, distinct reliability issues, and more recently, renewable portfolio standards programs. Several incentives supporting renewables and energy efficiency are also available at this level.

4.148. (...) As of February 2022, two sets of safeguard measures, on Crystalline Silicon Photovoltaic Cells, and on Large Residential Washers, were in place (Sections 3.1.6 and 3.1.7). (...)