Nov. 29 (Bloomberg) — Technological developments are revolutionizing the U.S. energy sector. In addition to increased output of renewables such as wind and solar power, advances in hydraulic fracturing and horizontal drilling are enabling companies to exploit the vast U.S. natural gas reserves. Some even predict the U.S. will become a net energy exporter in a decade or so, a dramatic turnaround from just a few years ago.
Given the far-reaching changes on the ground, now might be an opportune time to craft a national energy strategy. Both President Barack Obama and Republican Mitt Romney supported the development of such a plan during the recent campaign. But a better bet is that U.S. energy policy in the next couple of years will continue along the haphazard path it has traveled in the last few.
In a recent study, Bloomberg Government analyst Rob Barnett and Bloomberg New Energy Finance analysts Stephen Munro and Ethan Zindler conclude that the Environmental Protection Agency will continue to play the leading role in shaping U.S. energy policy in the next several years, by adopting specific regulations about circumscribed topics. They expect EPA to complete a number of regulatory initiatives started during President Barack Obama’s first term, such as limiting the greenhouse gas emissions of existing power plants. Action by Congress to enact comprehensive energy legislation is seen as unlikely in the near term.
Politics is one reason the U.S. endures a piecemeal regulatory approach to energy rather than a more comprehensive legislative one. But fiscal realities may be changing the political calculus. The yawning federal budget deficit and the urgent need for new sources of revenue have revived talk in some quarters of a congressionally-mandated tax on carbon emissions. Though Congress seems unlikely to agree on such a measure at this time, the lure of revenue may eventually prove irresistible.
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