UNITED STATES DEPARTMENT OF ENERGY
Summary: Transforming U.S. Energy Infrastructures in a Time of Rapid Change: The First Installment of the Quadrennial Energy Review
Summary for Policymakers
The U.S. energy landscape is changing. The United States has become the world’s leading producer of oil and natural gas combined. The country is less dependent on foreign oil, as a percentage of national oil consumption, than it has been since 1971. Current cars can go farther on a gallon of gas than ever before. Between 2005 and 2014, U.S. consumption of motor gasoline fell 2.6 percent despite population growth of 7.6 percent and gross domestic product growth of 13.0 percent. Additionally, as a result of changes in economic structure and conditions and policies to promote energy efficiency, U.S. electricity consumption was flat over that 10-year period and total energy use declined by 1.9 percent.
The composition of the Nation’s energy supply has also started to shift: petroleum consumption is flat and coal consumption is declining, while the use of natural gas and renewables is growing. In 2014, renewable energy sources accounted for half of new installed electric-generation capacity, and natural gas units made up most of the remainder. Electricity generation from wind grew 3.3-fold between 2008 and 2014, and electricity generation from solar energy grew more than 20-fold.
The focus of U.S. energy policy discussions has shifted from worries about rising oil imports and high gasoline prices to debates about how much and what kinds of U.S. energy should be exported, concerns about the safety of transporting large quantities of domestic crude oil by rail, and the overriding question of what changes in patterns of U.S. energy supply and demand will be needed— and how they can be achieved—for the United States to do its part in meeting the global climate change challenge.
In the “Climate Action Plan” unveiled by President Obama in June 2013, he directed his Administration to initiate an interagency Quadrennial Energy Review (QER) to help ensure, in this dramatically changing energy landscape, that Federal energy policy is appropriately matched to the Nation’s economic, security, and climate goals. The approximately annual installments of the QER over the ensuing 4 years are to focus on different components of the Nation’s energy system—resource extraction and processing, energy transport and storage infrastructure, electricity generation, energy end-use—providing findings and recommendations on how Federal energy policy can best complement and incentivize state, local, tribal, and private sector actions so as to meet ongoing and emerging challenges and take advantage of new opportunities.
This first installment of the QER addresses infrastructures for energy transmission, storage, and distribution (TS&D), broadly defined as infrastructures that link energy supplies, carriers, or by-products to intermediate and end users. This focus was chosen because the dramatic changes in the U.S. energy landscape have significant implications for TS&D infrastructure needs and choices. Well-informed and forward-looking decisions that lead to a more robust and resilient infrastructure can enable substantial new economic, consumer service, climate protection, and system reliability benefits. Good decisions on TS&D infrastructure can also provide flexibility in taking advantage of new opportunities to achieve our national energy objectives.
This summary follows the organization of the main report, starting with an introduction to TS&D infrastructure issues (corresponding to Chapter I, Introduction, in the main report) and continuing with sections on the following:
- Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure (Chapter II)
- Modernizing the Electric Grid (Chapter III)
- Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace (Chapter IV)
- Improving Shared Transport Infrastructures (Chapter V)
- Integrating North American Energy Markets (Chapter VI)
- Addressing Environmental Aspects of TS&D Infrastructure (Chapter VII)
- Enhancing Employment and Workforce Training (Chapter VIII)
- Siting and Permitting of TS&D Infrastructure (Chapter IX).
The main report’s treatment of the QER analytical and stakeholder process (Chapter X, Analytical and Stakeholder Process) and its appendices on technical details of TS&D infrastructure for liquid fuels, natural gas, and electricity are not covered here.
Introduction to TS&D Infrastructure Issues
The United States has one of the most advanced energy systems in the world, supplying the reliable, affordable, and increasingly clean power and fuels that underpin every facet of the Nation’s economy and way of life. The energy TS&D infrastructure that links the components of that system with each other and with users is increasingly complex and interdependent. It includes approximately 2.6 million miles of interstate and intrastate pipelines; about 640,000 miles of transmission lines; 414 natural gas storage facilities; 330 ports handling crude petroleum and refined petroleum products; and more than 140,000 miles of railways that handle crude petroleum, refined petroleum products, liquefied natural gas, and coal. The components of the Nation’s TS&D infrastructure considered in this report are listed in Table SPM-1.
The requirements that this TS&D infrastructure must meet are extensive and demanding. It must handle a diverse and evolving mix of energy sources and energy products; link sources, processors, and users across immense distances; match demands that vary on multiple time scales; co-exist with competing uses of the same systems (e.g., ports and railways); and perform 24 hours a day, 365 days a year with high reliability, which in turn requires both low susceptibility to disruptions and the resilience to recover quickly from whatever disruptions nonetheless occur. The longevity and high capital costs of energy TS&D infrastructure, moreover, mean that decisions made about how to locate, expand, and otherwise modify this infrastructure today will be influencing—either enabling or constraining—the size and composition of the national energy system for decades to come.
Challenges of TS&D Infrastructure Management and Policy
Much of the TS&D infrastructure is owned and operated by the private sector, and a significant portion of the related legal, regulatory, and policy development and implementation occurs at state and local levels. At the same time, the Federal Government controls and operates substantial TS&D infrastructure assets of its own, including inland waterways, thousands of miles of transmission lines, and strategic oil and product reserves. Some of the infrastructure elements owned by others are federally regulated with respect to aspects of siting, safety, environment, and reliability. A number of emergency authorities bearing on TS&D infrastructure are also vested in the Federal Government.
A further complexity affecting the TS&D infrastructure management and policy is that these infrastructures often reach across state and even international boundaries, thus affecting large regions and making multi-state and sometimes multi-national coordination essential for modernization, reliability, resilience, and flexibility. In addition, the large capital costs, scale, and “natural monopoly” characteristics of much TS&D infrastructure tend to perpetuate the role of incumbent providers; these circumstances constrain innovation and add to the usual litany of market failures—public goods, externalities, information deficits, perverse incentives—generally understood to warrant intervention through government policy when the proposed remedy is expected to have sufficient net benefits to overcome predictable ancillary and unintended consequences.
Download full version (PDF): Quadrennial Energy Review
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The mission of the Energy Department is to ensure America’s security and prosperity by addressing its energy, environmental and nuclear challenges through transformative science and technology solutions.
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