Policy Reset

US Energy Act of 2020 seeks to decarbonise the economy

The year 2020 ended on a promising note for the US energy sector. The Energy Act of 2020, which is a comprehensive update of the US federal energy policies over 13 years, was signed into law by the former US president as part of the Consolidated Appropriations Act, 2021. Significantly, the Energy Act of 2020 embodies bipartisan provisions from the Senate’s American Energy Innovation Act or S. 2657 and the House’s Clean Energy Jobs and Innovation Act or H.R. 4447. Broadly, the Energy Act establishes or reauthorises various programmes to facilitate innovation in renewable and clean energy technologies, earmarking an investment of $35 billion in clean energy research, development and demonstration programmes (RDD) over the next five years. The objective is to reduce greenhouse gas emissions from the power sector, industry and buildings while keeping energy affordable and globally competitive.

The legislation focuses on energy storage; advanced nuclear energy; carbon capture, utilisation and storage; carbon removal; renewable energy; critical minerals and materials; fusion; industrial technologies; smart manufacturing; and grid modernisation, among other areas. It reauthorises essential programmes such as Advanced Research Projects Agency-Energy and Weatherization Assistance. It also includes various measures intended to improve energy efficiency and brings administrative reforms to improve the Department of Energy (DoE). The following are some of the key provisions of the act.

Energy efficiency: The act aims to improve the efficiency of everything from schools to data centres, while promoting weatherisation and smart buildings. It contains several technology-oriented and technology-neutral measures to boost energy efficiency. It directs the Secretary of Energy to establish a rebate programme to encourage the replacement of energy inefficient electric motors and transformers.

Nuclear energy: It requires the Secretary of Energy to establish a programme to support the availability of high-assay low-enriched uranium for civilian domestic RDD and commercial use; and reauthorises the DoE’s nuclear energy RDD and commercial application activities. It authorises an advanced reactor demonstration programme, funding for a versatile test reactor, and international coordination efforts.

Renewable energy and storage: The act reauthorises the DoE’s marine, hydropower, geothermal, wind and solar energy RDD and CA programmes. Further, it has established a wind technician training grant programme and launched an advanced solar manufacturing initiative to enhance domestic manufacturing. It has extended incentives for hydroelectric production (up to 2036); directed the US Geological Survey to update its geothermal resource assessment; and promoted technical innovations for geothermal development. It requires the Secretary of the Interior to set national goals for wind, solar and geothermal energy production by September 1, 2022, and permit at least 25 GW of electricity from such sources by 2025. The act has established an RDD programme to advance energy storage technologies and directs the Secretary of Energy to carry out demonstration projects, as well as a competitive pilot project grant programme; establish a joint long-term demonstration initiative with the Secretary of Defense; facilitate a technical and planning assistance programme for rural electric cooperatives and municipal utilities; and establish an energy storage materials recycling R&D programme. It authorises $1 billion over five years for federal innovation investments in energy storage technology and RDD.

Carbon management and carbon removal: The act directs the Secretary of Energy to conduct RDD and CA activities for carbon capture, storage, large-scale sequestration, utilisation and high efficiency turbines. It has also established an RDD programme to examine the methods and strategies to remove carbon dioxide from the atmosphere.

Grid modernisation: The act reauthorises the smart grid demonstration programme in the Energy Independence and Security Act of 2007, and adds the commercial application of distribution automation technologies to the programme goals. It also authorises RDD and CA on the development of grid architectures for a modern grid; operation and control of the grid; interoperability of emerging technologies with existing grid infrastructure; and underground transmission and distribution lines. Further, it has authorised the DoE’s RDD activities on integrating renewable energy and electric vehicles into the grid. The secretary can award grants of up to $15 million annually to assist municipal governments, rural electric cooperatives and isolated communities in overcoming identified barriers.

DoE innovation: The act has established a new Office of Energy Technology Transitions with the mission to expand the commercial impact of the DoE’s research investments and to focus on commercialising technologies that advance the missions of the DoE.

The industry response to the Energy Act of 2020 has been quite positive. The act is a major step towards ensuring the decarbonisation of the US economy by fostering innovation across the spectrum of technologies that are critical for the country’s energy and national security as well as for long-term economic competitiveness.

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