US shale revolution has ‘reshaped’ global energy landscape: IEA

The IEA review claims that US government policy reflects a strategy to boost energy production, benefit from greater energy exports, keep consumer bills under control and demonstrate leadership in energy technologies. One core component of this strategy is to reduce regulatory hurdles to expanding production of energy resources.

Though the country’s carbon dioxide (CO2) emissions are projected to fall over the next 10 years, the IEA also encourages a further strengthening of this trajectory. The agency warns that despite CO2 savings made by switching to natural gas and renewables for electricity generation, nuclear retirements and less-stringent emissions regulations could jeopardise progress.

The abundance of low-cost natural gas in the US energy mix has resulted in gas-fired generation overtaking coal-fired generation in the country’s power sector. Equally, falling costs and increased policy support for renewables have driven growth in wind and solar capacity. As a result, the IEA says, coal and nuclear plants that had long been the cornerstones of the US electricity sector are facing closure.

‘Since the last in-depth review five years ago, the US has reshaped energy markets both domestically and around the world,’ said Dr Fatih Birol, the IEA’s Executive Director, as he presented the report alongside Rick Perry, the US Secretary of Energy, in Washington DC.

‘In this context, the IEA commends the lifting of the US ban on crude oil exports as well as efforts to streamline regulatory approvals for LNG exports, which have helped bolster global energy security by diversifying supply options for importers,’ Birol added.

In the report, the IEA notes that future production growth and exports will depend on the complementary build out of oil and gas pipelines. In August, the Environmental Protection Agency announced that it would relax federal rules on methane by permitting oil and gas firms to police themselves when it comes to preventing the gas from leaking out of production infrastructure.

However, some major oil and gas firms distanced themselves from the decision, rather than welcoming it as expected. According to the New York Times, this is because the industry fears that it will be less successful in arguing that gas should replace coal in power generation without constraints on harmful emissions.

Ultimately, the IEA recommends policy and regulatory responses to ‘ensure a smooth transition in the electricity sector that fully leverages the growth in variable renewables’ while ensuring the power system remains resilient.