Overshoot Day: What Does It Imply?
8 min
Level
Earth overshoot day is becoming more worrisome as each year passes. What is overshoot day about? Find out more about this term and what it implies.
The voice of impact
ESG / CSR
Industries
Ecology
Greenly solutions
US
US
Our 2023 Guide to the US Energy Market
Level
Climate change is impacted by a wide variety of factors, but the energy market continues to be one of the biggest roadblocks in working towards a low-carbon economy and society.
What is the state of the U.S. Energy Market in 2023, and what changes should be made if the U.S. is determined to reach their emission reduction goals?
What is the energy market?
The energy markets are commodity markets that handle the exchange of energy from one entity to another. For instance, an energy market could refer to electricity or the use of gasses and oil. Energy markets through two different types of methods – regulated energy markets and deregulated energy markets. An example of a regulated energy market is when customers have limited options available to them when choosing which type of energy, such as electricity, that they would like to use. Deregulated energy markets allow consumers to choose from a wide variety of energy options.
Deregulated energy markets have become the norm throughout the United States since the 1970s, following the Public Utilities Regulatory Policies Act and the Energy Policy Act in an attempt to promote the use of clean energy. The act has since been successful, allowing for more personalized and environmentally-friendly energy choices to be made amongst those in the energy market.
In simple terms, a regulated electricity market consists only of entities that are the sole owner of all the units producing and providing electricity to others. These entities will directly sell their electricity to those interested, and can allow for affordable prices and guarantee of power. Deregulated electricity markets allow the opportunity for wholesale electricity, which also allows customers to compare electricity prices and scope out potential renewable energy resources to reduce greenhouse gas emissions and fight against climate change.
How has the energy market been affected in 2022?
Unfortunately, the energy market took a massive hit nearing the end of 2022 due to the ongoing conflict between Russia and Ukraine. This is because many of the world relies on Russia to provide oil and fossil fuels used for everyday energy use – such as powering an office building or to heat homes in the winter.
This has provoked certain countries, such as the U.K., to announce an energy shortage – and encourage citizens to decrease their use of energy or even initiate periods of time where electricity is unavailable to preserve the now-more-finite-than-ever resource.
Many will choose to look at global conflict as discouraging to make an attempt to rectify an entire industry such as the energy market, and on the other hand – some view it as an opportunity to speed-up the transition to the use of clean energy and help develop a society striving towards net-zero emissions. However, many also view it as a downward spiral – where fossil fuels are only bound to increase in use in the midst of the energy crisis out of fear that these last reserves of fossil fuels are all that the world has left.
Think of the current energy crisis as someone who decided on January 1st after the new year to go to the gym three times a week. However, that plan was now made more difficult – as the time they intended to go to the gym was filled with a different activity: such as taking their child to soccer practice or a new work meeting at that time of day. Some may find it easier to give up, and some may be intrigued to confront the challenge head on – and this is the same scenario that is being presented with the current energy crisis and the efforts to rectify the energy market itself.
However, it is worth noting that at many times in history where a cross-roads has been presented – that true change was finally elicited. In other words, the energy market can still be adapted to adhere to the environmental measures necessary to fight against climate change – but it requires a new level of dedication and effort.
Are there changes to come in the U.S. energy market for 2023?
Due to the combination of worsening climate change and the lack of once reliable resources now compromised due to the ongoing global conflicts in Russia, the U.S. is looking to make some changes to the energy market come 2023.
In regards to the upcoming changes to be made to the U.S. energy market, some are convinced that the energy market will be making changes solely to accommodate for the newfound energy shortage many are experiencing – though, many also see this as a positive as it will help kickstart the needed transition to strive towards a net-zero emissions society. However, the current projections still say otherwise.
Even in 2050, the U.S. Energy Information reveals that 75% of those involved in the United States energy market will still be using fossil fuels, and that only a 4% decrease in fossil fuels will be accomplished between 2021 and 2050. On a positive note, coal and nuclear power will get closer towards becoming obsolete, and will no longer serve a role in large energy consumption. In addition, renewable energy resources will grow rapidly – up to 18% in comparison to current levels.
However, renewable energy sources still aren’t expected to reap the same financial benefits as fossil fuels given the restraints of the existing policies – but hopefully, some of the new environmental legislation being released can provoke this to change. Therefore, the changes in the U.S. energy market are largely contingent on governmental incentives – as resources like coal will continue to be used and abused until further notice.
If the U.S. is really determined to make changes in their energy market, businesses should seek new avenues to mitigate further risks to the energy market itself – such as by reduce exposure to future market shocks such as by limiting financial risks in financial contracts, encouraging the use of multiple energy sources (especially renewable energy sources, as these continue to grow in availability and popularity), and by investing in the development and installation of new technologies that can help to improve efficiency across the energy market.
How else can the energy market improve?
Often overlooked as important throughout the energy market as a whole, many neglect the importance of supply chains in the energy market – and how they could help create a more resilient market as a whole.
Supply chain resilience allows those in the energy market to better understand the financial expense and production burden it takes to deliver the end product, electricity, to a consumer – allowing for a positive influence to adjust the energy market to adhere its operations to the environmental measures necessary to combat climate change. In other words, many energy markets will still seek the use of fossil fuels to provide electricity for their consumers – but the problem is that fossil fuels are already a finite resource that contribute to greenhouse gas emissions. Therefore, it is important for the energy market to recognize the long-term value of renewable energy sources, such as wind turbines and solar panels. These might cost more upfront for those in the energy industry, but over time – this could result in business cost savings whilst also reducing excessive emissions.
However, it isn’t just up to those within the energy market to make the necessary changes – but those who frequently collaborate with the energy industry as well. For instance, investors should aim to understand the long-term benefits of investing in clean energy research and development. Even more so, it is up to the government to pass legislation requiring companies to reduce their emissions and make use of these clean technologies – many of which continue to go to waste, even in the midst of this winter’s energy crisis. Thankfully, organizations such as the CHIPS and Science Act have already provided over $50 billion in subsidies to help develop new technology for the energy sector. The new Inflation Reduction Act of 2022 also allocates $369 billion to help improve the use of clean energy. These clean energy funds can continue to support the creation of new electric vehicle charging stations, improved public transit, more efficient electrical grids, and tax credits for those who choose renewable energy over fossil fuels.
Has there been any progress made in the improvement of the U.S. energy market?
It’s hard to make a full-on transition to the use of renewable energy and to eschew the need of a finite resource that has been used for decades, such as coal, immediately – but the U.S. has made some great strides. The U.S. made an announcement at G7 2021 on their efforts to reduce their use of coal as an energy source, and they have been successful thus far – with their use of coal being cut in half since 2005. In addition, the U.S. has now allotted natural gasses to make up for up to 38% of energy mixes in the United States.
While the use of renewable energy isn’t the norm yet in the United States, it is starting to make its name known – as the country has since doubled their use of renewable energy sources such as through the use of wind turbines and solar panels.
The Biden administration is a solid reason for these new energy reforms being made throughout the country, as the current president is determined for the U.S. to use electricity completely carbon footprint free by the year 2035. This sentiment has also been expressed in the Inflation Reduction Act of 2022, where almost $370 billion dollars have been allocated towards incentivizing Americans to pick the eco-friendly option whenever possible, such as by purchasing an electric vehicle instead of a gasoline powered car.
The energy market, inevitably, is about to be shaken up in the midst of unprecedented environmental legislation being passed – and many companies and individuals across the country will need to comply with the new regulations being made to vehicle and general transportation usage. The energy market doesn’t have to stand at a crossroads wondering what to do next, but it will stay there if there are bystanders in the midst of the transition to clean energy.
What about Greenly?
If reading this article on our guide to the 2023 energy market in the U.S. has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
No matter which industry your company belongs to, Greenly can help you develop a personalized plan to reduce your carbon footprint.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Click here to learn more about Greenly and how we can help you reduce your carbon footprint.
More Articles
View all
What is the Carbon Footprint of the iPhone?
1 min
Level
The iPhone 14 will be released on September 16. But do you know the exact carbon footprint of an iPhone?
What’s the Problem with Wizz Air Unlimited Flights?
9 min
Level
In this article, we’ll provide an overview of Wizz Air’s unlimited flight program and ways Wizz Air could alter their services to be more eco-friendly.
What is the Inflation Reduction Act of 2022?
9 min
Level
What is the inflation reduction act of 2022, and how does it help to fight inflation?
Share
Subscribe to the newsletter