Economic Policies for Affordable, Secure and Clean Energy: Insights from the United States

Luke Hatton and Patrick Lenain | 28 May 2025
Fiscal, Policy Briefs | Tags: Energy, Fossil Fuel Subsidies, Renewables, United States

A related blog is available HERE.

The U.S. energy system has undergone key shifts over the last few years. Domestic production of oil and natural gas has grown significantly. Electricity generation has become cleaner. The role of coal power has declined. Low-carbon investments have increased, propelled by the competitiveness of renewable energy and tax credits under the Inflation Reduction Act (IRA). As a result, renewable power now constitutes 16% of electricity supply.

These developments notwithstanding, several challenges remain:
• A substantial number of Americans must allocate a sizable share of their budget to transport and energy bills, resulting in “transport insecurity” and “energy poverty”.
• U.S. households remain vulnerable to fluctuations in international energy markets, particularly due to the strong role of gasoline for transportation and its price exposure to global events. The country also relies on imports of uranium and clean energy technologies such as batteries and solar panels.
• Nearly four out of ten Americans live in areas with unhealthy levels of air pollution. In addition, the United States continues to be the second largest emitter of carbon dioxide, with almost no decline in 2024.

The U.S. energy landscape is at a political crossroads. While both the previous as well as the new Administration have emphasized the need to make energy more affordable and strengthen energy security, the stance regarding fossil fuels has changed. President Biden restricted the extraction of coal, oil and gas on federal lands and offshore waters, and the approval of related transport infrastructures. President Trump is following a markedly different strategy. The new Administration has also shifted away from the previous administration’s objective of a greater role for renewable energy.

A diverse range of policy initiatives, many of which can be implemented at the state and local levels, are available to continue the transition towards an affordable, secure, and clean U.S. energy system, inter alia:

• Supporting households in reducing their energy bills and transitioning to renewables with targeted subsidies, especially for domestic retrofits and electric mobility.
• Aligning tax rates to create a level playing field between different energy technologies whilst maintaining affordable prices.
• Expanding coverage of carbon pricing for power generation under the Regional Greenhouse Gas Initiative (RGGI) scheme.
• Easing regulations which impede and delay the deployment of new energy infrastructure, particularly transmission and distribution.
• Ensuring that states have sufficient access to funding required to deliver on energy transition targets and objectives.

Economic Policies for Affordable, Secure and Clean Energy: Insights from India

Priya Sahu and Nirosha Elsem Varghese | 3 April 2025
Fiscal, Discussion Notes | Tags: Energy, Fossil Fuel Subsidies, India, Renewables
India is making significant strides toward affordable, secure and clean energy with the help of ambitious economic policy packages. Yet, like in other countries, many challenges remain.... continue reading

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This policy brief examines the recent emergence of climate policy packages and their impact on climate, social, financial, and fiscal outcomes. It also recommends steps that Ministries of Finance can... continue reading

Economic Policies for Affordable, Secure and Clean Energy: Insights from the UK

Luke Hatton and Patrick Lenain | 1 October 2024
Fiscal, Policy Briefs | Tags: Energy, Fossil Fuel Subsidies, Renewables, United Kingdom
Transitioning to a more affordable, secure and clean energy system is a key priority for the UK government. Elected in July 2024, the new government led by Prime Minister Keir... continue reading

Economic Policies for Affordable, Secure and Clean Energy. Insights from France

Patrick Lenain | 3 May 2024
Fiscal, Blog | Tags: Decarbonization, Energy, Fossil Fuel Subsidies, France, Industrial Policy, Tax Expenditures
Successive French governments have reformed the country’s energy sector, with notable achievements in maintaining affordable access, ensuring supply security, and reducing carbon emissions. However, the energy crisis triggered by Russia's... continue reading

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Patrick Lenain | 25 August 2023
Fiscal, Blog | Tags: Carbon Pricing, Energy, Renewables
One in five people lacks access to affordable and reliable power. Properly designed, differentiated carbon prices based on purchasing power parity exchange rates (PPPs) would be a giant step to... continue reading

Luke Hatton

Luke Hatton is a Researcher at Imperial College London, where he is part of the Grantham Institute’s “Science and Solutions for a Changing Planet” Doctoral Training Programme. Prior to joining Imperial, Luke worked at Element Energy advising a broad range of public and private clients on navigating the energy transition.

Patrick Lenain

Patrick Lenain is a Senior Associate with CEP. He is also an Adjunct Professor of Economics at Université de Paris-Est Créteil. He worked previously at the OECD, IMF, European Commission and French Treasury. His research interests include climate change, tax reform, and macroeconomic policy.