The U.S. energy system currently comprises a vast and complex set of interlocking technologies for the production, distribution, and use of fuels and electricity (Boxes 1.2 and 1.3; Figure 1.1²). It evolved over the last century in response to a broad set of circumstances: rapidly growing demand for energy, advances in technology, diverse public policies and regulations, and the powerful market forces that have accompanied economic growth and globalization. As a result, the energy system’s technologies and production assets are of many different vintages and often rely on aging and increasingly vulnerable infrastructures.

Five critical characteristics of this system stand out:

1. The United States relies on the burning of carbon-based fossil fuels for more than 85 percent of its energy needs (Figure 1.2).

2. The burning of fossil fuels has a number of deleterious environmental impacts, among the most serious of which is the emission of greenhouse gases, ³ primarily carbon dioxide (CO₂). At present, the United States emits about 6 billion tonnes (6 gigatonnes) of CO₂ per year into the atmosphere. Emissions have grown by almost 20 percent since 1990 but have recently leveled off somewhat (Figure 1.3). However, CO₂ emissions are projected to increase in the future under the Energy Information Administration’s (EIA’s) “business as usual ” reference case ((see Box 2.1 in Chapter 2).

3. Despite decades of declining energy intensity (i.e., energy consumption per dollar of gross domestic product; see Figure 1.4), the United States still has a higher per capita consumption of energy than either the European Union or Japan (Figure 1.5). And despite improvements in energy efficiency, U.S. energy consumption continues to rise, in part because of