The United States is currently attempting to develop energy policy instruments to deal with issues related to energy use. The rationales for policy are many and varied, and include social, economic, environmental, and security considerations.
Policy instruments can be designed to shift a larger portion of the social costs (e.g., environmental impacts) to users and producers. Other tools are designed to reduce the risk of developing new technologies, particularly to private sector investors. Energy policy can be developed to affect the demand for, and/or supply of energy. Interventions can be specific to a particular technology, source, or use, or they can be generic–applying to all energy sources or uses.
Demand side policies are designed to affect the demand for fuel or power and include energy taxes to encourage consumers to use less fuels or power or to buy more efficient vehicles or appliances. On the supply side, numerous approaches are being taken including subsidies (for capital costs of building production and/or distribution facilities and infrastructure); fuel standards (e.g., mandates intended to increase domestic production and use of alternative fuels); or guarantees (i.e., for loans, purchase quantities, purchase prices, etc.).
The different policy instruments work in different ways and consequently affect consumers and producers differently. In addition to federal energy policies, several states have also enacted fuel and/or power policies.