North America Network

North America Network

The North America region currently consists of Mexico and the United States of America. As significant energy producers and consumers, energy plays a critically important and highly valued part in the North American economies. The transition to clean energy therefore creates both large challenges and major opportunities which drive the region’s action priorities.

Regional action priorities that support the Council’s mission and humanising energy vision are agreed on an annual basis by national Member Committees in the framework of a Regional Action Plan. In 2021,  key topics of interest to members included hydrogen as a key constituent in the future energy economy, advanced nuclear/SMR’s and transportation electrification needs and challenges.

The region has also addressed their countries’ unique issues and challenges at energy forums and workshops focusing on topics such as, replacement of nuclear, regulation on CCS technology, smart energy policies, energy efficiency with advanced technologies, and trade issues. 

The region organises the World Energy Council official regional forum, the North America-Latin America bi-regional forum which addresses energy efficiency, energy conservation, alternative energies, energy transport and fossil fuels issues. 

Energy in North America 

REGIONAL OVERVIEW & CONTEXT

As was the case previously, North America stands out from other regions and the global picture as active engagement from a critical mass representing broader societal needs and infrastructure action planning are critical uncertainties, along with concerns around populism and acceptability. Stakeholder coordination, demand management, capital cost and investment are action priorities. While the importance of transmission grids for successful energy transitions was recognised, uncertainty remains around technology advancements, regulatory frameworks, investment and financing. Climate change management, previously the highest critical uncertainty, is now in the action space, albeit in its unbundled form of climate mitigation and adaptation.

NORTH AMERICA REGIONAL DEEP DIVE

Major regional changes

The 2024 North America World Energy Issues Map attributes the highest degree of impact and uncertainty to infrastructure, compared to climate change management, recognised as the highest critical uncertainty in the 2022 Issues Map. This change was expected following the enactment of major energy and climate investment packages over the last couple of years, making aging infrastructure a limiting factor for large-scale deployment. In the United States (U.S.), the Inflation Reduction Act’s incentives to growth in renewable power generation, increased the demand for a stronger transmission infrastructure, capable of responding to the technical requirement of intermittent power inputs. Considering the largest share of U.S. respondents in the North America Issues Survey, the 2024 Issues Map highlights the high impact of transmission grids to achieve the region’s energy and climate targets. With major government investments in energy technologies and climate solutions, the investment indicator moved from high to medium uncertainty, compared to 2022.

Hydrogen and Power-to-X underwent a remarkable transformation from very high uncertainty in 2022 to relatively low uncertainty in the 2024 map, benefiting from strong policy signals and a generous tax credit system from the U.S. government for hydrogen (a 10-year incentive of up to US$3/kg H2) and low-carbon fuels production (a tax credit of up to US$1/gallon for non-aviation fuels and US$1.75/gallon for sustainable aviation fuels).

North America stands out as the sole region among affluent industrialized areas that exports more fossil fuels than it imports. Scoring an "A" in the Security Dimension of the World Energy Trilemma Index, the United States and Canada have significantly enhanced their economies and secured their energy supply through the exploitation of shale gas and oil sands. Since 2018, Mexico has also prioritised its domestic fossil fuel industry for security reasons. In the Federal Budgets for 2021 and 2022, more than 70% of the funds earmarked for 'climate change mitigation and adaptation effects' were allocated to the transportation infrastructure of fossil gas. Consequently, energy security in North America primarily revolves around strengthening infrastructure to prevent disruptions. This focus on domestic infrastructure results in energy security uncertainties rooted more in local concerns than in international politics. From this emphasis on robust infrastructure, issues of societal needs and acceptability have become pivotal in the energy security discussions, driving the priorities of policy makers and energy leaders in the region.

Accelerating regional trends over the last 5 years

In the past five years, North America has experienced dramatic changes, which show no signs of slowing. Regional trends include increasingly extreme weather conditions and growing infrastructure needs. Both issues are being addressed through diverse policy levers to ensure the reliability and security of the power system. The North American Electric Reliability Corporation (NERC) released its annual state of reliability report based on trends from the previous five years. The 2023 report notes that the extreme weather events have increased dramatically in frequency, footprint, and duration, and pose a significant risk to reliability and stability. The report pointed out risks of supply shortfalls, which materialised during peak conditions in summer and winter. For instance, in September 2022, a Heat Dome event triggered seven Energy Emergency Alerts (EEAs) across parts of the Western Interconnection in Canada, the U.S., and Mexico. Factors contributing to reserve shortages included record demand, transfer curtailments, reduced energy output from generators, and limited generator availability.

The energy industry has been collaborating to update and identify reliability standards and to discuss these challenges and map out the evolution of the bulk power system. The booming amount of diverse generation provides additional flexibility, but also presents technical challenges such as performing through disturbances observed on the system.

In March 2023, the U.S. and Canada have committed to strengthening North American nuclear fuel supply chains and supporting the development of small modular reactors (SMR) through initiatives like the FIRST program and a one-year Energy Transformation Task Force. This collaboration aims to accelerate clean energy transitions, integrate economic and security policies, and enhance grid resilience and access to critical minerals, fostering regional energy cooperation and economic growth. The Energy Transformation Task Force was renewed for another year in May 2024.

Integrating people and communities in the energy transition

Equity measures are at the centre of efforts to integrate people and communities in energy transitions. That is why stakeholder coordination and acceptability are identified as high impact issues with low to medium uncertainty. There has been an increasing number of projects focusing on community engagement and promoting more equitable energy transition. The Inflation Reduction Act (IRA), the largest investment in reducing carbon pollution in U.S. history, has dedicated an Energy Community Tax Credit Bonus of up to 10 percent (production tax credits or investment tax credits) for projects, facilities, and technologies located in energy communities. Moreover, the Justice40 Initiative has been signed, to ensure that 40 percent of overall benefits of Federal climate and energy investments are dedicated to disadvantaged communities.

A SNAPSHOT OF 2024 RESULTS

Scalable technology and community strength

The trajectory from 2022 to 2024 in North America's energy landscape reveals a complex evolution, that marries ambition with the realities of economic and geopolitical volatility. The emphasised commitment to energy storage and renewable energies illustrates a push to upscale sustainable solutions (for example, with a projected 89% growth in storage), yet this ambition is now measured against the backdrop of fluctuating investment returns and a challenging market that still lacks large demand signals and regulatory clarity around permitting and siting timelines.

Despite the substantial energy consumption of data centres, telecommunications networks, and smart devices ‒ accounting for 3-4% of the world's electricity in 2023 with expectations to double by 2030 ‒ and the ever-growing opportunity space for Artificial Intelligence (AI) in energy, AI as a gamechanger technology was not high on the radar of North American survey respondents. This is unexpected considering the significant investments by major technology firms like Microsoft, Amazon, Google, and Meta in energy-efficient technologies and renewable energy sources, including next-generation nuclear power, to manage the escalating digital energy demand.

It is important to acknowledge that the push for groundbreaking energy technologies is not just about innovation, but it is also about making sure these advances are cost-effective and align with ever-changing policies. Additionally, the growing concerns around infrastructure and societal needs highlight the importance of ensuring that technological advances go hand in hand with community well-being and the strength of our public systems.

Canada provides a valuable example of community-centred approaches, where First Nation communities are the largest owners of renewable energy projects. These include wind, solar, hydro, and biomass. First Nation communities either own these projects outright or through partnerships involving revenue-sharing, employment, and capacity-building. Significant projects like the Henvey Inlet Wind Project, Grand Renewable Energy Park, and Mesgi'g Ugju's'n Wind Farm demonstrate the economic and infrastructural benefits these ventures offer, enhancing energy sovereignty and environmental stewardship. Supported by government and Indigenous-led organizations, this growing involvement positions First Nations as central players in Canada's shift towards sustainable energy, aiming to equitably distribute benefits and address past inequities.

Balancing economic growth with environmental responsibility

In the 2024 North America World Energy Issues Map, the dynamics of affordability, investor environment, and public acceptability emerge as increasingly uncertain and critical pieces of the energy transition puzzle. For example, the recent delays in offshore wind projects along the United States coastlines show how the combination of these three factors can impact the energy transition. In Canada, provincial fragmentation represents a significant challenge to economic growth and affordability, with research showing disparate levels of commitment to clean energy across provinces—from Quebec's proactive approach to Alberta's lower support for renewable energy development. Addressing the affordability concern is crucial to maintaining public support, as the energy transition's success relies on the widespread adoption of new technologies.

Equally, a stable and receptive investor environment is essential to fuel the financial investment necessary for overhauling energy infrastructure. From this perspective, Mexico's incoming administration has pledged to support private investment in the energy sector as long as it complements the country's energy sovereignty, designating 54% of the electricity market to the state-owned CFE and 46% to private companies, thus creating a regulated yet accommodating market environment.

Lastly, the increased uncertainty in acceptability highlights the importance of public approval and the efficacy of regulatory processes, which, if not carefully managed, can hinder the implementation of renewable technologies. These factors underscore the need for continued work to ensure the policy framework is not just environmentally ambitious but also socio-economically considerate, leading to a truly inclusive energy transition.

Climate risk and resilience

Trends in energy outcomes across North America provide invaluable insights into the region's climate vulnerabilities and its capacity for resilience. In 2023, the United States experienced 28 climate disaster events with costs exceeding US$1 billion in damage for each. In 2023, Canada recorded its hottest summer in 76 years, with temperature anomalies as high as +3.1°C in some regions and ocean temperatures around its coasts reaching historic highs. Canada's 2023 wildfire season was the most destructive ever recorded. Over 6,500 wildfires burned more than 18 million hectares of land, surpassing the previous record of 7.6 million hectares by a large margin. Thousands of people were displaced, critical energy infrastructure was destroyed, and oil and gas production were temporarily halted. In the same year, Mexico experienced heatwaves leading to a surge in electricity demand and operating reserve margin dropping below 6%. This record for climate disasters puts resilience at the centre of energy policy.

The growing embrace of renewable energy in the region highlights a significant stride towards a greener, less carbon-intensive future, reducing dependence on fossil fuels and improving resilience by broadening the energy mix and reducing risks of supply disruptions. Additionally, scrutinising energy consumption patterns exposes the ramifications of extreme weather events on energy infrastructure, spotlighting vulnerabilities and areas for enhancement to better confront climate-related adversities. Through monitoring of transmission grid performance, the implementation of energy efficiency measures, and the promotion of inclusive community involvement, North America can construct a sturdier energy framework adept at confronting the uncertainties posed by climate change.

FINAL CONSIDERATIONS

From 2022 to 2024, North America has demonstrated a dynamic approach to managing its energy portfolio amid economic and geopolitical shifts. This period has been marked by a strengthened commitment to sustainability, propelled by regional collaboration, technological advancements, evolving policies, and a re-evaluation of both infrastructure and energy security. The region has actively pursued the adoption of renewable energy, the enhancement of infrastructure, and the integration of societal considerations into energy policies. The U.S. Inflation Reduction Act is a pivotal development in balancing economic growth with environmental stewardship. However, the rate and focus of this transition remain subjects of ongoing debate, emphasizing the need for policies that reconcile energy security and economic imperatives with environmental objectives.

CONVERSATION STARTERS FROM THE 2024 WORLD ENERGY ISSUES MONITOR

• What are the specific challenges anticipated in the regional energy context in the year ahead, considering factors such as infrastructure action planning, acceptability and active stakeholder engagement?
• How do energy storage, critical minerals, supply chains and international collaboration interact with each other, and what implications does this interplay have?
• How is the active engagement of people and communities representing broader societal needs evolving, and what new approaches can be taken to reduce uncertainty?
• Why has uncertainty around hydrogen and P2X significantly declined, and what measures are needed to unlock their potential further?
• What factors have led to climate mitigation and adaptation transitioning from being the highest uncertainty to being in the action space? Is there an established acceptable level of climate resilience, and what additional conversations with stakeholders and supply chains may be necessary?
• The life cycle impacts of renewable energy solutions are a moderate uncertainty. Is this aspect gaining more attention and moving onto the radar, and if so, why?

ACKNOWLEDGEMENTS

Future Energy Leaders

Mahmoud Abouelnaga, Nonresident Senior Fellow, Atlantic Council

Naimat Chopra, Consultant, Economic Research & Development Impact - South Asia, Asian Development Bank (ADB)

Rachel Melton, Operations Compliance Analyst Lead, California ISO (CAISO)

Akshay Patil, Manager Data Science, Bain & Company

Qianru Zhu, Research Economist, Electric Power Research Institute (EPRI)

Regional Chair

Patricia Vincent-Collawn, Chair, North America, World Energy Council

Project Management

World Energy Council