QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1

QUADRENNIAL ENERGY REVIEW:

ENERGY TRANSMISSION, STORAGE,

AND DISTRIBUTION INFRASTRUCTURE

April 2015
QUADRENNIAL ENERGY REVIEW

ENERGY TRANSMISSION, STORAGE,

AND DISTRIBUTION INFRASTRUCTURE

April 2015
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 i

In June 2013, through the President’s “Climate Action Plan” and in response to a 2011 

recommendation by the President’s Council of Advisors on Science and Technology, President 

Obama initiated a quadrennial cycle of energy reviews to provide a multi-year roadmap for 

U.S. energy policy. In a Presidential Memorandum released on January 9, 2014 (see page iii 

for full text), President Obama directed his Administration to conduct a Quadrennial Energy 

Review (QER) and identified infrastructure as the focus of its first installment:1 

The President also announced the formation of a White House Task Force—co-chaired by 

the Director of the Office of Science and Technology Policy and the Special Assistant to the 

President for Energy and Climate Change from the Domestic Policy Council and comprised of 

22 Federal agencies with equities in energy—to develop the QER. The Task Force is directed 

to deliver a report to the President that includes the following:

• Provides an integrated view of, and recommendations for, Federal energy policy in 

the context of economic, environmental, occupational, security, and health and safety 

priorities, with attention in the first report given to the challenges facing the Nation’s 

energy infrastructures.

• Reviews the adequacy of existing executive and legislative actions and recommends 

additional executive and legislative actions as appropriate.

• Assesses and recommends priorities for research, development, and demonstration 

programs to support key energy innovation goals.

• Identifies analytical tools and data needed to support further policy development and 

implementation. 

Preface

“

This first-ever review will focus on infrastructure challenges, 

and will identify the threats, risks, and opportunities for 

U.S. energy and climate security, enabling the Federal 

Government to translate policy goals into a set of 

analytically based, clearly articulated, sequenced and 

integrated actions, and proposed investments....”
ii QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

The President further directed the Department of Energy (DOE) to provide analytical support 

for the QER and to help manage the interagency process through a secretariat at DOE. This is 

consistent with DOE’s missions and statutory responsibilities. DOE has undertaken periodic 

reviews and analyses of the energy sector (including in the “National Energy Strategy” of 

1991 and the “Comprehensive Energy Strategy” of 1998) and contributed to the work of the 

National Energy Policy Development Group led by the Vice President in 2001, but the last 

national energy policy report was published nearly 14 years ago, and the U.S. energy system 

has changed very significantly over that period. The Presidential Memorandum on the 

QER recognizes that such a review is overdue and the high value of the White House as the 

convener of such an effort. It also reinforces the equities that multiple agencies have in Federal 

energy policy. 

As directed by the President, the QER is envisioned as a focused, actionable document 

designed to provide policymakers, industry, investors, and other stakeholders with unbiased 

data and analysis on energy challenges, needs, requirements, and barriers that will inform a 

range of policy options, including legislation. Each installment of the QER will analyze and 

make recommendations for a key component of the energy value chain. 

1 The White House. "Obama Administration Launches Quadrennial Energy Review." January 9, 2014. 

https://www.whitehouse.gov/the-press-office/2014/01/09/presidential-memorandum-establishingquadrennial-energy-review. Accessed January 15, 2015. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 iii

The White House

January 09, 2014 

Presidential Memorandum -- Establishing a Quadrennial Energy Review

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES 

Affordable, clean, and secure energy and energy services are essential for improving U.S. economic 

productivity, enhancing our quality of life, protecting our environment, and ensuring our Nation’s 

security. Achieving these goals requires a comprehensive and integrated energy strategy resulting 

from interagency dialogue and active engagement of external stakeholders. To help the Federal 

Government better meet this responsibility, I am directing the undertaking of a Quadrennial 

Energy Review. 

The initial focus for the Quadrennial Energy Review will be our Nation’s infrastructure for 

transporting, transmitting, and delivering energy. Our current infrastructure is increasingly 

challenged by transformations in energy supply, markets, and patterns of end use; issues of aging 

and capacity; impacts of climate change; and cyber and physical threats. Any vulnerability in 

this infrastructure may be exacerbated by the increasing interdependencies of energy systems 

with water, telecommunications, transportation, and emergency response systems. The first 

Quadrennial Energy Review Report will serve as a roadmap to help address these challenges. 

The Department of Energy has a broad role in energy policy development and the largest role in 

implementing the Federal Government’s energy research and development portfolio. Many other 

executive departments and agencies also play key roles in developing and implementing policies 

governing energy resources and consumption, as well as associated environmental impacts. In 

addition, non-Federal actors are crucial contributors to energy policies. Because most energy and 

related infrastructure is owned by private entities, investment by and engagement of the private 

sector is necessary to develop and implement effective policies. State and local policies; the views 

of nongovernmental, environmental, faith-based, labor, and other social organizations; and 

contributions from the academic and non-profit sectors are also critical to the development and 

implementation of effective energy policies. 

An interagency Quadrennial Energy Review Task Force, which includes members from all 

relevant executive departments and agencies (agencies), will develop an integrated review of 

energy policy that integrates all of these perspectives. It will build on the foundation provided in 

Presidential 

Memorandum 
iv QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

my Administration’s Blueprint for a Secure Energy Future of March 30, 2011, and Climate Action 

Plan released on June 25, 2013. The Task Force will offer recommendations on what additional 

actions it believes would be appropriate. These may include recommendations on additional 

executive or legislative actions to address the energy challenges and opportunities facing the 

Nation. 

Therefore, by the authority vested in me as President by the Constitution and the laws of the 

United States of America, I hereby direct the following: 

Section 1. Establishing the Quadrennial Energy Review Task Force. 

(a) There is established the Quadrennial Energy Review Task Force (Task Force), to be co-chaired 

by the Director of the Office of Science and Technology Policy and the Director of the Domestic 

Policy Council, which shall include the heads of each of the following, or their designated 

representatives: 

(i) the Department of State; 

(ii) the Department of the Treasury; 

(iii) the Department of Defense; 

(iv) the Department of the Interior; 

(v) the Department of Agriculture; 

(vi) the Department of Commerce; 

(vii) the Department of Labor; 

(viii) the Department of Health and Human Services; 

(ix) the Department of Housing and Urban Development; 

(x) the Department of Transportation; 

(xi) the Department of Energy; 

(xii) the Department of Veterans Affairs; 

(xiii) the Department of Homeland Security; 

(xiv) the Office of Management and Budget; 

(xv) the National Economic Council; 

(xvi) the National Security Staff; 

(xvii) the Council on Environmental Quality; 

(xviii) the Council of Economic Advisers; 

(xix) the Environmental Protection Agency; 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 v

(xx) the Small Business Administration; 

(xxi) the Army Corps of Engineers;

(xxii) the National Science Foundation; and 

(xxiii) such agencies and offices as the President may designate. 

(b) The Co-Chairs may invite independent regulatory agencies with energy-related 

responsibilities, including the Federal Energy Regulatory Commission and the Nuclear Regulatory 

Commission, to participate in the Task Force, as determined to be appropriate by those agencies. 

(c) The Co-Chairs shall regularly convene and preside at meetings of the Task Force and shall 

determine its agenda. Under the direction of the Co-Chairs, the Task Force shall: 

(i) gather ideas and advice from State and local governments, tribes, large and small 

businesses, universities, national laboratories, nongovernmental and labor organizations, 

consumers, and other stakeholders and interested parties; and 

(ii) coordinate the efforts of agencies and offices related to the development of the 

Quadrennial Energy Review Report, as described in sections 1 and 2 of this memorandum. 

(d) The Secretary of Energy shall provide support to the Task Force, including support for 

coordination activities related to the preparation of the Quadrennial Energy Review Report, policy 

analysis and modeling, and stakeholder engagement. 

(e) The Task Force shall submit a Quadrennial Energy Review Report to the President every 

4 years beginning with a report delivered by January 31, 2015. Intermediate reports and other 

material may be prepared by the Task Force as required by the President. 

Sec. 2. The Quadrennial Energy Review Report. 

The Task Force shall establish integrated guidance to strengthen U.S. energy policy. Building 

on the Blueprint for a Secure Energy Future and the Climate Action Plan, and taking into 

consideration applicable laws and regulations, the Task Force shall prepare a Quadrennial Energy 

Review Report that: 

(a) provides an integrated view of, and recommendations for, Federal energy policy in the context 

of economic, environmental, occupational, security, and health and safety priorities, with attention 

in the first report given to the challenges facing the Nation’s energy infrastructures; 

(b) reviews the adequacy, with respect to energy policy, of existing executive and legislative 

actions, and recommends additional executive and legislative actions as appropriate; 

(c) assesses and recommends priorities for research, development, and demonstration programs to 

support key energy-innovation goals; and 

(d) identifies analytical tools and data needed to support further policy development and 

implementation.
vi QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Sec. 3. Outreach. 

In order to gather information and recommendations and to provide for a transparent process in 

developing the Quadrennial Energy Review Report, the Task Force shall engage with State and local 

governments, tribes, large and small businesses, universities, national laboratories, nongovernmental 

and labor organizations, and other stakeholders and interested parties. The Task Force shall develop 

an integrated outreach strategy that relies on both traditional meetings and the use of information 

technology. 

Sec. 4. General Provisions. 

(a) This memorandum shall be implemented consistent with applicable law and subject to the 

availability of appropriations. 

(b) Nothing in this memorandum shall be construed to impair or otherwise affect: 

(i) the authority granted by law to any agency, or the head thereof; or 

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, 

administrative, or legislative proposals. 

(c) Nothing in this memorandum shall be construed to require the disclosure of confidential business 

information or trade secrets, classified information, law enforcement sensitive information, or other 

information that must be protected in the interest of national security or public safety. 

(d) This memorandum is not intended to, and does not, create any right or benefit, substantive or 

procedural, enforceable at law or in equity by any party against the United States, its departments, 

agencies, or entities, its officers, employees, or agents, or any other person. 

(e) The Director of the Office of Science and Technology Policy is authorized and directed to publish 

this memorandum in the Federal Register. 

BARACK OBAMA 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 vii

TABLE OF CONTENTS

Preface...........................................................................................................................................................i

Presidential Memorandum...........................................................................................................................iii

List of Figures...............................................................................................................................................ix

List of Tables ...............................................................................................................................................xii

Summay for Policy Makers Transforming U.S. Energy Infrastructures in a Time of Rapid Change—

The First Installment of the Quadrennial Energy Review............................................................................S-1

Chapter I: Introduction.............................................................................................................................. 1-1

The Character of the Nation’s TS&D Infrastructure ..................................................................................................... 1-2

Trends Affecting TS&D Infrastructure Choices.............................................................................................................. 1-3

Energy Finance for TS&D Infrastructure ..................................................................................................................... 1-17

Energy Infrastructure Data and Information .............................................................................................................. 1-19

TS&D Infrastructure Goals and Architecture of the Study .......................................................................................... 1-19

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure........... 2-1

The Importance of Resilient, Reliable, Safe, and Secure TS&D Infrastructure ............................................................... 2-3

The Impacts of Disruptions on Energy TS&D Infrastructures........................................................................................ 2-4

Resilience, Reliability, Safety, and Asset Security for the Electric Grid: Analysis of Vulnerabilities ................................ 2-8

Resilience, Reliability, Safety, and Asset Security of Natural Gas TS&D Infrastructure: Analysis of Vulnerabilities...... 2-16

Resilience, Reliability, and Asset Security of Liquid Fuels TS&D Infrastructure: Analysis of Vulnerabilities.................. 2-27

Vulnerabilities of Shared Transportation Infrastructures ........................................................................................... 2-35

Vulnerabilities of Energy TS&D and Shared Infrastructures to Physical Attack........................................................... 2-36

Recommendations in Brief......................................................................................................................................... 2-42

Chapter III: Modernizing the Electric Grid ................................................................................................. 3-1

The Electric Grid in Transition....................................................................................................................................... 3-3

Drivers of Change for the Grid of the Future: Transmission and Distribution ............................................................... 3-6

Drivers of Change for the Grid of the Future: New Technologies and Services........................................................... 3-13

Drivers of Change for the Grid of the Future: Institutions and Utility Business Models ............................................. 3-19

Policy Framework for the Grid of the Future .............................................................................................................. 3-24

Recommendations in Brief......................................................................................................................................... 3-29

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace............. 4-1

A Broad and Collective View of Energy Security ......................................................................................................... 4-3

U.S. Energy Security, Changed Production Profile, and Infrastructure Needs................................................................ 4-4

The U.S. Strategic Petroleum Reserve: Oil Security Infrastructure................................................................................. 4-6

Infrastructure Supporting Energy Security through Fuel Diversity................................................................................ 4-9

Infrastructure Supporting Energy Security through Marine Transport ........................................................................ 4-13

Energy Security Benefits of North American TS&D Infrastructure............................................................................... 4-14

Recommendations in Brief......................................................................................................................................... 4-16
viii QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

TABLE OF CONTENTS (Continued)

Chapter V: Improving Shared Transport Infrastructures............................................................................. 5-1

Increased Use of Shared Transport Infrastructures for Energy...................................................................................... 5-3

Rail Transport of Liquid Fuels: Status and Trends ......................................................................................................... 5-4

Waterways, Ports, and Connectors: Status and Trends ............................................................................................... 5-13

Impact of Energy and Energy Component Transport on Multi-Modal Systems........................................................... 5-24

Data, Modeling, and Analysis .................................................................................................................................... 5-28

Recommendations in Brief......................................................................................................................................... 5-30

Chapter VI: Integrating North American Energy Markets........................................................................... 6-1

Benefits of North American Energy System Integration .............................................................................................. 6-3

Energy Security and the Arctic .................................................................................................................................. 6-13

Infrastructures for Diversification of Caribbean Energy Supply .................................................................................. 6-16

Recommendations in Brief......................................................................................................................................... 6-20

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure .................................................... 7-1

The Range of Environmental Effects Associated with TS&D Infrastructure................................................................... 7-3

Land-Use and Ecosystem Impacts of Constructing and Maintaining TS&D Infrastructure............................................ 7-3

Emissions from TS&D Infrastructure............................................................................................................................. 7-6

Other Environmental Issues....................................................................................................................................... 7-19

CO2

 Pipelines: Enabling Infrastructure for GHG Emissions Reductions....................................................................... 7-23

Recommendations in Brief......................................................................................................................................... 7-27

Chapter VIII: Enhancing Employment and Workforce Training................................................................... 8-1

Estimates of Transmission and Distribution Jobs ......................................................................................................... 8-3

Aging and Retiring Energy Workforce.......................................................................................................................... 8-4

Energy Sector Workforce Demands.............................................................................................................................. 8-4

Workforce Training Strategies...................................................................................................................................... 8-6

Data Challenges .......................................................................................................................................................... 8-7

Recommendations in Brief......................................................................................................................................... 8-11

Chapter IX: Siting and Permitting of TS&D Infrastructure.......................................................................... 9-1

A New Urgency to Improve Siting and Permitting ....................................................................................................... 9-3

The Federal Government’s Role in Siting, Permitting, and Review of Infrastructure Projects....................................... 9-6

Engagement of the Public in Energy Infrastructure Siting and Permitting ................................................................... 9-8

Variability in Siting and Permitting Timetables........................................................................................................... 9-10

Administration Actions to Modernize Siting, Permitting, and Review Processes ....................................................... 9-10

Recommendations in Brief......................................................................................................................................... 9-19

Chapter X: Analytical and Stakeholder Process....................................................................................... 10-1

QER Systems Analysis................................................................................................................................................ 10-2

QER Stakeholder Engagement................................................................................................................................... 10-5

QER Interagency Engagement ................................................................................................................................. 10-20

List of Acronyms and Units........................................................................................................................A-1
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 ix

LIST OF FIGURES

Figure SPM-1. Age by Decade of U.S. Gas Transmission and Gathering Pipelines...................................................................S-6

Figure SPM-2. Historic and Projected U.S. GHG Emissions under Obama Administration Targets.....................................S-8

Figure SPM-3. Billion-Dollar Disaster Event Types by Year.........................................................................................................S-9

Figure SPM-4. Gulf Coast Electricity Substation Facilities’ Exposure to Storm Surge under Different Sea-Level Rise Scenarios.S-10

Figure SPM-5. Investment in Transmission Infrastructure by Investor-Owned Utilities, 1997–2012..................................S-14

Figure SPM-6. Select Recommendations by Chapter..................................................................................................................S-33

Figure 1-1. Age by Decade of U.S. Gas Transmission and Gathering Pipelines.........................................................................1-4

Figure 1-2. U.S. Electricity Use and Economic Growth (3-Year Compound Growth Rate), 1950–2040................................1-8

Figure 1-3. Percent Change in Retail Electricity Sales (kilowatt-hours), 2008–2013 ................................................................1-9

Figure 1-4. Investment in Transmission Infrastructure by Investor-Owned Utilities, 1997–2012........................................1-10

Figure 1-5. Global Average Surface Air Temperature Relative to the 1951–1980 Average .....................................................1-11

Figure 1-6. Observed Change in Very Heavy Precipitation........................................................................................................1-12

Figure 1-7. Change in Average Temperature in the Later Part of this Century (2071-2099; 20-year average) Relative to the 

Late Part of Last Century (1970-1999) under Low- and High-Emission Scenarios for Global GHGs ................................1-13

Figure 1-8. Historic and Projected U.S. GHG Emissions under Obama Administration Targets.........................................1-17

Figure 1-9. Objectives, Goals, and Organization of the QER .....................................................................................................1-21

Figure 2-1. Illustration of Tornado and Hurricane Tracks, Wildfires, Earthquakes, and Coastal Inundation.......................2-5

Figure 2-2. Billion-Dollar Disaster Event Types by Year...............................................................................................................2-6

Figure 2-3. Left Figure: Electric Disturbance Events, January 2011–August 2014; Right Figure: Customer Hours Affected 

by Electric Disturbance Events, 2011–August 2014.......................................................................................................................2-9

Figure 2-4. Gulf Coast Electricity Substation Facilities’ Exposure to Storm Surge under Different Sea-Level 

Rise Scenarios ..................................................................................................................................................................................2-10

Figure 2-5. Total Incidents, Injuries, and Fatalities Associated with U.S. Natural Gas Pipelines, 2004–2013 ......................2-19

Figure 2-6. Methane Emissions from Natural Gas Distribution Systems in Indianapolis and Boston, 2013.......................2-20

Figure 2-7. Natural Gas Price Differentials between Henry Hub and Key Trading Points ....................................................2-26

Figure 2-8. Earthquake Vulnerability Hazard Regions Severity Indices for Earthquakes ......................................................2-33

Figure 2-9. Rail Thermal Misalignment ........................................................................................................................................2-36

Figure 3-1. The Electric Grid.............................................................................................................................................................3-3

Figure 3-2. Historic and Projected Expansion of Net Transmission Circuit Miles ...................................................................3-7

Figure 3-3. Investment in Transmission Infrastructure by Investor‐Owned Utilities, 1997–2012..........................................3-8

Figure 3-4. Transmission Operation and Planning Functions Shown by Timescale ................................................................3-9
x QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Preface: List of Figures

Figure 3-5. Different State Approaches to Energy Efficiency......................................................................................................3-19

Figure 3-6. Select Electricity Jurisdictions.....................................................................................................................................3-23

Figure 4-1. Trends in U.S. Use of Petroleum, Natural Gas, and Electricity, 2011–2040.............................................................4-4

Figure 4-2. Highlighted Liquid Fuels Pipeline Reversals and Expansions Accommodating Increased Domestic and 

Canadian Supply (existing or in construction by end 2014)........................................................................................................4-5

Figure 4-3. U.S. Hydrocarbon Gas Liquid Exports ......................................................................................................................4-10

Figure 4-4. Yearly Ethanol and Biodiesel Production, 2001–2013 .............................................................................................4-11

Figure 5-1. Originated Class I Railcars of U.S. Crude Oil (2009–2014, Quarterly)...................................................................5-4

Figure 5-2. Crude Oil by Train Loading, and Offloading, and Rail-to-Barge Facilities for 2010 and 2013............................5-6

Figure 5-3.Class I Railroad Commodities, Percentage by Weight and Gross Revenue (2013) ................................................5-7

Figure 5-4. Coal-Fired Power Plants Supplied by the Powder River Basin.................................................................................5-9

Figure 5-5. Monthly U.S. Coal Stockpile Levels at Electric Power Plants, 2009–2014.............................................................5-10

Figure 5-6. Annual Refinery Receipts of Domestic Crude Oil by Barge...................................................................................5-15

Figure 5-7. Inland Waterborne Shipments by Commodity, 2012 (by weight)..........................................................................5-17

Figure 5-8. Hours of Lock Unavailability on U.S. Inland Waterways, 2000–2014 ...................................................................5-18

Figure 5-9. Calcasieu River Ship Channel, Illustration (not to scale) of Authorized Dimensions and Example Conditions 

Where Shoaling Occurs...................................................................................................................................................................5-20

Figure 5-10. U.S. Coal Exports by Destination.............................................................................................................................5-23

Figure 5-11. Transport of Large Wind Turbine Blade..................................................................................................................5-25

Figure 6-1. North American Energy Flows.....................................................................................................................................6-4

Figure 6-2. Canadian Oil Production and Consumption, 2004–2015.........................................................................................6-5

Figure 6-3. Canadian Natural Gas Production, Domestic Demand, and Net Available Exports through 2035 ....................6-6

Figure 6-4. Mexico’s Oil Production and Consumption................................................................................................................6-8

Figure 6-5. U.S. Natural Gas Exports to Mexico.............................................................................................................................6-9

Figure 7-1. 2012 GHG Emissions from Natural Gas Production, Processing, Transmission, Storage, and Distribution.....7-8

Figure 7-2. Total Emissions Abatement Potential (million metric tons CO2-equivalent per year) .........................................7-9

Figure 7-3. Criteria Air Pollutant and Precursor Emissions from Stationary TS&D Facilities in 2011................................7-13

Figure 7-4. Air Emissions from the Transportation of Coal and Liquid Fuels, by Transport Mode .....................................7-15

Figure 7-5. Quantities of Energy Transported by Mode (other than pipeline) in 2012, by Fuel Type and Accounting for 

Distance Traveled (metric ton-miles per year).............................................................................................................................7-16

Figure 7-6. Panel A: Estimated Monetized Benefits of Reductions in PM2.5 and PM2.5 Precursors. Panel B: Estimated 

Annual Mean PM2.5 Levels Attributable to Aircraft, Locomotives, and Marine Vessels in 2016............................................7-17

Figure 7-7. Conditions Affecting Liquid Fuels Spill Severity......................................................................................................7-20
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 xi

Figure 7-8. Current CO2-EOR Operations and Infrastructure...................................................................................................7-24

Figure 8-1. Workforce Age Distribution in the Electric and Natural Gas Utilities by Percentage of Total Employees.........8-4

The largest percentages of utility employees are in the 48–52 and 53–57 age groups; 38 percent of electric and natural gas 

employees will be eligible to retire in the next decade. .................................................................................................................8-4

Figure 8-2. Age Distribution of Select Transportation Workers (2014)......................................................................................8-6

Figure 10-1. Inputs to the QER.......................................................................................................................................................10-2
xii QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Preface: List of Tables

LIST OF TABLES

Table SPM-1. Components of TS&D Infrastructure Considered in this Installment of the QER ..........................................S-4

Table SPM-2. Examples of Federal Mechanisms/Tools Applied to Each Energy Infrastructure Objective .........................S-32

Table 1-1. Elements of TS&D Infrastructure Considered in this Installment of the QER .......................................................1-2

Table 1-2. QER Scenarios ................................................................................................................................................................1-22

Table 2-1. Probability and Severity of Hurricane Damage to Liquid Fuels and Natural Gas Infrastructure .........................2-7

Table 2-2. 10 States with the Most Miles of Leak-Prone Distribution Mains...........................................................................2-21

Table 2-3. Expected Replacement Horizons for Select Utilities for Leak-Prone Mains..........................................................2-22

Table 2-4. Projected Incremental Natural Gas Demand for Select U.S. Industrial Sector Projects, 2015–2020 ..................2-24

Table 2-5. Probability and Severity of Earthquake Damage to TS&D Infrastructure .............................................................2-32

Table 3-1. Examples of Key Technologies for the Grid of the Future........................................................................................3-14

Table 3-2. Taxonomy of Utility Business Models (examples, ownership, and scope)..............................................................3-21

Table 5-1. Top 10 Port Systems by Total Energy Commodity Shipments, 2013 (millions of short tons).............................5-16

Table 8-1. Total U.S. Direct and Indirect Jobs in Energy T&D in 2013.......................................................................................8-3

Table 10-1. Table of QER Modeling Scenarios .............................................................................................................................10-3

Table 10-2. List of QER Formal Public Stakeholder Meetings (with topic, location, and date) ..........................................10-10
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-1

Summary

SUMMARY FOR POLICYMAKERS

The U.S. energy landscape is changing. The United States has become the world’s leading producer of 

oil and natural gas combined. The country is less dependent on foreign oil, as a percentage of national 

oil consumption, than it has been since 1971. Current cars can go farther on a gallon of gas than ever 

before. Between 2005 and 2014, U.S. consumption of motor gasoline fell 2.6 percent despite population 

growth of 7.6 percent and gross domestic product growth of 13.0 percent. Additionally, as a result of 

changes in economic structure and conditions, and policies to promote energy efficiency, U.S. electricity 

consumption was flat over that 10-year period and total energy use declined by 1.9 percent.a

The composition of the Nation’s energy supply has also started to shift: petroleum consumption is flat 

and coal consumption is declining, while the use of natural gas and renewables is growing. In 2014, 

renewable energy sources accounted for half of new installed electric-generation capacity, and natural 

gas units made up most of the remainder. Electricity generation from wind grew 3.3-fold between 

2008 and 2014, and electricity generation from solar energy grew more than 20-fold.  

The focus of U.S. energy policy discussions has shifted from worries about rising oil imports and 

high gasoline prices to debates about how much and what kinds of U.S. energy should be exported, 

concerns about the safety of transporting large quantities of domestic crude oil by rail, and the 

overriding question of what changes in patterns of U.S. energy supply and demand will be needed—

and how they can be achieved—for the United States to do its part in meeting the global climate 

change challenge. 

a The figures in this and the succeeding paragraph are from: Energy Information Administration. “Monthly Energy Review.” 

March 2015. www.eia.gov/totalenergy/data/monthly/pdf/mer.pdf. The population data are from: Census Bureau. 

“Population Estimates.” www.census.gov/popest/. Accessed April 5, 2015.

TRANSFORMING U.S. 

ENERGY INFRASTRUCTURES 

IN A TIME OF RAPID CHANGE: 

THE FIRST INSTALLMENT OF THE 

QUADRENNIAL ENERGY REVIEW
Summary: The First Installment of the Quadrennial Energy Review

S-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

In the “Climate Action Plan” unveiled by President Obama in June 2013, he directed his Administration to 

initiate an interagency Quadrennial Energy Review (QER) to help ensure, in this dramatically changing energy 

landscape, that Federal energy policy is appropriately matched to the Nation’s economic, security, and climate 

goals. The approximately annual installments of the QER over the ensuing 4 years are to focus on different 

components of the Nation’s energy system—resource extraction and processing, energy transport and storage 

infrastructure, electricity generation, energy end-use—providing findings and recommendations on how 

Federal energy policy can best complement and incentivize state, local, tribal, and private sector actions so as 

to meet ongoing and emerging challenges and take advantage of new opportunities. 

This first installment of the QER addresses infrastructures for energy transmission, storage, and distribution 

(TS&D), broadly defined as infrastructures that link energy supplies, carriers, or by-products to intermediate and 

end users. This focus was chosen because the dramatic changes in the U.S. energy landscape have significant 

implications for TS&D infrastructure needs and choices. Well-informed and forward-looking decisions that 

lead to a more robust and resilient infrastructure can enable substantial new economic, consumer service, 

climate protection, and system reliability benefits. Good decisions on TS&D infrastructure can also provide 

flexibility in taking advantage of new opportunities to achieve our national energy objectives. 

This summary follows the organization of the main report, starting with an introduction to TS&D 

infrastructure issues (corresponding to Chapter I, Introduction, in the main report) and continuing with 

sections on the following:

• Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure (Chapter II)

• Modernizing the Electric Grid (Chapter III)

• Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace (Chapter IV)

• Improving Shared Transport Infrastructures (Chapter V) 

• Integrating North American Energy Markets (Chapter VI)

• Addressing Environmental Aspects of TS&D Infrastructure (Chapter VII)

• Enhancing Employment and Workforce Training (Chapter VIII)

• Siting and Permitting of TS&D Infrastructure (Chapter IX).

The main report’s treatment of the QER analytical and stakeholder process (Chapter X, Analytical and 

Stakeholder Process) and its appendices on technical details of TS&D infrastructure for liquid fuels, natural 

gas, and electricity are not covered in the Summary for Policymakers.

Introduction to TS&D Infrastructure Issues

The United States has one of the most advanced energy systems in the world, supplying the reliable, affordable, 

and increasingly clean power and fuels that underpin every facet of the Nation’s economy and way of life. 

The energy TS&D infrastructure that links the components of that system with each other and with users 

is increasingly complex and interdependent. It includes approximately 2.6 million miles of interstate and 

intrastate pipelines; more than 640,000 miles of high-voltage transmission lines; 414 natural gas storage 

facilities; 330 ports handling crude petroleum and refined petroleum products; and more than 140,000 miles 

of railways that handle crude petroleum, refined petroleum products, liquefied natural gas, and coal. The 

components of the Nation’s TS&D infrastructure considered in this report are listed in Table SPM-1. 

The requirements that this TS&D infrastructure must meet are extensive and demanding. It must handle a 

diverse and evolving mix of energy sources and energy products; link sources, processors, and users across 

immense distances; match demands that vary on multiple time scales; co-exist with competing uses of the 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-3

same systems (e.g., ports and railways); and perform 24 hours a day, 365 days a year with high reliability, which 

in turn requires both low susceptibility to disruptions and the resilience to recover quickly from whatever 

disruptions nonetheless occur. The longevity and high capital costs of energy TS&D infrastructure, moreover, 

mean that decisions made about how to locate, expand, and otherwise modify this infrastructure today will 

be influencing—either enabling or constraining—the size and composition of the national energy system for 

decades to come. 

Challenges of TS&D Infrastructure Management and Policy

Much of the TS&D infrastructure is owned and operated by the private sector, and a significant portion of the 

related legal, regulatory, and policy development and implementation occurs at state and local levels. At the 

same time, the Federal Government controls and operates substantial TS&D infrastructure assets of its own, 

including inland waterways, thousands of miles of transmission lines, and strategic oil and product reserves. 

Some of the infrastructure elements owned by others are federally regulated with respect to aspects of siting, 

safety, environment, and reliability. A number of emergency authorities bearing on TS&D infrastructure are 

also vested in the Federal Government.

A further complexity affecting the TS&D infrastructure management and policy is that these infrastructures 

often reach across state and even international boundaries, thus affecting large regions and making multi-state 

and sometimes multi-national coordination essential for modernization, reliability, resilience, and flexibility. 

In addition, the large capital costs, scale, and “natural monopoly” characteristics of much TS&D infrastructure 

tend to perpetuate the role of incumbent providers; these circumstances constrain innovation and add to the 

usual litany of market failures—public goods, externalities, information deficits, perverse incentives—generally 

understood to warrant intervention through government policy when the proposed remedy is expected to 

have sufficient net benefits to overcome predictable ancillary and unintended consequences.
Summary: The First Installment of the Quadrennial Energy Review

S-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Fuel/Energy Carrier TS&D Infrastructure Element/System

Electricity

Transmission lines and substations

Distribution lines and distributed generation

Electricity storage

Other electric grid-related infrastructure

Natural Gas

Natural gas gathering lines

Transmission pipelines

Natural gas storage facilities

Processing facilities 

Distribution pipelines and systems

LNG production/storage facilities (including export terminals)

Coal

Rail, truck, barge transport

Export terminals

Crude Oil/

Petroleum Products

Crude oil pipelines

Crude oil and products import and export terminals

Rail, truck, barge transport

Oil refineries

Strategic Petroleum Reserve & Regional Petroleum Product Reserves

CO2

 pipelines (including for enhanced oil recovery)

Biofuels Transport of feedstock and derived products, biorefineries

Table SPM-1. Components of TS&D Infrastructure Considered in this Installment of the QER

Source: Chapter 1, Table 1-1. 

Given the complexity of this policy landscape, it should be obvious that Federal policies to encourage and 

enable modernization and expansion of the Nation’s TS&D infrastructure must be well coordinated with state, 

local, tribal, and (sometimes) international jurisdictions. Full consideration must be given to the interaction 

of policy at all levels of government with private sector incentives and capabilities and include attention to 

opportunities for well-designed, purpose-driven, public-private partnerships.

Current Trends Affecting TS&D Infrastructure Choices

A number of changes in the U.S. energy landscape over the last decade were previously mentioned—dramatic 

changes in the pattern of domestic coal, petroleum, and natural gas production; a drastically altered outlook 

for energy imports and exports; large increases in electricity generation from wind and sunlight; and an 

increased priority on moving rapidly to reduce greenhouse gas (GHG) emissions from the energy sector. All 

of these trends have significant implications for the Nation’s TS&D infrastructure. So does another trend that 

has been building for decades, which is lack of timely investment in refurbishing, replacing, and modernizing 

components of that infrastructure that are simply old or obsolete. These trends are elaborated briefly in the 

subsections that follow.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-5

Aging Infrastructure and Changing Requirements

More than a decade ago, a Department of Energy (DOE) report pronounced the U.S. electricity grid “aging, 

inefficient, congested, and incapable of meeting the future energy needs of the information economy without 

significant operational changes and substantial public-private capital investment over the next several 

decades.”1

 Although significant improvements have been made to the grid since then, the basic conclusion of 

the need to modernize the grid remains salient. The Edison Electric Institute estimated in 2008 that by 2030 

the U.S. electric utility industry would need to make a total infrastructure investment of $1.5 trillion to $2.0 

trillion, of which transmission and distribution are expected to account for about $900.0 billion.2

Modernization of the grid has been made all the more urgent by the increasing and now pervasive dependence 

of modern life on a reliable supply of electricity. Without that, navigation; telecommunication; the financial 

system; healthcare; emergency response; and the Internet, as well as all that depends on it, become unreliable. 

Yet the threats to the grid—ranging from geomagnetic storms that can knock out crucial transformers; to 

terrorist attacks on transmission lines and substations; to more flooding, faster sea-level rise, and increasingly 

powerful storms from global climate change—have been growing even as society’s dependence on the grid has 

increased. 

In addition, technology is altering expectations of what the grid should do. Once satisfied with a simple 

arrangement where utilities provided services and consumers bought power on fixed plans, individual 

consumers and companies increasingly want to control the production and delivery of their electricity, and 

enabling technology has become available to allow this. These trends, coupled with flat or declining electricity 

demand, could dramatically alter current utility business models, and they are already making it more 

important to appropriately value and use distributed generation, smart grid technologies, and storage. 

Natural gas and oil TS&D infrastructures likewise face aging and obsolescence concerns. These infrastructures 

have not kept pace with changes in the volumes and geography of oil and gas production. The Nation’s ports, 

waterways, and rail systems are congested, with the growing demands for handling energy commodities 

increasingly in competition with transport needs for food and other non-energy freight. Although 

improvements are being made, much of the relevant infrastructure—pipelines, rail systems, ports, and 

waterways alike—is long overdue for repairs and modernization.

One compelling example is the infrastructure for moving natural gas. Close to 50 percent of the Nation’s gas 

transmission and gathering pipelines were constructed in the 1950s and 1960s—a build-out of the interstate 

pipeline network to respond to the thriving post-World War II economy (see Figure SPM-1). Analyses 

conducted for the QER suggest that natural gas interstate pipeline investment will range between $2.6 billion 

and $3.5 billion per year between 2015 and 2030, depending on the overall level of natural gas demand. The 

total cost of replacing cast iron and bare steel pipes in gas distribution systems is estimated to be $270 billion.b

b The American Gas Association reports that the total cost of replacing all cast iron pipe in the United States would be about $83 billion 

in 2011 dollars. American Gas Association. “Managing the Reduction of the Nation’s Cast Iron Inventory.” 2013. www.aga.org/

managing-reduction-nation%E2%80%99s-cast-iron-inventory. Accessed January 16, 2015. According to Pipeline and Hazardous 

Materials Safety Administration data, cast iron pipes represent approximately 30 percent of the total leak-prone pipe in the United 

States. Therefore, assuming other pipe replacement has similar costs, the total cost for replacement of all leak-prone pipe is roughly 

$270 billion.
Summary: The First Installment of the Quadrennial Energy Review

S-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Figure SPM-1. Age by Decade of U.S. Gas Transmission and Gathering Pipelines

24%

1960s

23%

1950s

8%

1940s

4%

11%

1990s 9%

10% 2000s

1980s

11%

1970s

Pre-1940s

Source: Chapter 1, Figure 1-1. 

The Nation’s Strategic Petroleum Reserve (SPR) also requires attention. The design of the SPR and the 

infrastructure for utilizing it were determined in 1975, when domestic oil production was in decline, oil price 

and allocation controls separated the U.S. oil market from the rest of the world, there was no global commodity 

market for oil at all, and there were no hedging mechanisms to manage risk. The SPR requires updating in light of 

changed circumstances, including significant maintenance and upgrades to enhance its distribution capability. 

Climate Change

Energy TS&D infrastructure has always been shaped not only by the mix of energy supply technologies 

and end-use patterns, but also by the characteristics of the environment where the infrastructure must 

operate, including, for example, terrain, vegetation, soil and seismic conditions, and climate. It has long been 

true, as well, that choices about TS&D infrastructure have had to take into account the need to limit that 

infrastructure’s adverse impacts on the environment. 

By far the most important environmental factor affecting TS&D infrastructure needs now and going forward 

is global climate change. Sea-level rise, thawing permafrost, and increases in weather extremes are already 

affecting TS&D infrastructure in many regions. The need to mitigate global climate change by reducing 

GHG emissions, moreover, is accelerating changes in the mix of energy supply options and end-use patterns, 

and over time, it is likely to become the dominant such influence. Reducing GHG emissions from TS&D 

infrastructure, including methane emissions from the transmission and distribution of natural gas, will be 

increasingly important in this context.

The key relevant conclusions from climate science—as embodied in the most recent reports of the 

Intergovernmental Panel on Climate Change, the National Academy of Sciences (jointly with the Royal Society 

of London), and the Third National Climate Assessment of the Global Change Research Program3, 4, 5

—are that 

GHGs emitted by civilization’s energy system are the dominant cause of changes in climate being observed 

across the globe; that the changes are not just in average conditions, but in extremes, are already causing harm 

to life, health, property, economies, and ecosystem processes; and that deep reductions in GHG emissions will 

be required if an unmanageable degree of global climate change is to be avoided.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-7

Actions taken in the first term of the Obama Administration in response to the climate change challenge 

included major investments in a cleaner, more efficient U.S. energy future in the American Recovery and 

Reinvestment Act of 2009 and subsequent Presidential budgets; the promulgation of the first-ever joint fuel 

economy/GHG emission standards for light-duty vehicles and new, more stringent energy efficiency standards 

for commercial and residential appliances; and the announcement of a U.S. emissions reduction target in the 

range of 17 percent below the 2005 level by 2020. These steps were followed in the second term by the President’s 

announcement, in June 2013, of a new “Climate Action Plan” with three pillars: reducing U.S. emissions of GHGs, 

increasing domestic preparedness for and resilience against the changes in climate that can no longer be avoided, 

and engaging internationally to encourage and assist other countries in taking similar steps.6, 7

Among the actions subsequently taken under the “Climate Action Plan,” those with potential relevance for 

the future of TS&D infrastructure include a new Strategy for Reducing Methane Emissions nationwide; 

acceleration of permitting for new renewable energy projects on public lands and military installations; 

Executive Orders requiring that Federal departments and agencies—including those with responsibilities 

relating to TS&D infrastructure—take climate change into account in all of their policies and programs; and 

the announcement, in November 2014, of a post-2020 U.S. GHG emissions reduction target of 26 percent to 

28 percent below the 2005 level by 2025. 

The actions under the “Climate Action Plan” put the United States on a path to meet the Administration’s 

2020 and 2025 targets through several means, including the establishment of carbon emission standards for 

the power sector that will drive further shifts to low- and zero-carbon fuels, cleaner electricity generation 

technologies, and continuing improvements in end-use efficiency. Historic and projected U.S. emissions under 

these latest targets are shown in Figure SPM-2. While the Administration’s 2020 and 2025 targets are ambitious, 

it is clear that continued reduction in GHG emissions will be needed beyond 2025 in the United States and 

globally. These reductions will continue to drive significant changes in TS&D infrastructure in the longer term.
Summary: The First Installment of the Quadrennial Energy Review

S-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Figure SPM-2. Historic and Projected U.S. GHG Emissions under Obama Administration Targets

Source: Chapter 1, Figure 1-8.

Meanwhile, the ongoing impacts of global climate change have already been stressing energy TS&D 

infrastructure in a variety of ways. Extreme weather events with high societal costs have been increasing 

(see Figure SPM-3), a trend expected to intensify under continuing climate change. This means greater 

vulnerabilities for TS&D infrastructure from hurricanes, drought, extreme temperatures, wildfires, more 

intense precipitation events, and flooding. Climate change is also driving sea-level rise, which interacts 

with storm surge and heavy downpours to intensify coastal flooding, and it has been thawing large areas of 

permafrost in the far North, with impacts on pipelines, roads, and other energy-linked infrastructure. 

2005

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Million MtCO2e

Baseline: AEO 2014 with 2014 GHG Inventory Adjustments

Approximate 2025 Emissions trajectory before current Administration (AEO2008)

Approximate trajectory to U.S. 2025 Target of 26% to 28% below 2005 levels

17% below 

2005 in 2020

26% to 28%

below 2005

in 2025

• Robust action brings U.S. GHG emissions in the 

range of 26%–28% below 2005 levels by 2025

• Consistent with reductions of ~80% by 2050
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-9

Figure SPM-3. Billion-Dollar Disaster Event Types by Year

Source: Chapter 2, Figure 2-2.

Goals for TS&D Infrastructure Policy

This first installment of the QER analyzes how to leverage authorities, expertise, and resources to help 

modernize and transform the extensive, interlocking, capital-intensive networks constituting the national 

energy TS&D system so as to meet, in a complex jurisdictional environment, the evolving set of requirements 

and challenges just described. This report presents a set of findings and recommendations, organized around 

the high-level goals of energy security, economic competitiveness, and environmental responsibility, in the 

context of a set of analytically derived objectives that reflect an integrated assessment of the adequacy of 

existing TS&D infrastructures to meet these goals. These objectives include the following:

• Enhancing TS&D infrastructure resilience, reliability, safety, and asset security

• Modernizing the electric grid 

• Modernizing the segments of TS&D infrastructure essential for collective energy security 

• Improving the increasingly stressed TS&D infrastructures that are shared by energy and other goods 

and commodities.

These objectives are also informed and affected by an additional set of crosscutting needs and requirements, 

namely the following:

• Promoting environmental responsibility in developing, managing, and updating TS&D infrastructure, 

including reducing emissions from infrastructure that could contribute to climate change

• Developing and training the workforce needed for a 21st century energy infrastructure 

• Expediting the siting of critical TS&D infrastructures to meet a range of energy needs and policy objectives

• Enhancing North American energy market integration.

20

15

10

5

0

1980

Number of Events

1985 1990 1995 2000 2005 2010 2014

Drought Flooding Freeze Severe Storm Tropical Cyclone Wildfire Winter Storm
Summary: The First Installment of the Quadrennial Energy Review

S-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Modernizing the Nation’s TS&D infrastructures will also help enhance U.S. competitiveness in a global economy, 

and it will support jobs—approximately 1 million people were employed in energy transmission and distribution 

jobs in 2013, or almost 0.75 percent of U.S. civilian jobs; modernization will increase those numbers. 

Increasing the Resilience, Reliability, Safety, and Asset Security of 

TS&D Infrastructure

Ensuring the resilience, reliability, safety, and security of TS&D infrastructure is a national priority and 

vital to American competiveness, jobs, energy security, and a clean energy future. The imperative for TS&D 

infrastructure in the United States, going forward, is to maintain the high performance of existing systems; to 

continue to accommodate significant growth in domestic energy supplies; and to manage and adapt to new 

technologies, threats, and vulnerabilities in cost-effective ways. For example, severe weather is the leading 

source of electric grid disturbances in the United States. In fact, between 2003 and 2012, an estimated 679 

widespread power outages occurred due to severe weather, costing the U.S. economy $18 billion to $33 billion 

each year between 2003 and 2013. This risk is growing; the number of Gulf Coast electricity substations 

exposed to inundation caused by storm surge from Category 1 storms is projected to increase from 255 

to 337 by 2030 due to sea-level rise (see Figure SPM-4). TS&D infrastructures are becoming increasingly 

interconnected and interdependent, so disruptions from climate change, natural disasters, and cyber and 

physical incidents can have serious consequences beyond the specific TS&D infrastructure system that is 

directly affected. 

Figure SPM-4. Gulf Coast Electricity Substation Facilities’ Exposure to Storm Surge under Different Sea-Level Rise Scenarios

Source: Chapter 2, Figure 2-4.

 

0 10 20 5

Miles

0 10 20 5

Kilometers

Gulf of Mexico 

Texas

Louisiana

Area Exposed to Storm Surge 

from Category 1 Hurricanes:

Baseline Vulnerability

2030 Vulnerability 

2050 Vulnerability 

2060 Vulnerability 

Electrical Substations Exposed to 

Storm Surge from Category 1 Hurricanes:

Baseline Vulnerability

2030 Vulnerability 

2050 Vulnerability 

2060 Vulnerability 

Substations Not Exposed

Substation 

Capacity Max kV

0 - 150

> 750

350 - 750

150 - 350 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-11

Key Findings

Mitigating energy disruptions is fundamental to infrastructure resilience. Mitigating energy disruptions 

is particularly important because other critical infrastructures rely on energy services to operate, and these 

interdependencies are growing. Should disruptions occur, it is essential to have comprehensive and tested 

emergency response protocols to stabilize the system and begin recovery. 

TS&D infrastructure is vulnerable to many natural phenomena. These include hurricanes, earthquakes, 

drought, wildfires, flooding, and extreme temperatures. Some extreme weather events have become more 

frequent and severe due to climate change, and this trend will continue. Sea-level rise resulting from climate 

change, coupled with coastal subsidence in the Mid-Atlantic and Gulf Coast regions, increases risks and 

damages to coastal infrastructure caused by storm surge.

Threats and vulnerabilities vary substantially by region. In many cases, a particular natural threat or 

infrastructure vulnerability will be region-specific (e.g., Gulf Coast hurricanes threatening refineries), limiting 

the utility of national, one-size-fits-all solutions for reliability and resilience. Regional solutions are essential.

Recovery from natural gas and liquid fuel system disruptions can be difficult. Although liquid fuels and 

natural gas disruptions are less likely than electricity disruptions, it is relatively more difficult to recover from 

disruptions to these systems than electric systems. Recovery from pipeline disruptions is particularly difficult 

because of the need to locate and repair underground breakages. 

Cyber incidents and physical attacks are growing concerns. Cyber incidents have not yet caused significant 

disruptions in any of the three sectors, but the number and sophistication of threats are increasing, and 

information technology systems are becoming more integrated with energy infrastructure. There have been 

physical attacks; while some physical protection measures are in place throughout TS&D infrastructure 

systems, additional low-cost investments at sensitive facilities would greatly enhance resilience. 

High-voltage transformers are critical to the grid. They represent one of its most vulnerable components. 

Despite expanded efforts by industry and Federal regulators, current programs to address the vulnerability 

may not be adequate to address the security and reliability concerns associated with simultaneous failures of 

multiple high-voltage transformers.

Assessment tools and frameworks need to be improved. Research has focused more on characterizing 

vulnerabilities and identifying mitigation options than on measuring the effects of best practices for response 

and recovery. In addition, assessment tools and frameworks tend to characterize the impacts of disruptions on 

system performance, but are less able to examine impacts on national or regional consequences like economic 

loss or loss of life.

Shifts in the natural gas sector are having mixed effects on resilience, reliability, safety, and asset security. 

The addition of onshore shale gas infrastructure benefits natural gas resilience by decreasing the percentage of 

infrastructure exposed to storms. The Energy Information Administration (EIA) reports that the Gulf Coast 

percentage of natural gas production went from 18 percent in 2005 to 6 percent in 2013. On the other hand, 

overall reliance on gas for electricity has gone up, creating a new interdependence and grid vulnerability. 

Furthermore, additional export infrastructure resulting from the natural gas boom would increase 

vulnerabilities to coastal threats, such as sea-level rise.
Summary: The First Installment of the Quadrennial Energy Review

S-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Dependencies and interdependencies are growing. Many components of liquid fuels and natural gas 

systems—including pumps, refineries, and about 5 percent of natural gas compressor stations—require 

electricity to operate. The interdependency of the electricity and gas systems is growing as more gas is used in 

power generation. 

Aging, leak-prone natural gas distribution pipelines and associated infrastructures prompt safety 

and environmental concerns. Most safety incidents involving natural gas pipelines occur on natural gas 

distribution systems. These incidents tend to occur in densely populated areas. 

Selected Recent Federal Government Actions

The Federal Government, the states, and the private sector all play crucial roles in ensuring that energy 

infrastructures are reliable, resilient, and secure. In 2013, President Obama released Presidential Policy 

Directive-21, Critical Infrastructure Security and Resilience, establishing national policy on critical 

infrastructure security and resilience and refining and clarifying the critical infrastructure-related functions, 

roles, and responsibilities across the Federal Government, as well as enhancing overall coordination and 

collaboration. The directive applies to all critical infrastructures, but calls out energy infrastructures as being 

uniquely critical due to the enabling functions they provide across all other critical infrastructures. Other 

recent Federal Government actions include the following:

• Creating the Build America Investment Initiative. The Administration has created this initiative—

an interagency effort led by the Departments of Treasury and Transportation—to promote increased 

investment in U.S. infrastructure, particularly through public-private partnerships.

• Enhancing grid resilience to geomagnetic storms. In June 2014, the Federal Energy Regulatory 

Commission adopted a new reliability standard to mitigate the impacts of geomagnetic disturbances 

on the grid. In November 2014, the Administration established an interagency Space Weather 

Operations, Research, and Mitigation Task Force to develop a National Space Weather Strategy, to 

include mitigation of grid vulnerability. 

• Improving safety of natural gas transmission pipelines. The Pipeline and Hazardous Materials 

Safety Administration of the Department of Transportation (DOT) is currently developing a proposed 

rule on integrity management for natural gas pipelines. In addition, the Federal Energy Regulatory 

Commission has issued a policy statement that will allow interstate natural gas pipelines to recover 

certain expenditures made to modernize pipeline system infrastructure in a manner that enhances 

system reliability, safety, and regulatory compliance.

• Developing and operating regional refined petroleum product reserves. DOE created the Northeast 

Gasoline Supply Reserve in 2014 and continues to manage the Northeast Home Heating Oil Reserve. 

• Enhancing emergency preparedness. The National Petroleum Council, in response to a request from 

the Secretary of Energy, recently completed an Emergency Preparedness Study to help industry and 

government achieve a more rapid restoration of motor fuel supplies after a natural disaster.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-13

Recommendations in Brief

To continue to drive progress toward addressing these TS&D infrastructure challenges, we recommend taking 

the following additional actions:

Develop comprehensive data, metrics, and an analytical framework for energy infrastructure resilience, 

reliability, safety, and asset security. DOE, in collaboration with the Department of Homeland Security and 

interested infrastructure stakeholders, should develop common analytical frameworks, tools, metrics, and data 

to assess the resilience, reliability, safety, and security of energy infrastructures.

Establish a competitive program to accelerate pipeline replacement and enhance maintenance programs 

for natural gas distribution systems. DOE should establish a program to provide financial assistance to 

states to incentivize cost-effective improvements in the safety and environmental performance of natural 

gas distribution systems through targeted funding to offset incremental costs to low-income households and 

funding for enhanced directed inspection and maintenance programs. 

Support the updating and expansion of state energy assurance plans. DOE should undertake a multi-year 

program of support for state energy assurance plans, focusing on improving the capacity of states and localities 

to identify potential energy disruptions, quantify their impacts, share information, and develop and exercise 

comprehensive plans that respond to those disruptions and reduce the threat of future disruptions. 

Establish a competitive grant program to promote innovative solutions to enhance energy infrastructure 

resilience, reliability, and security. DOE should establish a program to provide competitively awarded grants 

to states to demonstrate innovative approaches to TS&D infrastructure hardening and enhancing resilience 

and reliability. A major focus of the program would be the demonstration of new approaches to enhance 

regional grid resilience, implemented through the states by public and publicly regulated entities on a costshared basis.

Analyze the policies, technical specifications, and logistical and program structures needed to mitigate 

the risks associated with loss of transformers. As part of the Administration’s ongoing efforts to develop a 

formal national strategy for strengthening the security and resilience of the entire electric grid for threats and 

hazards (planned for release in 2015), DOE should coordinate with the Department of Homeland Security 

and other Federal agencies, states, and industry on an initiative to mitigate the risks associated with the loss of 

transformers.  Approaches for mitigating this risk should include the development of one or more transformer 

reserves through a staged process.

Analyze the need for additional or expanded regional product reserves. DOE should undertake updated 

cost-benefit analyses for all of the regions of the United States that have been identified as vulnerable to 

fuel supply disruptions to inform subsequent decisions on the possible need for additional regional product 

reserves. 

Integrate the authorities of the President to release products from regional petroleum product reserves 

into a single, unified authority. Congress should amend the trigger for the release of fuel from the Northeast 

Home Heating Oil Reserve and from the Northeast Gasoline Supply Reserve so that they are aligned and 

properly suited to the purpose of a product reserve, as opposed to a crude oil reserve. 
Summary: The First Installment of the Quadrennial Energy Review

S-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Modernizing the Electric Grid

Electricity is central to the well-being of the Nation. The United States has one of the world’s most reliable, 

affordable, and increasingly clean electric systems, but the U.S. electric system is currently at a strategic 

inflection point—a time of significant change for a system that had had relatively stable rules of the road for 

nearly a century. The U.S. electricity sector is being challenged by a variety of new forces, including a changing 

generation mix; low load growth; increasing vulnerability to severe weather because of climate change; and 

growing interactions at the Federal, state, and local levels. Innovative technologies and services are being 

introduced to the system at an unprecedented rate—often increasing efficiency, improving reliability, and 

empowering customers, but also injecting uncertainty into grid operations, traditional regulatory structures, 

and utility business models. Modernizing the grid will require that these challenges be addressed.

Key Findings

Investments in transmission and distribution upgrades and expansions will grow. It is anticipated 

that in the next two decades, large transmission and distribution investments will be made to replace 

aging infrastructure; maintain reliability; enable market efficiencies; and aid in meeting policy objectives, 

such as GHG reduction and state renewable energy goals. Recent increases in investment in transmission 

infrastructure by investor-owned utilities are shown in Figure SPM-5.

Figure SPM-5. Investment in Transmission Infrastructure by Investor-Owned Utilities, 1997–2012

Source: Chapter 3, Figure 3-3.

Both long-distance transmission and distributed energy resources can enable lower-carbon electricity. The 

transmission network can enable connection to high-quality renewables and other lower-carbon resources far 

from load centers; distributed energy resources can provide local low-carbon power and efficiency. 

14

10

12

8

2

6

4

0

1997

Billions of 2012 Dollars

2000 2003 2006 2009 2012

Underground Lines and Devices

Station Equipment Other

Towers and Fixtures Overhead Lines and Devices Poles and Fixtures
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-15

The potential range of new transmission construction is within historic investment magnitudes. Under 

nearly all scenarios analyzed for the QER, circuit-miles of transmission added through 2030 are roughly equal 

to those needed under the base case, and while those base case transmission needs are significant, they do not 

appear to exceed historical yearly build rates.

Flexible grid system operations and demand response can enable renewables and reduce the need for new 

bulk-power-level infrastructure. End-use efficiency, demand response, storage, and distributed generation can 

reduce the expected costs of new transmission investment.

Investments in resilience have multiple benefits. Investments in energy efficiency, smart grid technologies, 

storage, and distributed generation can contribute to enhanced resiliency and reduced pollution, as well as 

provide operational flexibility for grid operators.

Innovative technologies have significant value for the electricity system. New technologies and data 

applications are enabling new services and customer choices. These hold the promise of improving consumer 

experience, promoting innovation, and increasing revenues beyond the sale of electric kilowatt-hours. 

Enhancing the communication to customer devices that control demand or generate power will improve 

the efficiency and reliability of the electric grid. For example, open interoperability standards for customer 

devices and modified standards for inverters will improve the operation of the grid. 

Appropriate valuation of new services and technologies and energy efficiency can provide options for 

the utility business model. Accurate characterization and valuation of services provided to the grid by 

new technologies can contribute to clearer price signals to consumers and infrastructure owners, ensuring 

affordability, sustainability, and reliability in a rapidly evolving electricity system.

Consistent measurement and evaluation of energy efficiency is essential for enhancing resilience 

and avoiding new transmission and distribution infrastructure. Efficiency programs have achieved 

significant energy savings, but using standard evaluation, measurement, and verification standards, like those 

recommended by DOE’s Uniform Methods Project, is key to ensuring that all the benefits of efficiency are 

realized, including avoiding the expense of building new infrastructure. 

States are the test beds for the evolution of the grid of the future. Innovative policies at the state level that 

reflect differences in resource mix and priorities can inform Federal approaches. 

Different business models and utility structures rule out “one-size-fits-all” solutions to challenges.A range of 

entities finance, plan, and operate the grid. Policies to provide consumers with affordable and reliable electricity must 

take into account the variety of business models for investing, owning, and operating grid infrastructure. 

Growing jurisdictional overlap impedes development of the grid of the future. Federal and state 

jurisdiction over electric services are increasingly interacting and overlapping.

Selected Recent Federal Government Actions

In addition to resilience-related activities aimed at the electric grid (e.g., large power transformer) discussed 

in the Chapter II (Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure), the 

Administration has undertaken the following activities aimed at creating the electric grid of the future:

• Promoting grid modernization. DOE has made a comprehensive grid modernization proposal in the 

President’s Fiscal Year (FY) 2016 Budget request. The crosscutting proposal supports strategic DOE 

investments in foundational technology development, enhanced security capabilities, and greater 

institutional support and stakeholder engagement, all of which are designed to provide the tools 

necessary for the evolution to the grid of the future. Specific elements include the following:
Summary: The First Installment of the Quadrennial Energy Review

S-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

□ A new State Energy Reliability and Assurance Grants program for grants to states, localities, regions, 

and tribal entities for electricity TS&D reliability planning.

□ A program directed at research and development (R&D) on transformer protection from 

geomagnetic fields.

□ Increases directed at improved controls, sensors, power electronics, and connection to energy storage.

□ Increases in the Smart Grid program to develop next-generation distribution management system 

and controls to accommodate new end-use technologies and develop microgrid systems.

□ Increases in R&D to improve building control system interoperability with new grid control systems 

and improve building internal controls to adapt to efficient and improved grid connectivity.

□ Increases to link plug-in electric vehicle systems to building and grid systems.

Recommendations in Brief 

The Administration and Congress should support or incentivize investment in electricity infrastructure reliability, 

resilience, and affordability through the development of tools, methods, and new funding for planning and 

operating the grid of the future. Accordingly, we recommend the following:

Provide grid modernization R&D, analysis, and institutional support. DOE should continue to pursue a 

multi-year, collaborative, and cost-shared research and development, analysis, and technical assistance program 

for technology innovation that supports grid operations, security, and management; and for analyses, workshops, 

and dialogues to highlight key opportunities and challenges for new technology to transform the grid.

Establish a framework and strategy for storage and grid flexibility. DOE should conduct regional and state 

analyses of storage deployment to produce a common framework for the evaluation of benefits of storage and 

grid flexibility, and a strategy for enabling grid flexibility and storage that can be understood and implemented by 

a wide range of stakeholders.

Conduct a national review of transmission plans and assess barriers to their implementation. DOE should 

carry out a detailed and comprehensive national review of transmission plans, including assessments on the types 

of transmission projects proposed and implemented, current and future costs, consideration of interregional 

coordination, and other factors. A critical part of this review should be to assess incentives and impediments to 

the development of new transmission.

Provide state financial assistance to promote and integrate TS&D infrastructure investment plans for 

electricity reliability, affordability, efficiency, lower carbon generation, and environmental protection. In 

making awards under this program, DOE should require cooperation within the planning process of energy 

offices, public utility commissions, and environmental regulators within each state; with their counterparts in 

other states; and with infrastructure owners and operators and other entities responsible for maintaining the 

reliability of the bulk power system. 

Coordinate goals across jurisdictions. DOE should play a convening role to bring together public utility 

commissioners, legislators, and other stakeholders at the Federal, state, and tribal levels to explore approaches to 

integrate markets, while respecting jurisdictional lines, but allowing for the coordination of goals across those lines. 

Value new services and technologies. DOE should play a role in developing frameworks to value grid services 

and approaches to incorporate value into grid operations and planning. It should convene stakeholders to 

define the characteristics of a reliable, affordable, and environmentally sustainable electricity system and 

create approaches for developing pricing mechanisms for those characteristics. The goal should be to develop 

frameworks that could be used by the Federal Energy Regulatory Commission, state public utility commissions 

in ratemaking proceedings, Regional Transmission Organizations in their market rule development, or utilities in 

the operation and planning of their systems.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-17

Improve grid communication through standards and interoperability. In conjunction with the National Institute of 

Standards and Technology and other Federal agencies, DOE should work with industry, the Institute of Electrical and 

Electronics Engineers, state officials, and other interested parties to identify additional efforts the Federal Government 

can take to better promote open standards that enhance connectivity and interoperability on the electric grid. 

Establish uniform methods for monitoring and verifying energy efficiency. Through its Uniform Methods 

Project, DOE should accelerate the development of uniform methods for measuring energy savings and promote 

widespread adoption of these methods in public and private efficiency programs. 

Modernizing U.S. Energy Security Infrastructures in a Changing 

Global Marketplace

Until recently, the concept of energy security has focused on “oil security” as a proxy for “energy security.” It is 

clear, however, that energy security needs to be more broadly defined to cover not only oil, but other sources of 

supply, and to be based not only on the ability to withstand shocks, but also to be able to recover quickly from 

any shocks that do occur. In addition, security is not exclusively domestic; it is dependent on interactions in 

the interconnected global energy market. U.S. energy security and the infrastructure that supports it should be 

viewed in the context of this new, broader, more collective definition of energy security.

Key Findings

Multiple factors affect U.S. energy security. These include U.S. oil demand; the level of oil imports; the 

adequacy of emergency response systems; fuel inventory levels; fuel substitution capacity; energy system 

resilience; and the flexibility, transparency, and competitiveness of global energy markets. 

The United States has achieved unprecedented oil and gas production growth. Oil production growth has 

enabled the United States to act as a stabilizing factor in the world market by offsetting large sustained supply 

outages in the Middle East and North Africa and, later, contributing to a supply surplus that has reduced oil 

prices to levels not seen since March 2009. The natural gas outlook has also changed tremendously. Just 10 years 

ago, it was projected that the United States would become highly dependent on liquefied natural gas imports, 

whereas the current outlook projects that the United States will have enormous capacity and reserves and 

could become a major liquefied natural gas exporter. 

The United States is the world’s largest producer of petroleum and natural gas. Combined with new clean 

energy technologies and improved fuel efficiency, U.S. energy security is stronger than it has been for over half 

a century. Nonetheless, challenges remain in maximizing the energy security benefits of our resources in ways 

that enhance our competitiveness and minimize the environmental impacts of their use.

The network of oil distribution (“the midstream”) has changed significantly. Product that had historically 

flowed through pipelines from south to north now moves from north to south, and multiple midstream modes 

(pipelines, rail, and barges) are moving oil from new producing regions to refineries throughout the United 

States. 

The SPR’s ability to offset future energy supply disruptions has been adversely affected by domestic and 

global oil market developments coupled with the need for upgrades. Changes in the U.S. midstream (for 

example, competing commercial demands and pipeline reversals) and lower U.S. dependence on imported 

oil have created challenges to effectively distributing oil from the reserve. This diminishes the capacity of the 

SPR to protect the U.S. economy from severe economic harm in the event of a global supply emergency and 

associated oil price spike. 
Summary: The First Installment of the Quadrennial Energy Review

S-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Increasing domestic oil production has focused attention on U.S. oil export laws established in the 

aftermath of the 1973–1974 Arab Oil Embargo. There are now concerns that the U.S. oil slate may be too 

light for U.S. refineries; although, recent Department of Commerce clarifications that liquid hydrocarbons, 

after they have been processed through a crude oil distillation tower, are petroleum products, and therefore 

eligible for export, will help avoid adverse production impacts. 

An extensive network of pipelines, electric transmission lines, roads, rail, inland waterways, and ports 

link the United States with Mexico and Canada. These systems provide not only economic value to all three 

nations, but also enhance continental energy security and improve system reliability. 

Biofuel production in the United States has increased rapidly over the last decade, enhancing energy 

security and reducing emissions of GHGs from transportation. This growth has been driven in part by the 

Renewable Fuel Standard. Ethanol now displaces approximately 10 percent of U.S. gasoline demand by volume; 

biodiesel, advanced, and cellulosic biofuel production volumes have also been growing. Continued growth in 

ethanol use will depend in part on investment in additional distribution capacity; growth in the use of other 

biofuels, such as “drop-in” fuels, will depend on continued investment in research, development, demonstration, 

and deployment.

Selected Recent Federal Government Actions

• Testing the capabilities of the SPR. In March 2014, DOE conducted a test sale to demonstrate the 

drawdown and distribution capacity of the SPR. This test sale highlighted changes needed in the 

distribution infrastructure in the Gulf Coast region.

• Addressing SPR deferred maintenance backlogs. The President’s FY 2016 Budget Request provided 

$257 million for the development, operation, and management of the SPR, including funding to 

address the backlog of deferred maintenance on the SPR. 

• Addressing changes in propane TS&D infrastructure. DOE has responded to changes in TS&D 

infrastructure for propane and other natural gas liquid by adding capability at the EIA to monitor 

propane inventories on a more granular, state-by-state basis. 

Recommendations in Brief

Update SPR release authorities to reflect modern oil markets. Congress should update SPR release 

authorities to allow the SPR to be used more effectively to prevent serious economic harm to the United States 

in case of energy supply emergencies.

Invest to optimize the SPR’s emergency response capability. DOE should analyze appropriate SPR size 

and configuration, and, after carrying out detailed engineering studies, DOE should make infrastructure 

investments to the SPR and its distribution systems to optimize the SPR’s ability to protect the U.S. economy in 

an energy supply emergency.  

Support other U.S. actions related to the SPR and energy security infrastructures that reflect a broader 

and more contemporary view of energy security. The United States should continue to consult with allies and 

key energy trading partners on energy security issues, building on the G-7 principles on energy security.

Support fuels diversity through research, demonstration, and analysis. DOE and the Department of 

Defense should continue research and demonstration activities to develop biofuels that are compatible with 

existing petroleum fuel infrastructure, especially in aviation and for large vehicles. DOE should provide 

technical support to states, communities, or private entities wishing to invest in infrastructure to dispense 

higher-level ethanol blends. DOE should ensure adequate support for data collection and analysis on fuels, like 

propane, that play an important role in the Nation’s diverse energy mix and where delivery is challenged by 

changing TS&D infrastructures.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-19

Undertake a study of the relationship between domestic shipping and energy security. The relevant agencies 

should conduct a study of the economic, engineering, logistics, workforce, construction, and regulatory 

factors affecting the domestic shipping industry’s ability to support U.S. energy security. The Secretary of 

Transportation should ensure that the National Maritime Strategy includes a consideration of the energy 

security aspects of maritime policy in its discussion and recommendations.

Improving Shared Transport Infrastructures

Changes in U.S. energy production and use are stressing and transforming the way that energy and other 

commodities are transported in the United States. Some energy commodities, such as coal and ethanol, have 

traditionally relied on rail and barge transport to move from suppliers to distribution points and end users. 

Their use of transportation modes (e.g., rail, barge, and truck transport) that are also shared by agricultural and 

other major commodities is being joined by significant growth in the use of these transport modes by crude 

oil, refined petroleum products, and petrochemicals. Increasingly, the shipment of oil from the wellhead to 

a refinery may employ a combination of trucks, pipelines, railcars, barges, and other marine vessels—giving 

oil transportation in the United States a more multi-modal character. Since these transportation modes have 

been, and continue to be, used for transporting other commodities, they are considered in the QER to be 

“shared transport infrastructures” for energy commodities. The growing utilization of rail, barge, and truck for 

oil transport, as well as for other energy supplies and materials, exacerbates underlying issues in these shared 

transport infrastructures and underscores the need for an expanded infrastructure investment as proposed by 

the Administration.

Key Findings

Rapid crude oil production increases have changed the patterns of flow of North American midstream 

(pipelines, rail, and barge) liquids transport infrastructure. Pipelines that previously delivered crude oil from 

the Gulf of Mexico to Midcontinent refineries have now changed direction to deliver domestic and Canadian oil 

to the Gulf of Mexico. In addition, oil produced in North Dakota is now being shipped to refineries on the East 

and West Coasts of the United States. As a result, modes of transport other than pipelines are being employed to 

move crude oil, including a significant increase in crude oil unit trains and barge shipments.

Limited infrastructure capacities are intensifying competition among commodities, with some costs 

passed on to consumers. Until new additional capacity becomes available, the competition among commodity 

groups for existing capacity will intensify. The proximity of Bakken crude oil movements and Powder River 

Basin coal movements, along with agricultural shipments in the region, affect Midwest power plants and 

the food industry. Typically, rail and barge service are the most cost-effective shipping methods available 

for moving grain and other relatively low-value, bulk agricultural commodities, and the Department of 

Agriculture has indicated that disruptions to agricultural shipments caused by recent unexpected shifts in 

supply and demand for rail services exceed even those caused by Hurricane Katrina. 

Rail, barge, and truck transportation are crucial for ethanol shipment. Ethanol production in the United 

States has increased over the last few decades. Ethanol is typically shipped from production plants by rail and 

then delivered by truck (or directly by rail or barge) to petroleum product terminals. Ethanol is likely to rely on 

shared infrastructure for its transport for the foreseeable future.

The ability to maintain adequate coal stockpiles at some electric power plants has been affected by rail 

congestion. The Surface Transportation Board (STB) recently acted to require weekly reports of planned 

versus actual loadings of coal trains.
Summary: The First Installment of the Quadrennial Energy Review

S-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Funding for the U.S. freight transportation system is complex and involves a combination of Federal, state, 

local, and private investments. Railroad infrastructure is primarily owned and maintained by the private sector. 

The marine transportation infrastructure involves a mix of Federal, state, local, and private investments, and 

roadways are owned and maintained by a range of Federal, state, local, and—in some cases—even private entities.

Navigable waterways are essential for the movement of energy commodities, equipment, and materials, 

especially petroleum and refined petroleum products. Investments in construction, rehabilitation, and 

maintenance of this infrastructure must be balanced against other investments, including other water resource 

investments, such as flood and coastal storm damage reduction projects and aquatic ecosystem restoration. 

Increased transportation of crude oil by rail and barge has highlighted the need for additional safeguards. 

For rail transport, in particular, the Federal Government has a number of efforts underway, including a 

rulemaking on improving the safety of rail transport of crude oil, including more robust tank car standards 

and operational requirements, to address these concerns.

Multi-modal shared transportation infrastructure is stressed by increased shipments of energy supplies, 

materials, and components. Wind turbine blades, for example, have more than tripled in length since the 

1980s. Transporting components of this size (and others of significant weight and size, such as large power 

transformers) creates a range of challenges, including wear on roads, many of which are rural; the need to 

coordinate movement through ports, tunnels, overpasses, and turning areas; and additional permitting and 

police escort requirements.

Selected Recent Federal Government Actions

The stresses on shared transport infrastructures as a result of changes in energy production have resulted in a 

series of responses and initiatives across the Administration, including both regulatory initiatives on the part 

of responsible agencies for specific infrastructures and broader initiatives to provide new resources to help the 

modernization of these shared infrastructures. These include the following:

• Addressing congestion and service for rail transport of commodities. In light of the problems of 

rail congestion affecting shipments of key commodities, STB, an independent regulatory body in DOT, 

has taken a number of actions. Starting in October 2014, STB has required all major (Class I) railroads 

to publicly file weekly data reports regarding service performance of unit trains carrying coal, crude 

oil, ethanol, and grain. In December 2014, STB initiated a formal notice and comment rulemaking 

proceeding for weekly performance data reporting by the Class I railroads and also the freight railroads 

serving the Chicago gateway. STB has two ongoing proceedings on rail business practices aimed at 

helping shippers to gain competitive access to railroads and be protected against unreasonable freight rail 

transportation rates.

• Improving safe shipment of crude oil by rail. DOT and other Federal agencies have been taking action 

to respond to heightened awareness and concern over rail shipments of crude oil from the Bakken and 

ethanol. DOT issued a proposed rule in August 2014 containing comprehensive proposed standards 

to improve the rail transportation safety of flammable liquids, including unit trains of crude oil and 

ethanol. A final rule is anticipated to be issued in mid-2015. DOE, in cooperation with the Pipeline and 

Hazardous Materials Safety Administration, is supporting studies on the properties (including behavior 

in fires) of crude oil. The Federal Emergency Management Agency has assessed training needs and 

requirements in 28 states with oil rail routes identified by DOT. The interagency National Response Team 

Training Subcommittee launched Emerging Risks Responder Awareness Training for Bakken Crude Oil 

to help responders better prepare for these incidents.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-21

• Doubling the size of the Inland Waterways Trust Fund. This fund currently pays 50 percent of 

the Federal cost for construction, replacement, rehabilitation, and expansion costs for inland and 

intracoastal waterways. In December 2014, Congress authorized an increase in the fuel tax supporting 

this fund from the current $0.20 per gallon to $0.29 per gallon, which took effect April 1, 2015. 

In addition, the President’s Fiscal Year 2016 Budget proposes a new per-vessel user fee that will raise 

$1.1 billion over the next 10 years, effectively doubling the level of resources available in the Fund. 

• Helping ports through the DOT Maritime Administration StrongPorts initiative. This program is 

developing tools and initiatives helpful to port authorities that are pursuing modernization projects, 

including those interested in public-private partnerships. While the StrongPorts initiative does 

not provide direct financial assistance, the recently released guide provides an additional resource 

regarding financing for ports. 

• Creating a multi-modal freight grant program through the GROW AMERICA Act. The 

Administration has proposed the GROW AMERICA Act, which includes $18 billion over 6 years to 

establish a new multi-modal freight grant program to fund innovative rail, highway, and port facilities 

that will improve the efficient movement of goods across the country. The Generating Renewal, 

Opportunity, and Work with Accelerated Mobility, Efficiency, and Rebuilding of Infrastructure 

and Communities throughout America Act (GROW AMERICA Act) also will give shippers and 

transportation providers a stronger role in working with states to collaborate and establish long-term 

freight strategic plans.

• Expanding funding for the DOT TIGER grant program. The Transportation Investment Generating 

Economic Recovery (TIGER) program is a competitive grant program that funds state and local 

transportation projects across the United States. The Administration’s GROW AMERICA Act proposal 

will provide $7.5 billion over 6 years to the TIGER grant program, more than doubling it.

Recommendations in Brief

Enhance the understanding of important safety-related challenges of transport of crude oil and ethanol 

by rail and accelerate responses. Key activities at DOE and DOT should be strongly supported.

Further analyze the effects of rail congestion on the flow of other energy commodities, such as ethanol 

and coal. DOE, STB, and the Federal Energy Regulatory Commission should continue to develop their 

understanding of how rail congestion may affect the delivery of these energy commodities. 

Analyze the grid impacts of delayed or incomplete coal deliveries. In assessing these issues, DOE and 

other relevant agencies should examine whether a minimum coal stockpile for electricity reliability should be 

established for each coal-fired unit.

Address critical energy data gaps in the rail transport of energy commodities and supplies. Congress 

should fund the President’s FY 2016 Budget Request for the EIA to address critical energy transportation data 

gaps and continued data sharing with the STB. 

Support alternative funding mechanisms for waterborne freight infrastructure. The Administration should 

form an ongoing Federal interagency working group to examine alternative financing arrangements for 

waterborne transportation infrastructure and to develop strategies for public-private partnerships to finance 

port and waterway infrastructure.

Support a new program of competitively awarded grants for shared energy transport systems. A new 

grant program—Actions to Support Shared Energy Transport Systems, or ASSETS—should be established and 

supported at DOT, in close cooperation with DOE. This program should be dedicated to improving energy 
Summary: The First Installment of the Quadrennial Energy Review

S-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

transportation infrastructure connectors. A Federal investment in ASSETS would likely mobilize additional 

and significant non-Federal investment, based on typical TIGER cost shares.

Support public-private partnerships for waterborne transport infrastructure. Developing a set of shared 

priorities for investment ensures that public and private sector needs are met.

Coordinate data collection, modeling, and analysis. DOE should lead an interagency effort with DOT, 

the Department of Agriculture, the Army Corps of Engineers, and the Coast Guard—in cooperation with 

other relevant agencies with data regarding marine, rail, and other energy transport modes—to improve and 

coordinate their respective data collection, analytical, and modeling capabilities for energy transport on shared 

infrastructures. 

Assess the impacts of multi-modal energy transport. DOE, working with DOT and the Army Corps of 

Engineers, should conduct a one-time comprehensive needs assessment of investment needs and opportunities 

to upgrade the Nation’s energy-related shared water transport infrastructure. 

Assess energy component transportation. DOE, in coordination with relevant agencies, should examine 

routes for transportation of energy system-related equipment, materials, and oversized components. The 

assessment would include the capacity of the Nation’s transportation infrastructure systems to safely 

accommodate more frequent and larger shipments where analyses indicate such transport will be required. 

Integrating North American Energy Markets

The United States, Canada, and Mexico, as well as other North American neighbors, benefit from a vast 

and diverse energy TS&D network that can enable the region to achieve economic, energy security, and 

environmental goals. Continued integration of the North American energy markets will increase those 

benefits and address structural changes and constraints that have arisen since new production, processing, 

consumption, and policies have taken effect.

Energy system integration is in the long-term interest of the United States, Canada, and Mexico, as it expands 

the size of energy markets, creates economies of scale to attract private investment, lowers capital costs, and 

reduces energy costs for consumers. There is already a robust energy trade between the United States and 

Canada (more than $140 billion in 2013) and the United States and Mexico (more than $65 billion in 2012). 

The scope and magnitude of the existing and ongoing energy integration among the United States, Canada, 

and Mexico goes far beyond any one particular infrastructure or project, and continuing to foster this 

integration is an enduring interest on the part of each country. While a smaller market, there are also needs and 

opportunities for greater energy trade and integration with individual nations and islands in the Caribbean. 

The North American Arctic region, including Alaska and U.S. territorial waters in the Bering, Chukchi, and 

Beaufort Seas, as well as Canada and its territorial waters, is experiencing rapid changes on land and at sea 

due to the changing climate. These changes have important implications for TS&D infrastructure in this 

region. Warming in the North American Arctic is resulting in increased risk of land subsidence from thawing 

permafrost, which threatens TS&D infrastructure. It also leads to a reduction in late-summer sea ice extent, 

which will affect offshore energy and mineral exploration and extraction in U.S. and Canadian waters. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-23

Key Findings

The United States has significant energy trade with Canada and Mexico, including oil and refined products, 

gas, and electricity. Canada is the largest energy trading partner of the United States, with energy trade valued 

at $140 billion in 2013. Mexican energy trade was valued at $65 billion in 2012. Both countries are reliable 

sources of secure energy supplies.

Greater coordination will improve energy system efficiency and build resiliency to disruptions of the North 

American energy market; it will also improve energy market data exchanges and regulatory harmonization.

The electricity systems of the United States and Canada are fully interconnected. There are currently more 

than 30 active major transmission connections between the United States and Canada, trading approximately 

$3 billion worth of electricity in 2014. If the transmission projects filed with DOE in the last 5 years are 

constructed, they would add approximately 4,100 megawatts of additional hydropower to the U.S. electricity 

mix.

Canadian natural gas production is expected to slightly outpace consumption with exports rising slowly 

over the projection period. Oil production is anticipated to continue to grow over the next 30 years. 

Mexico has reformed its energy sector. Mexico amended its constitution and reformed its energy sector 

in 2013, retaining government control over its assets while opening oil and gas resources to private sector 

exploration and development. These reforms provide an opportunity for increased trade with the United States.

Increasing U.S. natural gas exports may help Mexico generate more gas-fired electricity and achieve its 

environmental goals.

Changing climate conditions in the Arctic are expected to continue with the melting of permafrost and 

reduced sea ice extent, which will affect increasing energy development that is underway. This presents 

both an opportunity for greater cooperation between the United States and Canada, but also a need for both 

countries to undertake risk mitigation.

There is an opportunity to reduce Caribbean electricity costs and emissions. The Caribbean is largely reliant 

on foreign sources of oil with little energy resources of its own. Energy demand is driven largely by electricity 

generation, mostly from fuel oil. A 30 percent decrease in carbon dioxide (CO2

) emissions could be achieved by 

displacement of fuel oil by natural gas—and even more if this were combined with renewable energy. 

Selected Recent Federal Government Actions

Recognizing the importance of North American energy, the Administration has been undertaking a number of 

activities to promote market integration and to address the challenges we share in the North American Arctic 

region, including the following:

• Improving data exchange. The United States, Canada, and Mexico are creating a framework for the 

sharing of publicly available information and data on their respective energy systems. This initiative was 

formalized in a memorandum of understanding (MOU) signed by DOE, Canada’s Ministry of Natural 

Resources, and Mexico’s Ministry of Energy on December 15, 2014. The President’s FY 2016 Budget 

Request provides an increase of $1 million to the EIA for the purpose of carrying out this collaboration. 

• Leading the Arctic Council. In April 2015, the United States assumed the chairmanship of the Arctic 

Council for a 2-year period. This will provide the United States with the opportunity to implement 

increased international collaboration in such areas as addressing the impact of climate change and 

Arctic Ocean stewardship and scientific research. In addition to this leadership role in Arctic policy, 

there is an opportunity for increased and enduring cooperation between the United States and Canada 

on issues such as Arctic energy infrastructure and climate and ocean science as an important future 

dimension to the U.S.-Canadian energy relationship.
Summary: The First Installment of the Quadrennial Energy Review

S-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

• Partnering with remote communities to develop renewable energy. DOE’s National Renewable 

Energy Laboratory, in partnership with the Department of the Interior, has developed the Remote 

Communities Renewable Energy partnership to develop, demonstrate, and deploy smaller-scale 

technologies for remote communities, such as in the Arctic, to utilize local renewable energy 

resources, reduce diesel fuel dependence and distribution requirements, and create independent 

microgrid operations. 

• Pursuing a Caribbean Energy Security Initiative. In 2014, Vice President Biden announced the 

Caribbean Energy Security Initiative, which recognizes the diversity of Caribbean nations’ economies, 

natural resources, and energy constraints. Led by the State Department, in coordination with the U.S. 

Overseas Private Investment Corporation, DOE, and other agencies, the initiative seeks to improve 

energy sector governance, to increase access to affordable finance, and to improve communication and 

coordination among regional governments and their development partners.

Recommendations in Brief

Continue advances that have been made in the North American energy dialogue. The United States, 

Canada, and Mexico should encourage further business exchanges and regular minister-level engagement.

Increase the integration of energy data among the United States, Canada, and Mexico. Provide resources 

for the EIA to collaborate with its Canadian and Mexican counterparts to systematically compare their 

respective export and import data, validate data, and improve data quality. In addition, efforts should be taken 

to better share geographic information system data to develop energy system maps and review forwardlooking assessments and projections of energy resources, flows, and demand. 

Undertake comparative and joint energy system modeling, planning, and forecasting. Enhance comparative 

and joint modeling, planning, and forecasting activities among U.S., Canadian, and Mexican energy ministries 

and related governmental agencies. The current scale of activities has aided bilateral and individual goals; 

however, increasing trilateral engagement on planning, modeling, or forecasting activities would capture 

greater efficiencies and enhance each country’s ability to reach economic, security, and environmental 

goals. DOE’s Offices of Energy Policy and Systems Analysis and International Affairs would lead modeling 

workshops with their Canadian and Mexican counterparts to share methodologies and collaborate on North 

American analysis.

Establish programs for academic institutions and not-for-profits to develop legal, regulatory, and policy 

roadmaps for harmonizing regulations across borders. In partnership with universities, qualified not-forprofits, and relevant U.S. energy regulatory authorities, state/provincial, local, and national energy regulations 

will be compared to identify gaps, best practices, and inconsistencies with regulations in Canada and/or 

Mexico with the goal of harmonization.

Coordinate training and encourage professional interactions. This should involve the technical staff in 

government agencies of the three North American countries that share similar responsibilities to evaluate and 

implement cross-border energy projects.

Partner with Canada and the Arctic Council on Arctic energy safety, reliability, and environmental 

protection. Joint work should emphasize research and information sharing on the effects of spills and the 

effectiveness of countermeasures, the identification and mobilization of the resources necessary to mitigate the 

effects of a pollution incident, and the development of international guidelines for preparedness and response 

in this logistically challenging region.

Partner with Canada and the Arctic Council on energy delivery to remote areas. This should be done 

through promoting and disseminating the work of the Remote Community Renewable Energy partnership.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-25

Promote Caribbean energy TS&D infrastructure. As part of a larger Caribbean strategy, the United States 

should support the diversification of energy supplies, including actions to facilitate the introduction of cleaner 

forms of energy and development of resilient energy TS&D infrastructure in the Caribbean.

Addressing Environmental Aspects of TS&D Infrastructure

Energy TS&D infrastructure affects the environment in a variety of ways. While it is important to address 

the direct environmental impacts and vulnerabilities of TS&D infrastructure, this infrastructure also has 

enormous potential to enable better environmental performance for the energy system more broadly. Key 

examples include CO2

 pipeline infrastructure to enable carbon sequestration, smart grid technologies to enable 

energy efficiency, and long-distance transmission to enable utilization of remote renewable resources. Energy 

efficiency also reduces the need for new infrastructure. 

Understanding the potential positive and negative effects of TS&D infrastructure on the achievement of 

overall environmental goals—including climate mitigation—is key to siting, constructing, operating, and 

maintaining TS&D infrastructure in an environmentally responsible manner. Many QER recommendations in 

other chapters touch on actions that will enhance the ability of the United States to achieve its environmental 

goals. This chapter focuses on those that relate specifically to the environmental impacts posed by TS&D 

infrastructure itself.

Key Findings

TS&D infrastructure can serve as a key enabler for—or barrier to—better environmental outcomes. 

Certain types of TS&D infrastructure enable improvements in system-wide environmental performance at 

lower cost, such as electric transmission and distribution infrastructure to access renewable energy resources 

and interstate natural gas pipelines which can facilitate CO2 emission reductions from the electric power 

sector.

TS&D infrastructure contributes a relatively small share of total air and water pollution from the energy 

sector. TS&D infrastructure covered by this installment of the QER contributes to nearly 10 percent of 

U.S. GHG emissions. Many of the environmental issues related to TS&D infrastructure are subject to rules 

established by existing statute and regulation. 

Energy infrastructure can have direct, indirect, and cumulative land-use and ecological impacts. The 

nature and magnitude of those impacts depend on a number of factors, including whether construction of a 

facility will affect endangered species or sensitive ecological areas, or cause land-use impacts such as top-soil 

erosion or habitat fragmentation.

Energy transport, refining, and processing infrastructure contribute to emissions of criteria air pollutants 

that pose risks to public health and the environment. Ports and rail yards with high densities of vehicles 

and congestion often have high concentrations of pollutants and increase risks to nearby urban communities. 

Reducing emissions of particulate matter from aircraft, locomotives, and marine vessels would have public 

health benefits. Low-income and minority households are two to three times more likely to be affected by 

freight-based diesel particulate pollution than the overall U.S. population.

Transportation of crude oil by pipeline, rail, and waterborne vessels has safety and environmental 

impacts. The Federal Government has a number of efforts underway to mitigate these impacts, including a 

rulemaking on rail transport of crude oil. 
Summary: The First Installment of the Quadrennial Energy Review

S-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

The United States currently has a network of more than 4,500 miles of CO2 transportation pipelines that 

can be a critical component of a low-carbon future. The pipelines mostly transport naturally occurring 

CO2, but new projects are increasingly linking captured CO2 from electric power plants and other industrial 

sources to a productive use in oil fields (through CO2

 enhanced oil recovery) and safe storage in deep saline 

formations.

Selected Recent Federal Government Actions

In addition to the efforts to improve natural gas pipeline safety discussed under Chapter II (Increasing the 

Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure), which will have environmental 

benefits, the Administration is undertaking a number of other initiatives to reduce methane emissions and 

address environmental effects of TS&D infrastructure. They include the following:

• Setting a national goal to reduce methane emissions. Building on the 2014 interagency Strategy 

to Reduce Methane Emissions, in January 2015, the President announced a national goal to reduce 

methane emissions from the oil and gas sector by 40 percent to 45 percent from 2012 levels by 2025. 

• Establishing standards for methane emissions from new and modified sources. The Environmental 

Protection Agency (EPA) has initiated a rulemaking to set standards for methane and volatile 

organic compound emissions from new and modified oil and gas production sources and natural gas 

processing and transmission sources. EPA will issue a proposed rule in the summer of 2015, and a final 

rule will follow in 2016. 

• Modernizing natural gas transmission and distribution infrastructure. Following on its methane 

roundtables, DOE is taking steps to encourage reduced GHG emissions, including the following:

□ Issuing energy efficiency standards for natural gas and air compressors

□ Funding was proposed in the FY 2016 Budget to advance R&D to bring down the cost of detecting 

leaks and to improve estimates of methane emissions from midstream natural gas infrastructure for 

incorporation into EPA’s Greenhouse Gas Inventory

□ Implementing an Advanced Natural Gas System Manufacturing Research and Development 

Initiative

□ Partnering with the National Association of Regulatory Utility Commissioners to help modernize 

natural gas distribution infrastructure

□ Issuing an Advanced Fossil Energy Projects Solicitation inviting applicants to apply for developing 

new methane reduction technologies

□ Developing a clearinghouse of information on effective technologies, policies, and strategies. 

• Working cooperatively with industry to reduce methane emissions. EPA is working to expand on 

its successful Natural Gas STAR Program by launching a new partnership in collaboration with key 

stakeholders later in 2015. EPA will work with DOE, DOT, and leading companies—individually 

and through broader initiatives, such as the One Future Initiative and the Downstream Initiative—to 

develop and verify robust commitments to reduce methane emissions. 

• Reducing other air pollution from TS&D infrastructure systems. A number of Administration 

initiatives are reducing air pollution from TS&D infrastructure. Examples of this include the EPA’s 

guidelines to states to reduce ozone precursors from oil and gas systems; DOE’s work to improve 

the energy efficiency of equipment powering natural gas transmission systems and other TS&D 

infrastructure; DOT’s Federal Highway Administration funding of state and local programs that 

reduce air emissions through its Congestion Mitigation and Air Quality Improvement program; and 

funding of the National Clean Diesel Campaign, which issues grants to eligible entities for projects to 

reduce emissions from existing diesel engines, which are pervasive in TS&D infrastructure. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-27

Recommendations in Brief 

Improve quantification of emissions from natural gas TS&D infrastructure. Congress should approve the 

$10 million requested in the FY 2016 Budget to help update Greenhouse Gas Inventory estimates of methane 

emissions from natural gas systems. DOE and EPA should undertake a coordinated approach, building on 

stakeholder input, to ensure that new research and analysis is targeted toward knowledge gaps unaddressed by 

other researchers. 

Expand R&D programs at DOE on cost-effective technologies to detect and reduce losses from natural gas 

TS&D systems. DOE should leverage its R&D efforts in this area to facilitate broader air quality benefits. 

Invest in R&D to lower the cost of continuous emissions monitoring equipment. To further improve safety 

and reduce emissions from natural gas systems, additional R&D—as proposed in the FY 2016 Budget—is 

needed to reduce costs and enable deployment of continuous emissions monitoring technologies.

Support funding to reduce diesel emissions. To protect workers and nearby communities through further 

reductions in diesel particulate matter emissions from ports and rail yards, the Administration proposed, and 

Congress should provide, funding for the Diesel Emissions Reduction Act and other related programs.

Collaborate on R&D on the beneficial use and/or disposal of dredging material. The Army Corps of 

Engineers and other appropriate Federal agencies should undertake collaborative R&D on treating and then 

either beneficially using or disposing of dredging material. 

Improve environmental data collection, analysis, and coordination. DOE should work with other Federal agencies 

to improve data and analysis on the environmental characteristics and impacts of TS&D infrastructures. 

Work with states to promote best practices for regulating and siting CO2

 pipelines. Building on successful 

state models for CO2 pipeline siting, DOE, in cooperation with Federal public land agencies, should take a 

convening role to promote communication, coordination, and sharing of lessons learned and best practices 

among states that are already involved in siting and regulating CO2 pipelines or that may have CO2 pipeline 

projects proposed within their borders in the future.

Enact financial incentives for the construction of CO2

 pipeline networks. Congress should enact the 

Administration’s proposed Carbon Dioxide Investment and Sequestration Tax Credit, which would authorize $2 

billion in refundable investment tax credits for carbon capture technology and associated infrastructure (including 

pipelines) installed at new or retrofitted electric generating units that capture and permanently sequester CO2. 

Enhancing Employment and Workforce Training

The workforce needed to build, maintain, and operate energy infrastructures will continue to evolve and, in 

many cases, grow significantly. The heavy investment in new U.S. energy infrastructure that is anticipated 

over the next few decades, combined with the maintenance needed by current infrastructure systems and 

the looming retirement of a significant fraction of this sector’s labor pool, will stimulate the creation of a 

wide range of new job opportunities for skilled workers. This will pose an increasing challenge for workforce 

development and job training strategies.

Key Findings

Approximately 1 million people were employed in energy transmission and distribution jobs in 2013.

This represented almost 0.75 percent of U.S. civilian jobs. An additional 900,000 jobs were indirectly supported 

by energy transmission and distribution activity. 
Summary: The First Installment of the Quadrennial Energy Review

S-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Projections indicate that, by 2030, the energy sector overall, including the TS&D segment, will employ 

an additional 1.5 million workers. Most of these jobs will be in construction, installation and maintenance, 

and transportation, and approximately 200,000 more workers with computer and mathematics skills will be in 

demand. 

Changes in the electricity sector, in particular, affect the number and types of energy jobs. New 

technologies are changing the skill sets in demand in the electricity workforce, creating opportunities 

that include utility management positions for smart grid programs, meter installers and service providers, 

intelligent transmission and distribution automation device producers, communications system products and 

services providers, and software system providers and integrators.

Accelerating methane abatement actions in the natural gas TS&D system is projected to support a 

significant number of jobs. One study projects that an accelerated replacement timeline along with other 

measures could support 313,000 jobs throughout the economy.

New job-driven training strategies, reflecting a broader range of needed skills, will be required to meet 

the challenges of the future. Whether it is by expanding training curricula to use the latest educational tools 

and techniques, moving to a competency-based system of evaluating educational and training outcomes, or 

engaging new pools of potential talent (such as veterans), innovation in methods to attract and train the TS&D 

infrastructure workforce of the future will be required.

Defining priorities in the area of jobs and workforce training and establishing effective programs 

requires good data. It is challenging both to define and quantify jobs in the energy industry because of how 

employment data in the United States are organized and published. The lack of information is especially 

critical in job categories experiencing high growth and rapid technological change, such as those dealing with 

infrastructure associated with the solar industry.

Selected Recent Federal Government Actions

The activities of the Federal Government to respond to changes in employment and workforce for TS&D 

infrastructures exist in a broader context of initiatives to train a competitive domestic energy workforce that 

are being undertaken by the energy industry, labor organizations, colleges, trade schools, and state and local 

governments. Some recent Federal actions and initiatives that are aimed at supporting and partnering with 

these broader efforts include the following:

• Expanding existing efforts. The Administration’s Ready to Work Initiative and the passage of the 

Workforce Innovation and Opportunity Act have led to several important efforts in the energy sector. 

In addition to the significant investments in energy and advanced manufacturing workforce training, 

the newly formed Skills Working Group, an interagency task force of 13 Federal agencies chaired 

by the Secretary of Labor, has focused on the energy sector as one of six key opportunity areas for 

expanding apprenticeships, building career pathways to the middle class, and initiating place-based 

initiatives to expand opportunities to underserved communities.

• Providing financial assistance for training. The Department of Labor has granted $450 million 

in Trade Adjustment Assistance Community College and Career Training grants to nearly 270 

community colleges across the country. Also, in December 2014, the Department of Labor announced 

the American Apprenticeship Grants Competition—a $100-million grant program to launch 

apprenticeship models in high growth fields, such as energy, and expand apprenticeship models that 

work.

• Creating an energy Jobs Strategy Council. DOE has created a new Jobs Strategy Council, which 

brings together the diverse energy programs of the Department with its laboratories and technology 

resources to accelerate job creation across all energy sectors in partnership with other Federal agencies, 

the private sector, and state and local governments. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-29

• Developing curricula and certification standards. DOE has been deeply engaged with both 

traditional and new energy sectors, developing curricula and/or certification standards for the solar, 

unconventional natural gas extraction, and building energy efficiency industries, for instance. In 

addition, through DOE’s Office of Economic Impact and Diversity and its new Jobs Strategy Council, 

the Department’s programs have focused on driving energy opportunities to traditionally underserved 

communities and to veterans and other specific populations.

Recommendations in Brief

Support an energy-job skills training system through the interagency Skills Working Group. The training 

system should include new curricula, apprenticeship programs, industry-based credentialing standards, and 

innovative online learning systems.

Expand support for an open-source learning community to develop, facilitate, and expand use of stateof-the art courses in energy-related fields. These efforts should work to maintain and improve the National 

Training and Education Resource platform.

Coordinate efforts to accelerate the development of high-quality energy and manufacturing curricula and 

apprenticeship programs. DOE should coordinate with existing Department of Labor and National Science 

Foundation programs. 

Facilitate national credentials for energy occupations. DOE should support and facilitate an industry-led 

process of defining needed skills in a number of emerging occupations. 

Facilitate the transition of military veterans into the energy sector. DOE should work with the Departments 

of Labor and Defense and stakeholders to standardize the applicability of Military Occupation Codes to 

civilian jobs in energy sectors.

Establish an interagency working group to reform existing energy jobs data collection systems. DOE 

should convene a group with the Departments of Labor and Commerce to provide complete and consistent 

definitions and quantification of energy jobs across all sectors of the economy.

Siting and Permitting of TS&D Infrastructure

The trends affecting TS&D infrastructure are discussed in this report—including major increases in oil and gas 

production, expanding production of renewable energy, changing requirements for what is expected of energy 

infrastructure, climate change, and steps to maintain electricity grid—are shaping and driving demand for new 

TS&D infrastructure. Over the last decade, there has been a growing awareness of the gap between the times typically 

needed to permit new generation and production sources of energy and the much longer times needed for TS&D 

infrastructure. This discrepancy in permitting time frames affects everything from transmission planning to utility 

procurement and project finance decisions—making it more challenging to plan, site, permit, finance, and construct 

energy infrastructure projects. Given these challenges, it is essential to promote more timely permitting decisions 

while protecting our Nation’s environmental, historic, and cultural resources. 

Key Findings

The involvement of multiple jurisdictions adds time to siting, permitting, and review of infrastructure 

projects. As major infrastructure projects are proposed, Federal, state, local, and tribal governments must work 

to consider and minimize potential impacts on safety and security, as well as environmental and community 

resources (e.g., air, water, land, and historic and cultural resources). These entities often have overlapping and 

sometimes conflicting statutory responsibilities for siting and permitting projects. The interplay among the 

diverse sets of participants and statutorily defined responsibilities is challenging, and for particularly large and 

complex infrastructure projects, multiple permits and approvals can lead to inefficiencies and delay.
Summary: The First Installment of the Quadrennial Energy Review

S-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Close collaboration with tribal, state, and local governments is critical to siting, permitting, and review 

of infrastructure projects. Most infrastructure siting and permitting decisions are made at the state and local 

levels; some also require consultation with affected Indian Tribes. The bulk of Federal review and permitting 

responsibilities are also handled at regional offices rather than agency headquarters. The local nature of 

decision making requires close interaction between local and tribal governments and Federal agencies, as well 

as appropriate knowledge of resource concerns to be addressed in the permitting process.

Robust public engagement is essential for the credibility of the siting, permitting, and review process. Major 

infrastructure projects, such as high-voltage transmission lines and pipelines, are likely to trigger potentially 

conflicting stakeholder interests and have the potential to produce significant impacts on local communities 

and the environment due to their complexity and scale. Robust stakeholder engagement is necessary to avoid, 

minimize, and mitigate these potential impacts and is likely to reduce delays in reaching a decision. 

Siting timetables vary widely, and processes for siting energy infrastructure differ by sector. Major 

infrastructure projects typically involve multi-year design, development, and construction timelines with complex 

approval processes. Timelines and processes for approval vary depending on the scope and type of project.

Selected Recent Federal Government Actions

The Obama Administration has taken steps within and across Federal agencies to modernize the Federal 

permitting and review process for major infrastructure projects to reduce uncertainty for project applicants, to 

reduce the aggregate time it takes to conduct reviews and make permitting decisions by half, and to produce 

measurably better environmental and community outcomes. These include the following actions:

• Coordinating project review. The Interagency Steering Committee established under Executive Order 

13604 and the Interagency Infrastructure Permitting Improvement Team housed at DOT are currently 

developing a Policy for Coordinated Review of infrastructure project applications among Federal 

agencies and with project sponsors. 

• Developing pre-application procedures and cost recovery for project reviews. In 2013, DOE—

through the Council on Environmental Quality and the Administration’s Rapid Response Team for 

Transmission—developed a proposed Integrated Interagency Pre-Application Process for onshore 

electric transmission lines. DOE is now considering issuing a revised regulation under Section 216(h) 

of the Federal Power Act that would incorporate that process. In September 2014, the Bureau of Land 

Management issued a proposed rule that would require all applicants for rights of way across public 

lands for electric transmission lines of 100 kilovolts or greater and pipelines 10 inches or more in 

diameter to hold pre-application meetings to coordinate with appropriate Federal and state agencies 

and tribal and local governments. It would also require proponents to pay reasonable or actual costs 

associated with the pre-application process.

• Expanding online project tracking and developing metrics. The Administration launched a Federal 

Infrastructure Project Permitting Dashboard to track designated infrastructure project schedules. The 

dashboard also hosts a “Permit Inventory”—a searchable database of required permits and approvals—

as well as National Environmental Policy Act (NEPA) reviews and milestones relating to major 

infrastructure projects.

• Expanding availability and sharing of data and geographic information system tools. The 

Administration has identified a number of actions and policies to facilitate adequate collection, 

integration, and sharing of the best available data to assist project sponsors in siting projects in order 

to minimize resource impacts and to support Federal decision making, including (1) NEPAnode; 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-31

(2) the Fish and Wildlife Service Information, Planning, and Conservation Tool; (3) EPA’s NEPAssist; 

(4) the Eastern Interconnection States Planning Council Energy Zones Mapping Tool; (5) the Army 

Corps’ Federal Support Toolbox; (6) the Western Governors’ Associations’ Crucial Habitat Assessment 

Tool; and (7) the National Oceanic and Atmospheric Administration’s Social Vulnerability Index.

• Designating corridors for pipelines, electric transmission lines, and related infrastructure. The 

Department of the Interior and the Department of Agriculture are conducting a periodic review 

of the Western energy rights-of-way corridors designated in 2009. As directed in the June 2013 

Presidential Memorandum, DOE issued two reports—one for assessing potential corridors in the 

West, as proposed by the Western Electricity Coordinating Council, and one for the rest of the United 

States that looks at current and potential crossings for transmission lines and oil and gas pipelines on 

federally protected national trails.

• Undertaking landscape- and watershed-level mitigation and conservation planning. Federal land 

management agencies have begun to implement mitigation and conservation planning at the landscape, 

ecosystem, or watershed level. For example, in March 2014, the Department of the Interior released the 

Solar “Regional Mitigation Strategy for the Dry Lake Solar Energy Zone,” and in April 2014, Secretary 

Jewell issued the “Strategy for Improving the Mitigation Practices of the Department of the Interior.”

Recommendations in Brief

Allocate resources to key Federal agencies involved in the siting, permitting, and review of infrastructure 

projects. Federal agencies responsible for infrastructure siting, review, and permitting have experienced 

dramatic appropriations cuts and reductions in staff. Many of the components of the overall effort to improve 

the Federal siting and permitting processes have been stymied in recent years by appropriations shortfalls. 

Congress should fully fund these priorities. 

Prioritize meaningful public engagement through consultation with Indian Tribes, coordination with 

state and local governments, and facilitation of non-Federal partnerships. Early and meaningful public 

engagement with affected residential communities, nonprofit organizations, and other non‐Federal stakeholders 

through the NEPA process and other forums can reduce siting conflicts. Federal agency coordination with 

state and local governments and government-to-government consultation with affected Indian Tribes should 

remain a Federal Government priority. When possible, Federal agencies should co-locate energy infrastructure 

environmental review and permitting staff from multiple Federal agencies’ regional and field offices.

Expand landscape- and watershed-level mitigation and conservation planning. When adverse impacts to 

the Nation’s landscape cannot be avoided or minimized any further, Federal agencies should seek innovative 

approaches to compensate for adverse project impacts commensurate with the scope and scale of the project 

and effects to resources. Through mitigation planning at a landscape, ecosystem, or watershed scale, agencies 

can locate mitigation activities in the most ecologically important areas.

Enact statutory authorities to improve coordination across agencies. Congress should authorize and fund 

the Interagency Infrastructure Permitting Improvement Center in DOT, as set forth in Section 1009 of the 

Administration’s draft legislation for the GROW AMERICA Act. 

Adopt Administration proposals to authorize recovery of costs for review of project applications. 

Consistent with the proposal in the President’s FY 2016 Budget Request, additional flexibility for certain 

agencies to accept funds from applicants would be appropriate and could expedite the Federal permitting and 

review process.
Summary: The First Installment of the Quadrennial Energy Review

S-32 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Investing in Energy Infrastructure

The replacement, expansion, and modernization of dedicated and related energy infrastructure require 

major investment over an extended period of time. Most of the resources will come from the private 

sector—sometimes as approved costs under Federal and state-regulated rate structures for energy delivery 

to consumers and businesses. Nevertheless, a significant number of the infrastructure recommendations put 

forward in this QER call for Federal funds, either for direct investment or for stimulating and incentivizing 

other investments. The desirability of Federal engagement comes in large part from classic market failures of a 

variety of kinds, above all public goods and negative externalities. As noted in a 2012 report by the Department 

of the Treasury and the President’s Council of Economic Advisers, moreover, there is a large body of evidence 

showing significant private sector productivity gains from public infrastructure investments, in many cases 

with higher returns than private capital investment.8

The QER calls for increased Federal investments, targeted both at areas of traditional Federal responsibility and at 

new approaches to inform, incentivize, and leverage the investment decisions of state and local governments and the 

private sector that reinforce overarching economic, security, and environmental objectives (see Table SPM-2).

Table SPM-2. Examples of Federal Mechanisms/Tools Applied to Each Energy Infrastructure Objective

Objectives Resilience, Reliability 

Safety and Security 

Electricity Grid 

Modernization

Energy Security 

and Supporting 

Infrastructures 

Shared Transport 

Infrastructures 

Mechanisms/Tools Improvement

Direct Federal 

Infrastructure 

Investments

Provide competitive, costshared implementation 

grants to harden and 

enhance the resilience 

of electricity TS&D 

infrastructures

Provide competitive 

grants for State and 

multi-State reliability 

planning to meet 

environmental, resilience, 

and efficiency goals

De-bottleneck Strategic 

Petroleum Reserve (SPR) 

distribution capability 

through marine terminal 

enhancements

Provide cost sharing for 

investments in shared 

energy transportation 

systems 

Research, 

Development and 

Analysis

Develop and 

demonstrate costeffective technologies 

to detect and reduce 

GHG losses from natural 

gas transmission and 

distribution systems

Assess flexibility and 

value of electricity 

storage

Enhance research on Arctic 

energy safety and accident 

prevention

Support research on 

disposal of dredging 

materials 

Data Collection 

and Information 

Management 

Develop a framework 

and metrics for modeling 

and measuring resiliency

Institutionalize energy 

efficiency evaluation, 

measurement, and 

verification

Increase the integration 

of EIA energy data with 

Canada and Mexico

Improve data 

collection on shared 

energy transportation 

infrastructure

Federal Regulation 

Enhance safety standards 

for gas transmission 

pipelines

Develop grid connectivity 

and interoperability 

standards to enhance 

safe and reliable grid 

operation

Revise legal, regulatory, 

and policy roadmaps for 

harmonizing regulations 

for energy emergency 

response

Eliminate regulatory 

impediments to ensure 

adequate power plant 

fuel reserves.

Workforce 

Development

Develop curricula, training programs, and industry-based credentialing standards to expand energy sector 

workforce
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 S-33

Some of these investments were already proposed in the President’s FY 2016 Budget Request. The 

recommendations that were not proposed in the FY 2016 Budget, both on the mandatory and discretionary 

side, will be subject to the President’s Budget process, including, for example, identification of revenue sources 

or other offsets. Other recommendations would require new authorizing legislation and were not proposed in 

the FY 2016 Budget. Figure SPM-6 summarizes select recommendations by chapter, together with initial orderof-magnitude cost estimates. More precise cost estimates will depend upon more detailed program design 

and final statutory language. The Administration looks forward to working with Congress to advance these 

recommendations. 

Figure SPM-6. Select Recommendations by Chapter

Smart Grid 

of the Future

Resiliency, Recovery, 

Safety and Asset 

Recovery

Modernizing Global 

Energy Security 

Infrastructures

Improvements

to Shared 

Infrastructure

Integrating 

North American 

Energy Markets

• Grid Modernization*

($3.5B)

• Grants for state 

and multi-state grid 

reliability planning*

($300-$350M)

• SPR modernization 

and life extension 

($1.5-$2B)

• G-7 Collective Energy 

Security Initiative

• Implementation Grants 

for Energy System 

Hardening ($3-$5B)

• Rate Mitigation 

for accelerated NG 

distribution pipe 

replacement 

($2.5-$3.5B)

• State Energy 

Assurance/Resiliency 

Planning Grants* 

($350-$500M, 

depending on 2 or 3 

year cycle)

• Strategic Transformer 

Reserve

• ASSETS grants for 

energy-intensive 

connector projects 

($2-$2.5B)

• Enhance North 

American energy 

integration through 

cooperative measure 

with Canada and 

Mexico

• Caribbean 

Renewables/LNG 

project planning 

support

Note: Most funding is over 10 years and would be incremental to agency baseline budgets. Programs identified with an asterisk would require 

incremental funding over a shorter time period.
Summary: The First Installment of the Quadrennial Energy Review

S-34 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Endnotes

1. Department of Energy. “Grid 2030: A National Vision for Electricity’s Second Hundred Years.” 2003. http://www.ferc.

gov/eventcalendar/files/20050608125055-grid-2030.pdf. Accessed January 26, 2015.

2. Edison Electric Institute. “Transforming America’s Power Industry: The Investment Challenge 2010-2030.” November 

2008. http://www.eei.org/ourissues/finance/Documents/Transforming_Americas_Power_Industry_Exec_Summary.pdf. 

Accessed January 15, 2015.

3. Intergovernmental Panel on Climate Change. “Climate Science 2014: Synthesis Report.” http://www.ipcc.ch/.

4. National Academy of Sciences and Royal Society of London. “Climate Change: Evidence and Causes.” 2014. http://nassites.org/americasclimatechoices/more-resources-on-climate-change/climate-change-evidence-and-causes/.

5. Global Change Research Program. “Climate Change Impacts in the United States: The Third U.S. National Climate 

Assessment.” 2014. http://nca2014.globalchange.gov.

6. The White House. “The President’s Climate Action Plan.” June 2013. https://www.whitehouse.gov/sites/default/files/

image/president27sclimateactionplan.pdf.

7. The White House. “President Obama’s Climate Action Plan: Progress Report.” June 2014. https://www.whitehouse.gov/

sites/default/files/docs/cap_progress_report_update_062514_final.pdf.

8. “A New Economic Analysis of Infrastructure Investment.” Prepared by the Department of the Treasury with the 

Council of Economic Advisers. March 23, 2012.
Summary: The First Installment of the Quadrennial Energy Review

S-36 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-1

Chapter I

This chapter provides a general introduction to transmission, storage, and 

distribution (TS&D) infrastructure issues and to the report. It describes why 

TS&D infrastructure is important to the U.S. energy system. It then covers a 

set of trends and issues affecting the current U.S. TS&D infrastructure and 

the demands it will need to meet going forward. Finally, the chapter briefly 

describes the objectives that informed the study’s development and the 

architecture of the report that resulted. 

INTRODUCTION
1-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

The Character of the Nation’s TS&D Infrastructure 

The United States has one of the most advanced energy systems in the world, supplying the reliable, affordable, 

and increasingly clean power and fuels that underpin every facet of the Nation’s economy and way of life. 

The energy TS&D infrastructure—defined here as the infrastructure that links energy supplies, energy carriers, 

or energy by-products to intermediate and end users—is large, complex, and interdependent. It includes 

approximately 2.6 million miles of interstate and intrastate pipelines; 414 natural gas storage facilities; 330 

ports handling crude petroleum and refined petroleum products; and more than 140,000 miles of railways 

that handle crude petroleum, refined petroleum products, liquefied natural gas (LNG), and coal. The electrical 

component of the Nation’s TS&D infrastructure links more than 19,000 individual generators with a capacity 

of 1 megawatt or more (sited at more than 7,000 operational power plants), with more than 642,000 miles of 

high-voltage transmission lines and 6.3 million miles of distribution lines.1, 2 

The critical importance of these infrastructure facilities is not only in linking energy system components with 

each other and with end users across the Nation; they also link the U.S. energy system to the rest of the world. 

The TS&D infrastructure elements considered in this report are listed in Table 1-1. 

Table 1-1. Elements of TS&D Infrastructure Considered in this Installment of the QER3

Fuel/Energy Carrier TS&D Infrastructure Element/System

Electricity

Transmission lines and substations

Distribution lines and distributed generation

Electricity storage

Other electric grid-related infrastructure

Natural Gas

Natural gas gathering lines

Transmission pipelines

Natural gas storage facilities

Processing facilities 

Distribution pipelines and systems

LNG production/storage facilities (including export terminals)

Coal

Rail, truck, barge transport

Export terminals

Crude Oil/

Petroleum Products

Crude oil pipelines

Crude oil and products import and export terminals

Rail, truck, barge transport

Oil refineries

Strategic Petroleum Reserve & Regional Petroleum Product Reserves

CO2

 pipelines (including for enhanced oil recovery)

Biofuels Transport of feedstock and derived products, biorefineries
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-3

The requirements that this TS&D infrastructure must meet are extensive and demanding. It must handle a 

diverse and evolving mix of energy sources and energy products; link sources, processors, and users across 

immense distances; match demands that vary on multiple time scales; co-exist with competing uses of the 

same systems (e.g., ports and railways); and perform 24 hours a day, 365 days a year with high reliability, which 

in turn requires both low susceptibility to disruptions and the resilience to recover quickly from whatever 

disruptions nonetheless occur. The longevity and high capital costs of energy TS&D infrastructure, moreover, 

mean that decisions made about how to locate, expand, and otherwise modify this infrastructure today will 

be influencing—either enabling or constraining—the size and composition of the national energy system for 

decades to come. 

Much of the TS&D infrastructure is owned and operated by the private sector, and a significant portion of the 

legal, regulatory, and policy development and implementation around such infrastructure occurs at state and 

local levels. At the same time, the Federal Government controls and operates substantial TS&D infrastructure 

assets of its own, including inland waterways, thousands of miles of transmission lines, and strategic oil and 

product reserves. Some of the infrastructure elements owned by others are federally regulated with respect to 

aspects of siting, safety, environment, and reliability. Additionally, a number of emergency authorities bearing 

on TS&D infrastructure are vested in the Federal Government.

A further complexity affecting the TS&D infrastructure management and policy is that these infrastructures 

often reach across state and even international boundaries, thus affecting large regions and making multi-state 

and sometimes multi-national coordination essential for modernization, reliability, resilience, and flexibility. 

In addition, the large capital costs, scale, and “natural monopoly” characteristics of much TS&D infrastructure 

tend to perpetuate the role of incumbent providers; these circumstances constrain innovation and add to the 

usual litany of market failures—public goods, externalities, information deficits, perverse incentives—generally 

understood to warrant intervention through government policy when the proposed remedy is expected to 

have sufficient net benefits to overcome predicable ancillary and unintended consequences.

Given the complexity of this policy landscape, it should be obvious that Federal policies to encourage and 

enable modernization and expansion of the Nation’s TS&D infrastructure must be well coordinated with state, 

local, tribal, and (sometimes) international jurisdictions and with full consideration of the interaction of policy 

at all levels of government with private sector incentives and capabilities, to include attention to opportunities 

for well-designed, purpose-driven, public-private partnerships. 

Trends Affecting TS&D Infrastructure Choices

The U.S. energy landscape is in a time of transition. The relevant trends include dramatic changes in the 

pattern of domestic coal, petroleum, and natural gas production; a drastically altered outlook for energy 

imports and exports; large increases in electricity generation from wind and sunlight; and an increased priority 

on moving rapidly to reduce greenhouse gas (GHG) emissions from the energy sector. All of these trends have 

significant implications for the Nation’s TS&D infrastructure. So does another trend that has been building for 

decades, which is a lack of timely investment in refurbishing, replacing, and modernizing components of that 

infrastructure that are simply old or obsolete. These trends and their implications for TS&D infrastructure are 

elaborated briefly in the subsections that follow.

Aging Infrastructure and Changing Requirements

More than a decade ago, a Department of Energy (DOE) report pronounced the U.S. electricity grid “aging, 

inefficient, congested, and incapable of meeting the future energy needs of the information economy without 

significant operational changes and substantial public-private capital investment over the next several 

decades.”4

 Although significant improvements have been made to the grid since then, the basic conclusion of 
1-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

the need to modernize the grid remains valid. The Edison Electric Institute estimated in 2008 that by 2030 the 

U.S. electric utility industry will need to make a total infrastructure investment of between $1.5 trillion and 

$2.0 trillion, of which transmission and distribution investment is expected to account for about $900.0 billion.5

Modernization of the grid has been made all the more urgent by the increasing and now virtually pervasive 

dependence of modern life on a reliable supply of electricity. Without that, navigation, telecommunication, the 

financial system, healthcare, emergency response, and the Internet, as well as all that depends on it, become 

unreliable. Yet, the threats to the grid—ranging from geomagnetic storms that can knock out crucial transformers; 

to terrorist attacks on transmission lines and substations; to more flooding, faster sea-level rise, and increasingly 

powerful storms from global climate change—have been growing even as society’s dependence on the grid has 

increased. 

In addition, changes in the expectations and desires of businesses and individual consumers have been altering 

what the grid is expected to do. Once satisfied with a simple arrangement where utilities provided services and 

consumers bought power on fixed plans, now individuals and companies want to control the production and 

delivery of their electricity, and technology has become available to implement those wishes. These trends, 

coupled with flat or declining electricity demand, could dramatically alter current utility business models, and 

they are already making it more important to appropriately value and use distributed generation, smart grid 

technologies, and storage. 

Natural gas and oil TS&D infrastructures likewise pose aging and obsolescence concerns. These infrastructures 

simply have not kept pace with changes in the volumes and geography of oil and gas production. The Nation’s 

ports, waterways, and rail systems are congested, with the growing demands for handling energy commodities 

increasing in competition with transport needs for food and other non-energy freight, and much of the relevant 

infrastructure—pipelines, rail systems, ports, and waterways alike—is long overdue for repairs, not to mention 

modernization.

One compelling example is the infrastructure for 

moving natural gas. Close to 50 percent of the Nation’s 

gas transmission and gathering pipelines were 

constructed in the 1950s and 1960s—a build-out of the 

interstate pipeline network to respond to the thriving 

post-World War II economy (see Figure 1-1). Analyses 

conducted for the Quadrennial Energy Review (QER) 

suggest that natural gas interstate pipeline investment 

will range between $2.6 billion and $3.5 billion per year 

between 2015 and 2030, depending on the overall level 

of natural gas demand. The total cost of replacing cast 

iron and bare steel pipes in gas distribution systems is 

estimated to be $270 billion.a

Figure 1-1. Age by Decade of U.S. Gas Transmission and 

Gathering Pipelines6

Nearly 60 percent of U.S. natural gas transmission and gathering lines are at least 45 years old, and 35 percent are 55 years old or older.

a The American Gas Association reports that the total cost of replacing all cast iron pipe in the United States would be about $83 billion 

in 2011 dollars. American Gas Association. “Managing the Reduction of the Nation’s Cast Iron Inventory.” 2013. www.aga.org/

managing-reduction-nation%E2%80%99s-cast-iron-inventory. Accessed January 16, 2015. According to Pipeline and Hazardous 

Materials Safety Administration data, cast iron pipes represent approximately 30 percent of the total leak-prone pipe in the United 

States. Therefore, assuming other pipe replacement has similar costs, the total cost for replacement of all leak-prone pipe is roughly 

$270 billion.

24%

1960s

23%

1950s

8%

1940s

4%

11%

1990s 9%

10% 2000s

1980s

11%

1970s

Pre-1940s
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-5

Increases in U.S. Oil and Natural Gas Production and Proved Reserves

The United States is the world’s largest combined producer of petroleum and natural gas. In just 2 years, U.S. oil 

production increased by 35 percent from 2011 to 2013.7 U.S. proved reservesb of crude oil and lease condensates 

increased each year from 2009 through 2013 and now total more than 36 billion barrels—a level not seen for 

almost four decades.8

 Some of this increased production has been in locations that did not have sufficient pipeline 

capacity to accommodate it. For example, proved reserves of crude oil and lease condensate in North Dakota 

recently surpassed those of the Federal waters in the Gulf of Mexico, ranking North Dakota second only to Texas 

among U.S. oil-producing states.9 

Industry has responded to the infrastructure gap by expanding pipeline capacity where it can; reversing flow 

direction on other pipelines; converting natural gas lines to oil; and seeking new “workaround” solutions to 

transportation bottlenecks by moving increasing amounts of oil by truck, barge, and rail. 

The profile for U.S. natural gas production and reserves is similar. Between 2005 and 2013, U.S. production 

increased by 28 percent, and in 2013, proved natural gas reserves in the United States hit 354 trillion cubic 

feet—a new record.10 In 2013, shale gas was 38 percent of U.S. production and 47 percent of proved gas 

reserves;11, 12 between 2010 and 2013, shale gas production increased by 114 percent.13 The geography of gas 

production and reserves has also changed dramatically. Seventy percent of net increases in proved gas reserves 

are in just two states: Pennsylvania and West Virginia.14 This production is also occurring in locations where 

natural gas has not been produced in the past, changing movement of product flows and placing demands on 

the infrastructure to move this product to consumers. 

Decreases in Oil Consumption

At the same time that U.S. oil production has been growing markedly, U.S. oil consumption, and particularly 

consumption of a major refined product (gasoline), has been falling.15 A number of factors have led to the 

decrease in oil consumption. The Administration has set historic fuel economy standards for light and heavy 

vehicles in recent years, which are already having an impact. In October 2014, a record was set for new light-duty 

vehicle efficiency in the United States, reaching 24.1 miles per gallon.16 By 2025, passenger and light-duty trucks 

are expected to be more than twice as efficient, reaching an average of 54.5 miles per gallon.17 Many of these 

vehicles are hybrid or electric; widespread deployment of hybrid vehicles could substantially reduce oil demand, 

and wide-scale deployment of electric vehicles would require changes to the United States’ current infrastructure. 

An increase in natural gas heavy-duty vehicles is projected; this is unlikely to make a significant difference in 

TS&D infrastructure requirements.18

The Energy Information Administration (EIA) forecasts show a slight drop in oil demand by 2040 as a result of 

these standards; this is a significant change from previous forecasts, which anticipated increases in fuel demand 

in 2040.19 The Renewable Fuel Standard also requires that a mandated volume of renewable fuels (such as 

ethanol and biodiesel) to be blended into U.S. transportation fuels. In 2012, ethanol consumption reached nearly 

10 percent of U.S. gasoline demand by volume.20 After decades of growth, U.S. vehicle miles traveled dropped 

between 2007 and 2008 and have been relatively flat since.21 Specifically, from 1971 through 1995, average vehicle 

miles traveled growth was approximately 3 percent per year; this growth rate dropped to about 2 percent per 

year from 1996 through 2007 and has been close to 0 percent from 2008 to 2012. Vehicle miles traveled per capita

actually peaked a few years earlier in 2004 and has continued to decline.22 Finally, a proportion of the decline in 

fuel consumption is the result of reduced demand during the contraction of the economy in 2008 to 2009. 

b Proved reserves are estimated volumes of hydrocarbon resources that analysis of geologic and engineering data demonstrates with 

reasonable certainty are recoverable under existing economic and operating conditions. Reserve estimates change from year to year as 

new discoveries are made, existing fields are more thoroughly appraised, existing reserves are produced, and prices and technologies 

change. See: Energy Information Administration. “U.S. Crude Oil and Natural Gas Proved Reserves.” December 19, 2014. 

www.eia.gov/naturalgas/crudeoilreserves/. 
1-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Reductions in Net Oil Imports

As a consequence of both increased oil production and decreased oil consumption, net petroleum imports to the 

United States have declined steadily and significantly in recent years. The United States is currently less dependent 

on foreign oil than it has been in over 40 years. In 2005, net U.S. imports of crude oil and petroleum products 

averaged about 12.5 million barrels per day (million bbl/d) of a total of 20.8 million bbl/d of product supplied; 

by year-end 2014, net imports of crude oil and petroleum products exceeded 5.0 million bbl/d of a total of 

19.6 million bbl/d.23, 24, 25 This decrease in net petroleum imports has improved the energy and economic security 

of the United States. The United States remains, however, a large crude oil importer and petroleum product 

exporter;26 these links into the global market also link the United States to global oil prices and oil price volatility. 

Continued attention to infrastructure (e.g., the Strategic Petroleum Reserve) that addresses those vulnerabilities is 

needed.

Increases in Petroleum Product and Natural Gas Exports

U.S. exports of crude oil and petroleum products have increased dramatically.  In 2005, the United States 

exported 1.2 million bbl/d of crude oil and petroleum products (gasoline, distillate, jet fuel, petroleum coke, 

and hydrocarbon gas liquids); by October 2014, this amount grew to around 4.0 million bbl/d of crude oil and 

petroleum products.27 Almost 92 percent of total exports are refined products from oil; only 8 percent of the 

total is crude oil.28 Many of these refined products are produced or shipped from the Gulf of Mexico, which has 

increased the flow of petroleum and petroleum products in TS&D infrastructure flowing in that direction.

In addition, the United States is positioned to become a major exporter of natural gas just 10 years after an 

accelerated development of significant import capacity.  Rising supplies and falling natural gas costs in the United 

States opened a price gap with other parts of the world and eliminated most of the need to import LNG. In 

response, developers have started to repurpose previously constructed LNG import terminals to allow exports. 

Approved LNG export permits to Free Trade Agreement and non-Free Trade Agreement countries are about 40 

billion cubic feet per day (Bcf/d) and 5.74 Bcf/d, respectively. Total capacity of natural gas pipelines to Mexico was 

6.5 Bcf/d in 2008,29, 30 and by 2016, EIA projects that the United States will be exporting more than 1 trillion cubic 

feet of natural gas to Mexico annually.31 This additional capacity is meant to serve anticipated growing demand 

from Mexico’s electric power sector.32

Onshoring of Energy-Intensive Industries

According to the Congressional Budget Office, without shale gas, U.S. natural gas prices would be 70 percent 

higher than projected prices by 2040.33 The availability of lower-cost natural gas and natural gas liquids (NGL) 

provides an advantage for U.S. manufacturers using natural gas or NGL for heat, power, or feedstocks. As 

NGL costs have decreased, process costs for U.S. petrochemical manufacturing, which commonly uses NGL 

as a feedstock, have also decreased. This has enabled some U.S. petrochemical facilities to gain an export 

advantage over other parts of the world.34 As a result, many expansions and additions to the U.S. petrochemical 

manufacturing sector have been announced. The industrial sector as a whole has also taken advantage of 

abundant natural gas. U.S. industrial consumption of natural gas has increased 15 percent from 2007 to 2014.35

The 2014 Annual Energy Outlook Reference case projects industrial consumption of natural gas and petroleum 

to increase substantially from 2014 levels by 2025 and NGL and petrochemical feedstock consumption to increase 

44 percent from 2014 levels by 2025.36 Many of these increased operations will require access to, and be sited near, 

natural gas and NGL TS&D infrastructure. As a result, in 2014, renewable energy (including hydropower) made 

up almost 13 percent of U.S. electricity generation.37
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-7

Increased Deployment of Renewable Energy for Power Generation

Renewable energy deployment in the United States is rising. From 2008 to the end of 2013, the amount of 

electricity generated from wind energy has more than tripled, and the amount from solar has increased by 

more than tenfold.38 Renewable energy systems, including hydropower, wind, biomass, geothermal, and solar, 

generated 523 million megawatt-hours of electricity in the United States in 2013.39 According to EIA, in the 

first 6 months of 2014, 26 percent of the 4,396 megawatts of new utility-scale installed generating capacity that 

came online were solar additions and one-sixth were wind. Solar additions were up 67 percent over the same 

time period in 2013 and wind more than doubled.40

One important driver of increased renewable energy generation for electricity has been falling costs. 

Photovoltaic solar modules cost about 1 percent of what they did 35 years ago.41 Analysis by the National 

Renewable Energy Laboratory has found that the average cost for a utility-scale photovoltaic project in the 

United States dropped from about $0.21 per kilowatt-hour in 2010 to $0.11 per kilowatt-hour at the end 

of 2013.42 A second driver for increased renewable electricity generation has been state-level Renewable 

Portfolio Standards. Thirty-eight states have Renewable Portfolio Standards or some kind of preference or 

goal for renewables.43 Almost all states have met their targets for 2013.44 A third important driver has been the 

Production Tax Credit.

The increase in renewable electricity has changed demands on TS&D infrastructure. Some significant 

renewable resources are located far from population centers, and construction of adequate TS&D 

infrastructure is key to accessing those resources. Another element of TS&D infrastructure—energy storage—

may also become more important as a means of integrating higher amounts of intermittent renewables into 

the electric grid. At present, though, the many options for managing and operating the grid have lessened 

demand for long-distance transmission, though this could strand some high-value resources in both the 

midcontinent and offshore, particularly where there is no nearby demand. Power companies have multiple 

options for meeting state Renewable Portfolio Standards, and depending on how they choose to comply, there 

will be more or less need for additional transmission and distribution systems, particularly interstate TS&D 

infrastructure. For example, Texas requires the use of indigenous renewable resources for power generation 

to meet its standard. While it is the only state to do so explicitly, 17 other states offer a range of preferences 

for in-state renewable generation sources, including rebates or upfront cash incentives, income or franchise 

tax incentives, property or sales tax incentives, Property Assessed Clean Energy or low-interest financing, 

grant programs, feed-in tariffs, and bond funding.45 With respect to energy storage, while it is an important 

enabler for variable renewables, the lack of available energy storage is not yet a limiting factor for expansion of 

renewable electricity generation.

Increased Use of Natural Gas for Power Generation

Abundant natural gas supply and comparatively low prices have also affected the economics of electric power 

markets. Additionally, recent environmental regulations at the local, state, regional, and Federal levels have 

encouraged switching to fuels with lower emissions profiles, including natural gas and renewables. Natural 

gas demand for power generation grew from 15.0 Bcf/d in 2005 to 21.4 Bcf/d in 2013, and it is projected 

to increase by another 6.2 Bcf/d by 2030.46, 47, c Electricity generation from natural gas rose by 85 percent 

nationally from 2000 to 2013—from 601 terawatt-hours in 2000 to 1,114 terawatt-hours in 2013.48 To better 

understand the scale of natural gas use, total U.S. natural gas consumption in 2013 was 71.6 Bcf/d.49

c Note that the EIA 2030 projection made does not include laws and policies not enacted or finalized at the time of the projection.
1-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Natural gas-fired power plants accounted for just more than 50 percent of new utility-scale generating capacity 

added in 2013.50, d Natural gas-fired capacity continued to expand in 2014.51 Infrastructure changes may be 

needed to accommodate future growth in natural gas use for power, including repurposing and reversals of 

existing pipelines; lateralse

 to gas-fired generators;52 more looping and compression to the existing network; 

potential new pipelines (although, this could be regionalized); and additional processing plants and highdeliverability storage. Under multiple scenarios, the pace of these changes for the interstate natural gas pipeline 

system through 2030 is projected to be comparable to or less than historical build rates.

Slowing Rate of Electricity Demand Growth

Growth in U.S. electricity demand is at its lowest level in decades (as illustrated in Figure 1-2), driven most 

significantly by policies that promote energy efficiency, supply/demand balance, and the shift in the economy 

to less energy-intensive industry.53 It is important to note, at the same time, that while there is low demand 

growth nationally, there is wide variation in the amount of load growth across states and regions (see Figure 1-3). 

Figure 1-2. U.S. Electricity Use and Economic Growth (3-Year Compound Growth Rate), 1950–204054

The rate of growth in electricity use has declined since 1950, while the rate of growth in gross domestic product has stayed relatively constant. The 

slower electricity growth rate is a result of several factors, including a decline in energy-intensive industries, increasing energy efficiency, and the slow 

recovery from the recent recession.

d Representative capacity factors by technology are: coal 85 percent, conventional combined cycle 87 percent, conventional combustion 

turbine 80 percent, nuclear 90 percent, wind 35 percent, solar photovoltaic 25 percent.

e Small segments of pipelines designed to link gas-fired power plants to the natural gas pipeline system.

14%

Rate of Growth

12%

10%

8%

6%

4%

2%

0%

-2%

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

HISTORY PROJECTIONS

GDP Electricity Use

0.9%

2.4%

2011-2040

Average
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-9

Figure 1-3. Percent Change in Retail Electricity Sales (kilowatt-hours), 2008–201355

There is a considerable variation in electricity retail sales among states and by region, ranging from an increase of 27 percent in North Dakota to a 

decrease of 11 percent in Kentucky; these variations are due in part to changes in load growth.

Power Plant Retirements

Since October 2012, utilities have announced the retirement of five nuclear reactors in California, Wisconsin, 

Florida, and Vermont; Oyster Creek in New Jersey is also slated for retirement.56 U.S. electricity providers are 

announcing the retirement of a number of coal-generating assets. EIA forecasts 49.4 gigawatts of retirements 

between 2013 and 2020.57 Changes in baseload generation will affect transmission infrastructure needs. 

Market-related factors driving coal retirements include declining growth in electricity demand, lower natural 

gas prices, and changing coal prices. Due to rising international demand and declines in domestic mining 

productivity, EIA projects steady price increases for coal through 2040;58 meanwhile, market prices for coal 

have increased by roughly 70 percent since 2000.59 Coal generation retirements will vary by region, based on 

the amount of existing coal generation, with regionally varying implications for transmission and bulk power 

system’s operations and reliability. Retirements are also affecting the nuclear power industry, with closures 

announced in 2012–2013 of five nuclear reactors, the first since 1998. Nuclear power supplied nearly 19.0 

percent of U.S. electricity in 2013—all of it carbon free—yet only accounts for 10.0 percent of total installed 

capacity, with 2014 preliminary data showing a record average 90.9 percent capacity factor for the Nation’s 100 

nuclear units.60 The loss of these plants could lead to a shift in power flows across the transmission system. 

6%

-4%

-1%

8% -4%

-1%

-9%

27%

10%

4%

-1%

5%

9%

1%

1%

-2%

-2%

-2%

-2%

-2%

-2%

-2%

0%

0%

0%

-2%

-4%

-8%

-4%

-2%

-5%

-3%

0%

0%

-8%

-11%

-3%

-3%

-3%

-3%

-7%

-8%

2%

2%

-9%

2%

3%

5%

6%

0%

0%

Increase Decrease

Percent Change 
1-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Rising Investment in Electric Transmission

According to EIA, between 1997 and 2012 electric transmission investments by private companies and 

investors increased fivefold in real terms (2012 dollars), growing from $2.7 billion in 1997 to $14.1 billion in 

2012—reversing a three-decade decline (see Figure 1-4).61 Reasons for increased investment include reliability 

enhancement, connecting to renewables, demand shifts, cost increases, and market reforms that created more 

options for independent generators.

Figure 1-4. Investment in Transmission Infrastructure by Investor-Owned Utilities, 1997–201262

14

10

12

8

2

6

4

0

1997

Billions of 2012 Dollars

2000 2003 2006 2009 2012

Underground Lines and Devices

Station Equipment Other

Towers and Fixtures Overhead Lines and Devices Poles and Fixtures

Spending on transmission Infrastructure has increased fivefold since the late 1990s.

Climate Change

Energy TS&D infrastructure has always been shaped not only by the mix of energy supply technologies 

and end-use patterns, but also by the characteristics of the environment where the infrastructure must 

operate, including, for example, terrain, vegetation, soil and seismic conditions, and climate. It has long been 

true, as well, that choices about TS&D infrastructure have had to take into account the need to limit that 

infrastructure’s adverse impacts on the environment. 

By far the most important environmental factor affecting TS&D infrastructure needs now and going forward is global 

climate change. Sea-level rise, thawing permafrost, and increases in weather extremes are already affecting TS&D 

infrastructure in many regions. The need to mitigate global climate change by reducing GHG emissions, moreover, is 

accelerating changes in the mix of energy supply options and end-use patterns, and over time, it is likely to become the 

dominant such influence. Reducing GHG emissions from TS&D infrastructure, including methane emissions from 

the transmission and distribution of natural gas, will be increasingly important in this context.

Some key aspects of the climate change picture are summarized here as a prelude to the discussion in later chapters 

of how decisions about TS&D infrastructure will likely be influenced by this and other environmental issues.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-11

Climate Science

The key conclusions from climate science—as embodied in the most recent reports of the Intergovernmental 

Panel on Climate Change,63 the National Academy of Sciences (jointly with the Royal Society of London),64

and the Third National Climate Assessment of the U.S. Global Change Research Program65—are that GHGs 

emitted by civilization’s energy system are the dominant cause of changes in climate being observed across the 

globe; that the changes not just in average conditions but in extremes are already causing harm to life, health, 

property, economies, and ecosystem processes; and that deep reductions in GHG emissions will be required if 

an unmanageable degree of global climate change is to be avoided.

Climate Trends

The annually and globally averaged air temperature near Earth’s surface has been directly computable from 

thermometer measurements around the world since the late 19th century; determinations of this average over 

the period 1880–2014 by the National Oceanic and Atmospheric Administration and the National Aeronautics 

and Space Administration are shown in Figure 1-5. According to the best estimates of both organizations, 2014 

was the hottest year since 1880, 2010 the second hottest, and 2005 the third hottest. 

The increase in the average temperature, amounting to about 1.4 degrees Fahrenheit for the world and 1.6 

degrees Fahrenheit for the United States, is not per se the essence of the climate change problem, however. 

These average temperatures, like the temperature of the human body, are simply indices pointing to the overall 

state of a very complex system. In the case of climate, the state of the system includes not just the averages, but 

the spatial and temporal variations of temperature, humidity, clouds, winds, rainfall and snowfall, and tropical 

and extratropical storminess, as well as such closely related factors as sea level; sea-ice cover; ocean currents; 

the stability of permafrost; and the amount of water stored in groundwater, snowpack, and mountain glaciers. 

Figure 1-5. Global Average Surface Air Temperature Relative to the 1951–1980 Average66

1.25

1.00

0.75

0.50

0.25

0.00

-0.25

-0.50

-0.75

-1.00

-1.25

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Degrees Fahrenheit

NOAA NASA
1-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Climate Change Impacts

A number of the manifestations of global climate change are particularly relevant to the TS&D focus of this 

report. These include dramatic increases in very hot days and heat waves in many regions; a higher fraction of 

rain falling in downpours in most regions (see Figure 1-6); increases in the intensity of droughts, wildfires, and 

the most powerful storms in some; the shrinkage of sea ice and the thawing of permafrost in the far North; and 

the rise of mean sea level. 

Figure 1-6. Observed Change in Very Heavy Precipitation67

-12% <0 0-9 10-19 20-29 30-39 40+

Change(%)

16%

12%

5%

37%

71%

27%

11%

Intense precipitation events are becoming more frequent, particularly in the northeastern United States. The map shows percent increases in the 

amount of precipitation falling in very heavy events (defined as the heaviest 1 percent of all daily events) from 1958 to 2012 for each region of the 

United States. 

It is these kinds of changes that have brought climate change home to a large proportion of the world’s 

population, including in the United States. Additionally, because of these manifestations of climate change 

beyond average warming, their impacts on life and property and livelihoods, and the prospect of their 

continuing to worsen going forward, in proportion to the size of future emissions (see Figure 1-7), that many 

policymakers, many leaders of business and civil society, and large majorities of publics around the world have 

concluded that it is time to take action both to reduce those emissions and to increase preparedness for and 

resilience against whatever further changes in climate materialize.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-13

Figure 1-7. Change in Average Temperature in the Later Part of this Century (2071-2099; 20-year average) Relative 

to the Late Part of Last Century (1970-1999) under Low- and High-Emission Scenarios for Global GHGs68

3 4 5 6 7 8 9 10 15

Temperature Change (°F)

Lower Emissions

Higher Emissions
1-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Human Causes of Climate Change

The most important of the anthropogenic emissions driving global climate change are those of CO2

, methane, 

and particulate black carbon. Of the total warming influences exerted by anthropogenic emissions since the 

nominal start of the Industrial Revolution in 1750, 42 percent came from CO2 emissions, 24 percent from 

methane emissions, and 16 percent from particulate black carbon emissions; the remainder was divided almost 

equally among emissions of halocarbons, nitrous oxide, and carbon monoxide (which converts to CO2 in 

the atmosphere).69 The relative importance of CO2

 emissions compared to those of the other heat-trapping 

substances has been growing over time, moreover. Based on integrated warming influence over the next 

100 years, U.S. emissions of CO2 in 2013 accounted for more than 82 percent of the impact of all U.S. GHG 

emissions combined for that year.70 The share of CO2 as a proportion of all global GHG emissions in the same 

year, calculated on the same basis, was about the same.71

The main sources of the anthropogenic additions of CO2 to the atmosphere over the course of the industrial 

revolution have been fossil fuel burning (including flaring of natural gas), cement production, and land-use 

change. By 2013, the fossil fuel and cement contribution accounted for 92 percent of the total.72 U.S. CO2 

emissions from fossil fuels and cement in 2013 amounted to about 17 percent of the world total and came from 

oil burning (40 percent), coal burning (30 percent), useful natural gas burning (25 percent), non-energy uses 

of fossil fuels (3 percent), cement manufacturing and other non-fossil-fuel industrial activities (1 percent), and 

gas flaring (1 percent).73

In recent years, the main contributors to global emissions of methane from human activities have been the 

fossil fuel system (30 percent of human-caused emissions), livestock (27 percent), landfills (21 percent), 

biomass/biofuels burning (11 percent), and rice cultivation (11 percent).74 In the United States, which accounts 

for about 8 percent of anthropogenic methane emissions worldwide, the role of the energy system in methane 

emissions has been larger; the main contributors in 2013 were the fossil fuel system (43 percent), livestock and 

manure management (34 percent), and landfills and other waste management (20 percent).75

TS&D systems are responsible for only a small fraction of overall U.S. emissions. There are nonetheless 

opportunities to reduce emissions from this sector—for example, through halting methane leakage from 

natural gas pipelines and processing facilities. And, of course, the expanded implementation of no- and lowCO2

 energy technologies being undertaken to reduce the energy system’s GHG emissions overall will place 

additional demands on TS&D in some cases (e.g., to link remote renewable energy sources with demand 

centers and to move captured CO2

 from fossil-fueled (and, possibly biomass-fueled) power plants through 

pipeline networks to sites for productive use or geologic storage). 

The U.S. Response to the Climate Change Challenge

The Obama Administration has addressed the growing threat from climate change through a comprehensive 

set of energy and environmental strategies to cut GHG emissions domestically and through sustained 

diplomacy to spur global action. 

The Administration’s First Term

First term actions include $80 billion of investments in a cleaner, more efficient U.S. energy future through 

the American Recovery and Reinvestment Act of 2009, as well as additional funding through subsequent 

Presidential budgets; the promulgation of the first-ever joint fuel economy/GHG emission standards for lightduty vehicles and new, more stringent energy efficiency standards for commercial and residential appliances; 

and the announcement of a U.S. emissions reduction target in the range of 17 percent below the 2005 level by 

2020. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-15

Other actions to deploy low-carbon solutions included creation of the TIGER program (i.e., the Transportation 

Investment Generating Economic Recovery program), which combines Federal, private, state, and local 

funding to advance public transportation; the public-private Better Buildings Initiative to boost the energy 

efficiency of commercial and industrial buildings; and promulgation of the first-ever national fuel efficiency 

and GHG emissions standards for heavy-duty trucks and buses.

The Administration also invested in clean energy technology leadership through increases in DOE funding 

for research and development on clean energy and energy efficiency; creation of five Energy Innovation Hubs 

linking academia, industry, and government in a concerted effort to overcome barriers to the development 

and commercialization of a variety of cleaner and more efficient energy technologies; and the launch of the 

Transportation Electrification Initiative to accelerate market adoption of advanced electric vehicles.

These domestic initiatives contributed to a number of the trends affecting TS&D infrastructure that were 

mentioned previously in this chapter, such as decreases in oil consumption, increased deployment of 

renewable energy for power generation, and slowing the rate of electricity demand growth. 

The Climate Action Plan

In June 2013, the President announced a comprehensive “Climate Action Plan,” with three pillars:76

• Additional measures to reduce domestic GHG emissions and bolster land-sector carbon sinks, 

including CO2

 emission standards for existing and new fossil-fueled electric power plants, an 

interagency strategy to reduce methane emissions, and further commitments to clean energy and 

increased energy efficiency.

• Measures to increase domestic preparedness for and resilience against changes in climate that can 

no longer be avoided, including directing Federal agencies to incorporate climate change preparedness 

and resilience into their missions and policies, establishing interagency and state/local/tribal task forces 

on preparedness and resilience to advise on and implement additional steps, developing strategies 

and partnerships for managing floods and droughts, and mobilizing science and data to support these 

efforts.

• Leading international efforts to address climate change, including not just leading by example, but 

also bilateral and multilateral engagement on emission reduction targets and technologies (focusing 

particularly on the largest-emitting nations), assistance on building preparedness and resilience 

(focusing particularly on developing countries), and mobilizing clean energy and preparedness finance.

As noted in the Preface, the “Climate Action Plan” also mandated the production of an interagency QER, of 

which this report is the first installment.

Among the actions subsequently taken under the “Climate Action Plan,”77 those with the greatest potential 

relevance for the future of TS&D infrastructure (and thus most germane to the focus of this report) include 

the following: 

• On domestic emissions, changes to TS&D infrastructure will play a role in achieving the interagency 

strategy to reduce methane emissions nationwide, in the acceleration of permitting for new renewable 

energy projects on public lands and military installations, and in the implementation of Executive 

Orders requiring that Federal departments and agencies—including those with responsibilities relating 

to TS&D infrastructure—take climate change into account in all of their policies and programs.

• On preparedness and resilience, an Executive Order in November 2013 established both an 

interagency Council on Climate Preparedness and Resilience to coordinate the Federal Government’s 

activities in this domain and a State, Local, and Tribal Leaders Task Force on Climate Preparedness and 

Resilience to advise the President and the council on needs on the ground. A climate data initiative was 
1-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

launched in March 2014 to make available, in convenient form, all of the relevant data held by Federal 

departments and agencies; the “Third U.S. National Climate Assessment” (providing information 

tailored to regional and sectoral preparedness and resilience needs, including the needs of the energy 

sector) was released in May 2014, and the first version of a user-friendly U.S. Climate Resilience Toolkit 

was released to the public in November 2014. Among the benefits of these initiatives is better data and 

insight for TS&D infrastructure owners, regulators, and other stakeholders concerning the potential 

effects on that infrastructure of climate-driven phenomena such as sea-level rise.

• On international engagement, in November 2014, in a joint announcement with Chinese President Xi, 

President Obama announced a new U.S. target for post-2020 GHG emission reductions: 26 percent to 

28 percent below 2005 levels by 2025. At that event, the Chinese government made the unprecedented 

commitment that Chinese emissions would peak by around 2030 and that China would boost its 

economy-wide share of non-fossil-fuel energy to about 20 percent by that time. Since then, the United 

States has worked with other countries, including Mexico, to secure ambitious climate change and clean 

energy commitments from those two countries, as well. Improvements to TS&D infrastructure will play 

a role in facilitating the achievement of the U.S. target and in increasing clean energy trade and market 

integration with Mexico.

Results of the Administration’s Energy and Climate Policies

Between 2008 and 2014, the U.S. economy grew by 8.5 percent while total energy use and electricity generation 

both fell by 0.6 percent. That means the energy efficiency and electricity efficiency of the U.S. economy—real 

gross domestic product per quadrillion British thermal unit of total energy and real gross domestic product 

per billion kilowatt-hours of electricity—both grew during this period by 9.1 percent, an average of about 1.5 

percent per year.78 U.S. GHG emissions in 2013 were 7.0 percent below the 2008 level and 9.2 percent below the 

2005 level used as a reference point for U.S. emissions reduction targets.79

A large part of these recent emissions reductions have come from the electric power sector, where emissions 

from coal burning declined 21.3 percent and emissions from all fossil fuel combustion in power plants 

declined 15.4 percent between 2005 and 2014.80 Key factors contributing to this trend have included a 

reduction in demand growth; fuel switching from coal and petroleum to lower-carbon natural gas; and the 

previously mentioned growth in generation from wind and solar energy.81 In addition, a combination of state 

and Federal policies, plus industry actions that include improved gas infrastructure equipment, contributed to 

a 13 percent decline in methane emissions in natural gas systems between 2005 and 2012.82

The Path Forward

As noted above, the Obama Administration committed formally in 2009 to a target of reducing U.S. GHG 

emissions to a level in the range of 17 percent below the 2005 value by 2020, and it committed further, in 

November 2014, to a level 26 percent to 28 percent below the 2005 value by 2025. Historic and projected U.S. 

emissions under these targets, to 2025, are shown in Figure 1-8.

The Administration’s actions under the “Climate Action Plan” put the United States on a path to meet the 

Administration’s 2020 and 2025 targets. According to the “U.S. Climate Action Report 2014” submitted by the 

Administration to the UN Framework Convention on Climate Change, U.S. emissions reductions by 2020 

under the “Climate Action Plan,” compared a 2012 Policy Baseline scenario,f

 could amount to 485 million 

metric tons to 800 million metric tons in energy sector CO2, 100 million metric tons to 135 million metric 

tons of CO2

 equivalent in hydrofluorocarbons reductions under the Montreal Protocol, and 25 million metric 

f The 2012 Policy Baseline Scenario assumes no additional measures beyond those in place in 2012 are implemented.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-17

tons to 90 million metric tons of CO2 equivalent in methane reductions under the “Climate Action Plan’s” 

Methane Strategy.84 The report indicates that these and a combination of smaller reductions from other sectors 

of the economy would bring total U.S. emissions in 2020 down to the range of 17 percent below 2005 levels. 

Steepening of the downward trend after 2020, as Figure 1-8 shows, will be required in order to reach the 

target of 26 percent to 28 percent below the 2005 level by 2025. This is to be accomplished through several 

means, including implementation of carbon emission standards for the power sector that will drive further 

shifts to low- and zero-carbon fuels, cleaner electricity generation technologies, and continuing improvements 

in end-use efficiency. Improvements in TS&D infrastructures will assist in meeting these goals. While the 

Administration’s 2020 and 2025 targets are ambitious, it is clear that continued reduction in GHG emissions 

will be needed beyond 2025 in the United States and globally. These reductions will continue to drive 

significant changes in TS&D infrastructure in the longer term.

Energy Finance for TS&D Infrastructure

Significant investment by both the private and public sectors will be required to meet energy objectives and 

reduce vulnerabilities to disruptive events, but capital and cost of capital issues will be less challenging in 

the near term than regulatory or market structure barriers. Although most energy TS&D assets are privately 

or non-federally funded and owned, significant elements of the Nation’s shared transport infrastructure, 

increasingly important for energy commodities, are federally funded and owned. 

2005

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

1990 1995 2000 2005 2010 2015 2020 2025 2030

Million MtCO2e

Baseline: AEO 2014 with 2014 GHG Inventory Adjustments

Approximate 2025 Emissions trajectory before current Administration (AEO2008)

Approximate trajectory to U.S. 2025 Target of 26% to 28% below 2005 levels

17% below 

2005 in 2020

26% to 28%

below 2005

in 2025

• Robust action brings U.S. GHG emissions in the 

range of 26%–28% below 2005 levels by 2025

• Consistent with reductions of ~80% by 2050

Figure 1-8. Historic and Projected U.S. GHG Emissions under Obama Administration Targets83
1-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Private Sector Financing for Infrastructure

As an investment class, infrastructure generally is considered to be a long-term investment with relatively low 

risk, and most energy TS&D infrastructure projects fall into this category. Capital generally is available for 

projects that have a predictable revenue stream, have stable cash flows, and are based on proven technologies.g, 85 

These may include distribution infrastructure investments, where the rate base and rate of allowed return on 

investment have been established for the utility by the public service commission through the rate case process, 

or investments by a natural gas midstream pipeline company that have signed long-term contracts with 

suppliers or shippers. These stable, predictable returns are attractive to capital markets, including institutional 

investors, many of whom are looking for lower-risk, longer-duration assets to match long-dated liabilities.86, h

Barriers to investment tend to arise from unfavorable market fundamentals or regulatory challenges, rather 

than from constraints related to access or cost of capital (although, this may change if interest rates rise or 

risk spreads change). These barriers include lack of full market valuation (e.g., for grid ancillary services, 

including storage) and lack of information for decision makers (e.g., to inform an appropriate level of resiliency 

upgrades). Additionally, market externalities, such as climate change impacts due to GHG emissions, are not 

addressed. Additional public financing mechanisms may help support investment; for example, by de-risking 

projects that incorporate innovative technology, as well as ameliorating near-term affordability issues such as 

rate shock to customers from infrastructure modernization (further discussed in Chapter II, Increasing the 

Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure).

Public Sector Financing for Infrastructure

The Federal Government funds and owns key elements of the Nation’s energy systems, such as the Strategic 

Petroleum Reserve for liquid fuels and the Power Marketing Administrations for electricity. The government 

also plays a role in demonstrating and deploying first-of-a-kind technologies at scale, such as through the 

DOE Loan Program. In addition, the Department of Agriculture’s Rural Utility Service provides support for 

TS&D infrastructure. In addition, energy TS&D infrastructure investments have been supported by Federal tax 

credits and structures, such as master limited partnerships for natural gas and liquid fuels transmission, taxexempt municipal bonds for public utilities, and investment tax credit for storage associated with renewable 

power.

Large segments of shared infrastructure, such as highways, water transportation, and ports, are supported by 

public funds.87 For example, water transport infrastructure, including canals, shipping channels, and locks, are 

constructed and maintained by the Army Corps of Engineers through Federal appropriations. In many cases, as 

discussed in Chapter V (Improving Shared Transport Infrastructures), these assets serve a vital and increasing 

role in the transport and distribution of energy supplies, which have been underfunded for many years. 

This installment of the QER and the analysis supporting its recommendations suggests the need for substantial 

additional private and public sector investment. Targeted Federal investments will be needed in areas such 

as the Strategic Petroleum Reserve, ports, and waterways, as well as other areas of traditional government 

responsibility, and to incentivize the mobilization of private sector capital. Appropriately designed Federal 

investments will pay significant dividends for the Nation’s competitiveness, energy security, and the transition 

to a clean energy future. As disruptive events to energy infrastructure become more prevalent, the Federal 

g For example, one panelist at the QER Finance Stakeholder meeting in New York City commented that today’s market has a 

“tremendous amount of capital” chasing “a dearth of [financeable] projects.” See: Department of Energy. “Summary of Presentations 

and Comments at the Quadrennial Energy Review Stakeholder Meeting #13.” p. 2. October 6, 2014.

h Additionally, global total capital for all mutual fund and institutional investors is estimated at approximately $75 trillion, with 

approximately $20 trillion in U.S. pension funds alone, although only a fraction of this capital is currently dedicated to the 

infrastructure asset class. See: Ceres. “Investing in the Clean Trillion: Closing The Clean Energy Investment Gap.” www.ceres.org/

resources/reports/investing-in-the-clean-trillion-closing-the-clean-energy-investment-gap/view. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-19

Government can build and incentivize the capacity of states, tribes, and localities for greater reliability, 

resiliency, and recovery through energy assurance plans and grants.  

Energy Infrastructure Data and Information

Policymakers and companies rely on energy data to understand the status and evolution of national energy 

systems and associated implications for markets, resilience, environment, safety, and other issues. One of the 

major goals of policymakers is to forecast potential trends or disruptions to the system, identify vulnerabilities, 

accurately characterize and quantify the scale of externalities, and then direct the response that is in the 

national interest. Good decision making by public and private entities alike on energy investments and policies 

requires accurate, accessible data and analysis. There are three overlapping areas around data that need to be 

improved in order for the Federal Government to accomplish its energy policy goals: data gaps, analytical 

methodology, and modeling/visualization tools.

Many national-level data gaps in liquid fuels, natural gas, and electricity infrastructure need to be filled, 

particularly for environmental and safety issues and energy-related transport. In many cases, current data 

is either outdated, sporadically collected, privately held, not coordinated in definitions or formats, “siloed” 

in different databases, or simply not collected. For example, information of railway congestion related to 

energy product transportation is severely outdated, with data often lagging by 2 years or more (see Chapter V, 

Improving Shared Transport Infrastructures).

Energy stakeholders also need improved, commonly accepted analytical methodologies to define, measure, 

verify, and evaluate options in order to make more accurate and timely decisions regarding infrastructure. 

For example, frameworks and tools for assessing energy infrastructure resilience to disruptions vary widely 

across industries and government agencies and may be well-tailored for specific industries and sectors, but are 

not designed to aid policymakers and regulators in understanding current vulnerabilities; in deciding where 

to focus efforts and investment to increase resilience; or in determining what level of resilience is needed to 

protect consumers, safety, and the economy. 

Finally, as the quality and consistency of data improve, models available to the Federal Government must 

be adapted to utilize that data effectively and to address key emerging policy questions. For example, 

models cannot fully address issues of electric grid congestion at a national scale. Further, while many 

energy-sector-specific modeling and visualization tools already exist, these often are likely to ignore critical 

interdependencies or operate with low temporal resolution. Gaps also exist in high-quality modeling and 

visualization tools in specific subsectors, such as electricity distribution, natural gas production, bulk gas 

transmission, and the liquid fuels network.

TS&D Infrastructure Goals and Architecture of the Study

This report’s integrated assessment of the emerging threats, risks, and opportunities for TS&D energy 

infrastructure in the United States was guided by three high-level goals:

Economic competitiveness: Energy infrastructure should enable the Nation to, under a level playing field and 

fair and transparent market conditions, produce goods and services that meet the test of international markets 

while simultaneously maintaining and expanding jobs and the incomes of the American people over the longer 

term. Energy infrastructures should enable new architectures to stimulate energy efficiency, new economic 

transactions, and new consumer services.

Environmental responsibility: Energy infrastructure systems should be developed and managed in an 

environmentally responsible manner, taking into consideration the imperatives of climate change and the 
1-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

societal costs and benefits of reducing or avoiding pollution and land-use impacts on a lifecycle basis in order 

to minimize their environmental footprint while enabling better environmental performance for the energy 

system more broadly. It is also important for policies to promote equity and avoid disproportionate impacts to 

any particular populations. 

Energy security: Vulnerabilities resulting from disruptions to energy infrastructure should be minimized 

from disruptions in supply and mitigate impacts of disruptions, including economic impacts. If disrupted, the 

U.S. energy infrastructure should be able to recover quickly. Energy security should support overall national 

security and encompass a collective approach to U.S. allies, other friendly nations, and trading partners. 

The “Desirable Infrastructure Characteristics” box provides a longer list of characteristics that U.S. TS&D 

infrastructures should embody (in varying degrees) by 2030. The overall structure of the study and its 

recommendations is depicted in Figure 1-9.

Desirable Infrastructure Characteristics 

In addition to the high-level goals of competitiveness, energy security, and environmental responsibility, this report focuses 

on how to enhance a more granular set of desirable characteristics that transmission, storage, and distribution infrastructures 

should, in varying degrees, embody by 2030:

Reliability. The ability of a system or its components to operate within limits so that instability, uncontrolled events, or 

cascading failures do not result if there is a disturbance, whether the disturbance is a disruption from outside the system or an 

unanticipated failure of system elements. Reliability also means that a system’s components are not unexpectedly failing under 

normal conditions.

Resilience. The ability of a system or its components to adapt to changing conditions and withstand and rapidly recover 

from disruptions. To the extent that actions improve a system’s ability to withstand disruptions, they might be characterized as 

enhancing reliability, or resilience, or both. The ability to recover from a disturbance, however, is specific to resilience.

Safety. Achieving an acceptably low risk to life and health in the design, construction, operation, and decommissioning of 

a system. That level of risk is determined by taking into account the magnitude of potential consequences, the probability of 

those consequences occurring, and the costs of risk mitigation.

A minimal environmental footprint. Energy systems should be efficient and designed, constructed, operated, and 

decommissioned in a manner that minimizes carbon pollution. They should have a minimal impact on air quality and water 

quantity and quality, have a minimal land-use footprint, have a low impact on biological resources, and have minimal toxic 

emissions. 

Flexibility. Energy infrastructure should be flexible enough to accommodate change in response to new, expected, or 

unexpected internal or external system drivers. Flexibility could include extensibility, the ability to extend into new capabilities 

beyond those required when the system first becomes operational; interoperability, the ability to interact and connect 

with a wide variety of systems and subsystems, both in and outside of the energy sector; and optionality, which provides 

infrastructures or features of infrastructures that would allow users to maximize value under future unforeseen circumstances. 

Distributed generation, for example, could include these characteristics. 

Affordability. Ensures that at both the system and component levels, costs and defined needs (or requirements) of users are 

balanced with their ability to pay and consider the value created by the energy goods or services for the users or the system.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-21

High Level Goals Energy Infrastructure Objectives Crosscutting Issues

JOBS

ENVIRONMENT

NATURAL GAS

LIQUID FUELS

ELECTRICITY

SITING

ENERGY

 INFRASTRUCTURE 

FOR THE 21ST 

CENTURY

Increasing the Resilience, 

Reliability, Safety, and 

Asset Security of TS&D 

Infrastructure

Modernizing 

the Electric Grid

Modernizing U.S. Energy 

Security Infrastructures in 

a Changing Global 

Marketplace

Improving 

Shared 

Transport 

Infrastructures

Energy Security

Economic

Competitiveness 

Environmental

Responsibility

Figure 1-9. Objectives, Goals, and Organization of the QER88

This figure shows the comprehensive set of interactions and overlapping objectives and goals of energy TS&D infrastructure, and of the corresponding organization of the QER. 

Figure Notes:

1. Analyses were conducted with high-level national goals as the guideposts: (1) energy security, (2) environmental responsibility, and (3) economic competitiveness. 

2. Central to the QER is a set of four analytically derived objectives that represent an integrated approach to assessing the adequacy of our TS&D 

energy infrastructures for supporting these high-level goals. These objectives are: (1) increasing TS&D resilience, reliability, safety, and asset 

security; (2) modernizing the electric grid; (3) modernizing U.S. energy security infrastructure; and (4) improving shared transport infrastructures. 

3. The QER also provides more conventional sector-level analyses of three infrastructures that represent key fuels/energy carriers: (1) liquid fuels, 

(2) natural gas, and (3) electricity. Each of these is described in detail in Appendices A, B, and C. Finally, the figure shows a host of additional 

crosscutting government and private sector mechanisms/tools that enable or impede energy infrastructures in achieving the objectives; these 

are represented in the surrounding circles and include jobs and training, environment, and siting. Other crosscutting issues are embedded in 

the integrated analysis.
1-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Assessing Trends Using Scenario Analysis

The QER used scenario analyses to assess the impact of many of the factors previously described on the need 

for liquid fuels, natural gas, and electricity transmission infrastructure between 2014 and 2030. The scenarios 

explored infrastructure changes and TS&D investments that might be required under a range of possible 

future conditions, including changes in policy. Factors analyzed included, among others, an economy-wide cap 

on CO2 emissions driving a 40-percent reduction in 2030, decreases in renewable generation costs, increased 

natural gas prices, and dramatic expansions of LNG export capacity (see Table 1-2). Each of these scenarios 

was run individually, and some were run in combination. The scenarios were defined to be “stressing” as they 

were not those considered most likely, but were those that might require the greatest amount of change in 

existing infrastructure. Each scenario was compared to the Annual Energy Outlook 2014 Reference case. 

Scenario outputs included the amount of additional transmission and storage infrastructure built, GHG 

emissions, and energy costs. 

Table 1-2. QER Scenarios

The natural gas scenario analysis results indicated that even under conditions of high domestic gas demand 

or high U.S. gas exports, the amount of new gas transmission infrastructure needed is lower than or 

commensurate with historical build rates. More new infrastructure is needed for the high U.S. exports case 

than for the high domestic demand case because new pipelines would be needed, especially in the Gulf region. 

The electricity scenarios similarly showed that transmission needs through 2030 do not significantly exceed 

historical build rates under a wide range of renewable energy deployments, under a GHG cap, and under 

accelerated retirements. Certain scenarios do, however, produce different regional transmission needs; for 

example, more transmission is required in the Great Lakes region relative to the base case if wind costs drop by 

about 15 percent. Finally, liquid fuels scenarios showed that very little liquid fuels transmission infrastructure 

will be built even under high-demand conditions.

Scenarios Model

Base Case: Annual Energy Outlook 2014 Reference Case

Natural Gas

• High domestic gas demand

• High world gas supply

• High U.S. exports

Deloitte (MarketPoint)

• Coupled gas infrastructure and electricity market models

• Outputs include major pipeline capacity expansions and 

new pipeline builds

Electricity

• Low wind cost

• Low solar cost

• Low-cost storage

• High/low electricity demand

• High natural gas prices

• 40-percent economy-wide greenhouse gas reduction by 2030

• High penetration of distributed generation (photovoltaic)

• High natural gas use

• No new transmission

National Renewable Energy Laboratory 

(Renewable Energy Deployment System, ReEDS)

• Electricity generation capacity expansion model

• Outputs include transmission capacity expansion, 

generation, electricity costs, etc.

Liquid Fuels

• Low/high oil resource

• Revisit oil export ban/keep intact

• Low oil demand

Energy Policy Research Foundation, Inc. 

(Ponderosa Crude Flow Model)

• Pipeline flow and refinery model allocates domestic and 

foreign crude oil based on refinery demand and margin 

optimization

Oak Ridge National Laboratory/Jacobs Model

• Detailed refinery modeling (Jacobs) informs simplified 

refinery, crude distribution model (Oak Ridge)
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-23

 The Quadrennial Technology Review

The Quadrennial Technology Review (QTR) is a report issued by the Department of Energy (DOE) that examines the most 

promising research, development, demonstration, and deployment (RDD&D) opportunities across a broad spectrum of energy 

supply and end-use technologies. The first QTR was issued in 2011; DOE is anticipating the release of the second review in 

mid-2015. While the Quadrennial Energy Review (this report) is focused on infrastructure and policy issues across the public 

sector, the QTR is primarily focused on DOE-supported RDD&D to meet national energy challenges and goals. The two reviews 

are parallel to and complementary with each other.

The 2011 QTR defined a framework for understanding and discussing energy system challenges; established a set of priorities 

for DOE; and explained to stakeholders the roles of DOE and its national laboratories, the broader government, the private 

sector, academia, and innovation in energy transformation.

The 2015 edition of the QTR will describe the Nation’s energy technology landscape and the dramatic changes that have 

taken place since the first report in 2011. The 2015 QTR will approach the analysis from a systems perspective to explore the 

integration of science and technology. It will include chapters on the following:

• Advancing systems and technologies to produce cleaner fuels

• Enabling modernization of electric power systems (grid)

• Advancing clean electric power technologies (generation)

• Increasing efficiency of building systems and technologies

• Innovating clean energy technologies in advanced manufacturing

• Advancing clean transportation and vehicle systems and technologies

• Enabling capabilities for energy science and technology.

As with the 2011 QTR, the 2015 QTR will inform DOE’s strategic planning through detailed technology assessments that 

examine potential RDD&D pathways and their impacts out to 2030 and beyond.

More information on the QTR can be found at www.energy.gov/qtr. 

In parallel with the QER, DOE is conducting a Quadrennial Technology Review examining energy research, 

development, demonstration, and deployment opportunities. Unlike the QER, which assesses the entire energy 

sector, the QTR is more directly focused on DOE’s internal research and technology priorities. The first QTR 

was issued in 2011, and the box below describes the 2015 QTR effort.
1-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

Organization of the Remainder of the Report

The analysis conducted for the QER identified four major integrated objectives that address near-, mid-, and 

long-term energy infrastructure needs and challenges, which are covered in Chapters II through V:

• Chapter II. Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure, 

focusing on the range of vulnerabilities and growing threats for TS&D infrastructures and ways to 

decrease those vulnerabilities, including hardening them to make them less vulnerable, more reliable 

and resilient, or safer.

• Chapter III. Modernizing the Electric Grid, enabled through infrastructures, policies, technologies, 

and other mechanisms.

• Chapter IV. Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace, 

including physical, market, and geopolitical recommendations.

• Chapter V. Improving Shared Transport Infrastructures, focusing on rail, waterways, ports, and 

roadways—transportation modes shared by other commodities and products that are seeing significant 

increases in use for the transportation of energy commodities. 

The report also focused on crosscutting areas of inquiry that are important to the integrated analyses, as well as 

the analyses of the physical energy infrastructures in Chapters VI through IX:

• Chapter VI. Integrating North American Energy Markets summarizes how an integration 

of the North American energy market could enhance energy security, reliability, resiliency, and 

competitiveness policies affecting cross-border infrastructures.

• Chapter VII. Addressing Environmental Aspects of TS&D Infrastructure focuses on ways to cut 

carbon pollution and protect the environment.

• Chapter VIII. Enhancing Employment and Workforce Training focuses on enhancing jobs, 

competitiveness, and training for modernizing energy infrastructures.

• Chapter IX. Siting and Permitting of TS&D Infrastructure focuses on promoting siting and 

permitting policies that expedite infrastructure build-out while protecting the environment and 

communities.

The processes through which the findings and recommendations emerged are described in:

• Chapter X. Analytical and Stakeholder Process describes how the QER analysis was informed by the 

stakeholder outreach effort and provides details on the systems analysis commissioned to support the 

QER. 

Sector-specific analyses of the following physical infrastructures (listed in more detail in Table 1-1) were also 

completed and accompany this report as appendices, as does a summary of Federal emergency authorities 

germane to recovery of TS&D infrastructure after disasters:

• Appendix A. Liquid Fuels

• Appendix B. Natural Gas

• Appendix C. Electricity 

• Appendix D. Federal Emergency Authorities.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-25

Endnotes

1. Edison Electric Institute. “EEI Statistical Yearbook 2013.” Table 10.6. http://www.eei.org/resourcesandmedia/products/

Pages/ProductDetails.aspx?prod=617A7D67-9678-44FC-AE6F-6876ADAE7406&type=S. Accessed March 18, 2015. 

2. Platts. “Platts UDI Directory of Electric Power Producers and Distributors, 122nd Edition of the Electrical World 

Directory.” p. vi. 2014. 

3. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.

4. Department of Energy. “Grid 2030: A National Vision for Electricity’s Second Hundred Years.” 2003. http://www.ferc.

gov/eventcalendar/files/20050608125055-grid-2030.pdf. Accessed January 26, 2015.

5. Edison Electric Institute. “Transforming America’s Power Industry: The Investment Challenge 2010-2030.” November 

2008. http://www.eei.org/ourissues/finance/Documents/Transforming_Americas_Power_Industry_Exec_Summary.pdf. 

Accessed January 15, 2015.

6. Department of Transportation. “The State of the National Pipeline Infrastructure.” p. 7. 2011. https://opsweb.phmsa.

dot.gov/pipelineforum/docs/Secretarys%20Infrastructure%20Report_Revised%20per%20PHC_103111.pdf.

7. Energy Information Administration. “Crude Oil Production.” December 30, 2014. http://www.eia.gov/dnav/pet/pet_

crd_crpdn_adc_mbblpd_a.htm. Accessed January 15, 2015. 

8. Energy Information Administration. “U.S. Crude Oil and Natural Gas Proved Reserves: With data for 2013.” 

December 4, 2014. http://www.eia.gov/naturalgas/crudeoilreserves/. Accessed February 2, 2015.

9. Energy Information Administration. “Crude Oil Proved Reserves, Reserves Changes, and Production.” December 4, 

2014. http://www.eia.gov/dnav/pet/pet_crd_pres_a_EPC0_R01_mmbbl_a.htm. Accessed February 2, 2015. 

10. Energy Information Administration. “Natural Gas Summary.” January 30, 2015. http://www.eia.gov/dnav/ng/ng_sum_

lsum_dcu_nus_a.htm. Accessed February 2, 2015. 

11. Energy Information Administration. “Natural Gas Summary.” January 30, 2015. http://www.eia.gov/dnav/ng/ng_sum_

lsum_dcu_nus_a.htm. Accessed February 25, 2015.

12. Energy Information Administration. “Natural Gas.” http://www.eia.gov/dnav/ng/ng_enr_shalegas_dcu_NUS_a.htm. 

Accessed February 25, 2015.

13. Energy Information Administration. “Shale Gas.” December 4, 2014. http://www.eia.gov/dnav/ng/ng_sum_lsum_dcu_

nus_a.htm. Accessed February 2, 2015. 

14. Energy Information Administration. “U.S. Crude Oil and Natural Gas Proved Reserves.” December 4, 2014. 

http://www.eia.gov/naturalgas/crudeoilreserves/. Accessed January 15, 2015. 

15. Energy information Administration. “U.S. Product Supplied of Finished Motor Gasoline.” January 29, 2015. 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus1&f=a. Accessed February 26, 2015.

16. Environmental Protection Agency. “News Release: U.S. Fuel Economy Researches All-Time High/Fuel Economy 

Gains For New Vehicles Continue Under President Obama’s Clean Car Program.” October 8, 2014. http://yosemite.

epa.gov/opa/admpress.nsf/bd4379a92ceceeac8525735900400c27/87acb71855bed86585257d6b0052c584!OpenDocu

ment. Accessed January 15, 2015. 

17. The White House. “Obama Administration Finalizes Historic 54.5 MPG Fuel efficiency Standards.” August 28, 2012. 

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18, 2015.
1-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

19. Energy Information Administration. “Annual Energy Outlook 2014: Market Trends: Liquid fuels.” May 7, 2014. 

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issuestrends/pdf/bit.pdf. Accessed February 2, 2015.

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24. Energy Information Administration. “Petroleum & Other Liquids: U.S. Imports by Country of Origin.” December 30, 

2014. http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m.htm. Accessed January 15, 2015.

25. Energy Information Administration. “Petroleum Navigator.” http://www.eia.gov/dnav/pet/pet_cons_psup_dc_nus_

mbblpd_m.htm. Accessed March 4 2015.

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pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm. Accessed February 26, 2015. 

27. Energy Information Administration. “U.S. Exports of Crude Oil and Petroleum Products.” January 29, 2015. http://

www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTEXUS1&f=M. Accessed February 26, 2015.

28. Energy Information Administration. “Petroleum & Other Liquids: Exports.” December 30, 2014. http://www.eia.gov/

dnav/pet/pet_move_exp_dc_nus-z00_mbblpd_m.htm. Accessed January 15, 2015.

29. Energy Information Administration. “Locations of U.S. Natural Gas Import and Export Points.” 2009. http://www.eia.

gov/pub/oil_gas/natural_gas/analysis_publications/ngpipeline/impex_list.html. Accessed February 2, 2015.

30. Energy Information Administration. “Workbook Contents.” December 31, 2014. http://www.eia.gov/naturalgas/

pipelines/EIA-StatetoStateCapacity.xls.

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March 13, 2013. http://www.eia.gov/todayinenergy/detail.cfm?id=10351. Accessed January 15, 2015. 

32. Department of Energy, Office of Fossil Energy. “Natural Gas Imports and Exports Second Quarter Report 2014.” 

p. 15. http://energy.gov/sites/prod/files/2014/10/f19/2nd14ng.pdf. Accessed January 15, 2015. 

33. Congressional Budget Office. “The Economic and Budgetary Effects of Producing Oil and Natural Gas from Shale.” 

p. 1. December 9, 2014. http://www.cbo.gov/sites/default/files/cbofiles/attachments/49815-Effects_of_Shale_Production.

pdf. Accessed January 15, 2015. 

34. Thompson, J. “Booming Shale Gas Production Drives Texas Petrochemical Surge.” Federal Reserve Bank of Dallas. 

Fourth Quarter 2012. http://www.dallasfed.org/assets/documents/research/swe/2012/swe1204h.pdf. Accessed January 

15, 2015. 

35. Energy Information Administration. “Natural Gas Consumption by End Use – Industrial.” December 31, 2014. http://

www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_m.htm. Accessed January 15, 2015.

36. Energy Information Administration. “Annual Energy Outlook 2014.” Table A2. April 2014. http://www.eia.gov/

forecasts/aeo/pdf/0383(2014).pdf. Accessed February 2, 2015. 

37. Energy Information Administration. “Net generation for all sectors, annual.” Electricity Data Browser. http://www.eia.

gov/electricity/data/browser. Accessed February 2, 2015.

38. Energy Information Administration. “Net generation for all sectors, annual.” Electricity Data Browser. http://www.eia.

gov/electricity/data/browser. Accessed February 26, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-27

39. Energy Information Administration. “Net generation for all sectors, annual.” Electricity Data Browser. http://www.eia.

gov/electricity/data/browser. Accessed February 2, 2015. 

40. Energy Information Administration. “Electric Power Monthly, November 2014” and “Electric Power Monthly, 

February 2014.” http://www.eia.gov/electricity/monthly/. Accessed February 2, 2015. 

41. The White House. “Solar Progress Report: Advancing Toward a Clean Energy Future.” May 2014. http://www.

whitehouse.gov/sites/default/files/docs/progress_report--advancing_toward_clean_energy_future.pdf. Accessed January 

21, 2015.

42. Department of Energy. “Progress Report: Advancing Solar Energy Across America.” February 12, 2014. http://energy.

gov/articles/progress-report-advancing-solar-energy-across-america#. Accessed February 2, 2015. 

43. Center for Climate and Energy Solutions. “Renewable and Alternative Energy Portfolio Standards.” http://www.c2es.

org/us-states-regions/policy-maps/renewable-energy-standards. Accessed February 2, 2015.

44. Barbose, G. “Renewables Portfolio Standards in the United States: A Status Update.” Lawrence Berkeley National 

Laboratory. September 2014. http://emp.lbl.gov/sites/all/files/2014%20RPS%20Summit_Barbose.pdf. Accessed February 

2, 2015.

45. North Carolina Clean Energy Technology Center. “Database of State Incentives for Renewables & Efficiency 

(DSIRE).” http://www.dsireusa.org/. Accessed February 26, 2015.

46. Energy Information Administration. “Monthly Energy Review.” Table 7.3b. p. 110. February 2015. http://www.eia.gov/

totalenergy/data/monthly/pdf/sec7_10.pdf. Accessed March 20, 2015.

47. Energy Information Administration. “2014 Annual Energy Outlook.” Table 135. May 7, 2014. http://beta.eia.gov/

forecasts/aeo/tables_ref.cfm. Accessed February 25, 2015.

48. Energy Information Administration. “Monthly Energy Review.” Table 7.2a. p. 97. January 2015. http://www.eia.gov/

totalenergy/data/monthly/archive/00351501.pdf. Accessed February 25, 2015.

49. Energy Information Administration. “U.S. Natural Gas Consumption by End-Use.” http://www.eia.gov/dnav/ng/ng_

cons_sum_dcu_nus_a.htm. Accessed March 4, 2015.

50. Energy Information Administration. “Half of power plant capacity additions in 2013 came from natural gas.” Today in 

Energy. April 8, 2014. http://www.eia.gov/todayinenergy/detail.cfm?id=15751. Accessed January 21, 2015.

51. Energy Information Administration. “Natural gas, solar, and wind lead power plant capacity additions in first-half 

2014.” Today in Energy. September 9, 2014. http://www.eia.gov/todayinenergy/detail.cfm?id=17891. Accessed February 

2, 2015.

52. Tobin, J. “Expansion and Change on the U.S. Natural Gas Pipeline Network 2002.” Natural Gas Analysis Publications 

2002. May 12, 2003. http://www.eia.gov/pub/oil_gas/natural_gas/feature_articles/2003/Pipenet03/pipenet03.html. 

Accessed January 15, 2015. 

53. Energy Information Administration. “U.S. economy and electricity demand growth are linked, but relationship 

is changing.” Today in Energy. March 22, 2013. http://www.eia.gov/todayinenergy/detail.cfm?id=10491. Accessed 

February 2, 2015.

54. Energy Information Administration. “Annual Energy Outlook 2013 Early Release.” December 2012.

55. Energy Information Administration. “EIA Electricity Data Browser: retail electricity sales data.” http://www.eia.gov/

electricity/data/browser. Accessed January 9, 2014.

56. Energy Information Administration. “Lower power prices and high repair costs drive nuclear retirements.” Today in 

Energy. July 2, 2013. http://www.eia.gov/todayinenergy/detail.cfm?id=11931. Accessed February 26, 2015.

57. Energy Information Administration. “Annual Energy Outlook 2014.” May 7, 2014. www.eia.gov/forecasts/aeo. 

Accessed January 26, 2015. 
1-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction

58. Energy Information Administration. “Annual Energy Outlook 2014.” May 2014. http://www.eia.gov/analysis/

projection-data.cfm#annualproj. Accessed February 9. 2015.

59. Energy Information Administration. “Coal Data Browser.” January 20, 2015. http://www.eia.gov/coal/data.cfm#prices. 

Accessed February 9, 2015. 

60. Nuclear Energy Institute. “US Nuclear Power Plants Posted Record High Efficiency in 2014.” January 22, 2015. http://

www.nei.org/News-Media/Media-Room/News-Releases/US-Nuclear-Power-Plants-Posted-Record-High-Efficie. 

61. Energy Information Administration. “Investment in electricity transmission infrastructure shows steady increase.” 

Today in Energy. August 26, 2014. http://www.eia.gov/todayinenergy/detail.cfm?id=17711. Accessed January 26, 2015.

62. Energy Information Administration (based on Federal Energy Regulatory Commission Financial Reports, as accessed 

by Ventyx Velocity Suite). “Investment in electricity transmission infrastructure shows steady increase.” Today in 

Energy. http://www.eia.gov/todayinenergy/detail.cfm?id=17711. August 24, 2014. 

63. Intergovernmental Panel on Climate Change. “Climate Science 2014: Synthesis Report.” http://www.ipcc.ch/.

64. National Academy of Sciences and Royal Society of London. “Climate Change: Evidence and Causes.” 2014. http://

nas-sites.org/americasclimatechoices/more-resources-on-climate-change/climate-change-evidence-and-causes/.

65. Global Change Research Program. “Climate Change Impacts in the United States: The Third U.S. National Climate 

Assessment.” 2014. http://nca2014.globalchange.gov. 

66. Schmidt, G. and T. Karl. “NOAA/NASA Annual Global Analysis for 2014.” January 2015. http://www.ncdc.noaa.gov/

sotc/briefings/201501.pdf. 

67. Global Change Research Program. “U.S. National Climate Assessment.” 2014. http://nca2014.globalchange.gov/

downloads.

68. Global Change Research Program. “Climate Change Impacts in the United States.” 2014.

69. Intergovernmental Panel on Climate Change. “Climate Science 2013: The Physical Science Basis.” Ch. 8 

Supplementary Material, Table 8.SM.6.

70. Environmental Protection Agency. “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2013.” 

February 11, 2015. http://www.epa.gov/climatechange/pdfs/usinventoryreport/US-GHG-Inventory-2015-Main-Text.pdf.

71. World Meteorological Organization. “The State of Greenhouse Gases in the Atmosphere Based on Global 

Observations through 2013.” September 9, 2014. http://library.wmo.int/opac/index.php?lvl=notice_display&id=16396. 

72. Global Carbon Project. “Global Carbon Budget 2014.” September 21, 2014. http://www.globalcarbonproject.org/

carbonbudget/. 

73. Environmental Protection Agency. “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2013.” 

February 11, 2015. http://www.epa.gov/climatechange/pdfs/usinventoryreport/US-GHG-Inventory-2015-Main-Text.pdf.

74. Intergovernmental Panel on Climate Change. “Climate Science 2013: The Physical Science Basis.” Table 6.8.

75. Environmental Protection Agency. “Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2013.” 

February 11, 2015. http://www.epa.gov/climatechange/pdfs/usinventoryreport/US-GHG-Inventory-2015-Main-Text.pdf.

76. Environmental Protection Agency. “Inventory of Greenhouse Gas Emissions and Sinks: 1990-2013.” April 2015. 

http://www.epa.gov/climatechange.ghgemissions/usinventoryreport.html. Accessed April 20, 2015.

77. The White House. “President Obama’s Climate Action Plan: Progress Report.” June 2014. https://www.whitehouse.gov/

sites/default/files/docs/cap_progress_report_update_062514_final.pdf. 

78. Energy Information Administration. “Monthly Energy Review.” March 2015. http://www.eia.gov/totalenergy/data/

monthly/pdf/mer.pdf. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 1-29

79. Energy Information Administration. “Monthly Energy Review.” March 2015. http://www.eia.gov/totalenergy/data/

monthly/pdf/mer.pdf.

80. Energy Information Administration. “Monthly Energy Review.” March 2015. http://www.eia.gov/totalenergy/data/

monthly/pdf/mer.pdf.

81. Energy Information Administration. “U.S. Energy-Related Carbon Dioxide Emissions, 2013.” October 21, 2014. 

http://www.eia.gov/environment/emissions/carbon/. Accessed January 26, 2015.

82. Environmental Protection Agency. “Inventory of Greenhouse Gas Emissions and Sinks: 1990-2012.” Chapter 3. 2014. 

http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2014-Chapter-3-Energy.pdf. 

83. The White House. “We’re taking action of climate change.” March 31, 2015. https://medium.com/@Deese44/we-retaking-action-on-climate-change-and-the-world-is-joining-us-2bf44a62b9b9.

84. Department of State. “U.S. Climate Action Report 2014: First Biennial Report of the United States of America.” 

January 2014. http://www.state.gov/documents/organization/219039.pdf. 

85. Bosworth, B. and S. Milusheva. “Innovations in U.S. Infrastructure Financing: An Evaluation.” The Brookings 

Institution and the Nomura Foundation Conference on the Global Economy after the Tohoku Earthquake. 2011. 

http://www.nomurafoundation.or.jp/wordpress/wp-content/uploads/2014/09/20111107_Barry_Bosworth-Sveta_

Milusheva_000.pdf. Accessed February 26, 2015. 

86. Della Croce, R. and J. Yermo. “Institutional Investors and Infrastructure Financing.” OECD Working Papers on 

Finance, Insurance and Private Pensions, No. 36. OECD Publishing. 2013. http://dx.doi.org/10.1787/5k3wh99xgc33-en. 

Accessed January 15, 2015.

87. Congressional Budget Office. “Issues and Options in Infrastructure Investment.” May 2008. www.cbo.gov/sites/default/

files/05-16-infrastructure.pdf. Accessed January 15, 2015.

88. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.
1-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter I: Introduction
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-1

Chapter II

This chapter addresses a broad range of challenges to the resilience, reliability, 

safety, and asset security of transmission, storage, and distribution (TS&D) 

and shared infrastructures. The challenges vary among different types of TS&D 

infrastructure and among different regions of the United States. First, the 

electric grid is examined. The grid is especially vulnerable to extreme weather 

events. It also is vulnerable to low-probability/high-consequence events. 

Natural gas is the second TS&D infrastructure discussed. Here, in addition to the 

examination of vulnerabilities and interdependencies, is a discussion of safety 

issues. The third major section of this chapter addresses the resilience, reliability, 

and asset security of TS&D infrastructure for liquid fuels. This chapter concludes 

by presenting a series of major recommendations, a number of which cut across 

and address multiple infrastructures and challenges. 

INCREASING THE RESILIENCE, 

RELIABILITY, SAFETY, AND 

ASSET SECURITY OF TS&D

INFRASTRUCTURE
2-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

FINDINGS IN BRIEF: 

Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure 

Mitigating energy disruptions is fundamental to infrastructure resilience. Mitigating energy disruptions is 

particularly important because other critical infrastructures rely on energy services to operate, and these interdependencies are 

growing. Should disruptions occur, it is essential to have comprehensive and tested emergency response protocols to stabilize 

the system and begin recovery. 

Transmission, storage, and distribution (TS&D) infrastructure is vulnerable to many natural phenomena.

These include hurricanes, earthquakes, drought, wildfires, flooding, and extreme temperatures. Some extreme weather events 

have become more frequent and severe due to climate change, and this trend will continue. Sea-level rise resulting from 

climate change, coupled with coastal subsidence in the Mid-Atlantic and Gulf Coast regions, increases risks and damages to 

coastal infrastructure caused by storm surge.

Threats and vulnerabilities vary substantially by region. In many cases, a particular natural threat or infrastructure 

vulnerability will be region specific (e.g., Gulf Coast hurricanes threatening refineries), dampening the utility of national, onesize-fits-all solutions for reliability and resilience. Regional solutions are essential.

Recovery from natural gas and liquid fuel system disruptions can be difficult. Although liquid fuels and natural gas 

disruptions are less likely than electricity disruptions, it is relatively more difficult to recover from disruptions to these systems 

than electric systems. Recovery from natural gas disruptions is particularly difficult because of the need to locate and repair 

underground breakages. 

Cyber incidents and physical attacks are growing concerns. Cyber incidents have not yet caused significant 

disruptions in any of the three sectors, but the number and sophistication of threats are increasing, and information 

technology systems are becoming more integrated with energy infrastructure. There have been physical attacks; while some 

physical protection measures are in place throughout TS&D infrastructure systems, additional low-cost investments at sensitive 

facilities would greatly enhance resilience. 

High-voltage transformers are critical to the grid. They represent one of its most vulnerable components. Despite 

expanded efforts by industry and Federal regulators, current programs to address the vulnerability may not be adequate to 

address the security and reliability concerns associated with simultaneous failures of multiple high-voltage transformers.

Assessment tools and frameworks need to be improved. Research has focused more on characterizing vulnerabilities 

and identifying mitigation options than on measuring the effects of best practices for response and recovery. In addition, 

assessment tools and frameworks tend to characterize the impacts of disruptions on system performance, but are less able to 

examine impacts on national or regional consequences like economic loss or loss of life.

Shifts in the natural gas sector are having mixed effects on resilience, reliability, safety, and asset security.

The addition of onshore shale gas infrastructure benefits natural gas resilience by decreasing the percentage of infrastructure 

exposed to storms. The Energy Information Administration reports that the Gulf Coast percentage of natural gas production 

went from 18 percent in 2005 to 6 percent in 2013. On the other hand, overall reliance on gas for electricity has gone up, 

creating a new interdependence and grid vulnerability. Furthermore, additional export infrastructure resulting from the natural 

gas boom would increase vulnerabilities to coastal threats, such as sea-level rise.

Dependencies and interdependencies are growing. Many components of liquid fuels and natural gas systems—

including pumps, refineries, and about 5 percent of natural gas compressor stations—require electricity to operate. The 

interdependency of the electricity and gas systems is growing as more gas is used in power generation. 

Aging, leak-prone natural gas distribution pipelines and associated infrastructures prompt safety and 

environmental concerns. Most safety incidents involving natural gas pipelines occur on natural gas distribution systems. 

These incidents tend to occur in densely populated areas. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-3

Presidential Policy Directive-21a

In February 2013, the President broadened the national effort to strengthen and maintain secure, functioning, and resilient 

critical infrastructure by issuing Presidential Policy Directive-21, Critical Infrastructure Security and Resilience. The directive 

applies to all critical infrastructures, but calls out energy infrastructures as being “uniquely critical” due to the enabling 

functions they provide across all other critical infrastructures. This document goes on to define resilience as“the ability to 

prepare for and adapt to changing conditions and withstand and recover rapidly from disruptions. Resilience includes the 

ability to withstand and recover from deliberate attacks, accidents, or naturally occurring threats or incidents.” Threats 

may include natural or human-made hazards, such as hurricanes or physical threats. The consequences of these hazards to 

infrastructure broadly affect social welfare. They go beyond the ability of a system to operate and address the vitality of our 

national safety, prosperity, and well-being. 

a The White House Office. “Presidential Policy Directive 21 - Critical Infrastructure Security and Resilience.” February 12, 2013. 

http://www.whitehouse.gov/the-press-office/2013/02/12/presidential-policy-directive-critical-infrastructure-securityand-resil. Accessed February 2, 2015.

The Importance of Resilient, Reliable, Safe, and Secure TS&D 

Infrastructure

Building a resilient, reliable, safe, and secure energy infrastructure is a national priority and vital to American 

competitiveness, jobs, energy security, and a clean energy future. President Obama highlighted the importance 

of energy infrastructure in Presidential Policy Directive-21, in which energy infrastructures were described as 

“uniquely critical.” 

TS&D infrastructures—key components of the Nation’s energy systems—include approximately 2.6 million 

miles of interstate and intrastate pipelines, 142 operable refineries, about 642,000 miles of high-voltage 

transmission lines, and almost 6.3 million miles of electricity distribution lines.1

 These vast energy TS&D 

networks reliably deliver electricity, transportation fuels, and heat to more than 300 million American 

consumers daily and provide industry with feedstocks for a large range of products. The U.S. bulk electric 

power transmission system, for example, had high availability (97–98 percent) during the period from 2008 to 

2013.2

 In less than one decade, the U.S. natural gas and oil TS&D infrastructures have successfully connected 

significant new sources of supply to processing facilities and consumers. In addition, in just a few short years, 

ethanol has moved from a niche fuel to 10 percent of the Nation’s gasoline supply, supported by a TS&D 

system that has been flexible enough to accommodate this growth. 

The imperative for resilient TS&D infrastructures going forward is to maintain the high performance of the 

existing systems; to continue to accommodate significant growth in domestic supplies; and to manage and 

adapt to new technologies, threats, and vulnerabilities in cost-effective ways. These vulnerabilities are growing 

and exacerbated by climate change. 

In addition, TS&D infrastructures are becoming increasingly interdependent and interconnected. These 

extremely complex systems consist of physical TS&D facilities (such as transmission lines, pipelines, and 

storage facilities); cyber-dependent communications or control networks; roadways, railways, and waterways; 

and human decision makers (such as consumers, legislators, investors, and CEOs).3, 4 A key interdependency 

(and vulnerability) for all sectors and critical infrastructures is reliance on electricity, making its reliability a 

fundamental need and requirement economy-wide. 
2-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

The private sector, states, and Federal Government all play crucial roles in ensuring that TS&D infrastructures 

are reliable, resilient, and secure. Responsibility for resilience, reliability, and safety of privately held TS&D 

infrastructure lies mostly with the state public utility commissions and other state energy regulators, but 

also with Federal regulators such as the Federal Energy Regulatory Commission, the Nuclear Regulatory 

Commission, and the Department of Transportation’s Pipeline and Hazardous Materials Safety Administration. 

Given the national significance of these infrastructures to interstate commerce and the economy, the Federal 

Government regulates aspects of their operation and has other emergency authorities that it exercises in the 

public interest. Communication, coordination, and cooperation among all of these entities, in the exercise 

of their respective responsibilities, is essential. Key Federal emergency responsibilities relevant to energy 

infrastructure are highlighted in Appendix D.

• Reliability refers to the ability of a system or its components to operate within limits so that instability, uncontrolled 

events, or cascading failures do not result if there is a disturbance, whether the disturbance is a disruption from outside 

the system or an unanticipated failure of system elements. Reliability is also used by industry to mean that a system’s 

components are not unexpectedly failing under normal conditions.

• Resilience refers to the ability of a system or its components to adapt to changing conditions and withstand and 

rapidly recover from disruptions. To the extent that actions improve a system’s ability to withstand disruptions, 

they might be characterized as enhancing reliability, or resilience, or both. The ability to recover from a disturbance, 

however, is specific to resilience.

• Safety refers to achieving an acceptably low risk to life and health in the design, construction, operation, and 

decommissioning of a system. That level of risk is determined by taking into account the magnitude of potential 

consequences, the probability of those consequences occurring, and the costs of risk mitigation.

• Security refers specifically to the ability of a system or its components to withstand attacks (including physical and 

cyber incidents) on its integrity and operations. It overlaps, in part, with the concepts of reliability and resilience.

The Impacts of Disruptions on Energy TS&D Infrastructures

Disruptions of TS&D infrastructures have serious consequences for the Nation and many regions of the 

country. Extreme weather and climate change is a leading environmental risk to this infrastructure. Lowprobability, extremely high-consequence events, such as geomagnetic distrubances, must also be anticipated 

and managed. Figure 2-1 shows the regional distribution of various natural disasters in the contiguous 48 

states.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-5

This figure maps the regional distribution of major natural disasters to help visualize regional vulnerabilities. This visualization shows the lower 48 

states, but analysis was also completed on Alaska and Hawaii. 

Energy Infrastructure Damage from Hurricane Sandyb

Hurricane Sandy made landfall in New Jersey and New York, as a post-tropical cyclone, on October 29, 2012. The storm destroyed 

neighborhoods along the coast and directly or indirectly killed at least 159 people. At its peak, it knocked out power to 8.66 million 

customers from North Carolina to Maine and as far west as Illinois and Wisconsin. Sandy’s impact on the region’s petroleum 

infrastructure was severe, with flooding and power outages at refineries, pipelines, and petroleum terminals in the New York Harbor 

area, leading to depressed petroleum product supply in the Northeast and stock drawdowns and temporary price increases. Nearly 2 

weeks after the storm, product deliveries (outflows) from petroleum product terminals in the New York Harbor had returned to only 

61 percent of their pre-storm levels. Breaks in natural gas lines caused fires in some locations, resulting in the destruction of many 

residences. The supply issues at New York Harbor terminals, combined with power outages at retail fueling stations, led to widespread 

gasoline shortages in the New York City area in the weeks after landfall. This was largely caused by flooding damage to major terminals 

and docks in the Arthur Kill area of New Jersey. As a result, portable generators sat unused and lines at fueling stations were long 

and problematic, while consumers struggled to identify which gas stations had power and were operational. Significantly, these fuel 

shortages delayed first responders and other response and recovery officials. 

b Department of Housing and Urban Development. “Hurricane Sandy Rebuilding Strategy.” p. 24. Hurricane Sandy Rebuilding 

Task Force. http://portal.hud.gov/hudportal/documents/huddoc?id=hsrebuildingstrategy.pdf.

Figure 2-1. Illustration of Tornado and Hurricane Tracks, Wildfires, Earthquakes, and Coastal Inundation5

Hurricanes that caused

over $1B Damage 

(1980-Present)

Earthquakes (1990-2004)

Tropical Storm

Category 1

Category 2

Category 3

Category 4

Category 5

Hurricane Inundation Zones

Fires (2000-2009)

Tornado Paths 

(1990-2013)

EF1

EF2

EF3

EF4

EF5
2-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Natural disasters, equipment and maintenance failures, and physical attacks come at a significant cost. A 

National Research Council study looking at the 2003 blackout that affected the Midwest, the Northeast, 

and Canada concluded that “the economic cost of the 2003 blackout came to approximately $5 per forgone 

kilowatt-hour, a figure that is roughly 50 times greater than the average retail cost of a kilowatt-hour in 

the United States.”6 Data suggest that electricity system outages attributable to weather-related events are 

increasing, costing the U.S. economy an estimated $20 billion to $55 billion annually.7

In the United States, there were 11 individual weather disasters costing $1 billion in 2012, second only to 2011 

for the most on record.8 Insurance data identifies almost $22 billion in total losses from a range of weather 

events in 2013, excluding self-insured losses.9

Extreme weather events resulting in more than $1 billion in damages are increasing, as seen in Figure 2-2. 

The damages represented in this figure are broader than energy infrastructure; these trends, however, must be 

considered in future energy infrastructure policy.

Figure 2-2. Billion-Dollar Disaster Event Types by Year10, c

Extreme weather has a range of impacts on TS&D infrastructure. The severity of hurricane impacts on 

all energy infrastructure is highlighted in Table 2-1. Heat waves—also extreme weather events—affect 

electric TS&D infrastructure in several ways, including reducing the efficiency of electric transmission and 

distrubution circuits; increasing the load on the grid associated with additional demand for air conditioning; 

and reducing the efficiency of cooling at thermal power plants that can result in lower power plant output.11

Drought and extreme cold pose challenges to TS&D infrastructure by, for example, impeding barge transport 

of energy products. Drought also decreases the water available for natural gas processing.12

c Data from all original events were adjusted for inflation (using the Consumer Price Index, to 2014 dollars), prior to identifying events 

that exceeded $1 billion in damages. Caution should be used when interpreting long-term trends; data quality improves over time.

20

15

10

5

0

1980

Number of Events

1985 1990 1995 2000 2005 2010 2014

Drought Flooding Freeze Severe Storm Tropical Cyclone Wildfire Winter Storm

Costly weather-related disasters have been increasing in frequency over the past decade. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-7

Infrastructure

Tropical Storm 

(39-73 MPH)

Hurricane Cat 1-2

(74-95 MPH, 96-110 MPH)

Hurricane > Cat 3-5

(111-129 MPH, 

130-156 MPH, >157 MPH)

Probability 

of Damage

Severity of 

Damage

Probability 

of Damage

Severity of 

Damage

Probability 

of Damage

Severity of 

Damage

Loss of Electrical Power Med Significant Med-High Major High Catastrophic

Gulf of Mexico

Platforms Low Insignificant Med-High Major Med-High Major

Pumping/Compressor 

Station Low Insignificant Med Significant Med-High Major

Pipelines Low Insignificant Low-Med Interrupting Med-High Major

Rail Low Insignificant Low-Med Interrupting Med-High Major

Ports Low Insignificant Med-High Major High Catastrophic

Crude Tank Farm Low Insignificant Low-Med Interrupting Med Significant

Refineries Low Insignificant Med Significant Med-High Major

Natural Gas Plants Low Insignificant Med Significant Med-High Major

Product Storage 

Terminals Low Insignificant Low-Med Interrupting Med-High Major

Propane Tanks Low Insignificant Low Insignificant Low Insignificant

Underground Storage Low Insignificant Low Insignificant Low Insignificant

LNG Terminals Low Insignificant Med Significant Med-High Major

Local Gas Distribution Low Insignificant Med Significant Med-High Major

Filling Stations Low Insignificant Med Significant Med-High Major

SPR/NEHHOR Low Insignificant Low-Med Interrupting Med Significant

Continued increases in extreme weather can cause multiple stresses to energy systems more broadly, 

exacerbating direct effects on TS&D infrastructures. Sequential or compounded extreme weather events, such 

as Hurricanes Katrina and Rita, can result in significant nationwide economic and safety consequences that 

also affect TS&D infrastructures. 

Table 2-1. Probability and Severity of Hurricane Damage to Liquid Fuels and Natural Gas Infrastructure13, d

d Damage severity is defined by ease of recoverability. Infrastructure damage categorized as insignificant includes damage that can be 

resolved with no outside help (i.e., clearing downed trees). Interrupting damage is associated with damage that probably requires 

outside assistance to repair. Recovery from significant damage is problematic and causes minor delays. Major damage requires 

replacements to resolve and causes major delays. Damage defined as catastrophic disrupts infrastructure for months, in addition to 

requiring rebuilding. 

This table is an example of infrastructure damage from natural disasters (here showing tropical storms and hurricanes). For three ranges of intensity 

of tropical storms and hurricanes, the severity of probable damage was rated qualitatively using a 5-point scale (i.e., insignificant, interrupting, 

significant, major, and catastrophic) and probability also on a 5-point scale (i.e. low, low-medium, medium, medium-high, high). These ratings were 

based on the extensive review of impacts from past events and judgment of industry experts. 
2-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

As a result of greater awareness of the direct and indirect effects of climate-change-related extreme weather, 

there has been growing interest in understanding and reducing the impacts of disruptions. There is evidence 

that pre-disaster hardening of critical energy infrastructures could help save lives and reduce economic losses 

to individuals, businesses, insurers, states, and the Federal Government. A statistical study of 5,500 Federal 

Emergency Management Agency mitigation grants awarded between 1993 and 2003, while not specific 

to energy, found that the benefit-cost ratio for mitigation investments was about 4:1.14 In order to spend 

investment dollars more wisely, it is essential to focus on modernizing TS&D infrastructures at the same time 

that they are being hardened. 

A barrier to progress on understanding and reducing the impacts of disruptions on TS&D infrastructures is 

that frameworks, tools, and metrics for assessing and prioritizing energy infrastructure resilience, reliability, 

and security actions and investments vary widely across industries and government agencies.15, e

 While 

resilience measures may be well-tailored for specific industries and sectors, they are not designed to aid 

policymakers and regulators in understanding current vulnerabilities; in deciding where to focus efforts and 

investment to increase resilience, reliability, and security; or in determining degrees of resilience that are 

needed. At the regional level, the lack of commonly used analytical methods for determining the appropriate 

level of resilience, as well as what resilience projects are prudent, can lead to difficulty in determining which 

resilience projects should be recoverable in rates.

The sections that follow analyze the vulnerabilities to disruption of each major TS&D infrastructure sector—

electricity, natural gas, and liquid fuels—as well as the dependencies and interdependencies that could magnify the 

effect of any given disruption. There is substantial variability in the impact of natural threats on TS&D infrastrcutures, 

depending on the region in which they are located and on vulnerabilities inherent in the infrastructures of each sector. 

Resilience, Reliability, Safety, and Asset Security for the Electric 

Grid: Analysis of Vulnerabilities

Resilience and reliability of the electric grid is essential to the economy and our way of life. Electricity 

transmission is vulnerable to many of the same types of threats as electricity distribution, but each sector also 

comes with discrete risks. Differences in risk arise from the purpose of the equipment, from technological 

differences, and from regulatory aspects of transmission versus distribution systems. Analysis to inform the 

Quadrennial Energy Review (QER) identified components of four categories of electricity TS&D16 that are 

particularly vulnerable to hazards and ranked the vulnerabilities from low to high:

• Electricity Transmission: High vulnerability to physical attacks and wind; medium-high vulnerability 

to earthquakes, wildfires, snow and ice, extreme heat, and geomagnetic storms.

• Electricity Substations: Medium-high vulnerability to cyber and physical attacks and geomagnetic 

storms—large power transformers (LPTs) in such substations are a particular concern. A common 

vulnerability for substations is flooding, and flood vulnerability has a relatively high probability. 

• Aboveground Electricity Distribution: High vulnerability to wind; medium-high vulnerability to 

earthquakes, physical attacks, wildfires, and snow and ice.

• Control Centers: Medium-high vulnerability to cyber and physical attacks. 

e RAND documented 172 resilience metrics in peer-reviewed literature, and many others exist outside the literature, specific to single 

industries or even individual companies. There appear to be fewer metrics for liquid fuels and natural gas infrastructure than for 

electricity—this literature review found 105 metrics specifically related to electricity systems and only 67 for natural gas and oil. 

Existing metrics appear abundant for assessing resilience at the facility or system levels, but RAND found only 30 assessing regional 

or national resilience, many of which dealt with market factors rather than system performance. RAND also found that most metrics 

related to elements of disruption mitigation rather than system outcomes.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-9

Weather-Related and Other Reliability Vulnerabilities

Historically, weather-related disturbances are the leading source of grid outages. For a 5-year period from 2008 

to 2012, estimated costs of weather-related power outages ranged from $107 million to $202 billion.17 Weatherrelated disturbances have a far greater impact on grid reliability—measured in terms of customer interruption 

hours—than component failures, physical attacks, and cyber incidents combined (see Figure 2-3). 

Figure 2-3. Left Figure: Electric Disturbance Events, January 2011–August 2014; Right Figure: Customer Hours 

Affected by Electric Disturbance Events, 2011–August 201418

400

# of Events

300

350

250

200

150

100

50

0

Weather Component Failures and/or 

Internal Causes 

Physical Attack

2011-2014

Cyber Attack

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

# of Customer Hours (millions)

Weather Component Failures and/or 

Internal Causes 

Physical Attack

2011-2014

Cyber Attack

While weather was responsible for less than half of all reported incidents, weather accounted for the vast majority of customer interruption hours 

from 2011 to 2014. Not all reported events (shown on the left), such as voltage reductions and public appeals, result in actual customer outages 

(shown on the right).

The frequency and severity of certain types of extreme weather events have led to greater vulnerabilities for 

electric transmission and distribution systems.19 Recent Department of Energy (DOE) analysis20 examining the 

effects of climate change on infrastructure exposure to storm surge and sea-level rise found that vulnerabilities 

are likely to increase for many energy sector assets, including electricity. Figure 2-4 illustrates that, under the 

highest sea-level rise scenario from the National Climate Assessment,21 by 2030 the number of electricity 

substations in the Gulf of Mexico exposed to storm surge from Category 1 hurricanes could increase from 255 

to 337. Projected sea-level rise by 2050 would increase the number to roughly 400. Any significant increase 

in hurricane intensities in a warmer climate would greatly exacerbate exposure to storm surge and wind 

damage. Another important factor is current and projected development patterns, which is expected to have a 

larger effect on energy infrastructure vulnerability than rising sea levels, particularly in regions where energy 

distribution infrastructure is being built to serve growing populations in exposed coastal areas.22
2-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Figure 2-4. Gulf Coast Electricity Substation Facilities’ Exposure to Storm Surge under Different Sea-Level Rise 

Scenarios23, 24, f, g

Sea-level rise increases the vulnerability of electricity substations to inundation caused by hurricane storm surge. Future vulnerabilities correspond 

with a high-end sea-level rise scenario of 10 inches in 2030, 23 inches in 2050, and 32 inches in 2060. The baseline vulnerability corresponds with 

sea levels in 1992. 

Other extreme weather events that are projected to increase with climate change and have regional and 

possibly national-scale impacts include extreme heat waves, droughts, and wildfires that can damage 

electricity infrastructure or reduce transmission efficiency. U.S. temperatures are projected to continue rising 

in the coming decades.25 Electricity transmission and distribution systems carry less current and operate 

less efficiently when ambient air temperatures are higher.26 Case studies indicate that sudden, extreme heat 

can cause transformers to malfunction or stop working.27 Increasing temperatures also will likely increase 

electricity demand for cooling, which could increase utilization of transmission and distribution systems 

during peak demand periods. Increasing air and water temperatures also reduce the efficiency of power 

plant cooling, which increases the risk of partial or full shutdowns of generation facilities and loss of the grid 

services that they provide during heat waves.28

f The Platts Electric Substation data contains point features representing a total of 55,819 electric transmission, sub-transmission, and 

some distribution substations in North America. These substations can be located on the surface within fenced enclosures, within 

special purpose buildings, on rooftops (in urban environments), or underground.

g Areas inundated by hurricane storm surge do not account for local land subsidence, which will further increase the exposure of 

infrastructure in this region. Note that 2030, 2050, and 2060 vulnerabilities correspond with 10 inches, 23 inches, and 32 inches of 

sea-level rise, respectively. Zero sea-level rise corresponds with sea levels in 1992.

 

0 10 20 5

Miles

0 10 20 5

Kilometers

Gulf of Mexico 

Texas

Louisiana

Area Exposed to Storm Surge 

from Category 1 Hurricanes:

Baseline Vulnerability

2030 Vulnerability 

2050 Vulnerability 

2060 Vulnerability 

Electrical Substations Exposed to 

Storm Surge from Category 1 Hurricanes:

Baseline Vulnerability

2030 Vulnerability 

2050 Vulnerability 

2060 Vulnerability 

Substations Not Exposed

Substation 

Capacity Max kV

0 - 150

> 750

350 - 750

150 - 350 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-11

Drought is also problematic. In 2014, California experienced its third driest year in 119 years of record 

keeping.29 As a consequence, California hydroelectric generation—and the use of hydroelectric power for load 

leveling and energy storage—was significantly reduced. In June 2014, California hydroelectric generation was 

only 59 percent of the June average of the preceding 10 years.30 In addition, annual temperature profiles can 

impact the timing of water availability.31 A rapid spring thaw of the snowpack can overload reservoir capacity 

and lead to lost energy. Increasing frequency and severity of wildfires (also linked to droughts), particularly 

in the West, may damage electricity transmission and distribution infrastructure (such as utility poles, lines, 

transformers, and substations) and lead to power outages.32

Physical Attacks, Geomagnetic Disturbances, and Cyber Incidents: HighConsequence, Low-Probability Events

In addition to the impacts of severe weather and climate change, the electric grid is vulnerable to other events, 

including malevolent acts—such as physical attacks and cyber incidents—and geomagnetic disturbances. 

Large Power Transformers Vulnerable to Attacks

LPTs can weigh hundreds of tons, are expensive, and are typically custom made with procurement lead times 

of 1 year or more.33 In addition, due to their size and weight, moving LPTs presents logistical challenges 

requiring specialized equipment, permits, and procedures (see Chapter V, Improving Shared Transport 

Infrastructures, for more discussion of logistics challenges).

The loss of critical LPTs can result in disruptions to electricity services over a large area. Such a loss could be 

due to the customized nature of the components and the associated manufacturing requirements, as well as 

physical attacks (such as the Metcalf incident), natural hazards (such as geomagnetic disturbances, discussed 

below), or extreme weather (such as floods, salt water corrosion, and sudden heat waves). In the Metcalf attack 

on a substation in California, “multiple individuals outside the substation reportedly shot at the [high-voltage] 

transformer radiators ... causing them to leak cooling oil, overheat, and become inoperative.”34

The United States has never experienced simultaneous failures of multiple high-voltage transformers, but such 

an event poses both security and reliability concerns. The Edison Electric Institute, seeking to manage such 

vulnerabilities, has established a Spare Transformer Equipment Program, enabling utilities to stockpile and 

share spare transformers and parts. The inventory under this program is not large enough, however, to respond 

to a large, coordinated attack. Transformer design variations and the logistical challenges associated with their 

movement pose additional challenges to maximizing the effectiveness of the program. A National Research 

Council study referring to this effort noted that “... The industry has made some progress toward building an 

inventory of spares, but these efforts could be overwhelmed by a large attack” and that “it alone is not sufficient 

to address the vulnerabilities that the United States faces in the event of a large physical attack.”35

The National Research Council study further included as its number one recommendation that the 

Department of Homeland Security (DHS) should work with DOE and industry to “develop and stockpile 

a family of easily transported high-voltage recovery transformers and other key equipment.” The study 

acknowledged that the costs and benefits are hard to estimate, but noted that the benefits of such a stockpile 

would be “many times [the] cost” if available to respond to an event.36 The Western Area Power Administration 

proposed a strategic transformer reserve pilot program and included a calculation of costs. Under this 

program, the Federal Government would purchase 110 large transformers at a cost of $324 million to provide 

backup units for the roughly 20,000 LPTs nationwide in emergency events. The Federal Government could 

mitigate the cost of the program by sharing the burden with industry. The benefits would accrue to the entire 

national grid (valued at more than $1 trillion) and directly to the U.S. economy by avoiding outages. 
2-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

The use of smaller, less-efficient, temporary replacement transformers may be appropriate for emergency 

circumstances. In 2006, the Electric Power Research Institute suggested building compact “restoration 

transformers” that would fit on large cargo aircraft and trucks.37 Since then, DHS’s Recovery Transformer 

Program has developed and tested a flexible transformer that is transportable by truck and can be installed 

within several days of an incident. These technologies could help address logistical concerns with moving large 

transformers in the event of disruptions. 

Geomagnetic Disturbances

Geomagnetic storms are another high-consequence hazard for the electric grid that presents concerns 

due to the increasing reliance of many critical infrastructures on grid functions. These storms arise when 

charged particles and magnetic fields ejected from the Sun interact with Earth’s magnetic field. The resulting 

geomagnetically induced currents create a significant threat to the reliability of the interconnected grid across 

North America. Though the probability of an extreme geomagnetic storm is relatively low in any given year, the 

occurrence is almost inevitable at some point in the future. Geomagnetic storms have the potential to damage 

transformers and other critical grid assets over large geographical areas. A geomagnetic storm in 1989 resulted 

in a blackout in Montreal and most of the Province of Quebec. In October 2003, an intense geomagnetic 

storm caused a blackout in Malmo, Sweden, and damaged several transformers in South Africa. Economic 

and societal costs attributable to impacts of geomagnetic storms could be very large. A 2013 Lloyds of London 

report indicated that geomagnetic disturbances could cost the economy as much as $2.6 trillion and take 1 to 2 

years for a full recovery38 (to put this in perspective, the Northeast blackout in 2003 was estimated to have cost 

between $4 billion and $10 billion). 

Cyber Incidents

As seen in Figure 2-3, from 2011 through 2014 there were few reported cyber incidents on the electric grid and 

none reported that resulted in system outages. Cyber threats to critical infrastructure, though, are increasing. 

More than half of the cyber incidents to which DHS’s Industrial Control Systems Cyber Emergency Response 

Team responded in 2013 related to energy installations.39 Cyber events have the potential to cause significant 

and far-reaching problems on the power system.40 Administration actions on cybersecurity are discussed in 

greater detail on page 2-37.

Large Power Transformers: Lack of “Off-the-Shelf” Options Could Impact Reliabilityh

Sometimes the challenge of completing infrastructure investment is dependent on the time and schedule associated with the 

manufacturing of large power transformers. The Western Area Power Administration experienced this situation with its most 

recent transformer procurement and installation. Scheduled delivery of this transformer was planned to be 1 year ahead of a 

critical deadline. In December 2013—13 months before the deadline—the transformer failed during testing in the factory. 

This resulted in an initial 4-month delay to the expected delivery date. The transformer was rebuilt and delivered to the site, 

but was compromised due to contamination. This required returning the transformer to the factory for further inspection and 

corrective measures. In the factory, the transformer was refurbished and ultimately passed factory testing 10 months after the 

original delivery date. Delivery to the site, final assembly, and onsite testing and commissioning was completed 1 year after 

the original scheduled in-service date. While the deadline for commercial operation was ultimately met, there was no room for 

error and significant uncertainty in the ability to meet the critical service deadline. The lack of off-the-shelf transformer options 

and industry practice of as-needed manufacturing is an ongoing concern.

h Email communication between Western Area Power Administration and Department of Energy, Office of Energy Policy and 

Systems Analysis staff. March 26, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-13

Electricity TS&D Vulnerabilities Vary by Region

While all regions of the country are susceptible to certain weather-related disruptions, grid TS&D infrastructure 

in three regions is expected to be particularly vulnerable to climate change and extreme weather events:41

Southeast: Due to increasing temperatures, heat waves, and humidity, the Southeast is expected to require 

the steepest growth in electricity transmission and distribution to meet cooling demand.42 The region also 

is exceptionally vulnerable to sea-level rise and hurricanes (see Figure 2-4); challenges that are exacerbated 

by growing coastal populations.43

Southwest: Climate changes pose particular challenges for the Southwest, which is expected to get hotter 

and significantly drier; the regional population also is expected to increase 68 percent by 2050, further 

increasing electricity transmission and distribution load to meet higher cooling demands.44, 45 The increased 

frequency and severity of wildfires are expected to have significant impacts on electricity transmission and 

distribution in the Southwest. In 2007, due to a wildfire, San Diego Gas & Electric and Southern California 

Edison had to reduce their electrical loads by 500 megawatts, nearly 80,000 customers lost power, and more 

than two dozen transmission lines were out of service with damage to 35 miles of wire.46

Atlantic and Gulf Coasts: Due to land subsidence, rising sea levels and shifts in ocean currents, heavier 

downpours, and the potential for more intense hurricanes in the future, coastal infrastructure in these 

regions is increasingly exposed to erosion, flooding, storm surge, and damage from high winds. Coastal 

development patterns that do not take these trends into account increase the vulnerabilities in these regions. 

Hurricanes Katrina and Rita combined downed more than 85,000 utility poles, 800 distribution substations, 

and thousands of miles of transmission and distribution lines, leaving more than 3.5 million customers 

along the Gulf Coast (especially in Louisiana, Mississippi, Florida, and Texas) without power at the height of 

the disruptions.47 As another example, 75 percent of the net annual power generation in the New York City 

metropolitan region comes from 27 power stations that lie in the Federal Emergency Management Agency 

100-year flood zone, a vulnerable position for a vast proportion of the region’s energy infrastructure. 

Dependencies of the Electricity Grid on Other TS&D Systems

As noted, all critical infrastructures depend on electricity; the electric grid also depends on other energy and 

related infrastructures within the scope of the QER. Coal, natural gas, and, to a limited extent, petroleum 

are used as fuels for power generation; the systems that move these fuels to generators are critical to the 

grid. Natural gas demand for power generation is expected to grow 30 percent by 2030, making electricity 

generation increasingly dependent on natural gas supply and transmission systems.48 Generation from 

petroleum was only 0.6 percent of the total in 2013, but dual-fueled (natural gas and petroleum) plants in 

the Northeast increased electricity reliability in the winter of 2013-2014 when the extreme cold of the polar 

vortex threatened to constrain natural gas supplies. Power generation from coal is dependent on shared 

transportation infrastructures, especially rail; this dependency is discussed in greater detail in Chapter V 

(Improving Shared Transport Infrastructures).

Other key dependencies of the electric power sector include the following:

• The use of liquid fuels to power vehicles to repair and service transmission and distribution lines.

• Road, barge, and rail transportation networks used to deliver fuels, including liquefied natural gas for 

peaking facilities, and equipment supplies to generation stations.

• Transportation of LPTs, challenging because their large dimensions and heavy weight pose unique 

requirements to ensure safe and efficient transportation. Water is used for cooling and to reduce emissions.

• Natural gas, propane, and diesel to provide fuel for microgrids.

• Supervisory control and data acquisition and energy management systems that are essential to 

operations. 
2-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Actions for Managing Grid Vulnerabilities 

Options for managing the vulnerabilities of the electric grid span a wide range of technological sophistication. 

To date, activities and investments have been primarily at the lower end of the technology range, focused on 

bulk changes in physical infrastructure, such as building physical barriers or moving equipment, building 

backup systems, building non-wooden or reinforced poles, and burying lines underground.49 Reliability and 

resilience projects have also included operations and maintenance activities, such as aggressive vegetation 

management. While it might be considered low-tech, vegetation management is an essential activity; both the 

1996 West Coast and 2003 East Coast-Midwest power outages started from trees along transmission lines. 

A growing number of options for managing grid vulnerabilities to extreme weather use new technologies like 

smart meters and automated switching devices that allow for much quicker recovery times from disruptions. 

Microgrids and distributed generation technologies also provide options for improved resilience during storms.50

Incorporation of newer technologies is happening slowly. For example, about 90 percent of recent resilience 

project funds, in response to Hurricane Sandy, were spent on bulk infrastructure changes and additional 

operations and maintenance activities rather than on upgrading infrastructure components with advanced 

smart grid technologies.51 Some utilities are doing more than bulk infrastructure changes. After Hurricane 

Sandy took out ConEdison’s substation on the lower East Side, helping to throw lower Manhattan into 

darkness, for example, the utility’s plan of action included construction of walls and barriers; installation of 

pumping equipment and submersible network equipment; and the deployment of smart grid tools to enhance 

network flexibility in emergencies.52

Barriers to Managing Electric Grid Vulnerabilities

As an integral part of risk management, utilities have proposed and completed projects to harden their 

infrastructures against wind and flood damage for many years; several state public utility commissions have 

issued rulemakings and other regulatory instructions related to electricity infrastructure resilience and 

hardening since 2005.53 Yet, in some cases, procedural barriers to cost recovery for addressing vulnerabilities 

remain.

Rate-based cost recovery for repair of damages already incurred by storms and for future long-term 

investment programs remains the most common mechanism for paying for these damages. The criteria, 

process, and timing of this cost recovery vary widely between states. For example, states such as Oklahoma, 

New Hampshire, and Connecticut allow resilience project cost recovery through surcharges or other rateadjustment mechanisms that allow utilities to immediately rate base their expenditures rather than waiting 

for the next rate case. Many states, however, have prohibitions against single-issue ratemaking, meaning that 

a utility that does not have a general rate case scheduled in the near future would have no recourse to recover 

its costs for resilience measures, perhaps for years.54 Investments in efficiency and distributed generation 

are increasingly recognized as viable strategies for improving energy system resilience (see Chapter III, 

Modernizing the Electric Grid); for example, the New York State Department of Public Service recently 

approved such projects as part of a broader rate case focused on hardening and resilience.55

Beyond procedural barriers, there are problems with inadequate information and tools with which to manage 

for resilience. Quantitative measures of adequacy of resilience investments, or even a commonly accepted 

method for determining the appropriate level of resilience at either the transmission or distribution level, 

do not exist. For example, while the North American Electric Reliabilty Corporation develops and enforces 

mandatory reliability standards applicable to the bulk electric system (subject to Federal Energy Regulatory 

Commission review, approval, and independent enforcement authority) and, more recently, physical security 

and geomagnetic disturbance standards, there are no mandatory standards in place that speak directly to grid 

resilience against natural disasters. In addition, there is no common, generally accepted analytical method of 

determining whether it is prudent to implement alternative resilience projects.56
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-15

Administration Initiatives on Electric Grid Resilience

The Build America Investment Initiative. This initiative is an interagency effort led by the Departments of Treasury and 

Transportation to promote increased investment in U.S. infrastructure, particularly through public-private partnerships. The 

Department of Energy has participated in the effort and included several recommendations related to resilience of the electricity 

sector that focus on data, information, and analytical tools. The initiative establishes an electricity resilience information portal 

at the Department of Energy to provide data, tools, and best practices to support investment in resilient electricity infrastructure; 

improve electricity sector data availability and data standardization; develop analytical tools to evaluate the potential impacts 

of climate change in assessments of electricity resilience investments; create standard metrics to account for the benefits 

of resilience in electricity infrastructure investment decisions; and establish a resilience course to educate state and local 

stakeholders on robust decision making related to new infrastructure.

Coordination and Outreach to Reduce Vulnerabilities of the Grid to the Loss of Large Power Transformers. The 

Administration has made it a priority to work with industry to identify challenges and create solutions for increasing the security 

and resilience of the electric grid, including the development of an integrated national plan to mitigate challenges pertaining to 

aging power transformers, the cyber and physical security of transformers, and the vulnerabilities of large power transformers. 

The Administration is working with trade association leadership and the private sector to improve the coordination of existing 

and planned transformer-sharing programs and to identify solutions for transformer replacement capabilities as part of its 

efforts to enhance the resilience of the Nation’s electric grid. These efforts will be part of a formal national strategy (planned for 

release in 2015) for strengthening the security and resilience of the entire electric grid for threats and hazards. In its Recovery 

Transformer Program, the Department of Homeland Security’s Science and Technology Directorate has developed, tested, and 

demonstrated a prototype rapidly deployable extra high-voltage transformer that is transportable by road and can quickly be 

installed within several days of an incident. 

Enhancing Grid Resilience to Geomagnetic Storms. Ensuring that the United States is prepared to respond to and 

recover from severe space weather storms is a priority for the Administration. In November 2014, the Administration established 

an interagency Space Weather Operations, Research, and Mitigation Task Force. The Task Force is developing a National 

Space Weather Strategy with high-level strategic goals for improving forecasting, evaluating impacts, and enhancing national 

preparedness (protection, mitigation, response, and recovery) across all economic sectors to a severe space weather event.

Distribution hardening projects are separately planned on a utility-by-utility basis; data are not systematically 

reported, which makes any central coordination difficult in the event of a large-scale regional or national 

problem. Resilience project metrics and analysis methods typically are defined on a locality-by-locality basis, 

starting with risk-assessment modeling of, for example, flooding or wind damage. The analysis may incorporate 

specific critical infrastructure, population, vulnerability, and duration to quantify the risk reduction and 

economic cost-benefit of alternative resilience projects.57 Methods for analyzing the potential economic impact 

of weather-related damage is a topic of ongoing development,58 and data for performing this analysis can be 

insufficient.59

The power industry’s resilience-related risk assessments largely focus on physical and cybersecurity—rather 

than extreme weather and climate change—and currently rely on information from the Federal Government. 

Incomplete or ambiguous threat information may lead to inconsistency in physical security among grid 

owners, inefficient spending of limited security resources at facilities (e.g., to address overestimated 

threats), or deployment of security measures against the wrong threat. For example, while physical barriers 

could protect against one particular type of attack, incorporation of better communication technologies 

could simultaneously reduce vulnerabilities to multiple forms of risks, such as physical and cyber threats, 

geomagnetic disturbances, electromagnetic pulses, and natural disasters.60 The Federal Government can fill 

gaps in creating data sets, tools, and assessments that provide a more complete and robust analytical approach 

to measuring resilience needs and investments. It can also step in where the utility industry is not wellpositioned to make significant investments—such as where new, innovative technologies can be introduced, 

but they face barriers to cost recovery in the rate base. 
2-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Resilience, Reliability, Safety, and Asset Security of Natural Gas 

TS&D Infrastructure: Analysis of Vulnerabilities

The physical or operational vulnerabilities of natural gas TS&D infrastructures to threats vary among 

infrastructure components. Though generally less vulnerable than electric power infrastructure, the natural gas 

TS&D sector contains several components that could be ranked high in terms of their vulnerability to damage 

and failure from a given hazard. These high-ranking components include natural gas transmission pipelines, 

compressor stations (which provide the pressure needed to move gas through pipelines), and distribution 

systems. Disruptions of these components could result in significant infrastructure outages. 

Pipeline and Storage Vulnerabilities

The vulnerability of natural gas pipelines is dependent on the type of pipeline. Offshore pipelines, from the 

perspective of natural threats, are most vulnerable to damage to platforms and risers from storms; during 

Hurricanes Katrina and Rita, the majority of the offshore pipeline damage occurred at or near platform 

interfaces. Onshore pipelines are vulnerable to landslides and earthquakes. Extreme cold temperatures 

adversely affect natural gas well production and the associated infrastructure; for example, when extreme cold 

in the southwestern United States in early February 2011 curtailed more than 7 billion cubic feet per day of 

natural gas production due to well freeze-offs (see more discussion of this on page 2-25).61

Another area of concern is aboveground pipelines in Alaska, which are becoming increasingly vulnerable 

to climate change and its associated temperature increases. This is contributing to the thawing of the 

permafrost, affecting the foundations of infrastructure, contributing to pipeline displacements, and increasing 

requirements for operations and maintenance.62 Permafrost thawing could have serious implications for 

Alaska’s energy infrastructure, such as the Trans-Alaska Pipeline System, transmission lines, fuel storage tanks, 

generators, and other large energy infrastructure. It is estimated that permafrost thaw could add between $3.6 

billion and $6.1 billion (10 percent to 20 percent) to current costs of maintaining public infrastructure—such 

as buildings, pipelines, roads, and airports—over the next 20 years.63

Administration Initiatives on Electric Grid Resilience (continued)

In addition, a Space Weather Action Plan, coordinated across numerous Federal departments and agencies, will establish 

actions, timelines, and milestones for implementation of the national strategy. Both the strategy and the action plan will be 

complete in 2015. In addition to this work, the President’s Fiscal Year 2016 Budget requests $10 million to conduct research 

to better understand the risks that ground-induced currents from geomagnetic storms or electromagnetic pulses could have on 

large power transformers. Also, in June 2014, the Federal Energy Regulatory Commission adopted the new reliability standard 

(EOP-010-1) developed by the North American Electric Reliability Corporation to mitigate the impacts of geomagnetic 

disturbances that can have potentially severe, widespread effects on the operations of the U.S. power system. The standard 

specifically addresses implementation of operating plans and procedures to mitigate effects of geomagnetic disturbances for 

reliability coordinators and transmission operators. This standard is in response to the Federal Energy Regulatory Commission’s 

May 2013 final rule (Order No. 779) in which it directed the North American Electric Reliability Corporation to develop 

geomagnetic disturbances vulnerability standards in two phases. The second phase of pending standards will provide more 

comprehensive protections by requiring applicable entities to protect their facilities against a benchmark geomagnetic 

disturbance event.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-17

Although pipelines above and below ground represent a highly dispersed element of the energy system that, 

like electric transmission lines, are difficult to protect, the underground portion of pipelines generally are 

difficult for non-professionals to locate; this reduces the possibility of physical attacks. The exception for 

pipeline systems is aboveground compressor stations. In addition, depending on their severity, earthquakes 

could have a major or catastrophic impact on both transmission and distribution pipelines (discussed later in 

this chapter; see Table 2-5).

There have been cyber incidents on natural gas systems, notably between February and March of 2013.64

During this time period, there were brute force attacks (i.e., efforts to obtain passwords and personal 

identification numbers) on a natural gas compressor station, resulting in a warning from DHS to gas system 

and other critical infrastructure operators. This alert prompted reports of similar activities, broadly from 

gas system operators in the Midwest and the Plains. These attacks, while unsuccessful, continued for over 

2 weeks. Vulnerabilities affecting natural gas resilience and reliability likely will grow given the increasing 

reliance of natural gas infrastructure on electricity and other electricity-dependent infrastructures, such as 

telecommunications.

In 2012, there were 414 underground natural gas storage sites in the United States.65 Three-hundred-eighty 

of the facilities were primarily used to meet seasonal winter demand; the remaining facilities are highdeliverability facilities used to inject and flexibly withdraw large natural gas volumes over short periods.

In general, natural gas underground storage is minimally susceptible to natural hazards. Underground gas 

storage facilities are well protected from accidents or malicious acts and generally insensitive to natural events, 

such as earthquakes, owing to the depth of underground storage and the design of the systems connecting the 

storage to the surface.66 However, the U.S. natural gas profile could change the economics of gas storage. Shale 

gas production has increased and gas price volatility has decreased; this may diminish economic incentives for 

storage.

Enhancing Natural Gas Transmission and Distribution Pipeline Safety

There were approximately 315,000 miles of transmission and gathering pipelines and a transmission capacity 

of approximately 443 billion cubic feet per day in the U.S. natural gas pipeline network in 2011. They form the 

backbone of the gas transmission infrastructure system and deliver natural gas directly to many high-volume 

customers, such as industrial plants and gas-fired electric generation. In 2013, the United States had 1,437 

distribution systems comprised of more than 2.1 million miles of distribution lines, delivering gas from highpressure pipelines to more than 68 million residential and 5 million commercial customers.67

Transmission Pipeline Safety

Operators of transmission pipelines and gathering lines have fewer requirements than distribution lines to 

ensure pipeline integrity and safety through damage prevention programs, routine inspection, leak detection, 

and the development of integrity management plans.68 While there are industry standards, for example, for 

instrumentation, safety equipment, and metering, there are no comparable industry standards or industry-led 

systematic research program for external sensor-based leak detection.69 Such a program and standards would 

be useful. 
2-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Administration Initiatives on Pipeline Safety

Transmission pipeline safety. The Obama Administration’s Department of Transportation and the Pipeline and Hazardous 

Materials Safety Administration first responded to concerns about transmission pipeline safety by issuing a “call to action” on 

pipeline safety in 2011. Congress also responded to the same concerns by passing the Pipeline Safety, Regulatory Certainty, 

and Job Creation Act of 2011.i This act directed the Department of Transportation to reexamine many of its requirements, 

including the expansion of integrated management plans for transmission pipelines.j In addition, in 2011, the National 

Transportation Safety Board recommended that the Pipeline and Hazardous Materials Safety Administration require all 

operators of transmission and distribution natural gas pipelines to equip their pipeline monitoring systems with tools to assist 

in recognizing and pinpointing the location of leaks.k The Pipeline and Hazardous Materials Safety Administration is currently 

developing a proposed rule on integrity management for natural gas pipelines. Also, it continues to conduct and support 

research to provide the technical and analytical foundation necessary for planning, evaluating, and implementing its pipeline 

safety program. In addition, the Federal Energy Regulatory Commission has issued a policy statementl that will allow interstate 

natural gas pipelines to recover certain expenditures made to modernize pipeline system infrastructure in a manner that 

enhances system reliability, safety, and regulatory compliance.

Distribution pipeline safety. The Department of Energy, as part of the President’s Strategy to Reduce Methane 

Emissions, convened a series of roundtable discussions with stakeholders (e.g., utilities, environmental groups, state officials, 

and academics) in 2014 focused on reducing methane emissions from gas transmission and distribution systems. Some 

stakeholders commented that it was both necessary and feasible to make further progress through additional efforts to 

modernize natural gas infrastructure in ways that improve safety and reduce emissions. For example, replacement programs for 

leak-prone pipelines achieve multiple benefits; they enhance safety, reduce methane emissions, and create jobs. One barrier to 

public utility commission approval of surcharges for infrastructure modernization is that consumer advocates typically oppose 

these mechanisms for cost recovery.m,n

 Some stakeholders noted that infrastructure replacements could be more cost effective 

and expeditious when state agencies and municipalities coordinate pipeline replacement with other public works projects 

(i.e., in conjunction with water and telecommunications modernization efforts). At the final stakeholder roundtable meeting, 

the Department of Energy announced a series of new initiatives that will help improve pipeline safety. Among them is a new 

partnership with the National Association of Regulatory Utility Commissioners to provide technical assistance for gas.distribution 

system modernization and a clearinghouse for related information on effective technologies and policy strategies.

i Department of Transportation, Pipeline and Hazardous Materials Safety Administration. “Pipeline Replacement Updates: Call 

To Action.” http://opsweb.phmsa.dot.gov/pipeline_replacement/action.asp. 

j Regulatory Certainty and Job Creation Act of 2011, Public Law No. 112-90, 125 Stat. 1904 (2012).

k National Transportation Safety Board and Department of Transportation, Pipeline and Hazardous Materials Safety 

Administration. “Recommendation P-11-10.” 2011. http://www.phmsa.dot.gov/pv_obj_cache/pv_obj_id_54F297878A547

2F8CDF692407F40A9AC8A530300/filename/NTSB%20Reply%20to%20P-11-8%20thru%20-20.pdf.

l Federal Energy Regulatory Commission. “Cost Recovery Mechanisms for Modernization of Natural Gas Facilities.” FR Doc. 

2014–28015. 2014. http://www.federalregister.gov/articles/2014/11/26/2014-28015/cost-recovery-mechanisms-formodernization-of-natural-gas-facilities.

m Popowsky, S. “Testimony before the House Consumer Affairs Committee of Pennsylvania; Regarding Special Session House Bill 

40 and House Bill 41 Natural Gas Issues.” November 9, 2007. http://www.oca.state.pa.us/Testimony/2007/00096290.PDF.

n Department of Transportation, Pipeline and Hazardous Materials Safety Administration. “Pipeline Safety: Safety of Gas 

Transmission Pipelines - Advanced Notice of Proposed Rulemaking (ANPRM).” Docket No. PHMSA-2011-0023. 76 Fed. Reg. 

5308. August 25, 2011. http://www.phmsa.dot.gov/portal/site/PHMSA/menuitem.6f23687cf7b00b0f22e4c6962d9c8789

/?vgnextoid=3d7248c521dd1310VgnVCM1000001ecb7898RCRD&vgnextchannel=2dd0d95c4d037110VgnVCM100

0009ed07898RCRD.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-19

Safety and Methane Emissions from Gas Distribution Systems

Natural gas distribution systems represent roughly 20 percent of all methane leaks from gas systems. 

Emissions from local distribution systems come largely from two sources—leak-prone pipelines and meters 

and regulators at city gates. Together, these two sources represent 70 percent of methane emissions from 

distribution systems. 

Most safety incidents involving natural gas pipelines occur on the natural gas distribution system, as shown 

in Figure 2-5. These incidents tend to occur in densely populated areas. Excavation damage is the leading 

cause of serious incidents along natural gas pipelines; although, significant and preventable contributors also 

include equipment failure, incorrect operation, and pipeline corrosion.70 Incidents are relatively infrequent, but 

increase as systems age. 

Figure 2-5. Total Incidents, Injuries, and Fatalities Associated with U.S. Natural Gas Pipelines, 2004–201371, o

The majority of natural gas pipeline-related incidents involve distribution pipelines. The annual number of incidents associated with U.S. natural gas 

pipelines (shown in inset) declined between 2004 and 2013.

o Note that only a small portion of gathering lines are subject to reporting requirements; therefore, the Pipeline and Hazardous 

Materials Safety Administration data likely represent a significant underestimate of incidents on gathering lines.

300

Distribution Transmission Gathering

200

400

Occurences (total 2004-2013) 

100

0

Incidents Injuries Fatalities

50

40

30

20

10

0

2004 2008 2012

Annual Incidents
2-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Figure 2-6. Methane Emissions from Natural Gas Distribution Systems in Indianapolis and Boston, 201372, p, q

After a pipeline explosion in Indianapolis, Indiana, in the 1980s, the city began a program to replace leak-prone natural gas pipelines. Massachusetts 

has more recently started a replacement program. 

Many companies, states, and localities have taken action to improve safety by accelerating distribution pipeline 

replacement. After a natural gas explosion in the early 1980s, Citizens Energy Group, the local distribution 

company for Indianapolis, initiated an aggressive pipeline replacement program that reduced the proportion 

of pipeline-miles made from cast iron and steel from 16 percent in 1990 to less than 1 percent in 2013.73, 74 

Massachusetts ranks seventh in the Nation for leak-prone iron and steel gas system mains (see Table 2-2). The 

state has taken proactive measures to reduce these risks. In 2009, the Massachusetts Department of Public 

Utilities established a Targeted Infrastructure Recovery Factor to incentivize the accelerated replacement 

of leak-prone natural gas distribution infrastructure and to support “... benefits to public safety, service 

reliability, and the environment.”75 The agency subsequently approved a Targeted Infrastructure Recovery 

Factor mechanism for National Grid’s Boston Gas in 2010.76 While Boston’s leak rates were higher than 

p The study authors use isotopic analysis to confirm that the methane measured in this study are from fossil sources (i.e., not 

biologically produced). The methodology used to convert measurements of methane concentration into flux estimates is described 

in: Environmental Defense Fund. “Methodology: How the data was collected.” www.edf.org/climate/methanemaps/methodology. 

Accessed February 27, 2015. 

q While fixing and repairing pipeline leaks is critical for increasing public safety, it is important to note that not every leak is dangerous; 

effective safety programs take many factors into consideration.

Indianapolis

Boston

Emissions Rate

Low (The same near-term climate impacts as driving a car between 100 and 1,000 miles everyday. Rate: 700 to 9,000 liters/day.)

Medium (The same near-term climate impacts as driving a car between 1,000 and 9,000 miles everyday. Rate: 9,000 to 

60,000 liters/day.)

High (The same near-term climate impacts as driving a car more than 9,000 miles everyday. Rate: More than 60,000 liters/day.)
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-21

Indianapolis’ in 2013 (see Figure 2-6), the proportion of pipeline-miles made from cast iron and steel in Boston 

Gas has reduced from 60 percent in 2008 to 51 percent in 2013.77 To further expedite pipeline replacement, 

Massachusetts recently enacted a law requiring utility classification and prioritization of pipeline leaks for 

replacement or repair.78

The most leak-prone distribution pipeline materials are cast iron and bare steel, accounting for 

approximately 9 percent of distribution pipes in the United States79 and resulting in roughly 30 percent 

of methane emissions from natural gas distribution systems.80 All regions of the country have some leakprone distribution pipeline networks. Table 2-2 presents the top 10 states with the most miles of leak-prone 

distribution mains.r

 The magnitude of investment needed to replace all leak-prone distribution mains 

nationwide is more than $270 billion.s

Table 2-2. 10 States with the Most Miles of Leak-Prone Distribution Mains81

Of the 10 states with the most miles of leak-prone natural gas mains, nine have infrastructure modernization acceleration initiatives.

Despite progress in many states to help the replacement of leak-prone pipes in distribution networks,82 some 

have limitations; many place caps on the magnitude of investments eligible for cost recovery and/or on the size 

of rate increases. Even with such special cost-recovery mechanisms,83 at least one dozen utilities will require 

two decades or more to replace their leak-prone pipeline. Table 2-3 shows replacement time frames for select 

distribution systems.

r Distribution mains are pipelines that serve as a common source of supply for more than one service line. Source: 49 CFR § 192.3. In: 

Department of Transportation, Pipeline and Hazardous Materials Safety Administration. “Glossary.” www.phmsa.dot.gov/staticfiles/

PHMSA/Pipeline/TQGlossary/Glossary.html#main. Accessed March 9, 2015. Generally, these are gas pipelines running underground 

along streets, connecting to service lines that run to individual buildings.

s The American Gas Association reports that the total cost of replacing all cast iron pipe in the United States is $82,682,696,844 in 

2011 dollars. According to Pipeline and Hazardous Materials Safety Administration data, cast iron pipes represent approximately 

30 percent of the total leak-prone pipe in the United States. Assuming other pipe replacement has similar costs, the total cost for 

replacement of all leak-prone pipe is roughly $270 billion. Source: American Gas Association. “Managing the Reduction of the 

Nation’s Cast Iron Inventory.” 2013. www.aga.org/managing-reduction-nation%E2%80%99s-cast-iron-inventory. Accessed 

January 16, 2015.

Rank State Leak Prone Iron 

Mains (mi)

Leak Prone Steel 

Mains (mi)

Total Leak Prone 

Mains (mi)

Total Leak Prone Mains (% of 

pipes in state)

1 PA 3,300 8,600 11,900 25%

2 NY 4,200 7,500 11,700 25%

3 OH 570 9,500 10,070 18%

4 CA 29 8,200 8,229 8%

5 NJ 4,900 2,200 7,100 21%

6 MA 3,600 2,600 6,200 30%

7 TX 820 5,000 5,820 6%

8 MI 3,000 2,300 5,300 9%

9 WV 13 3,000 3,013 29%

10 AL 1,200 820 2,020 7%
2-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Table 2-3. Expected Replacement Horizons for Select Utilities for Leak-Prone Mains84

Projected pipeline replacement rates (from a select group of utilities) vary considerably and can range from about one decade to more than 80 years. 

Key factors affecting projected time frames include remaining miles of pipeline made of leak-prone materials (e.g., cast iron and unprotected steel) 

and the scale of existing replacement programs. 

Another leading source of leaks is from meters and regulators at “city gate” station facilities that connect 

long-distance interstate transmission pipelines to local distribution networks. These account for 40 percent 

of methane emissions from natural gas distribution systems.85 A recent study found that in cases where 

companies had invested in upgrades, emissions from city gate stations in 2013 declined to a fraction of 

emission levels measured at the same stations in 1992. Conversely, the one station that had not invested in 

upgrades over this 20-year period saw a 40-percent increase in estimated emission levels, illustrating the 

environmental benefits of such investments.86 The Environmental Protection Agency’s Natural Gas STAR 

program encourages voluntary actions to address these losses through directed inspection and maintenance 

programs that include leak detection and repair measures. Installing state-of-the-art measurement 

technologies could assist in leak management. In addition, it is estimated87 that quarterly leak detection and 

repair, which requires little capital investment and could be scaled up quickly, could reduce emissions from city 

gate stations by 60 percent.

Utility Company Service Territory State Forecasted Timeframe (years)

Philadelphia Gas Works Philadelphia, PA PA 84 84

ConEd New York, NY NY 35 35

PECO Greater Philadelphia, PA PA 33 33

PSE&G Newark, NJ NJ 30 30

Pensacola Energy Pensacola, FL FL 30 30

Baltimore Gas Company Baltimore, MD MD 30 30

UGI Rural Pennsylvania PA 27 27

Consumers Energy Detroit, MI MI 25 25

DTE Detroit, MI MI 25 25

National Grid New York, NY NY 25 25

Dominion Hope Gas Co. Ohio OH 20 20

Yankee Gas Services Company Rural Connecticut CT 20 20

Peoples Gas Chicago, IL IL 20 20

National Grid - Niagra Mohawk Rhode Island RI 19 19

Peoples TWP Southwestern Pennsylvania PA 19 19

Peoples Natural Gas Co. Southwestern Pennsylvania PA 17 17

National Grid - Niagra Mohawk Syracuse, NY NY 16 16

Columbia Gas of Pennsylvania Southwestern Pennsylvania PA 15 15

Northern Utilities Maine ME 13 13

CenterPoint Arkansas AR 12 12
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-23

Natural Gas Infrastructure Dependencies

As noted, the electricity sector is increasingly reliant on natural gas as a fuel for power generation. On the flip 

side, many physical and operational components of natural gas TS&D infrastructures depend on electricity for 

key functions. In addition, other key sectors, such as industry and natural gas vehicles, depend on reliable and 

robust natural gas TS&D systems for a range of applications.

Gas System Dependencies on Electricity

Most pumps and compressors along natural gas gathering and transmission pipelines are fueled with gas flowing 

through the station,88 with only about 5 percent of installed compression horsepower on interstate pipelines 

nationwide requiring electricity to run.89, 90 In some areas of the Nation where there are concerns about emissions 

and the increased speed of permitting of electric compressors, there is significantly greater reliance on electric 

compressors.91, 92 Pennsylvania, Ohio, and California, for example, have a higher percentage of compressors powered 

by electricity than the national average.93 On the flip side, increased reliance on electricity-powered compressors 

could increase the vulnerability of the gas transmission system to power outages. During the 2011 “Big Chill” in the 

Southwest (see box), for example, rolling blackouts contributed to natural gas production outages (primarily affecting 

compressors on gathering lines), which in turn led to power generation curtailments.94

While compression facilities for underground natural gas storage generally are fueled by offtake gas, they 

may still require electric power.95 Electricity is needed for dehydration of underground stored gas. Pipelinequality natural gas is pumped into underground formations for storage; when the gas is withdrawn, it requires 

processing to remove water from the natural gas and to filter the gas all over again. 

Also, most of the Nation’s liquefied natural gas facilities store this gas for periods of peak demand or pipeline gas supply 

interruption. Cryogenic liquefaction of natural gas allows large volumes of gas to be stored and transported over long 

distances that cannot be technically or economically served by pipelines, and this process requires large amounts of 

electricity. These facilities are distributed across the Nation and generally are found near electric power stations.96

Centralized gas control stations monitor the flow of natural gas and collect, assimilate, and manage data received from 

compressor stations all along the pipeline. These control systems can integrate gas flow and measurement data with 

other accounting, billing, and contract systems. The data are transmitted through a communications network that 

could consist of company-owned, fiber-optic lines; leased telephone lines; ground- or satellite-based microwave; or 

radio communication systems.97 The total loss of communications could result in manual operations of the affected 

pipeline. Many systems in the oil, gas, and alternative fuels infrastructures are increasingly monitored and controlled 

remotely through cyber networks that are also powered by electricity.98

Dependencies of Other Sectors on Natural Gas TS&D Systems

Dependencies of other infrastructures on the natural gas TS&D sector include the following:

• Supply of natural gas liquids for petroleum refining. Growth in production of natural gas liquids 

has stimulated renewed interest in petrochemicals production where ethane and propane are 

key feedstocks (see Chapter V, Improving Shared Transport Infrastructures, for a more detailed 

discussion). 

• Natural gas as a transportation fuel. Compressed natural gas vehicles also rely on natural gas. Although 

there are only about 120,000 compressed natural gas vehicles in the United States today, the Energy 

Information Administration forecasts increases in natural gas vehicles over the next decades, especially 

in heavy-duty vehicles.99

• Industrial consumption of natural gas. Given low natural gas prices over the past several years and 

forecasts of abundant supplies at moderate prices in the future, there has been a resurgence of natural 

gas use in industrial applications in the United States, as seen in Table 2-4. 
2-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Table 2-4. Projected Incremental Natural Gas Demand for Select U.S. Industrial Sector Projects, 2015–2020100

Natural gas supply is projected to stimulate additional industrial construction and demand growth.

Natural Gas – Electricity Interdependencies

Nationally, natural-gas-fired power generation has increased by more than 40 percent since 2005, and carbon 

dioxide regulations may increase its use even further.101 The increasing absolute demand for natural gas in the 

power sector has heightened the interdependence between gas and electric systems. In addition, fast-ramping 

requirements of natural-gas-fired generation, especially in response to the need to firm renewable generation, 

has increased the need for scheduling coordination between the gas and electricity sectors. 

Gas Pipeline Transmission Capacity and Power Generation

An important question regarding natural gas transmission infrastructure is whether the existing gas transmission 

infrastructure can reliably accommodate increased use of natural gas in electric power generation, resulting from 

significant shifts in fuel utilization in the power sector. A recent DOE study for this QER on the adequacy of the 

national natural gas transmission system (there may be regional differences and needs, as discussed in the next 

section) to accommodate increased demand for natural gas102 concluded the following: 

• Higher utilization and repurposing of existing interstate natural gas pipeline infrastructure will reduce 

the need for new transmission pipelines. Pipeline flow patterns have already evolved with changes in 

supply and demand. Given the cost of building new pipelines, finding alternatives that utilize available 

existing pipeline capacity, such as adding compression to existing pipelines or reversing flow, is often 

less costly than building new pipeline capacity. 

Planned 

Operations 

Date

Chemical Metals Petroleum Other Industrial Total Demand

Year MMcf/d # Projects MMcf/d # Projects MMcf/d # Projects MMcf/d # Projects MMcf/d # Projects

2015 246 57 118 54 355 21 24 179 743 311 

2016 317 13 62 5 488 10 58 27 926 55 

2017 261 5 79 3 325 3 2 8 668 19 

2018 265 5 1 1 747 5 0 4 1,010 15 

2019 - - - - 1,350 4 - - 1,350 4 

2020 - - - 1 - - - - - 1 

Project 

dates not 

announced* 179 6 2 3 872 5 - - 1,050 14 

Total 1,090 80 261 64 3,260 43 86 218 4,700 405 

* Not announced at time of this analysis, 6/2014
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-25

• The changing geography of natural gas supply, where diverse sources are now found closer to demand 

centers, is reducing the need for additional long-distance interstate natural gas pipeline infrastructure. 

There will be a need for expanded natural gas pipeline capacity as a result of new and expanded 

production of natural gas from shale formations and growth in natural gas demand, but it is lower 

than would be expected if the increased production were concentrated in traditional gas-producing 

regions. 

• Incremental interstate natural gas pipeline infrastructure needs, even in a future that includes a 

national carbon policy, are projected to be modest. While a future carbon policy may significantly 

increase natural gas demand from the electric power sector, the projected incremental increase in 

natural gas pipeline capacity additions is modest relative to the reference case used in the analysis, 

which is based on projections from the 2014 Annual Energy Outlook. The rate of pipeline capacity 

expansion in the scenarios considered by the analysis is lower than the rate of natural gas pipeline 

capacity expansion that hs historically taken place.

The Big Chill: A Disruptive Event Made Worse by Infrastructure Interdependenciest

The “Big Chill” of 2011 illustrates the complicated relationship between natural gas and electric power, which had 

compounding effects during a period of extreme weather. 

During the first week of February 2011, the U.S. Southwest was hit by an arctic cold front that was unusually severe in terms 

of its low temperatures, gusting winds, geographic extent, and duration. From January 31 to February 4, temperatures in Texas, 

New Mexico, and Arizona were the coldest experienced within the region since 1971. Dubbed the “Big Chill” in the media, 

it overwhelmed the routine preparations for cold weather that had been put in place by electric generators and natural gas 

utilities located in those states. 

Within the Electric Reliability Council of Texas (ERCOT) Interconnection, starting in the early morning hours of February 2, the 

cold temperatures and wind chill caused a significant number of outages at generating plants, with approximately one-third 

of the total ERCOT generating fleet unavailable at the lowest point of the event. With electricity demand soaring because of 

the cold weather, ERCOT and some utilities in New Mexico instituted rolling blackouts to prevent collapse of their electric 

systems. For the Southwest as a whole, 67 percent of electric generator failures (by megawatt-hour) were due directly to 

weather-related causes, including frozen sensing lines, frozen equipment, frozen water lines, frozen valves, blade icing, and 

low-temperature cutoff limits on equipment.

Gas producers and pipelines were also affected in Texas, New Mexico, and Arizona. Natural gas production was diminished 

due to freeze-offs and the inability to reach gas wells (due to icy roads) to remove produced water and thereby keep them 

in operation. When rolling electricity blackouts hit gas producers and gas pipelines, it had the effect of causing further losses 

to natural gas supply. The ERCOT blackouts or customer curtailments caused or contributed to 29 percent of natural gas 

production outages in the Permian Basin and 27 percent of the production outages in the Fort Worth Basin, principally as a 

result of shutting down electric pumping units or compressors on gathering lines. As a result of all these factors, natural gas 

deliveries were affected throughout Texas and New Mexico. More than 30,000 customers experienced natural gas outages at 

some point during this period.

The majority of the problems experienced by the many generators that tripped, had their power output reduced, or failed to 

start during the event were attributable, either directly or indirectly, to the cold weather itself. However, at least another 12 

percent of these problems were attributed afterward to the interdependencies between gas and electricity infrastructures (such 

as lost electricity generation due to natural gas curtailments to gas-fired generators and difficulties in fuel switching).

t Federal Energy Regulatory Commission and North American Electric Reliability Corporation. “Report on Outages and 

Curtailments During the Southwest Cold Weather Event of February 1-5, 2011: Causes and Recommendations.” August 2011. 

http://www.ferc.gov/legal/staff-reports/08-16-11-report.pdf. Accessed February 2, 2015.
2-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Natural Gas Infrastructure Constraints in the Northeast

The Northeast represents a region of the country where natural gas transmission constraints have caused price 

differentials to rise during periods of peak demand.103 While, in the past few years, construction of natural gas 

pipelines in other parts of the country have caused natural gas price differentials to decrease in those regions, 

the Northeast has seen its price differentials increase (see Figure 2-7). Much of the northeastern Atlantic 

region (New England, New York, and—to some extent—the Mid-Atlantic States) continues to see natural gas 

supply constraints due to gas transmission capacity limits, especially during cold winter periods. However, 

the actions undertaken by the Independent System Operators, Regional Transmission Organizations, and 

market participants, such as PJM’s Cold Weather Preparation Guidelines and the continuation of Independent 

System Operator New England’s Winter Reliability Program for a second winter, have improved operational 

performance and moderated prices.104

Figure 2-7. Natural Gas Price Differentials between Henry Hub and Key Trading Points105, u

Basis differentials reflect regional gas infrastructure constraints and the price signal that spurs infrastructure investment. These constraints persist in 

New England and New York.

The Northeast region is located at the end of major pipeline routes from traditional natural gas producing 

areas. Its supplies of natural gas have tended to be constrained during winter peak periods, allowing prices to 

rise much higher in this region than in the rest of the country in recent years.106 For example, natural gas prices 

u The 2014 increase in Chicago city gate prices relative to Henry Hub is attributable to cold winter weather and deep drawdowns of gas 

in storage, rather than systemic infrastructure constraints, and is less likely to persist.

-3

-2

-1

0

1

2

3

4

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Henry Hub Price Differential ($/MMBtu)

Boston New York

Pittsburgh

Chicago Houston

West Texas

Wyoming Northern California

Southern California

Shale Era:

During the shale gas era, prices converge except in the 

Northeast (NY and New England)

Wyoming production outpaces 

take-away capacity

Rockies Express pipeline 

gradually relieves constraint
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-27

rose to greater than $34 per million British thermal unit during cold snaps in the winter of 2012-2013 and 

increased to more than $73 per million British thermal unit during the southward shifts in the polar vortex 

in the winter of 2013-2014.107 These capacity constraints are being exacerbated by a large increase in the use 

of natural gas in the electric power sector in New England. Despite large volumes of new unconventional 

gas resources available from the Marcellus Shale in nearby Pennsylvania, pipeline constraints have not 

allowed sufficient supplies of this gas to reach New England, resulting in upward pressure on prices at gas 

delivery points in the region.v The New York metropolitan area, by contrast, has alleviated some of the winter 

congestion it had faced by adding new pipeline capacity. 

The underlying issues affecting natural gas prices and reliability in New England are caused by several complex 

factors. One area of concern has been the role of capacity markets in the challenges associated with assuring 

access to adequate fuel supplies. Independent System Operator New England has taken a number of steps to 

address this issue, including implementing changes to its capacity markets to enhance generator performance 

and adopting winter reliability measures designed to address this concern.108, 109 Another issue has been public 

acceptance of new pipelines, especially in New England, which presents a substantial challenge to natural gas 

pipeline development.110 Several pending pipeline projects would alleviate infrastructure constraints into New 

England. In addition to the capacity market changes by Independent System Operator New England described 

above, the New England governors are formulating proposals to pay for new natural gas pipeline and electric 

transmission capacity and services. 

Resilience, Reliability, and Asset Security of Liquid Fuels TS&D 

Infrastructure: Analysis of Vulnerabilities

The U.S. liquid fuels system is diverse, robust, and resilient. In 2014, it produced an average of 8.7 million 

barrels per day (million bbl/d) of crude oil and 3.0 million bbl/d of natural gas liquids, as well as imported 

an average of 7.3 million bbl/d of crude oil.w, 111 In 2014, this system refined an average of 15.8 million bbl/d 

of crude oil into products in 142 operable refineries. While refining is concentrated on the Gulf Coast, the 

remainder is well-distributed between the East and West Coasts and the Upper Midwest and supplemented 

by product imports that enter through both coasts and from Canada. Its TS&D infrastructure consists of both 

dedicated pipelines and facilities and infrastructures shared with other major commodities.

Liquid Fuel Vulnerabilities Vary by Region

Despite the robustness of the system, the Nation’s liquid fuel infrastructure has vulnerabilities. These 

vulnerabilities are determined by the types of natural disasters that occur in a region, as well as by the types 

of infrastructure within the region. Regions have supply vulnerabilities if they are dependent on fuel supplies 

from outside the region. This section describes the relationship between the functions of the liquid fuel 

infrastructure in a given region and the geographically based vulnerabilities that it faces for regions defined by 

Petroleum Administration for Defense District (PADD) groupings, a subdivision of the petroleum sector that 

is commonly used by the Energy Information Administration and other energy analysts.112 The following are 

profiles of liquid fuel systems and vulnerabilities by PADD.113

v For a more detailed discussion of infrastructure constraints in the New England area, see the documents relating to the April 21, 2014, 

Quadrennial Energy Review Stakeholder Meeting, “New England Regional Infrastructure Constraints:” energy.gov/epsa/downloads/

qer-public-meeting-providence-ri-hartford-ct-new-england-regional-infrastructure. 

w Data are based on cumulative daily averages through December 26.
2-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Atlantic Coast-North (PADD I, Subdistrict A): 

This region (the Atlantic Coast north of New York) 

has no crude oil production or refining capacity 

and is not served by large pipelines from the Gulf 

Coast. The region predominantly receives its 

supply of liquid fuels by waterborne transport. It is 

consequently susceptible to weather disruptions of 

ports. Infrastructure in this region is also susceptible 

to extreme cold. 

Atlantic Coast-Central (PADD I, Subdistrict B):

This region has only a small amount of capacity 

for producing or refining crude oil, relative to its 

consumption. It is heavily dependent on receiving 

water shipment of crude oil and refined products at 

coastal ports and on pipeline shipments of refined 

products from the Gulf Coast on the Colonial and 

Plantation pipeline systems. It has a relatively high 

level of storage for refined products. Liquid fuels 

shipments are susceptible to weather disruption of 

ports, flooding of coastal refineries and terminals, 

and disruptions to flows on Colonial and Plantation 

pipelines. During the past century, land subsidence 

has contributed to rising relative sea levels along the 

Mid-Atlantic Coast as high as 5.0–10.0 millimeters 

per year (mm/yr), which is more than twice the 

global average (1.7 mm/yr).114

Atlantic Coast-South (PADD I, Subdistrict C): 

The southern part of this region (Florida and the 

coastal regions of Georgia, South Carolina, and 

North Carolina) has very little crude production 

or refining capacity and is not served by the large 

pipelines from the Gulf Coast. All coastal areas are 

supplied by waterborne deliveries, and Florida is 

heavily dependent on receiving water shipments of 

refined products. The interior portions of Georgia, 

South Carolina, North Carolina, and Virginia 

are dependent on pipeline shipment of refined 

products from the Colonial and Plantation pipeline 

systems. The region is susceptible to weather 

disruptions of receiving ports, pipeline shipments, 

as well as events that disrupt loading and 

departures of barges from the Gulf Coast. Over the 

past century, sea levels have increased by as much 

as 3–6 mm/yr in the Atlantic Coast-South region.115

ME

NH

VT

CT RI

MA

NY

NJ

PA

MD DE

VA

NC

SC

GA

FL

WV
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-29

Great Lakes/Midwest Region (Part of PADD II):

Refineries in this region have historically relied on 

crude oil shipped via pipeline from the Gulf Coast. 

Now almost all oil moved to refineries in the region 

comes from more recently developed supplies of 

Midcontinent and Canadian crude oil. This shift has 

diminished the need for pipelines to deliver crude 

oil from the Gulf of Mexico to the region, and many 

have been reversed to move additional Midcontinent 

and Canadian oil supplies south to the Gulf Coast 

(PADD III) refining complex. Weather events are 

less likely to affect multiple refineries in the Midwest 

compared to, for example, the refineries concentrated 

along the Gulf of Mexico. An earthquake in the 

New Madrid Seismic Zone could disrupt product 

deliveries, but it would be less likely now to disrupt 

crude oil supplies into the region than 5 years ago. 

Extreme cold can hinder refining and distribution.

Williston Basin (Part of PADD II): Recent 

development of technology to produce oil from shale 

formations (in this case, the Bakken formation) has 

made the Williston Basin an important producing 

area. The area is not highly susceptible to natural 

disasters, but is susceptible to extreme cold. The East 

and West Coasts and the Gulf Coast rely on this 

region for rail transport to bring its crude to their 

refineries. 

Oklahoma/Kansas (Part of PADD II): This region 

is a relatively large producer of crude oil and, more 

importantly, a national hub for trading, storing, and 

transporting crude oil. One of the largest oil storage 

and pipeline junction centers in the world is located 

near Cushing, Oklahoma. Tornados likely are the 

highest-impact hazard that could strike this area.

MN

WI

IL IN

OH

MI

KY

TN

MO

IA

NE

ND

SD

KS

OK
2-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Gulf Coast (PADD III): This region is a major 

center for onshore and offshore production, refining, 

and loading and unloading of water shipments of 

crude oil and refined products. Fifty-two percent of 

the Nation’s operable refinery capacity is in PADD 

III. It is susceptible to tropical storms and hurricanes, 

flooding, and sea-level rise. During the past century, 

land subsidence in the Gulf Coast region has caused 

relative sea levels to rise by 5–10 mm/year, which is 

more than the twice the global average. The highest 

rates of land subsidence within the Gulf Coast region 

are estimated to be in the vicinity of the Mississippi 

River Delta.116

Northern Rocky Mountain Region (PADD IV):

This region consumes fuels from refineries in the 

Salt Lake and Denver areas that mainly process 

crude oil produced from within the region. The main 

hazards are earthquakes and perhaps tornados. It is 

susceptible to extreme cold. Pipelines networks are 

less dense in the less populated regions of PADD IV. 

This leads to cities that are far from refining centers 

often being served by long dedicated pipelines. These 

cities are more dependent on the operation of single 

pipelines than typically is the case in regions of the 

country with higher-density populations. An example 

in PADD IV is Boise, Idaho, which is dependent on a 

single pipeline from Salt Lake City. 

West Coast Region (PADD V): Although this region 

still produces much of the crude oil processed in 

its refineries, it increasingly depends on receiving 

shipments by water from other regions and from 

ports within PADD V, including Alaska. PADD V is 

not well-connected to other PADDs by pipeline, but 

it does receive an increasing amount of its oil by rail. 

The level of imports to PADD V is stable. This region 

is susceptible to earthquakes and wildfires. Cities 

that are on the downstream edge of supply from 

West Coast refineries and depend on long dedicated 

pipelines include Phoenix, Arizona; Las Vegas, 

Nevada; and Reno, Nevada. During the past century, 

sea levels along the West Coast have generally risen 

at or below the global average rate.117

TX

NM AR

LA

MS AL

MT

ID

WY

UT

CO

WA

OR

CA

NV

AZ

AK

HI
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-31

Vulnerability of Fuel Supply Disruptions from Gulf Coast Hurricanes

As noted, the Gulf Coast region is home to more than 50 percent of the Nation’s refining capacity. Damage to 

liquid fuels infrastructure in this region can lead to significant impacts on much of the rest of the country, as 

the Gulf supplies oil products to the Northeast, Midwest, Mid-Atlantic, and South Atlantic regions.118 Many 

U.S. regions are vulnerable to severe weather in the Gulf of Mexico or other threats to infrastructure in the 

Gulf of Mexico or on the Gulf Coast. Land subsidence also is a widespread issue throughout the Gulf Coast 

(and Mid-Atlantic coastal areas). During the past century, global sea-level rise has averaged about 1.7 mm/

yr, though the rate in the Gulf has been faster (at 5–10 mm/yr, in part due to subsidence).119 Between now and 

2030, the average global sea-level rise could accelerate to as much as 18 mm/yr in worst-case scenarios.120

Gulf Coast refineries in the path of a major hurricane typically shut down in advance of a storm and restart after 

the storm has passed. While an undamaged refinery is likely to return to operation within 1 week of hurricane 

landfall, a severely damaged refinery might take several months to recover. Hurricanes Katrina and Rita provide 

examples of such impacts. The combined consequences of these two hurricanes in 2005 caused refinery outages 

of more than 4.5 million bbl/d. More than 20 refineries were shut down on the worst day, representing a loss of 

67 percent of the Gulf’s capacity and 28 percent of national refinery capacity. While the refineries recovered, the 

outage was still 2 million bbl/d 3 weeks after Rita’s landfall and remained at 1 million bbl/d for over 2 months. 

This caused a sharp, temporary increase in regional and national gasoline and diesel fuel prices.121

In response to these hurricanes, 30.0 million bbl of crude oil from the Strategic Petroleum Reserve (SPR) were 

offered to the market and 20.8 million bbl were ultimately sold; it took 20 days for the first oil to move. While 

the International Energy Agency, in a coordinated effort, released petroleum product stocks to assist with the 

U.S. supply disruption, these supplies were not easily distributed to the Southeast region; truck deliveries to the 

Southeast region were made hundreds of miles from ports on the Atlantic Coast. 

Similar petroleum product outages occurred in 2008 as a result of Hurricanes Gustav and Ike, leading to 

significant increases in motor fuel prices in all regions of the United States. In these instances, no SPR 

emergency release or International Energy Agency coordination action was taken.x

 In 2012, Hurricane Sandy 

caused numerous fuel supply and distribution problems in New York and New Jersey, involving refineries, 

marine terminals, petroleum product terminals, and retail service stations. As with the 2005 and 2008 

hurricanes, an SPR crude oil release would have provided little remedy to the fuel supply problems. Also, all 

four U.S. facilities are located in the Gulf Coast region and may be exposed to hurricane damage, including 

inundation caused by storm surge.122 In September 2008, for example, the Big Hill and West Hackberry sites 

sustained significant damage caused by Hurricane Ike.123

Industry has taken actions to harden Gulf Coast infrastructures after hurricanes in 2005 and 2008. 

Aboveground product storage tanks represent a particular vulnerability in hurricanes as they can float off their 

foundations and spill product, creating environmental and supply concerns. At least four companies surveyed by 

DOE in 2010124 indicated that they had “taken steps to ensure a minimum volume of product is in their storage 

tanks before a storm arrives.” The refinery and pipeline operators interviewed for this study all confirmed that 

they maintain confidential hurricane preparedness plans. State public utility commissions also have responded 

in a variety of ways, initiating studies of and rulemakings for storm hardening. On the power side, the actions 

of Entergy during Hurricane Gustav in 2008 provide an example of the efforts by utilities to maintain service 

to customers. Entergy’s use of grid sensors enabled it to identify and warn of islanding conditionsy in order 

to manage their impacts on its systems in four states. Entergy’s success during Gustav provides a replicable 

example for the effective use of technologies to manage storm impacts.125

x Some SPR sites sustained significant damage. While the SPR was able to conduct a test exchange of 5.4 million bbl of crude in 

response to requests for supplies from several refiners, it took weeks to restore SPR sites to their pre-storm levels of mission capability. 

y Islanding is an unsafe situation for utility workers, where a distributed generator, when not appropriately monitored or understood, 

continues to provide power when electricity from the utility is cut off.
2-32 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Vulnerabilities to Non-Weather-Related Refined Product Disruptions

In addition to storms on the East and Gulf Coasts, other natural disasters can cause interruptions of petroleum 

products. While the U.S. West Coast is not as vulnerable to hurricanes, a severe earthquake in the Los Angeles 

Basin or San Francisco region would cause significant disruptions of fuel supplies. For example, Table 2-5 and 

Figure 2-8 show (1) the potential impacts of severe earthquakes on a variety of energy infrastructures, and (2) 

regions that are prone to damaging earthquakes. The greatest infrastructure risks occur when the probability of 

damage and severity of damage are high, the risk of the event is high, and the infrastructure involved is critical. 

Western pipelines and refineries are both at risk in major earthquakes.

Table 2-5. Probability and Severity of Earthquake Damage to TS&D Infrastructure126

Infrastructure

Magnitude<5 Magnitude >5

Probability of 

Damage

Severity of 

Damage

Probability of 

Damage

Severity of 

Damage

Loss of Electrical Power Med Significant High Catastrophic

Gulf of Mexico Platforms Low-Med Interrupting Med Significant

Pumping/Compressor Station Low-Med Interrupting Med Significant

Pipelines Low-Med Interrupting Med-High Major

Rail Low Insignificant Med Significant

Ports Low Insignificant Med-High Major

Crude Tank Farm Low Insignificant Med Significant

Refineries Low Insignificant Med-High Major

Natural Gas Plants Low Insignificant Med Significant

Product Storage Terminals Low Insignificant Med Significant

Propane Tanks Low Insignificant Med Significant

Underground Storage Low Insignificant Low-Med Interrupting

LNG Terminals Low Insignificant Med Significant

Local Natural Gas Distribution Low Insignificant High Catastrophic

Filling Stations Low Insignificant Med Significant

SPR/NEHHOR Low Insignificant Low Insignificant

For two magnitudes of earthquake intensity, the severity of probable damage was rated qualitatively using a five-point scale (i.e., insignificant, 

interrupting, significant, major, and catastrophic) and probability also on a 5-point scale (i.e., low, low-medium, medium, medium-high, and high).
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-33

Figure 2-8. Earthquake Vulnerability Hazard Regions Severity Indices for Earthquakes127, z

Analyzing the impacts of earthquake on TS&D infrastructure involved a review of the probability of damage and severity of damage on infrastructure 

components (Table 2-5) and the probability of an event occurring in a region. Comparing this to the types and amounts of energy infrastructure in 

the region (e.g., limited liquid fuels pipelines in the Rocky Mountain region) identified regional TS&D infrastructure vulnerabilites.

Responding to Liquid Fuels Disruptions

There is a range of actions that could be taken to address the vulnerabilities outlined in the previous section. 

One is to develop strategic and regional stockpiles of oil and refined petroleum products to help respond to 

shortfalls caused by breakdowns in the liquid fuel infrastructure, regardless of cause. Another is additional 

hardening. Hardening can consist of flood protection (e.g., berms, eves, and floodwalls), self-sufficient electric 

power (e.g., a generator sited at a facility that is configured to operate in a safe “island mode” disconnected 

from the local electricity grid to supply that facility with electricity during a local grid blackoutaa), and other 

measures. A combination of these actions may provide the most cost-effective approach to avoid the loss of 

fuel supplies after a natural disaster, recognizing that government and industry (refiners, pipeline companies, 

utilities, power providers, the Army Corps of Engineers, and DOE) have different roles in implementing 

different measures.

z For a range of intensities of the event (e.g., earthquakes with a magnitude less than 5), the likely damage was rated on a qualitative 1–5 

score (i.e., minor, interrupting, significant, major, and catastrophic). These ratings were based on the extensive review of impacts from 

past events and judgment of industry experts.

aa “Island” facilities are used at facilities such as hospitals, office buildings, and sometimes individual’s homes; they can operate 

independently from the grid to provide electricity during a power outage. 
2-34 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Administration Activities for Liquid Fuels Resilience, Reliability, Safety, 

and Asset Security

Operations of Regional Oil Product Reserves. The President’s Fiscal Year 2016 Budget requests $7.6 million to continue 

operation of the Northeast Home Heating Oil Reserve. The Northeast Gasoline Supply Reserve will continue to be funded out 

of prior-year balances.

Southeast Refined Product Reserve Cost-Benefit Analysis. In 2011, the Department of Energy (DOE) carried out a 

cost-benefit study of the establishment of a Southeast Refined Product Reserve. This study estimated that such a Refined 

Petroleum Product Reserve would reduce the average gasoline price rise by 50 percent to 70 percent in the weeks immediately 

after a hurricane landfall, resulting in consumer cost savings.ab DOE is updating this study to reflect recent economic research 

and to examine whether currently available analyses of refinery hardening and climate change alter the study’s estimates of 

the likelihood of Gulf Coast refinery outages.

West Coast Regional Refined Product Reserve Cost-Benefit Analysis. DOE has launched a Refined Petroleum 

Product Reserve study for Petroleum Administration for Defense District (PADD) V (the West Coast, Alaska, and Hawaii). It will 

review current and projected oil and refined product demand in southern California, northern California, Arizona, Nevada, 

Washington, Oregon, Hawaii, and Alaska. It also will describe storage capacities; how and where stocks are stored; and 

how refined products move from refinery, to storage, to end-use markets. The study will evaluate the physical and market 

vulnerabilities that could cause a supply disruption or shortage to PADD V markets and estimate the probability of the 

occurrence of natural events at various locations within PADD V. The potential impacts on crude oil and petroleum product 

supplies from events of various intensity or duration will be estimated. The physical vulnerabilities to be considered will include 

earthquakes, tsunamis, and storms. Refined Petroleum Product Reserve configurations that could provide a relatively effective 

fuel supply relief, in light of the estimated likelihood of fuel supply interruptions, will be evaluated using a cost-benefit 

methodology similar to that used in DOE’s 2011 study,ac but will be updated to reflect recent economic research, especially 

concerning the impact of sudden increases of petroleum product prices on the U.S. economy. 

Emergency Preparedness Study. The National Petroleum Council, in response to a request from the Secretary of Energy, 

recently completed an Emergency Preparedness Study. This study will help industry and government achieve a more rapid 

restoration of motor fuel supplies after a natural disaster.

ab Department of Energy, Office of Fossil Energy and Office of Policy and International Affairs. “Refined Petroleum Product 

Reserve, Assessment of Energy Security Needs, Costs and Benefits.” September 2011.

ac Department of Energy. “Regional Petroleum Product Reserve: Assessment of Energy Security Needs, Costs, and Benefits.” 

September 2011.

The United States has created two regional petroleum product reserves (RPPRs) during the last 15 years—the 

Northeast Home Heating Oil Reserve (NEHHOR) and the Northeast Gasoline Supply Reserve. NEHHOR is a 

1-million-barrel reserve of ultra-low sulfur diesel, stored at terminals in Connecticut and Massachusetts. It is 

intended to provide a buffer to compensate for interruptions in heating oil supplies during severe winter weather. 

NEHHOR has a trigger mechanism established by the Energy Act of 2000 that requires a 60 percent price 

differential over the 5-year average price of heating oil, that the differential be sustained for 7 days, and that it 

continues to increase thereafter. A second authority for a release from NEHHOR is available to the President for 

a “regional supply shortage of significant scope and duration.”128 These release authorities have never been used. 

After Hurricane Sandy, however, NEHHOR distillate was provided to the Department of Defense. The Defense 

Logistics Agency distributed this fuel to support emergency operations and other priorities. 

Also, the Northeast Gasoline Supply Reserve currently contains about 1 million barrels of gasoline in five 

locations in New Jersey, Massachusetts, and Maine to serve consumers in the northeastern United States. This 

gasoline reserve operates under the same release authorities as the SPR, but under different authorities than 

the NEHHOR; depending on the nature and degree of the emergency, the threshold for use of these facilities in 

concert could prove difficult to reach. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-35

Liquid Fuel TS&D Dependencies on Electricity

In 2013, U.S. refineries consumed a total of 46 million megawatt-hours of purchased electricity in their 

operations. One of the biggest vulnerabilities for Gulf Coast and East Coast refineries can be the lack of 

electricity supply. Without power, refineries cannot continue to operate, and petroleum products cannot be 

moved through pipelines. A number of refineries have invested in portable generators; however, the majority 

has only established plans for leasing generators in advance of the hurricane, and even the largest 2-megawatt 

mobile generators cannot provide enough electricity to operate a refinery. During electrical outages, these 

generators provide electricity to critical facilities—the data control center, critical information technology 

facilities, and the water pumps required to remove storm water from the plant and refinery equipment. The 

high probability of electricity outages after hurricanes has caused refiners to initiate controlled shutdowns in 

advance of landfalls to avoid “cold shutdowns” that result in refinery damages.

Crude oil and refined product pipelines also rely on electricity to move petroleum products, such as gasoline, 

through their systems. As noted, power outages from Hurricane Katrina caused the complete shutdown of 

three major pipelines for 48 hours and forced these pipelines to operate at reduced capacities for an additional 

2 weeks.129 In 2006, Colonial Pipeline responded to the need to keep pipelines operating during emergencies 

by installing trailer-mounted portable generators, some transformers, and additional cables. The generators are 

staged at a site in Mississippi and can be moved to any of Colonial’s pump stations depending on emergency 

needs.130

Even these actions, however, have limitations, as they assume uninterrupted supplies of product from 

refineries and terminals. Evidence suggests this is problematic, as transmission pipelines depend on many 

independent and interconnected pipelines and terminals for delivery of supplies; the overall network feeding 

major transmission pipelines may not be able to meet supply needs in the event of a disruption. Also, this 

intermediary infrastructure is often co-owned by refineries; if a refinery is disrupted and vulnerable, so too are 

the interconnecting pipelines and ultimately the transmission pipelines that move product to consumers.131

Refineries, pipelines, and distribution systems also rely on electricity to power supervisory control and data 

acquisition and other monitoring systems that ensure that their operations are efficient, safe, and secure. 

Finally, the loss of electricity can have a significant impact on retail gasoline distribution (see the Hurricane 

Sandy box on page 2-5). 

Vulnerabilities of Shared Transportation Infrastructures 

Transportation infrastructure (such as railroads, barges, tankers, and ports) that liquid fuels and coal share 

with other commodities also face resilience challenges from extreme weather and climate change. As noted, 

extreme weather events are increasing. Intermodal crossing points, such as grade crossings and waterwayrailroad trestle intersections, will be vulnerable, as will stretches of rail far removed from observational 

networks.132

Rail Vulnerabilities Associated with Extreme Weather

Railroads are vulnerable to structural damage and track misalignment where the roadbed has been affected by 

extreme weather. Railroad operations also are affected by weather conditions such as snow, flash floods, heat 

waves, and extreme wind. Extreme heat, for example, causes materials to expand, leading highways and roads 

to buckle and rails to kink (see Figure 2-9). A 1,800-foot section of rail can expand by a foot with an 80-degree 

temperature change.133 These kinks can be highly dangerous and require vigilant track inspections. Some rail 

operators also issue “heat orders” during high temperatures that require trains to slow their speed along the 

tracks.134
2-36 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

Barge and Tanker Transport Are 

Affected by Extreme Weather 

More than 4,500 tank barges transport liquid fuels 

and coal nationwide.136, 137 They are vulnerable 

to damage by storm surge, as well as river flow 

fluctuations (e.g., on the Mississippi River) that can 

impede traffic or reduce barge fuel carrying capacity.

During Hurricane Katrina, the Coast Guard closed 

parts of the Lower Mississippi River to traffic for 

more than a week as inspectors surveyed the river 

obstructions. More than 300 barges along the river 

were set adrift, sunk, or damaged, posing further risks 

to navigation.138 Increased storm surge and flooding 

could interrupt barge navigation by flooding inland 

marine transportation infrastructure and increasing 

the velocity of flow on rivers, forcing channels to 

shutdown intermittently. In the long term, increased 

incidents of storm surge and coastal flooding may 

cause sand formations to build up in channels, 

forcing operators to shutdown channels that have 

become too shallow.

Flooding by itself can have an impact on pump stations, control rooms, oil tanks, well pads, and barges or 

tankers travelling on flooded navigable waterways, such as the Mississippi River. High water conditions can 

disrupt barge and tanker traffic by, for example, barring navigation under bridges. In addition, if port and 

terminal facilities were flooded and shutdown, barge shipments that require loading or unloading at the 

terminals would be delayed.139

Drought can also affect some port facilities and some navigation channels that are inland, such as the 

Great Lakes. If water levels are too low, barges risk running aground, causing either disruptions to liquid 

fuel transport or lower draft limits. This forces barges to carry lighter loads, thereby reducing available 

supply.140 Low water levels also can be caused by freezing temperatures upstream, leaving less water available 

downstream.141 Climate change is expected to cause more frequent and severe weather in the future, which in 

some regions will lead to droughts and floods that may create further vulnerabilities for barge transport. 

Vulnerabilities of Energy TS&D and Shared Infrastructures to 

Physical Attack

The lack of controlled standoff distancesad or adequate barriers for a range of oil and gas transmission 

and distribution facilities and infrastructures makes them especially vulnerable to physical attacks. Much 

of the liquid fuel TS&D infrastructure in the central Atlantic Coast region, for example—including gas 

production, ports and terminals, and processing and refining facilities—is geographically concentrated, 

visible, and potentially accessible from major and ancillary transportation routes, making it vulnerable 

to intentional damage.142 Physical attacks on this type of infrastructure could have outsized impacts 

because of the concentration of refining and product storage facilities that serve other domestic markets. 

ad “Controlled standoff distance” refers to the distance maintained between an asset and a potential detonation site.

Track buckling is typically caused by a combination of high compressive 

forces due to temperature stresses, weakened track conditions, and 

mechanical stress from train braking and rolling friction. Safety and 

operations are therefore impacted by both extreme high and low 

temperatures, by causing track creep, and by making track more 

susceptible to the mechanical stresses that cause buckling.

Figure 2-9. Rail Thermal Misalignment135
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-37

Results from an Argonne National Laboratory analysis of DHS survey dataae on critical infrastructure energy facilities 

showed that at many facilities vehicles may pose a risk by being placed (legally or illegally) inside a safe standoff perimeter.

Increasing standoff distance is an effective way to mitigate potential consequences of certain types of threats. 

Other measures include fencing, barriers, access control points, and security personnel. Notably, only a portion 

of energy facilities has barriers in place sufficient to limit vehicle access and approach. The DHS critical 

infrastructure survey also assessed the existence of security forces at facilities. The prevalence of security forces 

is highly dependent on the energy subsector. Refineries generally have a security force, but liquid fuel product 

transport facilities tend to have less security.

ae DOE’s Office of Energy Policy and Systems Analysis requested that Argonne National Laboratory’s Infrastructure Assurance Center 

conduct an analysis of the protection and resilience information collected through DHS’s Enhanced Critical Infrastructure Program 

Initiative, which conducts facility site visits and surveys. The primary objective of this analysis was to identify gaps in preparedness 

and rapid recovery measures for surveyed energy facilities. The analysis was conducted on 273 energy facilities (170 electricity, 45 

liquid fuels, and 15 natural gas) using data collected from January 2011 through September 2014.

Improving Cybersecurity in the U.S. Energy Sector

This installment of the Quadrennial Energy Review did not carry out original analysis of cyber threats to energy infrastructure because 

significant work is being done elsewhere. It is noted, however, that cyber threats to energy delivery systems are growing and evolving. 

In 2013, there were 151 cyber incidents involving the energy sector that were reported to the Department of Homeland Security’s 

Industrial Control System Cyber Emergency Response Team. Cybersecurity is a shared responsibility among Federal, state, local, tribal, 

and territorial entities, as well as public and private owners and operators of critical infrastructure.

In February 2013, President Obama issued Executive Order No. 13636, Improving Critical Infrastructure Cybersecurity, and 

Presidential Policy Directive-21, Critical Infrastructure Security and Resilience. These policies reinforce the need for holistic 

systems thinking about security and risk management in the energy sector. In February 2014, the Obama Administration 

launched the Cybersecurity Framework to assist organizations in enhancing critical infrastructure cybersecurity. 

While the Department of Homeland Security coordinates the overall Federal effort to promote the security and resilience of the 

Nation’s critical infrastructure, in accordance with Presidential Policy Directive-21, the Department of Energy serves as the dayto-day Federal interface for sector-specific activities to improve security and resilience in the energy sector. This Quadrennial 

Energy Review report does not go into detail about cybersecurity; the U.S. government and others have activities underway to 

improve cybersecurity of critical infrastructure. Improving security and resilience includes accelerating progress in the following 

areas relevant to the Quadrennial Energy Review:

Build robust information-sharing architecture across the energy sector. Robust information sharing between 

government and industry (including owners and operators) is critical for addressing cyber threats. Information Sharing and 

Analysis Centers help propagate information on cyber threats, vulnerabilities, incidents, and solutions in the energy sector. 

Expand implementation of best practices and sound investments by owners and operators. The Cybersecurity 

Capability Maturity Model, developed by the Department of Energy in partnership with industry and others, can identify and 

assess various practices for energy sector cybersecurity. In many cases, there is an opportunity for owners and operators of 

critical infrastructure to invest more in people, processes, and technology that can improve security and resilience. The model 

can assist those responsible for overseeing cybersecurity decisions.

Develop and deploy cutting-edge technical solutions. Experience indicates that proactive measures taken on the basis 

of advanced research and development can provide a defensive edge. The Department of Energy has partnered with energy 

sector owners, operators, and vendors since 2006 to research, develop, and deploy cybersecurity solutions according to a set 

of near-, mid-, and long-term objectives outlined in the “Roadmap to Achieve Energy Delivery Systems Cybersecurity,” which 

was developed through government-industry partnership. 

Build a strong incident management capability. Government and industry are developing a strong capability to respond to serious 

cybersecurity incidents in the energy sector. Incident response plans need to be developed, vetted, and tested through progressively 

challenging exercises, culminating in a capstone-type exercise like GridEx, which is hosted by the North American Electric Reliability 

Corporation. Future exercises could address the interdependency between the electricity subsector and the oil and gas subsector.
2-38 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

QER Recommendations

This chapter has laid out a broad range of crucial issues and questions relating to improving the 

resilience, reliability, security, and safety of energy TS&D infrastructures. To continue to drive progress 

toward improving these key energy infrastructures, we recommend taking the following additional 

actions:

Develop comprehensive data, metrics, and an analytical framework for energy infrastructure 

resilience, reliability, and asset security: Multiple gaps in federally accessible data impede decision 

making on policies and investment related to resilience, reliability, and security. These data are 

critical for understanding the extent to which our existing energy infrastructure is resilient and 

for better informing resilience investments. DOE, in collaboration with DHS and interested 

infrastructure stakeholders, should develop common analytical frameworks, tools, and metrics to 

assess the resilience, reliability, and security of energy infrastructures. The purpose of this work will 

be to help inform, coordinate, set priorities for, and justify expenditures across Federal agencies to 

increase the resilience, reliability, and security of energy infrastructure. 

Establish a competitive program to accelerate pipeline replacement and enhance maintenance 

programs for natural gas distribution systems: The proposed DOE program would provide 

Federal competitive financial assistance to states to incentivize cost-effective improvements in the 

safety and environmental performance of natural gas distribution systems. Specifically, it would 

target transitional assistance (for a 3- to 4-year period) to help low-income households absorb initial 

rate increases related to these activities; it would also provide incentives to accelerate the reduction 

of methane emissions through repairs of other system components. This includes programs to 

accelerate the rate of replacement and repair of pipelines made of leak-prone materials and direct 

inspection and maintenance to reduce emissions from regulators and meters at city gate facilities. 

Providing rate assistance to low-income customers could incentivize states to expand current special 

regulatory cost-recovery programs, which in turn would facilitate increased private investment in 

infrastructure modernization. (See additional discussion on employment and workforce training in 

Chapter VIII, Enhancing Employment and Workforce Training).

The program would be implemented through financial assistance to states awarded on a nationwide 

competitive basis. State applicants would be required to demonstrate how the proposed financial 

assistance would be integrated with rate-setting programs that would ensure that the funds are 

applied to the targeted beneficiaries. Applications could be prioritized for funding based on 

estimated net benefits of the proposal, considering factors such as enhancement of public safety, 

magnitude of methane emission reduction, innovation in technical and policy approaches, number 

of beneficiaries, and overall cost effectiveness. DOE would establish specific guidelines for each of 

the evaluation criteria. 

The estimated cost for this program is $2.5 billion to $3.5 billion over 10 years.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-39

QER Recommendations (continued)

Support the updating and expansion of state energy assurance plans: DOE began a State Energy 

Assurance Planning Initiative in 2009 with funding from the American Recovery and Reinvestment 

Act of 2009. The President’s Fiscal Year 2016 Budget proposes $35 million to establish a State Energy 

Assurance grant program to finance state, local, and tribal governments to continue this important 

task. DOE should continue a multi-year program of support for state energy assurance plans, 

focusing on improving the capacity of states and localities to identify potential energy disruptions, 

quantify their impacts, and develop comprehensive plans that respond to those disruptions and 

reduce the threat of future disruptions. 

• The specific objectives of this initiative should be as follows:

1. Strengthen and expand state, local, and tribal energy assurance planning and resilience 

efforts by incorporating innovative technologies and measures to improve resilience. 

2. Build state in-house energy assurance expertise.

3. Build regional energy assurance capability to allow states, localities, and tribes to better 

identify the potential for energy disruptions, quantify the impacts of those disruptions, 

and develop comprehensive mitigation and response plans.

4. Address the disproportionate impacts of potential energy disruptions on vulnerable or 

underserved communities. 

• Energy assurance plans funded under this recommendation should be continually updated to 

reflect changing conditions and new threats and should be tested for adequacy in simulations 

or exercises to maintain staff capacity to implement the plans. 

• As part of updating the state energy assurance plans, states would be encouraged to work 

with industry and each other to identify locations where energy infrastructure is particularly 

vulnerable to disruption (e.g., by physical attack) and craft effective strategies to reduce 

vulnerability and coordinate preparedness and response plans. 

• As part of these plans, states should also assess needs for backup electricity at retail gasoline 

stations along emergency evacuation routes. 

• DOE should encourage strong intergovernmental coordination to ensure state and local 

energy assurance plans interface with one another, as well as with Federal and private sector 

disaster and emergency response plans. 

• Having a state energy assurance plan that meets a threshold of completeness and rigor 

should be an eligibility requirement for other kinds of Federal funding related to energy 

infrastructure. 

• This program should be supported on either a 2-year or 3-year cycle.

On a 3-year cycle, the estimated support needed for this program over 10 years is $350 million. On a 

2-year cycle, the estimated support needed for this program over 10 years is $500 million.
2-40 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

QER Recommendations (continued)

Establish a competitive grant program to promote innovative solutions to enhance energy 

infrastructure resilience, reliability, and security: DOE should establish a program to 

provide competitively awarded grants to states to demonstrate innovative approaches to TS&D 

infrastructure hardening and enhancing resilience and reliability. A major focus of the program 

would be the demonstration of new approaches to enhance regional grid resilience, implemented 

through the states by public and publicly regulated entities on a cost-shared basis, incorporating 

lessons learned from new data, metrics, and resilience frameworks. 

• An example of such a project is the NJ TRANSITGRID, which incorporates renewable energy, 

distributed generation, and other technologies to provide resilient power to key NJ TRANSIT 

stations, maintenance facilities, bus garages, and other buildings. Through a microgrid design, 

NJ TRANSITGRID will also provide resilient electric traction power to allow NJ TRANSIT 

trains on critical corridors, including portions of the Northeast Corridor, to continue to 

operate even when the traditional grid fails.143 This project received $410 million from the 

Department of Transportation in late 2014 and partnered with DOE on project design. 

• The Department of Housing and Urban Development’s National Disaster Resilience 

Competition, which supports innovative resilience projects at the local level, could also serve 

as a model for types of projects to be funded, with a specific focus on energy. 

• The grant program should also include incentives to establish mandatory resilience standards 

and codes. States, tribes, and local governments with resilience standards in place would be 

eligible to receive cost-shared grant funding. Approved state energy assurance plans could 

also be a criterion for eligibility. 

The estimated cost for this program is $3 billion to $5 billion over 10 years.

Analyze the policies, technical specifications, and logistical and program structures needed to 

mitigate the risks associated with loss of transformers: As part of the Administration’s ongoing 

efforts to develop a formal national strategy for strengthening the security and resilience of the 

entire electric grid for threats and hazards (planned for release in 2015), DOE should lead—in 

coordination with DHS and other Federal agencies, states, and industry—an initiative to mitigate the 

risks associated with the loss of transformers. Approaches for mitigating this risk should include the 

development of one or more transformer reserves through a staged process.

• The staged process should begin with an assessment of technical specifications for reserve 

transformers, where transformers would be located and how many would be needed, how 

transformers would be secured and maintained, how transformers might be transported, and 

whether new Federal regulatory authorities or cost share are necessary and appropriate. These 

reserves may include smaller, deployable transformers. 

• The analysis under this process should both recognize significant efforts already underway 

by industry to share transformers and parts, including planning for surge manufacturing 

and long-term standardization of transformer designs, and build on policy work already 

underway by Federal regulators. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-41

QER Recommendations (continued)

Analyze the need for additional or expanded regional product reserves: The benefits of an RPPR 

derive from its ability to replace lost product supplies in emergency situations and mitigate sharp 

increases in petroleum product prices. DOE should undertake updated cost-benefit analyses for 

all regions of the United States that have been identified as vulnerable to fuel supply disruptions. 

Additional or expanded RPPRs could be supported, depending on the outcome of these studies.

Integrate the authorities of the President to release products from RPPRs into a single, unified 

authority: Congress should amend the trigger for the release of fuel from NEHHOR and from the 

Northeast Gasoline Supply Reserve so that they are aligned and properly suited to the purpose of a 

product reserve, as opposed to a crude oil reserve. 
2-42 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

RECOMMENDATIONS IN BRIEF: 

Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure 

Develop comprehensive data, metrics, and an analytical framework for energy infrastructure resilience, 

reliability, safety, and asset security. The Department of Energy (DOE), in collaboration with the Department of Homeland 

Security and interested infrastructure stakeholders, should develop common analytical frameworks, tools, metrics, and data to 

assess the resilience, reliability, safety, and security of energy infrastructures.

Establish a competitive program to accelerate pipeline replacement and enhance maintenance programs for 

natural gas distribution systems. DOE should establish a program to provide financial assistance to states to incentivize 

cost-effective improvements in the safety and environmental performance of natural gas distribution systems, through targeted 

funding to offset incremental costs to low-income households and funding for enhanced direct inspection and maintenance 

programs. 

Support the updating and expansion of state energy assurance plans. DOE should undertake a multi-year program 

of support for state energy assurance plans, focusing on improving the capacity of states and localities to identify potential 

energy disruptions, quantify their impacts, share information, and develop and exercise comprehensive plans that respond to 

those disruptions and reduce the threat of future disruptions. 

Establish a competitive grant program to promote innovative solutions to enhance energy infrastructure 

resilience, reliability, and security. DOE should establish a program to provide competitively awarded grants to states to 

demonstrate innovative approaches to transmission, storage, and distribution (TS&D) infrastructure hardening and enhancing 

resilience and reliability. A major focus of the program would be the demonstration of new approaches to enhance regional 

grid resilience, implemented through the states by public and publicly regulated entities on a cost-shared basis. 

Analyze the policies, technical specifications, and logistical and program structures needed to mitigate the 

risks associated with loss of transformers. As part of the Administration’s ongoing efforts to develop a formal national 

strategy for strengthening the security and resilience of the entire electric grid for threats and hazards (planned for release in 

2015), DOE should coordinate with the Department of Homeland Security and other Federal agencies, states, and industry—

an initiative to mitigate the risks associated with the loss of transformers. Approaches for mitigating this risk should include 

the development of one or more transformer reserves through a staged process.

Analyze the need for additional or expanded regional product reserves. DOE should undertake updated costbenefit analyses for all regions of the United States that have been identified as vulnerable to fuel supply disruptions to inform 

subsequent decisions on the possible need for additional regional product reserves. 

Integrate the authorities of the President to release products from regional petroleum product reserves into 

a single, unified authority. Congress should amend the trigger for the release of fuel from the Northeast Home Heating 

Oil Reserve and from the Northeast Gasoline Supply Reserve so that they are aligned and properly suited to the purpose of a 

product reserve, as opposed to a crude oil reserve. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 2-43

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111.Energy Information Administration. “Weekly Petroleum Status Report for Week Ended December 26, 2014.” 

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Product Reserve, Assessment of Energy Security Needs, Costs and Benefits.” September 2011.

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131.Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure 

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Product Reserve, Assessment of Energy Security Needs, Costs and Benefits.” September 2011.

143.NJ TRANSIT. “Governor Christie Announces NJ TRANSIT to receive $1.276 Billion in Resiliency Funding.” 

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ID=2939. 
2-52 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter II: Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-1

Chapter III

This chapter examines how the electricity grid of the future can provide 

affordable and reliable clean electricity, while minimizing further human 

contributions to climate change. After an introduction to the structure of the 

U.S. electrical grid, the chapter lays out a vision for its transformation and 

describes the drivers of change toward the future grid. These major drivers 

cover challenges and opportunities that affect transmission and distribution 

grids, involve new technologies and services, and require careful consideration 

of the diverse institutions and business models currently involved in managing 

the grid. After discussion of a policy framework for the grid of the future, the 

chapter concludes by presenting a series of recommendations, divided into 

three major categories: (1) research and development, analysis, and other 

studies; (2) state and regional planning and managing across jurisdictions; and 

(3) appropriate valuation, standards, and measurement methods to facilitate 

the introduction of new technologies and practices to improve the grid.

MODERNIZING THE 

ELECTRIC GRID
3-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

FINDINGS IN BRIEF: 

Modernizing the Electric Grid 

Investments in transmission and distribution upgrades and expansions will grow. It is anticipated that in the next 

two decades, large transmission and distribution investments will be made to replace aging infrastructure; maintain reliability; 

enable market efficiencies; and aid in meeting policy objectives, such as greenhouse gas reduction and state renewable energy 

goals. 

Both long-distance transmission and distributed energy resources can enable lower-carbon electricity. The 

transmission network can enable connection to high-quality renewables and other lower-carbon resources far from load 

centers; distributed energy resources can provide local low-carbon power and efficiency. 

The potential range of new transmission construction is within historic investment magnitudes. Under nearly 

all scenarios analyzed for the Quadrennial Energy Review, circuit-miles of transmission added through 2030 are roughly equal 

to those needed under the base case. And while those base-case transmission needs are significant, they do not appear to 

exceed historical yearly build rates.

Flexible grid system operations and demand response can enable renewables and reduce the need for new 

bulk-power-level infrastructure. End-use efficiency, demand response, storage, and distributed generation can reduce the 

expected costs of new transmission investment.

Investments in resilience have multiple benefits. Investments in energy efficiency, smart grid technologies, storage, and 

distributed generation can contribute to enhanced resiliency and reduced pollution, as well as provide operational flexibility for 

grid operators.

Innovative technologies have significant value for the electricity system. New technologies and data applications 

are enabling new services and customer choices. These hold the promise of improving consumer experience, promoting 

innovation, and increasing revenues beyond the sale of electric kilowatt-hours. 

Enhancing the communication to customer devices that control demand or generate power will improve the 

efficiency and reliability of the electric grid. For example, open interoperability standards for customer devices and 

modified standards for inverters will improve the operation of the grid. 

Appropriate valuation of new services and technologies and energy efficiency can provide options for the 

utility business model. Accurate characterization and valuation of services provided to the grid by new technologies can 

contribute to clearer price signals to consumers and infrastructure owners, ensuring affordability, sustainability, and reliability 

in a rapidly evolving electricity system.

Consistent measurement and evaluation of energy efficiency is essential for enhancing resilience and 

avoiding new transmission and distribution infrastructure. Efficiency programs have achieved significant energy 

savings, but using standard evaluation, measurement, and verification standards, like those recommended by the Department 

of Energy’s Uniform Methods Project, is key to ensuring that all the benefits of efficiency are realized, including avoiding the 

expense of building new infrastructure. 

States are the test beds for the evolution of the grid of the future. Innovative policies at the state level that reflect 

differences in resource mix and priorities can inform Federal approaches. 

Different business models and utility structures rule out “One-Size-Fits-All” solutions to challenges. A range of 

entities finance, plan, and operate the grid. Policies to provide consumers with affordable and reliable electricity must take into 

account the variety of business models for investing, owning, and operating grid infrastructure. 

Growing jurisdictional overlap impedes development of the grid of the future. Federal and state jurisdiction over 

electric services are increasingly interacting and overlapping.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-3

The Electric Grid in Transition

The United States has one of the world’s most reliable, affordable, and increasingly clean electric systems—a 

system that powers its economy and provides for the well-being of its citizens. The U.S. electric system is at a 

strategic inflection point—a time of significant change for a system that has had relatively stable rules of the 

road for nearly a century. 

The structure of today’s U.S. electric grid grew organically over the course of the last century (see Figure 3-1). 

Historically, it was geographically based—with one-way flows of energy from central station generators, over 

transmission networks, through substations to distribution systems, and over radial distribution circuits to 

end-use customers.

Figure 3-1. The Electric Grid1

Generating Station Generator

Step-Up

Transformer

Transmission

Customer

138 kV or 230 kV

Transmission Lines

765, 500, 345, 230 and 138 kV

Distribution 

Lines

Substation

Step-Down

Transformer

Subtransmission

Customer

26kV and 69kV

Primary Customer

13kV and 4kV

Secondary Customer

120V and 240V

Generation Transmission Distribution Customers

Six components comprise the grid: four physical components, including generation, transmission, distribution, and storage; the information 

infrastructure to monitor and coordinate the production and delivery of power and operate the grid; and customer demand—the driver of power 

system operation and investment. New storage technologies could be deployed throughout the power system in the future. 

The U.S. electricity sector is influenced by a variety of new forces, some of which will affect the future growth 

and management of the grid. Current drivers of change within the electricity sector include the growing use of 

natural gas to power electricity generation; low load growth; increasing deployment of renewable energy and 

the retirement of coal and nuclear generation; severe weather and climate change; and growing jurisdictional 

interactions at Federal, state, and local levels. Innovative technologies and services are being introduced to 

the system at an unprecedented rate, often increasing efficiency, reliability, and the roles of customers, but also 

injecting uncertainty into grid operations, traditional regulatory structures, and utility business models. 

The changing nature of grid operations, the implications of demand response and distributed generation 

deployment at increasing scale, the introduction of other new technologies, and growing consumer interaction 

with the grid are putting pressure on the regulatory boundaries that have evolved over the past century. 

Resolving the institutional, regulatory, and business model issues that could enable the grid of the future will 

help the United States take full advantage of the range of available energy sources and technologies that will 

help meet its climate change goals. These sources and technologies include energy efficiency; energy storage; 

carbon capture, utilization, and storage; electric vehicles; microgrids and other distributed technologies; and 

nuclear, natural gas, and renewable energy generation. A positive resolution of these issues will also help 

mitigate the growing vulnerabilities of the grid to cyber, physical, and climate change threats, as well as ensure 

the grid’s reliability under its current institutional structures. 
3-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

The Electric Grid: Complex, Highly Engineered, Essential for Modern Life

At the core of the electricity system is the grid—a complex, highly engineered network that coordinates the 

production and delivery of power to customers. There are six elements that make up the grid (see Figure 

3-1)—four physical components of the electric system (generation, transmission, distribution, and storage); 

the information infrastructure to monitor and coordinate the production and delivery of power and operate 

the grid; and demand—the driver of power system operation and investment. Transmission, storage, and 

distribution (TS&D) provide the backbone of the grid, with storage increasingly deployed throughout the 

power system.

Today, the U.S. transmission and distribution system is a vast physical complex of interlocked machines and 

wires, with a correspondingly complex set of institutions overseeing and guiding it through policies, statutes, 

and regulations. The U.S. grid delivers approximately 3,857 terawatt-hours2

 of electrical energy from electric 

power generators to 159 million residential, commercial, and industrial customers.a This is accomplished via 

19,000 individual generators at about 7,000 operational power plants in the United States with a nameplate 

generation capacity of at least 1 megawatt (MW).3

 These generators send electricity over 642,000 miles of highvoltage transmission lines and 6.3 million miles of distribution lines.4

 Together with its electric generation 

component, the grid is sometimes referred to as the world’s largest machine; in 2000, the National Academy of 

Engineering named electrification as the greatest engineering achievement of the 20th century.5

Transmission is the high-voltage transfer of electric power from generating plants to electrical substations 

located near demand or load centers. As shown in Figure 3-1, step-down substations are the boundary between 

the transmission system and the distribution system that serve retail customers. High-voltage transmission 

lines can more easily accommodate two-way flows of electricity than the distribution network. High-voltage 

transmission lines have a range of voltage classes—mostly alternating current with some direct current. 

Transmission lines are primarily owned by investor-owned utilities and public power and cooperative-owned 

utilities within each interconnection. New forms of ownership of transmission assets, including independent 

transmission companies and “pure-play” merchant transmission firms, are beginning to emerge. For the 

new transmission-focused utilities, the core business and potential source of profits is based on acquiring, 

developing, building, and operating transmission. 

Distribution is the delivery of power from the transmission system to the end users of electricity. Distribution 

substations connect to the transmission system and lower the transmission voltage to medium voltage. This 

medium-voltage power is carried on primary distribution lines, and after distribution transformers lower 

the voltage, secondary distribution lines carry the power to customers. Larger industrial customers may be 

connected directly at the primary distribution level. The poles supporting distribution lines, meters measuring 

usage, and related support systems are also considered to be part of the distribution system. 

A Vision for the Grid of the Future

Today’s grid—where power typically flows from central station power plants in one direction to consumers—is 

fundamentally different from the grid of the future, where two-way power flow will be common on both longdistance, high-voltage transmission lines and the local distribution network.

The grid of the future will be an essential element in achieving the broad goals of promoting affordable, 

reliable, clean electricity and doing so in a manner that minimizes further human contributions to climate 

change. To do this, the grid of the future will have to accommodate and rely on an increasingly wide mix of 

a Here, a “customer” is defined as an entity that is consuming electricity at one electric meter. Thus, a customer may be a large factory, a 

commercial establishment, or a residence. A rough rule of thumb is that each residential electric meter serves 2.5 people.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-5

resources, including central station and distributed generationb (some of it variable in nature), energy storage, 

and responsive load. It should support a highly distributed architecture that integrates the bulk electric and 

distribution systems. It should enable the operation of microgrids that range from individual buildings to 

multi-firm industrial parks and operate in both integrated and autonomous modes. 

New technologies for the grid, including storage, will alter the traditional real-time requirements for grid 

operations and the nature of production, transmission, and distribution of power—opening up new avenues 

for flexible and cost-effective operation of the grid. 

The grid of the future should be supported by a secure communication network—its information backbone—

that will enable communication among all components of the grid, from generation to the customer level, and 

protect the system from cyber intrusions. This communication network will support the ability to monitor 

and control time-sensitive grid operations, including frequency and voltage; dispatch generation; analyze 

and diagnose threats to grid operations; fortify resilience by providing feedback that enables self-healing of 

disturbances on the grid; and evaluate data from sensors (such as phasor measurement unitsc

) that enable the 

grid to maximize its overall capacity in a dynamic manner. 

In short, the grid of the future should seamlessly integrate generation, storage, and flexible end use. It should 

promote greater reliability, resilience, safety, security, affordability, and enable renewable energy, while achieving 

better economic and environmental performance, including reductions in greenhouse gas (GHG) emissions. 

It will require business models and regulatory approaches that sustain grid investment and continued 

modernization while at the same time allow for innovation in both technologies and market structures.

The Department of Energy’s (DOE’s) Quadrennial Technology Review summarizes the technology challenges 

and research, development, and demonstration requirements for transforming the grid and achieving this 

vision. The Quadrennial Energy Review (QER) therefore focuses on the institutional, regulatory, and business 

model barriers to achieving the grid of the future. 

Emerging Architecture of the Grid

The architecture of the grid is a new, emerging concept that defines the grid as not just a physical structure, but 

one that encompasses a range of actors and needs.6 This new, broader concept of a grid architecture considers 

information systems, industry, regulators, and market structures; electric system structure and grid control 

frameworks; communications networks; data management structure; and many elements that exist outside 

the utility but interact with the grid, such as buildings, distributed energy resources, and microgrids. The 

grid’s architecture is shaped by public policy, business models, historical and even cultural norms of practice, 

technology, and other factors. Analyses conducted for the QER (see box on page 3-6) focused on the complex 

interactions of these players and qualities, with the goal of suggesting recommendations to help drive toward a 

vision of actively shaping the grid of the future, as opposed to passively allowing the grid to evolve in a bottomup manner and waiting to see the form that emerges. Analyses carried out for the QER also considered the 

drivers of change and how those drivers affect both today’s grid and the future grid. 

b There are a variety of options for distributed generation, including photovoltaics, wind, low-head hydropower, combined heat and 

power, and fuel cells.

c Phasor measurement units operate by the simultaneous measurement and comparison of an important electrical property of 

large-scale alternating current transmission networks known as “phasor angles,” thus the name “phasor measurement units.” This 

will provide valuable real-time early warning of potential grid problems, including over very large geographic regions, when the 

technology is fully deployed and related tools to use the information are implemented.
3-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Drivers of Change for the Grid of the Future: Transmission and 

Distribution

While the architecture of the grid of the future extends well beyond the physical structure of the system, a 

discussion of the drivers of change for the grid of the future should start with a consideration of the changes 

that will likely affect both transmission and distribution systems. Both systems may continue to grow in 

physical size to meet new needs, including demands for lower carbon electricity, but investments to facilitate 

flexible operations and resilience can enable smart growth, so both transmission and distribution systems can 

serve customer needs more effectively and economically.

Investments in Transmission Are Expected to Grow

Transmission development and planning activity has been on the rise since the early 2000s, reversing a 

decades-long decline following the historic build-out of the transmission system in the mid-20th century. As an 

asset class, transmission attracts significant investment from utilities, financial investors, and project developers. 

Investor-owned utilities spent a record high of $16.9 billion on transmission in 2013,7 up from $5.8 billion in 

2001.8

 The number of circuit miles added to the Nation’s transmission networks has also been on the rise in recent 

years (see Figure 3-2), but new line construction accounts for just slightly more than half of total investments.9

Non-line investments—including station equipment, fixtures, towers and undergrounding lines—were increasing 

even during the lowest period of circuit miles construction from 1997 to 2012 (see Figure 3-3). 

Drivers of recent investment increases include new technologies for improved system reliability; development 

of new infrastructure to ease congestion; interconnection of new sources of generation, including renewable 

resources; and support for production of natural gas. These investments have very distinct regional 

characteristics based on the different resources and constraints of each region.10, 11 The largest increase in 

transmission spending over the last 15 years occurred in the Western Electricity Coordinating Council, with 

much of the transmission expansion happening in southern California to relieve constraints and connect to 

renewable resources.12

Looking forward over the next several years, a high level of transmission investment is expected to replace 

aging infrastructure; maintain system reliability; facilitate competitive wholesale power markets; and aid 

regions in meeting their public policy objectives, such as GHG reduction and renewable energy goals.13 How 

much new transmission capacity is built in the future depends on a number of factors, including the amount 

of transmission necessary to connect high-quality wind, solar, and other energy resources to load centers; 

uncertainty about state and Federal incentives like the Production Tax Credit; flat or declining electricity 

Electricity Transmission Scenario Analysis

Quadrennial Energy Review scenario analysis used the Regional Energy Deployment System model to determine the impact of 

varying 10 input assumptions, individually and in combination, on U.S. transmission needs (see Chapter I, Introduction, Table 1-2 

for the complete list of cases). The majority of cases characterized clean energy futures, in which renewable energy costs (such as 

solar and wind) dropped dramatically, or a greenhouse gas cap drove low- and carbon-free electricity generation deployment. 

An accelerated nuclear retirement case looked at the effect of the rapid loss of baseload capacity and is discussed in depth in the 

Electricity Appendix. The Quadrennial Energy Review focused on these cases as most likely to “stress” the transmission system, 

as they would produce significant changes in the electricity sector, and thus large potential changes in transmission needs. 

Under the Annual Energy Outlook 2014 Reference case, installed megawatt-miles of transmission infrastructure grew by 

0.3–1.5 percent per year and 6 percent total through 2030. While there was a range of new installed transmission across the 

scenarios, none of the scenarios appeared to require additional buildout beyond that already anticipated in the 2030 timeframe, nor 

did rates in any scenario exceed recent historical transmission investment levels.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-7

demand; and the costs of alternative generation and demand-side resources. For renewables, an additional 

uncertainty is whether time of permitting or the costs of additional transmission facilities may lead to the 

development of wind or solar resources that are of lower quality but closer to load (Appendix C, Electricity, 

includes a more in-depth discussion of transmission). Nevertheless, there are a number of long-distance 

interregional transmission lines now in various stages of market development.14, 15

Figure 3-2. Historic and Projected Expansion of Net Transmission Circuit Miles16

10,000

Circuit Miles

8,000

6,000

4,000

2,000

-2,000

0

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

[1]: EEI (>132kV) [2]: NERC (>200kV) [3]: Ventyx (>200kV)

Projected Transmission Additions from NERC under Form EIA-411 (>200kV)

Projected Transmission Additions from NERC under Form EIA-411 (all)

Period of Major Base Load Generator 

Additions and NERC-coordinated 

Construction of Regional Interties between 

Major Utilities to Improve Reliability in 

Response to Blackouts

Addition of new circuit miles to the Nation’s transmission system has increased in recent years after over a decade of lower build-out. This increase 

has been driven by investments to replace aging infrastructure; maintain system reliability; facilitate competitive wholesale power markets; and 

support public policy objectives, such as GHG reduction and renewable energy goals. Circuit miles constructed in a year vary more than total 

transmission infrastructure spending, which has had an upward trend since the late 1990s. Note that historical values are year to year reported net 

changes in total circuit miles. 
3-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

14

10

12

8

2

6

4

0

1997

Billions of 2012 Dollars

2000 2003 2006 2009 2012

Underground Lines and Devices

Station Equipment Other

Towers and Fixtures Overhead Lines and Devices Poles and Fixtures

Figure 3-3. Investment in Transmission Infrastructure by Investor‐Owned Utilities, 1997–201217

Spending on the various components of transmission infrastructure has steadily increased since the late 1990s, driven by factors ranging from the 

need to replace aging materials, to the development of new technology for increased reliability, to requirements to connect new generation.

Both Long-Distance Transmission and Distributed Energy Resources Can 

Enable Lower-Carbon Electricity

Both bulk and distributed technologies have the potential to supply low-carbon electricity, enhance system 

reliability, and operate at a reasonable cost for all consumers. High-quality renewable energy sources suitable 

for utility-scale generation facilities are often located in remote areas. New long-distance transmission lines 

may be necessary in the future to connect these resources to demand centers. Conversely, other factors, such as 

extensive deployment of distributed energy resources, could potentially reduce the need for additional longdistance transmission build-out in the future. 

The analyses conducted for the QER examined transmission capacity needs in 2030 under a variety of 

scenarios (this analysis did not consider distribution line needs). One scenario considered in QER analyses 

modeled transmission capacity necessary to accommodate high deployment of low-cost distributed energy 

resources using low-cost solar photovoltaic (PV) as a proxy for all types of distributed generation. The results 

of scenario modeling show that changes in transmission requirements through 2030 for a high-distributed 

PV case vary by region. In most regions, 2030 transmission needs are similar to those for a scenario based 

on the Annual Energy Outlook 2014 Reference case—high deployment of very low-cost distributed energy 

resources does not eliminate the need for additional transmission capacity. In fact, transmission requirements 

in the Upper Midwest and Great Lakes regions increase slightly under the distributed PV scenario in order to 

optimize remaining baseload resources. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-9

In the Southwest, transmission build-out requirements do, however, drop somewhat with expanded distributed 

PV because less utility-scale PV would be built in that region. This same effect is seen to a smaller extent 

in other Western regions. A review of three DOE-funded interconnection-wide studies, performed with 

American Recovery and Reinvestment Act of 2009 grants from 2012 to 2014, showed that scenarios combining 

high levels of end-use efficiency, demand response, and distributed generation can reduce the expected costs 

of new transmission investment. One 20-year scenario modeled in the Western Interconnection resulted in a 

reduction of $10 billion in transmission capital costs (or 36 percent below the base case).18

There are multiple technology innovations that could provide new long-distance transmission options. A 

serious physical challenge of high-voltage transmission lines is that the physics and safety factors require 

certain distances between the conducting wires and the ground and persons. Opponents of new transmission 

lines have called the resulting towers unsightly, intrusive, or “visual pollution.” Ways to reduce additional 

issues with siting include the use of existing transmission line corridors, as well as technology fixes, such as 

higher-capacity-conducting materials, high-voltage underground lines, and even superconducting cables 

(also underground). Encouraging progress has been made on higher-capacity conductors that can be restrung 

on existing towers and on underground high-voltage direct current cables. These technologies should be 

considered and used when appropriate.

Flexible Grid System Operations and Demand Response Enable Variable 

Renewables and Reduce Need for New Infrastructure

All power systems have been designed with some level of flexibility to accommodate variable and uncertain 

load and contingencies related to network and conventional power plant outages. Flexibility is the ability of a 

resource—whether it is a component or a collection of components of the power system—to respond to the 

scheduled or unscheduled changes of power system conditions at various operational timescales (see Figure

3-4 for the timescale of different grid operations and planning functions).19

Figure 3-4. Transmission Operation and Planning Functions Shown by Timescale20

Protection

Generator 

Primary Control 

and AGC*

Economic

Dispatch

Unit

Commitment

Mid-Term

Planning

Expansion

Planning

Milliseconds Seconds Minutes Hours Days Weeks Years

*Automatic Generation Control

Reliable and affordable electricity from the grid requires a continuum of operating, planning, and investment decisions over a wide-time horizon.

Grid operators must respond to trends affecting load patterns across a range of timescales, such as decreased 

demand growth, the changing demand patterns across the day, increased variable renewables, power plant 

retirements, and more extreme weather events. Many recent analyses lay out options for flexible electric 

systems.21 Increased electric system flexibility can come from a portfolio of supply- and demand-side options, 

including grid storage, more responsive loads, changes in power system operations, larger balancing areas, 

flexible conventional generation, and new transmission.22, 23 
3-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Demand Response

Demand response improves flexibility by enabling consumers to participate in load control; it could also 

reduce the need for new infrastructure. Demand response mechanisms can include automated load control, 

smart grid and smart metering, real-time pricing, and time-of-use tariffs. Demand response can be a costeffective grid resource; though, it requires strict regulations for response time, minimum magnitude, reliability, 

and verifiability of demand-side resources. Experience in the Texas wholesale electricity system and, more 

recently, in California shows that market designs that include demand response participation can markedly 

improve system flexibility. For example, industrial customers supply a significant portion of the Electric 

Reliability Council of Texas’s responsive (spinning) reserves and have demonstrated the ability to effectively 

respond within minutes to a dramatic change in wind output.24

Energy Storage

Energy storage technologies, including pumped hydro storage, thermal storage, hydrogen storage, and batteries 

provide valuable system flexibility. Storage is unique because it can take energy or power from the grid, add 

energy or power to the grid, and supply a wide range of grid services on short (sub-second) and long (hours) 

timescales. It can supply a variety of services simultaneously. For example, concentrating solar power paired 

with highly efficient thermal storage becomes a dispatchable resource (meaning grid operators can control 

the power output) available throughout the day. Many storage technologies (e.g., batteries, flywheels, and 

supercapacitors) have fast response rates (seconds to minutes) available over a short time frame; other storage 

technologies, such as compressed air energy storage, are better suited to offer flexibility in the time frame of 

hours to days. Pumped hydro storage is usable on a timescale from seconds to days.

Power Marketing Administrations: Valuable Federal Transmission Assets

Designed to provide customers access to electricity generated by Federal hydroelectric dams, the four Federal Power Marketing 

Administrations, along with the Tennessee Valley Authority, have a significant footprint within the North American grid. Today, 

in varying degrees, the operation, maintenance, and improvements to these Federal transmission assets are funded by revenues 

from and investments by preference customers. Honoring this unique customer-provider relationship, Congress has established 

two programs that build on the expertise of the Power Marketing Administrations. One is the Section 1222 program established 

by the Energy Policy Act of 2005 that authorizes the Department of Energy, through the Southwestern and/or Western Area 

Power Administrations, to partner with third parties to build transmission projects. There is one applicant proposing a line from 

wind resources in Oklahoma to Tennessee.d The other program is the Transmission Infrastructure Program established by the 

American Recovery and Reinvestment Act of 2009. The program allows the Western Area Power Administration to provide loans 

to and partner on transmission projects within its service area that support the development of renewable resources. The first 

Transmission Infrastructure Program project, the Montana to Alberta Tie Line, created 300 megawatts (MW) of transmission 

capacity specifically for renewable energy.e The project immediately enabled 189 MW to be deployed from the Rim Rock wind 

farm in Montana to markets.f The second project to be completed is Electrical District 5 – Palo Verde Hub. In this solar-rich area, 

the Electrical District 5 – Palo Verde Hub adds up to 410 MW of bi-directional capacity to the electric grid, including 254 MW of 

capacity connecting to the vital Palo Verde market hub that serves markets in Arizona, southern California, and Nevada.g

d Department of Energy. “Proposed Project: Plains and Eastern Clean Line.” http://energy.gov/oe/services/electricity-policycoordination-and-implementation/transmission-planning/section-1222-0. Accessed February 1, 2015.

e Enbridge. “Montanar-Alberta Tie-Line.” http://www.enbridge.com/DeliveringEnergy/Power-Transmission/Montana-AlbertaTie-Line.aspx. Accessed February 1, 2015.

f NaturEner. “Rim Rock Wind Farm.” http://www.naturener.us/rimrock. Accessed February 1, 2015.

g Western Area Power Administration. “Electrical District No. 5 - Palo Verde Hub Project.” http://ww2.wapa.gov/sites/western/

transmission/tip/project/pages/ed5pvh.aspx. Accessed February 1, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-11

Pumped hydro storage currently represents the largest share of storage in the United States, with 42 pumped hydro 

storage plants totaling about 22 gigawatts of installed capacity, which is equivalent to about 2 percent of U.S. electricity 

generation capacity.25 There are currently an additional 37 gigawatts of projects that are in some stage of licensing at 

the Federal Energy Regulatory Commission (FERC).26 The original pumped hydro storage plants were built to store 

power to release at peak demand. New technology (such as variable speed pumps) enable pumped hydro storage to 

provide ancillary services (i.e., functions that maintain the reliability of the grid); integrate variable renewables; and 

provide other services, such as restarting down generators during an outage. Under current market structures, options 

such as dispatchable natural gas are cheaper and faster to permit than pumped hydro storage. FERC has a pilot project 

underway to test a shorter 2-year licensing process for pumped hydro storage. 

Federal and State Activities to Promote Storage

Department of Energy (DOE) support for valuation, early deployment, and education has contributed to storage adoption. For 

example, Federal Energy Regulatory Commission Order 755 cited a DOE lab study showing that “energy storage resources (such 

as flywheels and batteries) could be as much as 17 times more effective than conventional ramp-limited regulation resources” 

for providing frequency regulation.h

 The order requires payment for frequency regulation resources based on a resource’s speed 

and accuracy,i resulting in significant growth of storage installations in markets such as PJM.j The recent DOE Energy Storage 

Safety Strategic Plan addresses institutional barriers to enhance the safety and reliability of storage.k

States have built on these advances to bring storage benefits to closer to the mainstream. California, home to multiple 

DOE-funded storage demonstrations,l, m, n has been aggressive with policies to promote storage, first with a program to 

incentivize behind-the-meter storage, and then with its storage mandate, which will require the state’s three utilities to deploy 

1,325 megawatts of storage by 2020.o In Hawaii, recent wind installations in Maui and Oahu have been paired with energy 

storage,p and Hawaiian Electric Company opened a solicitation for up to 200 MW of storage “to meet its goal of adding 

more renewable generation to the O‘ahu grid.”q Other states, including Arizonar and New York,s have approved or are actively 

encouraging their utilities to consider storage.

h Makarov, Y.V. et al. “Assessing the Value of Regulation Resources Based on Their Time Response Characteristics.” Pacific 

Northwest National Laboratory. June 2008. In: 137 FERC 61,064. p. 35. 2011.

i Federal Energy Regulatory Commission. “Frequency Regulation Compensation in the Organized Wholesale Power Markets.” 137 

FERC 61,064. 2011.

j PJM Independent Market Monitor. “2013 State of the Market Report for PJM.” p. 305. 2013.

k Department of Energy. “Energy Storage Safety Strategic Plan.” December 2014. http://energy.gov/sites/prod/files/2014/12/f19/

OE%20Safety%20Strategic%20Plan%20December%202014.pdf.

l Department of Energy. “Fact Sheet: Borrego Springs MicroGrid.” September 2013. http://www.sgiclearinghouse.org/sites/

default/files/projdocs/1650.pdf.

m Department of Energy. “Fact Sheet: Wind Firming EnergyFarm.” August 2013. http://energy.gov/sites/prod/files/Primus.pdf.

n Department of Energy. “Fact Sheet: Tehachapi Wind Energy Storage Project.” May 2014. http://energy.gov/sites/prod/files/

Tehachapi.pdf.

o Maui Electric Company. “Contract with Auwahi Wind Energy LLC.” 2011.

p Hawaiian Electric Company. “Request for Proposal (RFP# 072114-01) for 60 to 200 MW of Energy Storage for Oahu.” April 30, 2014. 

http://www.hawiianelectric.com/portal/site/heco/menuitem.508576f78baa14340b4c0610c510blca/?vgnextoid=03ebf2

19fe9a5410VgnVCM10000005041aacRCD&vgnextchannel=a595ec523c4ae010VgnVCM1000005c011bacRCRD&appI

nstanceName=default.

q California Public Utilities Commission. “Order Instituting Rulemaking Pursuant to Assembly Bill 2514 to Consider the Adoption 

of Procurement Targets for Viable and Cost-Effective Energy Storage Systems.” Decision 13-10-040. October 17, 2013.

r Arizona Public Service Company and Residential Utility Consumer Office. “APS AND RUCO JOINT REQUEST FOR REVIEW.” 

DOCKET NO. L-00000D-14-0292-00169, Case No. 169. 9 26, 2014.

s Consolidated Edison Company of New York. “Petition for Approval of Brooklyn Queens Demand Management Program.” 14-E0302. 2014.
3-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Traditionally, power generation must meet consumer demand in real time. Storage provides a buffer between 

generation and volatility of customer demand. FERC Order 755, adopted in 2011, recognizes the ability of 

storage to contribute to frequency regulation on the grid faster than centralized generators. The box on 

page 3-11 provides more examples of Federal support for storage development and deployment.

The impact of storage can be location-dependent, so grid operators and regulators need new planning tools 

and procedures to make use of storage as a standard grid component and to optimize storage location and 

size. Changes in the way the United States values ancillary services can also help make the services provided by 

storage a competitive option. In the future, distributed storage (e.g., grid-connected electric vehicles) could be a 

transformative technology. 

Changes to Power System Operations

Changes to power system operations and markets can provide significant existing flexibility, often at lower 

economic costs than building new transmission infrastructure. Operations examples include more frequent 

dispatch (which reduces the time frame over which a generator must follow a specified output level), smart 

network technologies, and increased plant cycling. 

Smart network technologies and advanced network management practices minimize bottlenecks and optimize 

transmission usage. They provide unprecedented, real-time visibility across the energy system. Transmission 

and distribution planners and operators can use this information to employ the most reliable and cost-effective 

flexibility options. They can consider building new generation and transmission alongside other options like 

demand response or bigger balancing areas.

Forecasting and planning are low-cost ways of accessing system flexibility. System operators increasingly 

require variable renewable energy generators to forecast power output to improve the ability of system 

operators to commit, dispatch resources, deploy reserves, and improve situational awareness.27 Integrating 

these data, along with wind and solar plant outage data, into market operations helps variable renewable 

energy plants participate in electricity markets. 

Market Signals

Market signals can enable flexibility. Establishing short-term market products for flexible capacity (e.g., the 

California Independent System Operator (ISO) and Midcontinent ISO’s proposed fast-ramping products) 

can also incentivize resources to respond to imbalances over the minutes-to-hours time frame. In market 

structures that more comprehensively value services provided to the grid, demand-side resources and storage 

could provide low-cost grid services, allowing more efficient grid operations and avoiding generation or 

transmission investments.28 Cost savings to the power system attributable to demand response and energy 

storage can be much larger than the revenue they can receive in current market structures.29

Investments in Reliability and Resilience Can Have Multiple Benefits

North American Electric Reliability Corporation standards (subject to FERC review, approval, and 

independent enforcement authority) require the bulk electric system to withstand certain disruptive events, 

including most single contingencies and some multiple contingencies, with no interruption to transmission 

service or major customer outages. Some outages, or “non-consequential load losses,” are tolerated in the 

case of extreme events, where multiple facilities are taken out of service simultaneously. The North American 

Electric Reliability Corporation requires bulk power system owners and operators to have plans in place to 

contain extreme events to prevent cascading outages to other regions.30
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-13

Resilience investments can require a substantial change in physical infrastructure, including building physical 

barriers or moving equipment, building backup systems, building non-wooden or reinforced poles, and 

burying lines underground.31 Resilience investment also includes additional operations and maintenance 

activities, which primarily means more thorough tree trimming.32

Many energy sector investments to mitigate climate change can have co-benefits that make the grid 

more resilient to climate change impacts and extreme weather. Investments in energy efficiency, smart 

grid technologies, storage, and distributed generation can also contribute to enhanced resilience from 

environmental threats.33 For example, DOE-funded demonstrations of distribution automation systems 

enabled a utility to restore power 17 hours faster following an outage, while other utilities have experienced 

marked improvements in outage interruption frequency and duration indices.34 In addition to providing added 

redundancy, transmission can also provide the operational flexibility to adapt to long-term changes, such as an 

increase in the peak-to-average energy demand and water constraints on energy production.35

Drivers of Change for the Grid of the Future: New Technologies and 

Services

A second dimension of the emerging architecture for the grid of the future has to do with new or emerging 

technological innovations in grid operations. Many of the characteristics that customers desire in the grid of 

the future—affordability, reliability, sustainability, and an improved customer experience—will be facilitated by 

new technologies. The challenges to speeding the adoption of these technologies include developing network 

designs and open standards so they can communicate and operate seamlessly with other elements of the grid, 

as well as determining the value of the benefits that they bring to customers.

Innovative Technologies Have Significant Value for the System 

An array of new technologies and data applications are enabling new electricity-related services, customer 

control choices, and investments that hold the promise of greatly improving electric consumer experience, as 

well as promoting a new ecosystem of innovation and revenues beyond the sale of electric kilowatt-hours.

Distributed generation systems provide consumers a number of benefits. According to a 2007 DOE study,36

these benefits include increased electric system reliability; reduction of peak power requirements; provision of 

ancillary services, including reactive power; improvements in power quality; reductions in land-use effects and 

rights-of-way acquisition costs; and reduction in vulnerability to terrorism and improvements in infrastructure 

resilience. 

A revolution in information and communication technology is changing the nature of the power system. The 

smart grid is designed to monitor, protect, and automatically optimize the operation of its interconnected 

elements, including central and distributed generation; transmission and distribution systems; commercial 

and industrial users; buildings; energy storage; electric vehicles; and thermostats, appliances, and consumer 

devices.37 Smart grid technologies include a host of new and redesigned technologies, such as phasor 

measurement units or advanced metering infrastructure, that provide benefits such as increased reliability, 

flexibility, and resiliency.38, 39, 40

Within the delivery portion of the electric grid, smart grid technology is enabling sizable improvements in 

distribution and transmission automation. Many of these new technologies are “behind-the-meter,” involving 

end-use management or generation on the consumers’ premises; these end-use technologies are not directly 

germane to this installment of the QER. Nevertheless, as parts of an integrated electricity system, with growing 

effects on TS&D, behind-the-meter technologies do affect and interact with the systems that are the focus 

of this QER. For example, engineers will need to design and install components of the grid, such as safety 

interlocks, since two-way power flow, introduced by distributed generation, may pose a danger to line workers.
3-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Emerging technologies on the distribution grid (whether digital communications, sensors, control systems, 

digital “smart” meters, distributed energy resources, greater customer engagement, etc.) present both technical 

and policy challenges and opportunities for the delivery of energy services. Power grids evolved organically in 

a bottom-up manner, as opposed to a centrally coordinated master plan. This build-up has led to large-scale 

legacy investments that require significant operating margins to maintain system stability, as opposed to more 

refined margins enabled by the rapid and precise control offered by new and emerging technologies. 

These changes have injected uncertainties into a utility business model that typically has relied on continued 

load growth, steady economic returns, and long payback horizons.41 While regulators, utilities, and the Federal 

Government are all engaged in addressing these uncertainties, developing appropriate rate structures for 

the benefits these technologies provide to the customer and the grid can be difficult, resulting in either overinvestment or under-investment and higher costs to consumers.

Another key element in the development and use of information technologies on the grid relates to network 

coordination. The grid of the future would benefit from overall network architectures that allow for specific 

grid elements to be aligned in ways that allow them to contribute to solving problems that affect multiple grid 

components. Whole-grid coordination, in which these distributed elements are made to cooperate to solve 

a common problem (i.e., overall grid stability), is a key challenge and opportunity for new information and 

network technologies and approaches. 

There are many other opportunities to infuse advanced technology into key operating elements of the grid. 

Some notable opportunities are shown in Table 3-1. 

Table 3-1. Examples of Key Technologies for the Grid of the Future42

Grid Component/Opportunity Description

AC/DC power flow controllers/converters Technologies that adjust power flow at a more detailed and granular level 

than simple switching.

Advanced multi-mode optimizing controls

Controls capable of integrating multiple objectives and operating over longer 

time horizons, to replace simple manual and tuning controls, or controls that 

operate based only on conditions at single points in time.

Bilaterally fast storage Energy storage in which charge and discharge rates are equally fast and thus 

more flexible.

Control frameworks New hybrid centralized/distributed control elements and approaches.

Management of meta-data, including network 

models

New tools for obtaining, managing, and distributing grid meta-data, including 

electric network models.

Synchronized distribution sensing Synchronization of measurements in order to provide more accurate snapshots 

of what is happening on the grid.

Transactive buildings Buildings with controls and interfaces that connect and coordinate with grid 

operations in whole-grid coordination frameworks.

“X”-to-grid interface and integration

Interface technologies, tools, and standards for the general connection 

of energy devices to power grids; includes integrated mechanisms for 

coordinating those devices with grid operations in whole-grid coordination 

frameworks.

Distribution System Operation Structure for clear responsibility for distributed reliability.

Innovation will introduce new grid components that are increasingly digitized, can provide new services for customers and grid operators, and 

continue to produce and reliably deliver affordable electricity to customers.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-15

Communication with Customer Devices Will Improve Efficiency and 

Reliability of the Grid

The evolving role of the modern-day electricity customer is transforming into a more dynamic, transactive role 

in which customers are also becoming participants in electric system operations. Customers can create value 

to the electric system in two ways: as both suppliers of responsive demand and producers of distributed power. 

As suppliers of responsive demand, customers can provide capacity resources to the system that helps maintain 

reliability and affordable prices. As distributed producers of power, customers can provide power that could 

reduce total GHG emissions, increase resilience, and forestall infrastructure investments.

Three impediments to realizing customer value are related to communications. First, comprehensive 

communication and data standards need to be developed.43 Competing, proprietary systems inhibit 

the adoption of technologies and control strategies and drive up the cost of deployment. Second, there 

is no uniform approach to characterizing the grid services that end-use devices can provide. Third, the 

communication and control interface devices between the customer as a distributed generator and the 

distribution system limit the types of service that the distributed generator can provide. In general, the lack of 

regulatory structures and standards are impeding the full utilization of information technology to enhance the 

efficiency and reliability of the grid. 

Low-cost sensors and controls in buildings, distributed generation, electric vehicle charging, end-use storage, 

and other innovations make it increasingly important to integrate building devices and control systems with 

utility distribution systems to fully enable the development of new value propositions. Customer applications 

in residential and commercial buildings could potentially have economic benefits worth $59 billion (in 2009 

dollars) by 2019, including packages of pricing, in-home displays, smart appliances, and information portals 

that would serve to reduce both energy demand and overall use.44 Well-designed control systems also can 

increase building efficiency.45

Capturing these benefits requires building communication networks, allowing the components to interoperate 

and respond to a facility-wide control. One impediment to fully realizing the benefits of information 

technology is the balkanized structure of regulation. Early information technology adoption was accomplished 

by vertically integrated utilities that used computers as a tool to enhance their ability to perform existing 

functions. New information technology enables new behaviors, market mechanisms, and monitoring and 

operating procedures. While the reliability and efficiency of the system can be improved in the long run, 

these changes pose a threat to the status quo and have potentially significant unintended consequences and 

ambiguous benefits for utilities. As a consequence, there is a general caution associated with the wide-scale 

deployment of new information technology infrastructures and devices. 

Speeding the adoption and accrual of potential benefits will require coordination of open standard 

development and clear business models that enable the benefits to be widely shared. An open standard for 

energy devices would be analogous to the voluntary industry USB standard developed in the mid-1990s, 

which allowed simple plug-and-play between smart phones, tablets, computers, chargers, printers, games, and 

many other peripheral devices. Its existence greatly expanded both the usability and types of all these personal 

electronic devices. Similar standards are emerging but not settled for the much newer set of information 

technology-enabled grid devices, leading to an ongoing lack of interoperability.
3-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Implications of Electric Vehicle Penetration for the Grid

Battery-electric vehicles run on electricity and plug-in hybrid electric vehicles run on a combination of electricity and gasoline. In 

2013, there were about 70,000 battery-electric vehicles and 104,000 plug-in hybrid electric vehicles—small numbers compared 

to the approximately 226 million registered vehicles in the United States. Total U.S. sales of plug-in electric vehicles (PEVs)

 have increased rapidly in recent years, but still represent only about 0.7 percent of new vehicle sales in 2014 (albeit up from

0.6 percent in 2013 and 0.4 percent in 2012). California is home to almost half of all of the Nation’s PEVs, but only about 5 out 

of every 1,000 registered California vehicles are PEVs.t

There has also been a rapid recent increase in the numbers of charging stations. From 2011 to 2014, the numbers of public 

electric vehicle charging outlets grew from fewer than 4,000 to more than 25,000.u Various business models for developing new 

charging stations have emerged, as installation costs can be high.v, w For each infrastructure upgrade, utilities and regulators 

must assess costs (e.g., installation) and benefits (e.g., ancillary services). 

According to the National Academy of Sciences in its 2013 report on electric vehicle deployment,x “The existing electric 

infrastructure does not present a barrier to the expansion of PEV technology in the United States given the projected growth of 

PEV use in the next decade.” In addition, the report states that “As PEVs account for a more significant share of total electricity 

consumption, the committee sees no barriers to provision of generation and distribution capacity to accommodate the growth 

through the normal processes of infrastructure expansion and upgrades in the electric utility industry.”

The National Academy of Sciences concludes that existing U.S. generation and transmission capacity could accommodate 5 

million to 50 million PEVs. However, the report also suggests that if large numbers of PEVs were to be charged at the same time 

as residences also see peak loads, there could be potential for overloading elements of the local distribution system and thus 

a need for local upgrades. Furthermore, the National Academy of Sciences notes that concentrations of fast-charging stations, 

dense clustering of private PEV owner charging, or fleet-charging facilities could require grid upgrades. An assessment prepared 

for the Independent System Operator/Regional Transmission Organization Council noted that smart grid enhancements could 

allow electric vehicles to provide services to the grid, particularly related to demand response and load balancing.y Furthermore, 

smart grid developments could enable a shift in charging to off-peak periods and help avoid additional generation requirements.z

t Energy Information Administration. “California leads the nation in the adoption of electric vehicles.” Today in Energy. December 

10, 2014. http://www.eia.gov/todayinenergy/detail.cfm?id=19131.

u Department of Energy, Office of Energy Efficiency and Renewable Energy, Alternative Fuels Data Center. “Alternative Fueling 

Stations by Fuel Type.” http://www.afdc.energy.gov/data/10332. Accessed January 16, 2015.

v Rocky Mountain Institute. “Pulling Back the Veil on EV Charging Station Costs.” RMI Outlet. April 29, 2014. http://blog.rmi.

org/blog_2014_04_29_pulling_back_the_veil_on_ev_charging_station_costs. Accessed January 16, 2015.

w Greene, D.L. “Alternative Transportation Refueling Infrastructure in the U.S. 2014: Status and Challenges.” University of 

Tennessee Knoxville. March 31, 2015.

x National Research Council. “Overcoming Barriers to Electric-Vehicle Deployment: Interim Report.” 2013. http://www.nap.edu/

download.php?record_id=18320.

y KEMA and Taratec Corporation. “Assessment of Plug-in Electric Vehicle Integration with ISO/RTO Systems.” Produced for the 

ISO/RTO Council. 2010. http://www.rmi.org/Content/Files/RTO%20Systems.pdf. Accessed January 27, 2015.

z Hadley, S.W. “Impact of Plug-in Hybrid Vehicles on the Electric Grid.” Oak Ridge National Laboratory. 2006. http://web.ornl.

gov/info/ornlreview/v40_2_07/2007_plug-in_paper.pdf.

In addition to interoperability, safe and improved connectivity is important to the deployment of new 

technologies to the grid. For example, there are voluntary industry standards for the interconnection of 

distributed generation of all types that connect customer-owned generation to the local distribution network. 

The majority of state public utility commissions use a voluntary standard issued in 2003 by the Institute 

of Electrical and Electronics Engineers (IEEE) known as the IEEE 1547 interconnection standards. These 

standards set technical guidelines for the interconnection of distributed resources less than 10 MW in size with 

the electric grid, including requirements relevant to the performance, operation, testing, safety considerations, 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-17

and maintenance of the interconnection. These standards are now in revision, with a goal of completion by 

2018. Modifications are taking into account impacts on grid reliability; new technologies that offer two-way 

communications and intelligent controls; and dispatchability of some types of distributed generation plus 

extension to demand response, storage, and microgrids.

Updated standards will both improve grid safety and better use distributed energy resources in maintaining 

overall system reliability. In particular, as large fossil-fueled generators with spinning turbines retire, the system 

is losing the inertia that has helped maintain grid frequency and thus grid reliability. Properly configured with 

appropriate communications, inverters used with distributed generation or storage can provide frequency 

regulation services to the grid to fill this gap. Conversely, improper connections or protocols could lead to 

simultaneous disconnection of all distributed energy resources under particular circumstances. While there is 

an existing process underway to update the IEEE 1547 interconnection standards, finding ways to accelerate 

the update of these standards will provide increased benefits to both customers and the reliability of the 

system.

Appropriate Valuation of New Services, Technologies, and Energy Efficiency

Ultimately, the electric system exists to serve load—or the demand for electric services—from the residential, 

commercial, industrial, and transportation sectors. There is a suite of services that the grid provides to meet 

real-time changes in load and supply, among other things. A better understanding of the full costs and benefits 

of those services would allow regulators, utilities, and customers to develop more fair and equitable pricing 

structures. 

These services and a range of other important societal goals are enabled by new technologies. Distributed 

energy and smart grid technologies offer the potential to help meet America’s changing energy needs, minimize 

the environmental impact of electricity generation, strengthen economic growth, and improve the reliability 

of the Nation’s electrical infrastructure. As noted, the full spectrum of existing and emerging technologies 

includes new intelligent grid (smart grid) delivery technologies, energy efficiency, combined heat and power, 

fuel cells, gas turbines, rooftop PV, distributed wind, plug-in hybrid and all-electric vehicles, distributed storage, 

demand response, and transactive building controls. 

At high penetrations, many of these new technologies could challenge current distribution systems and the 

functional integrity of the current electricity system. New investments and changes to existing regulatory, 

policy, financial, and business structures may be necessary to fully realize the benefits of these technologies. 

Regulators and policymakers will need to address the operational issues associated with new technologies, as 

well as longer-term concerns, such as how the loss of revenue (and a utility’s ability to cover fixed costs) and 

load resulting from increasing numbers of some installations of distributed energy resources could challenge 

utilities’ financial health under current business models. 

A key element for addressing the operational and business model concerns posed by new technologies centers 

on valuation (i.e., “What are the benefits of new services and technologies to the grid?” and conversely, “What 

is the cost of the services the grid provides to customers?”). There is no agreement on the answers, though, as 

answers depend on the situation. This issue has been examined in numerous valuation studies in the public 

domain. These studies do not consider the same set of impacts from one study to the next. For example, not all 

studies explicitly consider impacts on transmission and distribution, such as capacity avoidance, grid support 

services, or external impacts like avoided GHGs. The monetized estimates that different studies assign to a 

given service or impact (capacity, energy, system losses) can range by a factor of as much as five or more. 

There currently are no transparent, broadly accepted methods that can be used by stakeholders to determine 

the costs and benefits associated with integrating new services and technologies into the grid.46 Clearer 

valuation methods would empower legislators and regulators in their efforts to address their local needs as 
3-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

they formulate strategies and plans to provide a portfolio of electricity options that meet their state-specific 

goals for reliable, affordable, and clean electricity. It is also important for policymakers to understand that, as 

they work to value services on both sides of the meter, there is the potential for stranded assets (i.e., assets for 

which investments have been made but cannot be recovered) on both sides; valuation policies must take these 

issues into consideration as well.

Net Metering

The challenges associated with integrating new technologies into the current electricity grid system are 

illustrated by the variety of opinions on net metering. Net metering is a system for paying for generation 

located on customer facilities—typically, although not exclusively, small residential solar generators. Currently, 

45 states have Net Energy Metering programs that credit customers in some way for the energy they produce 

onsite.47 The most common type of Net Energy Metering customer today owns or leases a rooftop PV system, 

but current regulations often apply to other distributed energy technologies, such as gas-fired turbines and 

combined heat and power. With rapid solar PV market penetration, controversies among utilities, consumer 

groups, solar businesses, and other stakeholders have arisen in several states over how to account for the full 

cost of grid services, placing pressure on legislators and regulators to understand conflicting positions and 

analyses supporting them. 

Valuing Ancillary Services 

Ancillary services are defined by the North American Electric Reliability Corporation as “those services that 

are necessary to support the transmission of capacity and energy from resources to loads while maintaining 

reliable operation of the transmission system in accordance with good utility practice.”48 Types of ancillary 

services include ramping, voltage support, and frequency support, all of which are furnished by a combination 

of generation and transmission facilities. Ultimately, the system operator is responsible for ensuring that there 

are adequate ancillary services at all times to maintain reliability. The ability to provide ancillary services, such 

as frequency support, is changing with the transformation of the electric generation system. As the electric 

system continues to evolve, system planners and grid operators will need to value and integrate the services 

that new technologies can provide to maintain system stability and reliability. New payments, or changes to 

existing payment methods (both to generation owners and to other potential ancillary service providers), may 

be necessary to ensure continued provision of needed ancillary services to maintain grid reliability. 

Consistent Measurement and Evaluation of Energy Efficiency

The evaluation, measurement, and verification of energy efficiency savings are critical as efficiency becomes 

increasingly important as a mechanism to meet a variety of goals, including reducing the need to build 

additional generation and GHG reduction. Many entities have made progress toward standardizing the 

evaluation of energy efficiency. These methods can help regulators understand the opportunities energy 

efficiency creates for infrastructure avoidance.

Ratepayer-funded efficiency programs run by utilities and third parties, energy service companies’ projects, 

codes and standards, and other efficiency programs have achieved significant energy savings over the last three 

decades.49 These programs have developed in different ways across the country, along with some state variation 

in protocols and procedures for measuring and verifying savings. While inconsistencies can complicate efforts 

to compare measured savings across jurisdictions, a number of important standardization efforts have emerged 

in recent years at the state and regional levels that have started to address these issues. These include efforts 

led by the Northwest Regional Technical Forum and the Northeast Energy Efficiency Partnership that include 

development of regional databases of energy savings. Building on this momentum, DOE’s voluntary Uniform 

Methods Project for Determining Energy Efficiency Program Savings has convened policy stakeholders and 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-19

technical experts to develop a set of protocols for determining savings from energy efficiency measures and 

programs. Over the last 2 years, the Uniform Methods Project has issued more than 20 protocols for common 

residential, commercial, and crosscutting energy efficiency measures. The Energy Information Administration 

has also tracked energy efficiency program evaluations. 

Drivers of Change for the Grid of the Future: Institutions and Utility 

Business Models

A third dimension of the architecture for the grid of the future encompasses all the actors involved in 

managing the grid, including in industry and regulatory bodies (at all levels of government). These businesses 

and institutions shape the operation, management, and regulation of the grid. Incorporation of the new 

technologies and services will require an evolution in these businesses and institutions.

States Are the Test Beds for the Evolution of the Grid of the Future

States have the primary role in regulating the retail provision of electricity (see Figure 3-5), as well as the siting 

of transmission and generation. Due to this primacy, states are at the forefront of managing the transition to 

the grid of the future. Historically, states have been the laboratories for developing policies that reflect their 

individual and regional situations, and in the electricity sector, state policies reflect differences in resource mix, 

priorities, geography, economies, and even culture. 

Figure 3-5. Different State Approaches to Energy Efficiency50

Decoupling LRAM Performance

Incentive

None

Thirty-six states have adopted regulatory approaches to promote utility investment in energy efficiency: decoupling, lost-revenue adjust mechanisms 

(“LRAM”), or performance incentives.
3-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

As the complexity of the grid increases, states are working to develop policies that incorporate new services 

and technologies in a manner that maintains affordability and reliability. The unique circumstances of each 

state have resulted in a diverse set of responses across a range of issues confronting the electricity sector. For 

example, many states have adopted policies to support utility investments in energy efficiency. There are at least 

three different regulatory approaches being used: decoupling, lost revenue adjustment mechanism, and a broad 

set of methods to allow performance incentives (see Figure 3-5). These efforts create a regulatory model that 

rewards utility shareholders for effective energy efficiency efforts that lower ratepayer bills in the long term. 

Another example of state innovation is the cost-allocation scheme member states in the Midcontinent ISO 

and Southwest Power Pool negotiated among themselves for the funding of large region-wide transmission 

upgrades for each of their regions, which was then approved by FERC.51, 52

Different Industry Structures and Business Models Rule Out 

“One-Size-Fits-All” Solutions to Challenges

The grid is financed, planned, and operated by numerous entities that cross states, regions, and countries. It 

provides valuable services and includes a variety of industry types and a range of business models that often 

reflect regional differences in resource mix.

Policies designed to provide consumers with affordable and reliable electricity in the future must take into 

account the variety of business models for investing, owning, and operating grid infrastructure. The nature of 

the entities that comprise the grid has changed and will continue to do so. The earliest model of electric service 

delivery was the investor-owned, vertically integrated utility, namely the Edison Illuminating Company that 

used the New York City Pearl Street Station generator in 1882 to begin serving customers. Following, in the late 

1880s and 1890s, was the establishment of public power utilities, which were also vertically integrated, in small 

towns to also serve local loads with generation. Now, as shown in Table 3-2, the basic functions of the vertically 

integrated utility are performed by a wide variety of entities with different ownership structures, pursuing 

different functions. 

The variety of ownership and scope of the entities that comprise the grid leads to a complex set of motivations 

and decision drivers. The reliable operation of the grid is a testament to the integration of these different 

interests. There are five different predominant ownership types: (1) investor owned; (2) cooperatively owned, 

owned by their member customers; (3) publicly owned, such as by municipalities, states, public utility districts, 

and irrigation districts; (4) Federally owned; and (5) merchant companies that are competitive entities in 

generation, transmission, or retail supply. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-21

There is a diversity of ownership structures in the U.S. electricity sector. Such diversity often precludes one-size-fits-all policies.

Although all utilities may invest in demand response and energy efficiency, each ownership pattern engenders 

different interests in performance of service, investment, and market structure. For example, cooperatives have 

been innovative in their use of direct load control to modify peak load conditions,54 while publicly owned 

utilities have been leaders in energy efficiency.55 Because investor-owned utilities earn a return on capital 

expenses, and without special incentives, do not earn a return on cost-saving operational expenses, this class of 

utilities tends to lead in the development of new service through capital-intensive assets.

Investor-owned companies have fiduciary obligations to increase shareholder value. Regulated entities that 

earn profit based upon a return on invested capital lack a strong incentive (absent explicit requirements and 

incentives) to invest in energy efficiency practices. In contrast, public power and cooperative utilities are 

motivated to keep customers’ bills down and, as such, can optimize the provision of service by using both 

capital-intensive options and less capital-intensive alternatives (e.g., energy efficiency). 

Merchant generators whose profits are the residual revenues after expenses are paid (including return on 

capital) are motivated to maximize revenue. The Federal Power Marketing Administrations, such as the 

Western Area Power Administration and the Bonneville Power Administration, must follow the dictates of 

their statutory authorities. The balancing authorities, some of which are Regional Transmission Organizations 

or ISOs, in turn, are concerned about maintaining reliability while operating the bulk power system.

Table 3-2. Taxonomy of Utility Business Models (examples, ownership, and scope)53

State-Regulated 

IOUs

Cooperatively 

Owned Publicly Owned Federally Owned Merchant

Vertically Integrated 

(T,D,G)*

Oklahoma Gas & 

Electric None Los Angeles Dept. of Water & Power None None

Transmission and 

Distribution Pepco

Southern Maryland 

Electric COOP 

(SMECO)

Clallam County 

Public Utility 

District

None None

Generation and 

Transmission None Basin Electric G&T New York Power Authority

Tennessee Valley 

Authority LS Power

Generation and 

Distribution

DTE Energy; 

Consumers Energy

Fox Island (ME)

Electric

Lansing (MI) Board 

of Water & Light None NRG

Transmission None Upper Missouri 

Power Cooperative

Transmission 

Agency of 

Northern Calif.

Western Area Power 

Adminstration, 

Bonneville Power 

Administration, 

Southwestern Power 

Administration

ITC; Hudson 

Transmission; 

Transource 

Energy; Clean 

Lines Energy 

Partners

Distribution Mt. Carmel Public 

Utility Co. Kenergy Nashville Electric Service None None

Generation None Oglethorpe Power 

Corporation

Wyoming 

Municipal Power 

Agency

Bureau of Reclamation Calpine; BP 

Energy; Tenaska;

* (T,D,G= Transmission, Distribution, and Generation)
3-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Fragmented and Overlapping Jurisdictions Threaten to Impede Development 

of the Grid of the Future

Federal, regional, and state institutions and regulatory structures that have evolved over decades to manage the 

electric grid are increasingly interacting and overlapping. The geographical boundaries of the institutions are 

not coincident with the flow of electrons on the physical system. The increasing physical complexity of the grid 

will only complicate governance and analysis. Policymaking to address regulatory and operational challenges 

of the evolving grid is more difficult because models used to analyze the physical flows of electricity do not 

align with the institutional and regulatory structures (see Figure 3-6). 

The current Federal-state regulatory boundary dates back to the 1930s, when the Federal Power Act 

substantially expanded the responsibilities of the Federal Power Commission (the predecessor to FERC) 

and created Federal oversight of wholesale sales of electricity and of transmission of electricity in interstate 

commerce, as well as state oversight of retail sales and distribution of electricity. In recent decades, organized 

wholesale markets have spread geographically and incorporated a greater variety of products with a broader 

set of market participants. This trend—coupled with the increased ability of end-use consumers to supply 

distributed generation, demand response, and other services—has and will continue to raise questions about 

the dividing line between state and Federal jurisdiction.56

This threatens to impede the development of markets that efficiently integrate both utility-scale and small-scale 

participants. While FERC and the National Association of Regulatory Utility Commissioners have engaged 

in a collaborative dialogue on a range of topics (smart grid, demand response, enforcement, and others) 

since 2006,57 Federal and state regulators should seek new ways to coordinate goals across their respective 

jurisdictions, without which the Nation will not be able to take full advantage of the efficiencies offered by 

emerging technologies and the grid of the future.58
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-23

Alberta Electric

System Operator

Ontario Independent

Electricity System Operator

Midcontinent

ISO

Southwest 

Power Pool

Electric Reliability

Council of Texas

New York

ISO

PJM 

Interconnection

New England

ISO

California

ISO

Federally Regulated

Power Lines

Regional Transmission 

Organizations (RTOs)/Independent 

System Operators (ISOs)

115-161kv

230-500kv

Figure 3-6. Select Electricity Jurisdictions59

Transmission lines, which are regulated at the Federal level, cross state boundaries and connect the regional organizations that manage and operate 

the bulk power electricity grid. In contrast, states regulate the distribution of electricity to end-use customers for entities under their jurisdiction, as 

well as the siting of transmission on non-Federal lands. Further, in most states, local appointed or elected governing boards handle the regulation 

of distribution for their publicly or cooperatively owned electric utility. This diversity of institutions and differences in jurisdictional boundaries create 

challenges in grid governance (given that changing the grid in one location can alter electricity dynamics over a large area). 

NERC Regional Entities 

and Balancing Authorities

Dynamically Controlled 

Generation

* Bubble size is determined by 

 acronym width
3-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Policy Framework for the Grid of the Future

The transition from today’s existing grid to the grid of the future will be challenging. The electric grid is highly 

complex, has significant regional variability, and should be managed to accommodate a range of possible 

futures. The vision of the future electric grid described earlier in this chapter was developed after a year-long 

QER process of analyses and stakeholder engagement. The recommendations that follow are guided by five key 

policy principles that emerged from this work.

• The future grid should encourage and enable energy efficiency and demand response to cost effectively 

displace new and existing electric supply infrastructure, whether centralized or distributed. The 

policies, financial tools, and pricing signals that enable customers to save money and energy while 

enhancing economic growth should be preserved and strengthened as business models evolve. 

• The future grid should provide balanced support for both decentralized power sources and the central 

grid. As the costs of decentralized power sources and storage continue to fall, there will be increased 

opportunities for end users to partially or completely supply their own electricity. At the same time, the 

vast majority of American homes and businesses will continue to rely on the power grid for some or 

all of their electricity. It is essential, then, that investment in both centralized and decentralized systems 

occur in a balanced manner, preserving high-quality service for all Americans while simultaneously 

enabling new options and services that may reduce energy costs or climate impacts. Similarly, access 

to renewable energy, energy efficiency improvements, and new energy-related services should not be 

limited to isolated customer groups, but rather become an integral part of the universal service that 

both decentralized and centralized grid customers enjoy. 

• In the future grid, new business and regulatory models must respect the great regional diversity in 

power systems across the United States, as well as the critical roles played by state, local, tribal, and 

regional authorities, including state public service commissions and regional grid operators. The 

drivers of change in the power system cut across the traditional boundaries of state and Federal 

regulation and thereby introduce new challenges in designing and overseeing new business and 

regulatory models. An unprecedented amount of consultation and collaboration will be necessary to 

ensure that national objectives are met alongside complementary state policies in power systems that 

are inherently regional in their scope and technology.

• Planning for the future grid must recognize the importance of the transmission and distribution 

systems in linking central station generation—which will remain an essential part of the U.S. energy 

supply for many years to come—to electricity consumers. Transmission and generation both benefit 

from joint, coordinated planning. Transmission can allow distant generation—where there may be 

excess capacity—to supplement local supply and avoid the need to build new plants. New generation 

sometimes requires new transmission, especially remotely sited renewables or new nuclear plants. 

Utility and Regional Transmission Organization planning processes and tools should continue to 

evolve to evaluate transmission, generation (both central and distributed), and demand-side resources 

holistically. 

• Finally, the careful combination of markets, pricing, and regulation will undoubtedly be necessary in 

all business and regulatory models of the future grid. While the precise nature and scope of the market 

structures in the future grid may vary considerably, there is little doubt that markets in one form or 

another will be an important means of providing access to new technologies and services. Even in 

settings where prices are regulated, novel approaches can allow beneficial new pricing and service 

structures. Moreover, both new and traditional financing options provided by capital markets will be 

an important element in the future industry landscape. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-25

QER Recommendations

The Administration and Congress should support or incentivize investment in electricity infrastructure 

reliability, resilience, and affordability through the development of tools, methods, and new funding for 

planning and operating the grid of the future. Accordingly, we recommend the following:

Provide grid modernization research and development, analysis, and institutional support: 

A modernized 21st century grid will require a governing framework that values and optimizes the benefits 

from new technologies and services, as well as a physical infrastructure that maintains reliability, resilience 

to disruption, cost effectiveness, and flexibility to adapt to these changes. Early and strategic investments by 

DOE in foundational technology development, enhanced security capabilities, and institutional support 

and stakeholder engagement provide decision makers with a common set of tools that balances electric 

industry and consumer interests. Though small relative to the size of the industry, DOE’s investment is 

significant compared to utilities’ limited spending on innovation, which stems from an investor-owned 

business model where profits are based on return on capital expenditures, as well as public- and consumerowned power’s requirement for lowest feasible rates. The President’s Fiscal Year 2016 Budget requests $356 

million for DOE’s Grid Modernization Initiative. 

To reflect the rapidly shifting grid landscape, DOE should continue to pursue a multi-year, 

collaborative, and cost-shared research and development, analysis, and technical assistance program:

• Technology innovation resulting from research and development coordinated among DOE 

offices, creating new tools and technologies in areas such as the following: 

◦ Design and planning tools to model emerging needs

◦ System control and power flow to optimize for new grid capabilities

◦ Grid sensing and measurements for determining changes in variable generation markets 

and infrastructure conditions

◦ Devices and integrated systems testing for evaluation and validation of new technologies 

in a systems context

◦ Grid security and resilience efforts to protect, prevent, analyze, and respond to threats by 

developing physical and cybersecurity technology and standards 

◦ Risk management, including integrated demonstration of promising new technologies 

with new institutional approaches. 

• Institutional support and alignment, including analyses, workshops, and dialogues to highlight 

key policy and market challenges and options for grid transformation.

The cost of this program is estimated to be $3.5 billion over 10 years.

Establish a framework and strategy for storage and flexibility: Energy storage is a key functionality 

that can provide flexibility, but there is little information on benefits and costs of storage deployment at 

the state and regional levels, and there is no broadly accepted framework for evaluation of benefits below 

the bulk system level. DOE should conduct regional and state analyses of storage deployment to produce 

a strategy for flexibility and storage. The strategy will integrate the findings from these analyses and make 

them easy for all types of stakeholders, including regional and state leaders, to understand and implement 

where appropriate. It will also establish a common framework for exploring means, methods, and 

technologies that can enhance grid flexibility, regionally, in states, and load-serving entities. 
3-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

QER Recommendations (continued)

The national energy system storage strategy will address a suite of approaches that enable flexibility, 

including integrated planning methods, system operations and markets, demand and storage, 

conventional and variable renewable generation, and interconnected transmission networks.

Conduct a national review of transmission plans and assess barriers to their implementation: 

Transmission is critical both to ensuring reliability, as well as to connecting generation to load. 

While DOE has funded interconnection-level analyses of transmission needs and specific studies of 

transmission needs for renewable generation, a more detailed and comprehensive national review of 

transmission plans is warranted. DOE should carry out such a review to include assessments on the 

types of transmission projects proposed and implemented, current and future costs, consideration of 

interregional coordination, and other factors. Synthesizing this information at a national level would 

better inform and guide the development of transmission, including opportunities for additional 

regional or interregional coordination. In conjunction with such a review, it will be critical to assess 

incentives and impediments to the development of new transmission. Such an assessment should 

include a review of existing Federal incentives, implementation of Section 1222 of the Energy 

Policy Act of 2005 to enable third-party transmission projects partnered with the DOE Western 

and Southwestern Power Administrations, implementation of the $3.25 billion Western Area Power 

Administration Transmission Infrastructure Program, siting constraints, and other incentives and 

impediments that may exist at both the national and local levels.

Provide state financial assistance to promote and integrate TS&D infrastructure investment 

plans for electricity reliability, affordability, efficiency, lower carbon generation, and 

environmental protection with a focus on regional coordination: States are the test beds for 

the evolution of the electric power system. DOE should provide competitive funding for states to 

promote and integrate TS&D infrastructure investment plans for electricity reliability, affordability, 

efficiency, lower carbon generation, and environmental protection (including climate mitigation).

• As described in this chapter, states can play an important role in promoting grid reliability 

as new technologies, including distributed generation, are added to the grid, and consumers 

demand more services from the electric power system. The increasing interdependency of 

natural gas and electricity systems creates additional planning requirements, as does climate 

change and extreme weather events. 

• States have historically established separate agencies for reliability and environmental 

regulation of the electric power sector that operate independently of each other. The actions 

required to meet the goals of an affordable, resilient, reliable, and cleaner electricity sector are, 

however, becoming increasingly interdependent. States can provide innovative ways to address 

new trends that allow the electric sector to reliably provide services that meet environmental, 

resilience, and efficiency goals. In making awards under this program, DOE should require 

cooperation within the planning process of energy offices, public utility commissions, and 

environmental regulators within each state; with their counterparts in other states; and 

with infrastructure owners and operators and other entities responsible for maintaining the 

reliability of the bulk power system. 

The estimated support for this program is about $300 million to $350 million over 5 years.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-27

QER Recommendations (continued)

Coordinate goals across jurisdictions: Technology is indifferent to state-Federal boundaries 

and jurisdictions; technology users cannot be. Both Federal and state governments need to play 

constructive and collaborative roles in the future to ensure that consumers and industry are able to 

maximize the value of new technologies to enhance resilience and reliability and mitigate climate 

change. While the notions of retail versus wholesale have, in some respects, become blurred, the 

states still have a strong and important role in electricity regulation. The variety and strength of 

state policies on energy efficiency, storage, renewable energy, smart grid, and even GHG regulation 

demonstrates the undiminished importance of the power sector to state leaders, notwithstanding 

technological change. At the same time, portions of the electric power sector have an important role 

to play in improving the efficiency of the wholesale markets overseen by FERC at the Federal level. 

DOE should play a convening role to bring together public utility commissioners, legislators, and 

other stakeholders at the Federal, state, and tribal levels to explore approaches to integrate markets, 

while respecting jurisdictional lines, but allowing for the coordination of goals across those lines. 

Value new services and technologies: Efficient characterization and valuation of services provided 

to the grid by existing and new technologies is important for maintaining reliability and affordability 

of the rapidly evolving electricity system and providing clear price signals to consumers. Existing 

methods for establishing values and rates should appropriately compensate new technologies, with 

the potential to more effectively provide grid services reliably, affordably, and in compliance with 

environmental regulations. The Federal Government can play a role in developing frameworks to 

value grid services and approaches to incorporate value into grid operations and planning. 

• DOE should convene stakeholders to define the characteristics of a reliable, affordable, and 

environmentally sustainable electricity system and create approaches for developing pricing 

mechanisms for those characteristics. 

• The ability of distinct grid components to provide grid services should be evaluated, and 

options for increasing the viability of components to provide grid services should be 

reviewed—this would allow market operators and regulators to have a more complete 

understanding of the range of technologies and strategies that can provide grid services. 

• DOE should also work with stakeholders to develop a framework(s) for identifying attributes 

of services provided to the grid by electricity system components, as well as approaches to 

incorporate the valuation of grid service attributes in different regulatory contexts (e.g., 

pricing or incorporation in planning processes). 

• The convening efforts recommended here will build on past DOE workshops on the value of 

storage and distributed energy resources (discussed in Chapter X, Analytical and Stakeholder 

Process). The frameworks developed through this process could be used by FERC, state public 

utility commissions in ratemaking proceedings, Regional Transmission Organizations in their 

market rule development, or utilities in the operation and planning of their systems.
3-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

QER Recommendations (continued)

Improve grid communication through standards and interoperability: A plethora of both 

consumer-level and grid-level devices are either in the market, under development, or at the 

conceptual stage. When tied together through the information technology that is increasingly 

being deployed on electric utilities’ distribution grids, they can be an important enabling part of 

the emerging grid of the future. However, what is missing is the ability for all of these devices to 

coordinate and communicate their operations with the grid, and among themselves, in a common 

language—an open standard. One analogy is the voluntary industry USB standard developed in the 

mid-1990s that allows simple plug-and-play between smart phones, tablets, computers, chargers, 

printers, games, and many other peripheral devices, and whose existence has greatly expanded 

both the usability and types of all these personal electronic devices. Similar standards are emerging 

but not settled for the much newer set of information technology-enabled grid devices (i.e., a lack 

of interoperability exists). The Department of Commerce’s National Institute of Standards and 

Technology (NIST) was very active in working with industry and other interested parties to develop 

several generations of voluntary standards to bring interoperability to grid-connected devices. 

NIST’s efforts have now transitioned to the industry-based Smart Grid Interoperability Panel. DOE 

is supporting efforts by IEEE to develop next-generation standards for inverters used by distributed 

generation. While the Federal Government lacks authority to mandate standards in these areas, 

it can take additional steps. In conjunction with NIST and other Federal agencies, DOE should 

work with industry, IEEE, state officials, and other interested parties to identify additional efforts 

the Federal Government can take to better promote open standards that enhance connectivity and 

interoperability on the electric grid.

Establish uniform methods for monitoring and verifying energy efficiency: The measurement 

and verification of energy efficiency savings will be increasingly important as efficiency continues 

to become not just a source of revenue, but a mechanism by which the utility can meet its GHG 

reduction goals. Regulators need ways to understand, validate, and value savings from energy 

efficiency practices, including understanding the value of infrastructure avoidance as a result 

of efficiency investments. Through its Uniform Methods Project, DOE should accelerate the 

development of uniform methods for measuring energy savings and promote adoption of these 

methods in public and private efficiency programs. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 3-29

RECOMMENDATIONS IN BRIEF: 

Modernizing the Electric Grid

Provide grid modernization research and development, analysis, and institutional support. The Department of 

Energy (DOE) should continue to pursue a multi-year, collaborative, and cost-shared research and development, analysis, and 

technical assistance program for technology innovation that supports grid operations, security, and management, as well as for 

analyses, workshops, and dialogues to highlight key opportunities and challenges for new technology to transform the grid.

Establish a framework and strategy for storage and grid flexibility. DOE should conduct regional and state analyses of 

storage deployment to produce a common framework for the evaluation of benefits of storage and grid flexibility, and a strategy 

for enabling grid flexibility and storage that can be understood and implemented by a wide range of stakeholders.

Conduct a national review of transmission plans and assess barriers to their implementation. DOE should carry 

out a detailed and comprehensive national review of transmission plans, including assessments on the types of transmission 

projects proposed and implemented, current and future costs, consideration of interregional coordination, and other factors. A 

critical part of this review should be to assess incentives and impediments to the development of new transmission.

Provide state financial assistance to promote and integrate transmission, storage, and distribution 

infrastructure investment plans for electricity reliability, affordability, efficiency, lower carbon generation, 

and environmental protection. In making awards under this program, DOE should require cooperation within the planning 

process of energy offices, public utility commissions, and environmental regulators within each state; with their counterparts in 

other states; and with infrastructure owners and operators and other entities responsible for maintaining the reliability of the 

bulk power system. 

Coordinate goals across jurisdictions. DOE should play a convening role to bring together public utility commissioners, 

legislators, and other stakeholders at the Federal, state, and tribal levels to explore approaches to integrate markets, while 

respecting jurisdictional lines, but allowing for the coordination of goals across those lines. 

Value new services and technologies. DOE should play a role in developing frameworks to value grid services and 

approaches to incorporate value into grid operations and planning. It should convene stakeholders to define the characteristics 

of a reliable, affordable, and environmentally sustainable electricity system and create approaches for developing pricing 

mechanisms for those characteristics. The goal should be to develop frameworks that could be used by the Federal Energy 

Regulatory Commission, state public utility commissions in ratemaking proceedings, Regional Transmission Organizations in their 

market rule development, or utilities in the operation and planning of their systems.

Improve grid communication through standards and interoperability. In conjunction with the National Institute of 

Standards and Technology and other Federal agencies, DOE should work with industry, the Institute of Electrical and Electronics 

Engineers, state officials, and other interested parties to identify additional efforts the Federal Government can take to better 

promote open standards that enhance connectivity and interoperability on the electric grid. 

Establish uniform methods for monitoring and verifying energy efficiency. Through its Uniform Methods Project, DOE 

should accelerate the development of uniform methods for measuring energy savings and promote widespread adoption of these 

methods in public and private efficiency programs. 
3-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid

Endnotes

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8. Edison Electric Institute. “Transmission Investment: Adequate Returns and Regulatory Certainty are Key.” p. 6. June 

2013. http://www.eei.org/issuesandpolicy/transmission/Documents/transmission_investment.pdf. Accessed February 25, 

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9. Edison Electric Institute. “Actual and Planned Transmission Investment by Shareholder-Owned Utilities (2008–

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30. North American Electric Reliability Corporation. “Transmission System Planning Performance Requirements.” p. 6. 

http://www.nerc.com/files/TPL-001-4.pdf. Accessed January 27, 2015. 

31. Edison Electric Institution. “Before and After the Storm: A Compilation of Recent Studies, Programs, and 

Policies Related to Storm Hardening and Resiliency.” 2014. http://www.eei.org/issuesandpolicy/electricreliability/

mutualassistance/Documents/BeforeandAftertheStorm.pdf. Accessed January 27, 2015.; Executive Office of the 

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prod/files/2013/08/f2/Grid%20Resiliency%20Report_FINAL.pdf. Accessed January 27, 2015.; Electric Power Research 

Institute. “Enhancing Distribution Resiliency: Opportunities for Applying Innovative Technologies.” 2013. http://www.

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32. Quanta Technology. “Cost-Benefit Analysis of the Deployment of Utility Infrastructure Upgrades and Storm 

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National Laboratory. “Synthesis of Impacts/Disruptive Events on TS&D Infrastructure (Vol 1–3: Electricity, Liquid 

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November 2014. http://energy.gov/sites/prod/files/2014/12/f19/SG-ImprovesRestoration-Nov2014.pdf. Accessed February 

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Benefits_of_CVR_b.pdf. Accessed February 25, 2015. 

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February 25, 2015.

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National Laboratory. PNNL-24044. January 2015. http://energy.gov/epsa/qer-document-library.

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files/Electric_Grid_Full_Report.pdf. Accessed February 2, 2015.

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Grid: Can the smart grid live up to its expectations? McKinsey & Co. http://www.mckinsey.com/client_service/electric_

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prod/files/2014/08/f18/SmartGrid-SystemReport2014.pdf. Accessed March 17, 2015.
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48. North American Electric Reliability Corporation. “Glossary of Terms Used in NERC Reliability Standards.” Updated 

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50. Bhargava, A. “This map shows how 36 states are modernizing the utility business model.” Opower. http://blog.opower.

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52. Southwest Power Pool. “FERC Approves New Cost Sharing Method for Expanding SPP’s Transmission Grid.” June 

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Expanding%20SPP%20Transmission%20Grid.pdf. Accessed February 2, 2015.

53. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.

54. National Rural Electric Cooperative Association. “Request for Information Addressing Policy and Logistical 

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2011. http://swenergy.org/publications/documents/Municipal%20Utility%20Energy%20Efficiency%20Programs%20-%20

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56. See, for example, Electric Power Supply Association v. FERC, 753 F.3d 216 (D.C. Cir. 2014). Petition for certiorari 

pending.

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3-34 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter III: Modernizing the Electric Grid
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-1

Chapter IV

This chapter addresses the role of infrastructure in ensuring U.S. energy security 

in a global marketplace. It first describes the evolution of the concept of U.S. 

energy security in response to interconnected global energy markets. It then 

discusses the security benefits of both increased domestic production and 

increasingly efficient use of energy. The chapter then examines four sets of 

infrastructures and provides associated recommendations at the end of each 

discussion. First, it looks at modernizing the Strategic Petroleum Reserve (SPR), 

analyzing both its physical facilities and the legal authorities governing its use. 

Second, the chapter examines changes affecting infrastructures for delivering 

propane and alternative fuels—two important contributors to a diverse U.S. 

energy supply. Third, it looks at the need to reinvigorate the U.S.-flagged 

shipbuilding industry, given the importance of marine transport of energy 

commodities to U.S. security. The chapter concludes with a discussion of the U.S. 

energy infrastructures that are shared with Canada and Mexico. This discussion 

is related to the broader issues of North American energy market integration 

that are covered in Chapter VI (Integrating North American Energy Markets).

MODERNIZING U.S. ENERGY 

SECURITY INFRASTRUCTURES 

IN A CHANGING GLOBAL 

MARKETPLACE
4-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

FINDINGS IN BRIEF: 

Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace 

Multiple factors affect U.S. energy security. These include U.S. oil demand; the level of oil imports; the adequacy of 

emergency response systems; fuel inventory levels; fuel substitution capacity; energy system resilience; and the flexibility, 

transparency, and competitiveness of global energy markets. 

The United States has achieved unprecedented oil and gas production growth. Oil production growth has enabled 

the United States to act as a stabilizing factor in the world market by offsetting large sustained supply outages in the Middle 

East and North Africa and, later, contributing to a supply surplus that has reduced oil prices to levels not seen since March 

2009. The natural gas outlook also has changed tremendously. Just 10 years ago, it was projected that the United States 

would become highly dependent on liquefied natural gas imports, whereas the current outlook projects that the United States 

will have enormous capacity and reserves and could become a major liquefied natural gas exporter. 

The United States is the world’s largest producer of petroleum and natural gas. Combined with new clean energy 

technologies and improved fuel efficiency, U.S. energy security is stronger than it has been for over half a century. Nonetheless, 

challenges remain in maximizing the energy security benefits of our resources in ways that enhance our competitiveness and 

minimize the environmental impacts of their use.

The network of oil distribution (“the midstream”) has changed significantly. Product that had historically flowed 

through pipelines from south to north now moves from north to south, and multiple midstream modes (pipelines, rail, and 

barges) are moving oil from new producing regions to refineries throughout the United States. 

The Strategic Petroleum Reserve’s ability to offset future energy supply disruptions has been adversely 

affected by domestic and global oil market developments coupled with the need for upgrades. Changes in the 

U.S. midstream (for example, competing commercial demands and pipeline reversals) and lower U.S. dependence on imported 

oil have created challenges to effectively distributing oil from the reserve. This diminishes the capacity of the Strategic 

Petroleum Reserve to protect the U.S. economy from severe economic harm in the event of a global supply emergency and 

associated oil price spike. 

Increasing domestic oil production has focused attention on U.S. oil export laws established in the aftermath 

of the 1973–1974 Arab Oil Embargo. There are now concerns that the U.S. oil slate may be too light for U.S. refineries; 

although, recent Department of Commerce determinations that liquid hydrocarbons, after they have been processed through 

a crude oil distillation tower, are petroleum products, and therefore eligible for export, will help avoid adverse production 

impacts. 

An extensive network of pipelines, electric transmission lines, roads, rail, inland waterways, and ports link 

the United States with Mexico and Canada. These systems not only provide economic value to all three nations, but also 

enhance continental energy security and improve system reliability. 

Biofuel production in the United States has increased rapidly over the last decade, enhancing energy security 

and reducing greenhouse gases from transportation. This growth has been driven in part by the Renewable Fuel 

Standard. Ethanol now displaces approximately 10 percent of U.S. gasoline demand by volume; biodiesel, advanced and 

cellulosic biofuel production volumes have also been growing. Continued growth in ethanol use will depend in part on 

investment in additional distribution capacity; growth in the use of other biofuels, such as “drop-in” fuels, will depend on 

continued investment in research, development, demonstration, and deployment.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-3

A Broad and Collective View of Energy Security 

Until recently, the concept of energy security has focused on “oil security” as a proxy for “energy security.” It is 

clear, however, that energy security needs to be more broadly defined to cover not only oil, but other sources of 

supply, and to be based not only on the ability to withstand shocks, but also to be able to recover quickly from 

any shocks that do occur. In addition, security is not exclusively domestic; it is dependent on interactions in 

the interconnected global energy market. 

Acknowledging the need for a modern and collective definition of energy security, last May in Rome the G-7a

Energy Ministers adopted a set of seven core principles for energy security,1 several of which are particularly 

relevant to energy infrastructures: 

• Development of flexible, transparent, and competitive energy markets, including natural gas markets.

• Diversification of energy fuels, sources, and routes and encouragement of indigenous sources of 

energy supply.

• Reducing our greenhouse gas emissions and accelerating the transition to a low-carbon economy as a 

key contribution to enduring energy security.

• Enhancing energy efficiency in demand and supply and demand response management.

• Promoting deployment of clean and sustainable energy technologies and continued investment in 

research and innovation.

• Improving energy systems resilience by promoting infrastructure modernization and supply and 

demand policies that help withstand systemic shocks. 

• Putting in place emergency response systems, including reserves and fuel substitution for importing 

countries, in case of major energy disruptions.

U.S. energy security and the infrastructures that support it, both physical and geopolitical, should be viewed 

in the context of this new, broader, more collective definition of energy security. This chapter—and the 

Quadrennial Energy Review (QER) more widely—addresses each of these elements. Chapter II (Increasing 

the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure) considers various actions that 

the government and private sector can take to promote a more rapid and effective response to energy shocks, 

including those from weather, supply disruptions, and physical attacks. This chapter, as well as Chapter VI 

(Integrating North American Energy Markets), speaks to the increasing diversification of U.S. energy supply, 

with safe, secure, and economically efficient energy coming from Canada and Mexico through pipelines, over 

interconnected transmission networks, and via barge and tanker. The discussions in Chapter V (Improving 

Shared Transport Infrastructures) address issues related to the diversification of fuel supplies and routes, as 

well as the dynamics of better managing the distribution of the increasing production of domestic energy 

supplies. 

Energy security issues need to be considered in light of future supply growth projections, fuel switching, 

shifting consumption patterns, and their implications for both U.S. and world energy security. Irrespective 

of the recent global crude oil price drop, near-term projections from the Energy Information Administration 

(EIA) and other expert energy market forecasters indicate global supply growth will continue for some time 

and that potential oil price recovery—when and by how much—remains uncertain for the foreseeable future. 

Finally, the discussion of energy security would not be complete without addressing the demand side. 

While issues of energy conservation, energy efficiency, and demand reduction are largely out of scope for 

this installment of the QER, they are nonetheless relevant for energy security. Figure 4-1 shows U.S. energy 

a The G-7 countries include the United States, Canada, France, Germany, Italy, Japan, and the United Kingdom.
4-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

demand as projected by EIA through 2040. These projections indicate that U.S. liquid fuel demand is expected 

to grow through 2018 and then begin a slow decline for the remainder of the period. In contrast, EIA projects 

a steady growth through the projection period for both electricity and natural gas. However, it should be 

noted that EIA’s projections do not consider regulations that are not yet finalized. Thus, EIA projections do not 

account for electricity supply and demand changes likely to occur from implementation of the Environmental 

Protection Agency’s “Clean Power Plan,” because it has not yet been finalized. Should demand decline in any 

of these sectors (particularly, if the infrastructure and resources remained in place to manage higher levels of 

supply), the energy system’s ability to withstand supply disruption would increase. Of course, over the longer 

term, it is to be expected that a new equilibrium would be reached, and supplies and demand would again be 

in balance, suggesting that supply disruptions could still create insecurities in the energy system even with 

lower overall levels of energy flows. 

Figure 4-1. Trends in U.S. Use of Petroleum, Natural Gas, and Electricity, 2011–20402

20

25

30

35

40

45

50

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

Quadrillion BTU

 Electric Power Liquid Fuels Natural Gas

EIA projections indicate that through 2040, natural gas and electric power demand will steadily increase, while liquid fuels demand will increase 

until 2018 and then slightly decline through 2040. 

U.S. Energy Security, Changed Production Profile, and 

Infrastructure Needs

As discussed in Chapter I (Introduction), there have been striking changes in U.S. oil production over 

the last 5 years, as well as changes in supplies of natural gas, natural gas liquids (NGL), and biofuels. The 

unprecedented oil and gas production growth in the United States has made it the world’s largest producer 

of combined petroleum and natural gas. Growth in oil production has enabled the United States to act as 

a stabilizing factor in the world market by offsetting large sustained supply outages in the Middle East and 

North Africa and, more recently, contributing to a supply surplus that has reduced oil prices to levels not 

seen since March 2009.3

 The natural gas outlook also has significantly changed. Just 10 years ago, the United 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-5

States was forecast to become highly dependent on liquefied natural gas imports; however, the current outlook 

projects that the United States will have enormous capacity and will likely become a major liquefied natural gas 

exporter.4 Combined with new clean energy technologies and improved fuel efficiency, U.S. energy security is 

stronger than it has been for over half a century. 

This production of oil and natural gas is occurring in new locations often removed from areas of historical 

production. As a consequence, the flow of both raw energy commodities and their refined products is 

changing, placing demands on the infrastructure that moves them to intermediate users and consumers.

Historically, oil and oil products in the United States have tended to flow from south to north to inland 

refineries. Now, this generally has been reversed, with oil from the Bakken field in North Dakota and Montana 

moving from the north toward the Gulf of Mexico, as well as to East and West Coast refineries. Significant new 

quantities of crude oil from the Eagle Ford and Permian shale basins also are moving to Gulf Coast refineries. 

To accommodate these changes in the volume and geography of U.S. crude oil production, there have already 

been substantial pipeline additions and some reversals,5, 6

 as shown in Figure 4-2.There have also been 

significant increases in barge, rail, and truck transport of crude oil, crude oil products, petrochemicals, and 

ethanol. This build-out of infrastructure has improved U.S. energy security. Without it, the United States could 

not have reduced its reliance on imports of liquid fuels to the extent that it has.

Figure 4-2. Highlighted Liquid Fuels Pipeline Reversals and Expansions Accommodating Increased Domestic and 

Canadian Supply (existing or in construction by end 2014)7

Superior

Chicago

Patoka

Cushing

Port Arthur Houston

Corpus Christi

St. James

Big Spring

Canadian Crude from

Western Canada

Imports

Imports

Imports

Transmountain 

Expansion

890 MBbl/D (TBD)

Line 67 Expansion

570 MBbl/D (2014)

800 MBbl/D (TBD)

Line 61 Expansion

560 MBbl/D (2014)

1,200 MBbl/D (2015)

Line 68 Expansion

500 MBbl/D (2014)

Line 9 & 9B 

Expansion

Reversal (2013)

300 MBbl/D (2014)

Flanagan South

600 MBbl/D (2014)

Southern Access

300 MBbl/D (2Q 2015)

Pegasus

Out of Service due to Spill 

Gulf Coast Project

700 MBbl/D (2013)

830 MBbl/D (2014)

130 MBb/D Lateral to Houston (2015)

Ho-Ho Reversal

300 MBbl/D (2013)

Capline 

1.2 MBbl/D 

(potential reversal TBD)

Seaway System

150 MBbl/D Reversal (2012)

400 MBbl/D (2013)

850 MBbl/D (2014)

750 MBbl/D Lateral to Port Arthur (2015)

Basin Pipeline

Expansion to 450 MBbl/D (2012)

Sandpiper

225 MBbl/D (2017)

Pony Express

240 MBbl/D (1H 2015)

320 MBbl/D (2H 2016)

Infrastructure Change

Existing Infrastructure

Rest of World Imports

Eagle Ford System

Multiple Pipelines > 1,000 MBbl/D (2014/2015)

West Texas System

West Texas Gulf Expansion to 300 MBbl/D (2013)

Magellan Longhorn Reversal to 225 MBbl/D (2014)

Magellan Longhorn Expansion to 275 MBbl/D (2015)

Bridge Tex at 300 MBbl/D (2014)

Mid-Valley 

230 MBbl/D 

There have been substantial pipeline additions and some reversals of pipeline product flows to accommodate the changes in domestic production 

regions and the volumes of product that are being transported. 
4-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

Many U.S. Gulf Coast refineries have been largely configured to use a greater share of heavy crude oils, whereas 

nearly all of the recent incremental U.S. crude oil production is light oil. To date, U.S. refiners have been able to 

absorb increasing amounts of light crude oil by displacing imported light and medium crudes. The natural gas 

boom has not only reduced gas imports and enabled liquefied natural gas exports, but it has also reduced costs 

for U.S. refiners who use natural gas for process fuel. They are now more competitive in international markets, 

leading to more highly refined product exports.8

As a result of the renaissance of U.S. oil and natural gas production, the U.S. Gulf Coast marine facilities 

serving the SPR are operating at high capacities. This has implications for the distribution capacity of the 

SPR, the infrastructures that support it, and the degree to which it can protect the U.S. economy from oil 

disruptions.

The U.S. Strategic Petroleum Reserve: Oil Security Infrastructure

The SPR is a Federal facility that consists of a network of 62 salt caverns at 4 geographically dispersed storage sites 

in Louisiana and Texas. It currently holds 691 million barrels of crude oil. The SPR caverns are connected to three 

distribution networks—Seaway, Texoma, and Capline—that distribute SPR oil through a network of pipelines and 

marine terminals to Gulf Coast refineries, inland refineries, and refineries on the East and West Coasts. The SPR has 

a design drawdown capacity of 4.4 million barrels per day from its caverns into its distribution networks.9

 During an 

SPR release, an auction determines which U.S. refineries will receive SPR oil. The ability to deliver oil to the refineries 

is the SPR’s distribution capacity and depends on the SPR’s network of pipelines and marine terminals. 

The SPR is an important insurance policy for the U.S. economy in the event of serious oil supply disruptions and the 

associated price increases in domestic petroleum and petroleum products. Sharp increases in fuel prices and declines 

in gross domestic product growth have consistently followed previous oil supply disruptions. In spite of the changes in 

the U.S. oil profile, the U.S. economy will remain vulnerable to future international oil supply disruptions without the 

protection afforded by the SPR.10

Natural Gas and Liquid Fuels Scenario Analyses

Quadrennial Energy Review scenario analysis used the Deloitte MarketPoint model (www.deloittemarketpoint.com) and 

several oil infrastructure models to examine oil and gas transmission pipeline needs between 2014 and 2030. Several cases were 

run to evaluate different oil and gas production and demand profiles (see Chapter I, Introduction, Table 1-2 for the complete 

list of cases). Even under conditions where natural gas and liquid fuels demand increases dramatically, pipeline infrastructure 

requirements do not exceed recent historical industry build rates. The recent build-out to integrate new shale gas supplies has 

added substantial optionality to the interstate natural gas pipeline system. Options include utilizing excess pipeline capacity in 

some regions, as well as the potential for additional looping, compression, and pipeline reversals. These options dampen the 

need for new gas infrastructure; even when new gas capacity is regionally concentrated, as it would be in the Gulf if gas exports 

were to increase significantly, annual rates of investment are at or below historical levels. 

The analysis also incorporated expansion of the transportation and distribution infrastructure currently underway along with 

expansion of this infrastructure to accommodate forecasted growth in crude production. Crude by rail remained an important 

mode of transport for moving midcontinent crudes to coastal refineries. In addition, crude oil pipelines from north to south and 

west to east continued to expand in the midcontinent and west Texas, respectively. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-7

Changing Global and Domestic Oil Markets Underscore the Need to 

Modernize the SPR

U.S. and global oil markets have evolved since the 1970s, changing the environment in which the SPR operates. When 

the SPR was established, U.S. oil production was in decline, oil price and allocation controls separated the U.S. oil 

market from the rest of the world, and a truly global commodity market for oil, as we know it today, did not exist. 

The Energy Policy and Conservation Act of 1975’s (EPCA’s) 1970’s-era goal was focused on avoiding “national energy 

supply shortages”—a loss of supply to U.S. refineries—rather than on the impacts of an overall disruption of global oil 

markets—a less important concern given the existence of domestic price controls that aimed to separate domestic and 

foreign prices.

Regardless of the levels of U.S. oil imports, in today’s global oil markets, a severe global market disruption would 

have the same effect on domestic petroleum product prices whether or not U.S. refineries import crude oil from the 

disrupted countries.b, 11 EPCA’s definition of a “severe energy supply interruption” should expressly include criteria 

focused specifically on disruptions in the global oil market, regardless of whether they resulted in a loss of oil imports 

to the United States. 

Another change that would increase the effectiveness of the SPR involves the adequacy of the anticipatory authorities 

in EPCA, which articulate the process and criteria for an SPR release before domestic petroleum price increases. In 

1990, Section 161(h) was added to authorize an SPR release in anticipation of a severe increase of petroleum product 

prices; that authority is limited to a release of no more than 30 million barrels of oil and for no more than 60 days. In 

today’s fast-moving and globalized energy markets, the President should not have to wait until higher fuel prices have 

already damaged the U.S. economy before the SPR can be used without restrictions. The authority to anticipate an 

economy-damaging price increase as a result of a severe energy supply interruption should be added to the President’s 

broader Section 161(d) release authorities to more closely conform to other EPCA goals of preventing “a severe 

increase in the price of petroleum products” that “is likely to cause an adverse impact on the national economy.”

Further Enhancing the SPR’s Value in Today’s Oil Markets

In the event of a serious international oil supply disruption, offsetting a significant share of lost supplies with 

SPR oil, in concert with other countries that hold strategic reserves, would help reduce the sharp increase of 

international oil prices that would otherwise occur. When SPR oil is sold to domestic refineries, foreign oil 

shipments that would have been processed by U.S. refineries are freed up for use elsewhere, effectively increasing 

global oil supplies. The more oil the SPR is able to distribute to U.S. coastal refineries (inland refineries are now 

well supplied by domestic production and Canadian imports), the more oil will be added to global markets. This 

will mitigate the increase in international and domestic fuel prices and reduce harm to the U.S. economy. These 

diversions of foreign oil that would have been used by U.S. refineries are illustrated by the 2011 Libyan Collective 

Action.c At that time, the United States imported about 1 million barrels per day of oil from Nigeria. As a result 

of the June 2011 SPR release, significant Nigerian supplies were redirected to foreign refineries. The SPR oil 

sold to domestic refineries caused a corresponding increase of oil into the global market. 

In recent years, the changing geography of U.S. oil production has led to major changes in the domestic oil and natural 

gas pipeline system. New patterns of oil supply and demand among U.S. oil producers and refineries, along with 

associated changes in the U.S. midstream, have significantly reduced the ability of the SPR to distribute incremental

volumes of oil during possible future oil supply interruptions. Moving SPR oil to Midwest refineries—a historical 

pattern—would be of no value during a petroleum supply disruption as non-Canadian imports and Gulf Coast 

b Domestic petroleum product prices are determined by international oil prices. 

c In June 2011, the United States, as part of an International Energy Agency “Collective Action,” released 30 million barrels of SPR oil 

in response to the loss of Libyan oil production as a result of the Libyan civil war (February 2011) and subsequent loss of Libyan oil 

exports.
4-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

supplies into this refining complex have essentially disappeared. The U.S. pipeline distribution system, along with 

other modes of oil transport, is instead moving large volumes of oil to the Gulf Coast, especially from U.S. tight oil 

plays and Canada.d This new geography of U.S. oil production and energy exports has also increased commercial 

traffic at U.S. Gulf Coast marine loading facilities. 

While the SPR can commandeer dock space at certain leased locations, doing so might cause a corresponding 

reduction in commercial traffic. The changing patterns of U.S. oil importse

 mean that the location of an international 

oil supply disruption can affect the disposition of an SPR oil auction and the capacity of the SPR to deliver oil to its 

customers.f If the SPR cannot load oil onto barges and tankers without disrupting commercial shipments, SPR sales 

could be offset by a corresponding decrease in domestic crude oil shipments or exports of domestically produced 

petroleum products. For all of these reasons—the evolution of global oil markets, the participation of the United 

States in those markets, the changed geography and volume of U.S. oil supplies, reduced oil imports, and congestion of 

commercial facilities in the SPR’s distribution region—an effective SPR release will increasingly depend on the ability 

to load incremental SPR oil onto barges and tankers.12

SPR facilities are also aging. Investment has not kept pace with need. Some SPR infrastructure is nearing 

the end of its design life. Life-extension investments will be needed in the near future to ensure the SPR’s 

reliability for the next several decades. The Department of Energy (DOE) is working to address SPR-deferred 

maintenance issues within the regular budget process. The more costly long-term investments in life extension 

will need to be addressed separately.

d For example, the SPR’s distribution capacity has been affected by reversals of the Seaway and Ho-Ho pipelines. New pipeline capacity 

has been built to move oil stored at the Cushing, Oklahoma, terminal to the Gulf Coast, or to bypass Cushing by shipping oil from 

new tight oil plays directly to Gulf Coast refineries.

e Besides the virtual disappearance of non-Canadian imports to Midcontinent refineries, Gulf Coast refineries are using more heavy oil 

from Latin America and less oil from the Middle East, while West Coast and East Coast refiners continue to import Middle Eastern 

and other light/medium grade crudes.

f The maximum distribution rate during an oil supply interruption depends on the location of the oil-exporting nation(s) that has 

(have) been disrupted, the type of oil that has been disrupted, and whether the United States imports oil from that nation (and, if so, 

how much and to what refining region). Additionally, due to increased U.S. tight oil production, the three SPR distribution systems 

will, in the future, rely more on marine distribution of SPR oil than inland pipelines. The pipeline network will remain important, 

though, especially for disruptions of oil that the Gulf Coast refineries rely on (such as oil from Venezuela, Mexico, or Columbia). 

Supply disruptions from these sources may result in less congestion for moving SPR oil on its pipeline system. 

Administration Activities and Plans

In March 2014, the Secretary of Energy ordered the Strategic Petroleum Reserve office to conduct a test sale to demonstrate the 

drawdown and distribution capacity of the Strategic Petroleum Reserve in the two locations served by its Texoma distribution 

network. This test sale highlighted changes in the distribution infrastructure in the Gulf Coast region. During the test sale, 

purchasers had problems getting capacity on one major pipeline for preferred deliveries and had to make adjustments by 

shipping crude oil to a different terminal and placing the oil into temporary storage until pipeline capacity became available.g

The President’s Fiscal Year 2016 Budget provides $257 million for the development, operation, and management of the Strategic 

Petroleum Reserve. This is an increase over fiscal year 2015 enacted levels of more than $54 million. This additional funding 

includes more than $8.5 million for the operations and cavern integrity program, $17 million to improve distribution flexibility 

and reliability at the Big Hill site, and more than $26 million to reduce the backlog of deferred maintenance projects and address 

maintenance issues.

g Department of Energy. “Strategic Petroleum Reserve Test Sale 2014: Report to Congress.” p. 16. 2014. http://energy.gov/sites/

prod/files/2014/11/f19/2014%20SPR%20Test%20Sale%20Final%20Report.pdf. Accessed February 12, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-9

QER Recommendations

SPR MODERNIZATION

An effective modernization program for the SPR should reflect changed global oil markets and U.S. 

market conditions. It should be undertaken, as should all recommendations in this chapter, with a more 

up-to-date appreciation of the nature of energy security in an interconnected world. It should also focus 

both on physical infrastructure and an updated statutory trigger for the use of the SPR. Addressing 

both physical and statutory issues will ensure that high volumes of incremental barrels of oil will be able 

to move rapidly to U.S. refineries in case of a global market disruption, thereby increasing supplies in 

global markets and maximizing the value of the SPR for meeting the Nation’s strategic energy needs. 

Specific recommendations include the following:

Update SPR release authorities to reflect modern oil markets: Congress should update the SPR 

release authorities in EPCA so that (1) the definition of a severe energy supply interruption includes 

an interruption of the supply of oil that is likely to cause a severe increase in the price of domestic 

petroleum products, and (2) the requirement that a severe increase in the price of petroleum 

products has resulted from such emergency situation is changed to a requirement that a severe price 

increase will likely result from such emergency situation.

Invest to optimize the SPR’s emergency response capability: DOE should make investments to 

optimize the ability of the SPR to protect the U.S. economy in an energy supply emergency. It is 

anticipated that $1.5–$2.0 billion is needed to increase the incremental distribution capacity of 

the SPR by adding dedicated marine loading dock capacity at the Gulf Coast terminus of the SPR 

distribution systems, as well as undertaking a life extension program for key SPR components, 

including surface infrastructure and additional brine-drive caverns. This work should be preceded 

by DOE analyzing appropriate SPR size and configuration and carrying out detailed engineering 

studies.

Support other U.S. actions related to energy security infrastructures that reflect a broader and 

collective view of energy security: The United States should continue to consult with allies and 

key energy trading partners on energy security issues, as well as support actions related to energy 

infrastructures that are consistent with U.S. interests and G-7 principles on energy security.

Infrastructure Supporting Energy Security through Fuel Diversity

Transmission, storage, and distribution (TS&D) infrastructure has an important role to play in meeting 

another one of the long-term energy security core principles adopted by the G-7: diversifying energy fuels, 

sources, and routes and encouraging indigenous sources of energy supply. Two challenges in recent years 

related to maintaining a diverse supply of energy fuels—in the face of overall TS&D infrastructure changes that 

have been occurring—relate to the use of propane and biofuels.

Changes in NGL Infrastructure and Exports Could Have Propane Customer 

Impacts

Propane is a hydrocarbon gas liquid produced in gas plants and refineries. Propane is primarily used in 

industry, but during the winter, propane is an essential fuel for heat and is especially important in rural areas. 

The infrastructure connecting the producers of propane with distribution points for customers has changed 

dramatically in the last few years. As other geographies of energy supply have changed, infrastructure once used 
4-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

20,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

10,000

15,000

25,000

Thousand Barrels/Month

5,000

0

Propane/Propylene Pentanes Plus Normal Butane/Butylene Ethane/Ethylene

to transport propane to these distribution points (particularly those that serve agricultural users predominantly 

in the Upper Midwest) has been converted to other purposes. One of the major changes in this regard has been 

the reversal, by Kinder Morgan, of the Cochin pipeline, which originally transported propane from a storage 

site in Edmonton, Canada, to serve markets throughout the Midwest. In early 2014, the company reversed the 

pipeline’s flow to deliver NGL to Edmonton, cutting off a major supply source of propane for Midwest markets.

Although propane storage has increased along with recent increasing levels of NGL production, a growing 

portion of propane is being exported. Propane exports are seasonal, however, reflecting tighter markets 

during the winter when domestic demand is high and greater surplus during the summer. In addition, rapidly 

increasing exports of propane and other NGL, as shown in Figure 4-3, are competing with the supply needs 

of users of propane in the agricultural, residential, and petrochemical sectors. This changing interplay of NGL 

use was highlighted during the fall and winter of 2013–2014 when propane users encountered severe regional 

shortages and price spikes in some regions across the country.

Figure 4-3. U.S. Hydrocarbon Gas Liquid Exports13, h

Since 2009, U.S. hydrocarbon gas liquid exports have risen substantially due to increased domestic production and wide international price spreads.

h Hydrocarbon gas liquids: A group of hydrocarbons, including ethane, propane, normal butane, isobutane, and natural gasoline, and 

their associated olefins, including ethylene, propylene, butylene, and isobutylene. As marketed products, hydrocarbon gas liquids 

represent all NGL and olefins.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-11

Biofuels and TS&D Infrastructure Issues

Ethanol production in the United States has increased steadily over the last few decades, driven by tax credits, 

the oxygenate standard,i the Renewable Fuel Standard,j and the lower cost of ethanol relative to other gasoline 

additives. By 2012, ethanol production reached nearly 10 percent of U.S. gasoline demand by volume. As 

shown in Figure 4-4, further growth in ethanol production has flattened since then. Increased use of ethanol 

requires either growing gasoline consumption or higher-level blends (E15, with 15 percent ethanol, or E85, 

with up to 85 percent ethanol). However, the demand for gasoline is not expected to grow significantly (due 

to projected improvements of fuel economy and demographic trends). Continued growth in ethanol use will 

depend in part on private sector investment in additional distribution capacity of higher-level blends. 

Figure 4-4. Yearly Ethanol and Biodiesel Production, 2001–201314

Yearly production of ethanol increased between 2001 and 2011 and has declined slightly through 2013.

Ethanol shipments from production plants typically occur by rail, which accounts for approximately 70 percent 

of ethanol transport.15 Ethanol is then delivered by truck (or directly by rail) to petroleum product terminals 

that blend ethanol with unfinished gasoline for delivery by truck to retail outlets. It is difficult to move ethanol 

shipments by pipeline because ethanol absorbs water and can therefore degrade the specifications of petroleum 

products, which would follow it in the pipeline. 

Other biofuels have chemical properties more similar to gasoline and other hydrocarbons, enabling more ready 

distribution through existing TS&D infrastructure. Upstream biofuels involve biofuels that could be blended 

into the petroleum product supply chain at the refinery and then transported with the petroleum product 

i The oxygenate standard for reformulated gasoline, introduced by the Clean Air Act Amendments of 1990, required a minimum 

level of oxygen in complying gasoline. The oxygen content of gasoline is typically increased by blending ethanol or methyl tertiary 

butyl ether into gasoline. The oxygenate standard was repealed in the same legislation that established the Renewable Fuel Standard 

(Energy Policy Act of 2005).

j The Renewable Fuel Standard was enacted as part of the Clean Air Act by the Energy Policy Act of 2005 and amendments in 2007. 

The Renewable Fuel Standard requires a minimum level of qualifying biofuels, including ethanol, to be blended into U.S. motor fuels.

16

14

12

10

8

6

4

2

0

Billion Gallons of Production

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fuel Ethanol Production Biodiesel Production
4-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

through its normal infrastructure. These alternatives include oil from the pyrolysis of biomass, hydrocarbons 

derived from applying the Fischer-Tropsch process to mixtures of carbon monoxide and hydrogen produced 

in biomass gasifiers, oil derived from algae, and fatty acid methyl esters.16 Drop-in biofuels, such as biobutanol 

and renewable diesel, can use existing oil and gasoline infrastructure and be “dropped in” at points along the 

supply chain without infrastructure modification. Future research on both types of biofuels can support energy 

security through fuel diversity without posing additional infrastructure challenges.

Administration Activities and Plans

Propane. The Administration has taken a series of actions to respond to the changes in transmission, storage, and distribution 

infrastructure for propane and other natural gas liquids. The Energy Information Administration has added capability to 

monitor propane inventories on a more granular, state-by-state basis, greatly enhancing the ability of industry, consumers, and 

policymakers to monitor possible shortages or distribution issues. Because propane storage in customer tanks can provide an 

additional margin of supply security, the Federal Government supported public education campaigns to encourage consumers 

to fill their propane storage early for the 2014–2015 winter season. As of January 2015, propane inventories were above the 

5-year average, and the Propane Education and Research Council’s market research shows the campaign contributed to these 

increases.k,l

Department of Energy (DOE) alternative fuels programs. DOE has supported research and development on the 

compatibility of higher-level ethanol blends with distribution infrastructure and vehicles. DOE grants and loans helped initial 

commercial cellulosic ethanol refineries come online. DOE has active research programs on drop-in fuels, and small amounts 

are already entering the commercial markets.m DOE also has robust research, development, demonstration, and deployment 

programs using electricity and hydrogen in vehicles, and use of these fuels in transportation is increasing.

Department of Defense alternative fuels programs. The Air Force’s 2013 “U.S. Air Force Energy Strategic Plan” includes a 

goal to use cost-competitive alternative drop-in fuels for half of “non-contingency” operations by 2025. The Navy’s 2010 report, 

“A Navy Energy Vision for the 21st Century,” sets a goal of 50 percent of Naval energy use afloat to be derived from alternative 

fuels by 2020. The Navy designated an aircraft carrier task force built around the USS Nimitz as “the great green fleet,” which 

is intended to operate using biofuels by 2016.In support of these objectives, the Department of Defense has an active program 

of research and development and testing alternative fuels for use in a range of aircraft and ships, including Fischer-Tropsch 

synthetic biofuels and small amounts of algal biofuels. The Department of Defense also purchases alternative fuels for research 

and testing purposes.

k Propane Education & Research Council. “Results of the 2014 Consumer Safety Preparedness Campaign.” February 2015. http://

www.propanecouncil.org/uploadedFiles/Council/Campaigns/ConsumerCampaignPresentationResults.pdf. Accessed 

March 4, 2015. 

l Energy Information Administration. “This Week in Petroleum: Propane stocks (million barrels) and days of supply.” http://www.

eia.gov/petroleum/weekly/propane.cfm. Accessed February 25, 2015.

m Department of Energy. “Bioenergy Frequently Asked Questions.” http://www.energy.gov/eere/bioenergy/bioenergyfrequently-asked-questions. Accessed February 25, 2015. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-13

Infrastructure Supporting Energy Security through Marine 

Transport

The marked increase in inland, coastal, and offshore maritime traffic stemming from the recent boom in U.S. 

oil and gas production and the resulting investment in the petrochemical complex highlights the need for new 

energy transport vessels in the United States. 

Trends in U.S. Shipbuilding

American shipyards are experiencing a surge in construction orders for patrol boats, tugs, barges of all sizes, 

ferries, and other vessels. In 2012 alone, U.S. shipbuilders delivered 1,260 vessels17 and have since seen a spike 

in orders for large ocean-going vessels. Today, there are more than 30 large, self-propelled, ocean-going Jones 

Act-eligible tankers, articulated tug-barge units, and container ships either under construction or on order 

at U.S. shipyards. The Maritime Administration has noted that U.S. shipyards are experiencing the greatest 

volume of shipbuilding activity in more than three decades.18

An understanding of the history of the decline of U.S. commercial shipbuilding capacity is instructive. Until 

1981, the U.S. policy was to actively support its merchant marine fleet and the Nation’s domestic shipbuilding 

industry, recognizing its critical role in supporting national defense.19 U.S. international shipping companies 

received an operating subsidy, a condition for which was to buy U.S.-built ships. Subsidized shipping 

companies received a construction subsidy to make up the difference between the prices of less expensive 

foreign built ships and the prices charged by U.S. shipyards. In 1981, operating and construction differential 

subsidies were halted under the theory that the domestic industry would be supported by construction of 

naval vessels.20 When construction of naval vessels actually declined, the effect was a significantly diminished 

capacity for domestic shipbuilding.21 Prior to the 1980s, U.S. shipbuilders produced nearly 100 commercial 

ships per year. Orders for commercial ships dropped to zero in the mid-1980s and have averaged just seven 

ships per year since.22

QER Recommendations

TS&D INFRASTRUCTURE RELATED TO FUEL DIVERSITY

To address TS&D infrastructure issues related to promoting U.S. energy security through fuel diversity, 

we recommend the following:

Continue research, development, and deployment of drop-in biofuels and support work 

related to higher-level ethanol blends: DOE and the Department of Defense should continue to 

fund research and demonstration activities on drop-in jet fuel and diesel. These applications are 

important given the challenges of electrifying airplanes and other large vehicles. Most production is 

in the pilot or demonstration phase, and, beginning in 2011, some commercial flights in Europe and 

the United States have flown with 50-50 biofuel blends. Despite this, biofuels for aviation and large 

vehicle applications still face considerable challenges in penetrating these markets. In addition, 

DOE should provide technical support to states, communities, or private entities wishing to invest 

in infrastructure to dispense higher-level ethanol blends. 

Continue to monitor propane storage, use, and exports: Given the changes occurring in propane 

TS&D infrastructure, DOE should ensure adequate support for EIA’s data collection and analysis 

relative to domestic propane storage and use, as well as propane exports, going forward.
4-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

U.S. shipyards traditionally focused on orders from U.S. shipping companies.23 South Korea, Japan, and China 

have aggressively sought export business and subsidized their shipping industries.24 Currently, South Korea 

and China dominate the shipbuilding industry25 and benefit from technical learning, capital investment, and 

improving economies of scale and purchasing advantages. As a result, these nations now operate at much lower 

costs than competitors, including the United States.26 Despite accounting for about 20 percent of the global 

seaborne trade, the United States builds less than 1 percent of the world’s merchant vessels.27 Aside from lost 

commercial opportunity, some observers believe that reliance on foreign shipyards could have implications for 

U.S. security and prosperity.

QER Recommendations

MARINE TRANSPORT

The security implications are evident in the inextricable linkage between energy and maritime 

commerce, as recent changes require moving oil in new ways. Because it is important to have a better 

understanding of possible energy vulnerabilities associated with the overall decline in U.S. shipbuilding, 

as well as the competitiveness opportunities associated with enhancing domestic energy shipbuilding, 

we recommend the following:

Undertake a study of the relationship between domestic shipping and energy security: The 

relevant agencies should conduct a study of the economic, engineering, logistics, workforce, 

construction, and regulatory factors affecting the domestic shipping industry’s ability to support 

U.S. energy security. We recommend that the Secretary of Transportation ensure that the National 

Maritime Strategy includes a consideration of the energy security aspects of maritime policy in its 

discussion and recommendations.

Energy Security Benefits of North American TS&D Infrastructure

One of the most significant benefits to U.S. energy security is its location; the United States shares the North 

American continent with two close allies. The United States, Canada, and Mexico are each resource-rich 

nations; there is an enormous bilateral energy trade; and all three countries have intertwined and increasingly 

integrated energy markets and infrastructure. Three of the G-7 core principles for energy security have 

regional implications for the United States and its North American neighbors: the improvement of energy 

system resilience to disruptions through infrastructure modernization; the development of flexible and 

competitive energy markets; and the diversification of fuel mixes, sources, and routes. 

The TS&D infrastructure across the U.S.-Canadian and U.S.-Mexican borders is diverse and extensive. 

Currently, there are approximately 85 transboundary pipelines and 35 major electricity transmission lines 

that transport crude oil, refined products, natural gas, and electricity across the U.S.-Canadian border.n

 To 

the south, liquid fuels make up the largest share of the energy trade between the United States and Mexico, 

primarily via shipping in the Gulf of Mexico. Additionally, 17 natural gas interconnections currently span the 

U.S.-Mexican border, and while minimal, electricity trade does occur between California and Baja California 

and to a lesser extent between Texas, Tamaulipas, and Chihuahua.28

n Additional oil and petroleum products are shipped to Canada.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-15

The United States and Canada share water access through the Great Lakes and St. Lawrence Seaway. The Army 

Corps of Engineers lists more than 60 commercial harbors on the U.S. Great Lakes coast alone.29 Rail and 

trucking routes also span the border, enabling the transfer of energy commodities using several transportation 

modes. Further development of these interconnections could improve continental security and bring 

economic benefits. For example, the Electric Reliability Council of Texas has peak electricity demand that 

exceeds generation in south Texas, and it is using new high-voltage transmission lines to provide power from 

Mexican generating facilities to Texas. Additional generation is being proposed on the Mexican side of the 

border that can support Texan power requirements and help avoid power outages.

Chapter VI (Integrating North American Energy Markets) contains a more detailed discussion of the North 

American energy markets and the benefits of increased integration beyond that of enhanced regional energy 

security. 
4-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

RECOMMENDATIONS IN BRIEF: 

Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

Update Strategic Petroleum Reserve (SPR) release authorities to reflect modern oil markets. Congress should 

update SPR release authorities to allow the SPR to be used more effectively to prevent serious economic harm to the United 

States in case of energy supply emergencies.

Invest to optimize the SPR’s emergency response capability. The Department of Energy (DOE) should analyze 

appropriate SPR size and configuration, and, after carrying out detailed engineering studies, should make infrastructure 

investments in the SPR and its distribution systems to optimize the SPR’s ability to protect the U.S. economy in an energy supply 

emergency. 

Support other U.S. actions related to the SPR and energy security infrastructures that reflect a broader and 

more contemporary view on energy security. The United States should continue to consult with allies and key energy 

trading partners on energy security issues, building on the G-7 principles on energy security.

Support fuel diversity through research, demonstration, and analysis. DOE and the Department of Defense 

should continue research and demonstration activities to develop biofuels that are compatible with existing petroleum fuel 

infrastructure, especially in aviation and for large vehicles. DOE should provide technical support to states, communities, or 

private entities wishing to invest in infrastructure to dispense higher-level ethanol blends. DOE should ensure adequate support 

for data collection and analysis on fuels, like propane, that play an important role in the Nation’s diverse energy mix and are 

challenged by changing transmission, storage, and distribution infrastructures.

Undertake a study of the relationship between domestic shipping and energy security. The relevant agencies 

should conduct a study of the economic, engineering, logistics, workforce, construction, and regulatory factors affecting the 

domestic shipping industry’s ability to support U.S. energy security. The Secretary of Transportation should ensure that the 

National Maritime Strategy includes a consideration of the energy security aspects of maritime policy in its discussion and 

recommendations.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 4-17

Endnotes 

1. Foreign Affairs, Trade and Development Canada. “Joint Statement - Rome G7 Energy Ministerial Meeting.” 

http://www.international.gc.ca/g8/ministerials-ministerielles/2014-g7-rome.aspx?lang=eng. Accessed February 1, 2015.

2. Energy Information Administration. “Annual Energy Outlook -- Reference case tables released: May 2014.” Energy 

Consumption by Sector and Source, U.S. Reference Case. Petroleum and Other Liquids Subtotal. http://www.eia.gov/

analysis/projection-data.cfm#annualproj. 

3. Energy Information Administration. “Short-Term Energy Outlook.” February 10, 2015. http://www.eia.gov/forecasts/

steo/. Accessed February 25, 2015.

4. Energy Information Administration. “Annual Energy Outlook 2014.” April 2014. http://www.eia.gov/forecasts/aeo/

pdf/0383%282014%29.pdf. Accessed February 25, 2015.

5. Hays, K. “U.S. crude oil pipeline projects: Kinder Morgan acquiring Hiland Crude.” Reuters. January 21, 2015. 

http://www.reuters.com/article/2015/01/21/us-usa-pipeline-oil-factbox-idUSKBN0KU2SX20150121. Accessed February 3, 

2015.

6. Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure 

(Vol 1–3).” September 2014. http://energy.gov/epsa/qer-document-library. 

7. Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure 

(Vol 1–3).” September 2014. http://energy.gov/epsa/qer-document-library. 

8. Department of Energy. “DOE’s Program Regulating Liquefied Natural Gas Export Applications.” June 18, 2013. 

http://energy.gov/fe/articles/doe-s-program-regulating-liquefied-natural-gas-export-applications. Accessed February 12, 

2015.

9. Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure 

(Vol 1–3).” September 2014. http://energy.gov/epsa/qer-document-library. 

10. Difiglio, C. “Oil, Economic Growth and Strategic Petroleum Stocks.” Energy Strategy Reviews. Volume 5. p. 48–58. 

2014. http://www.sciencedirect.com/science/article/pii/S2211467X14000443. 

11. Energy Information Administration. “What Drives U.S. Gasoline Prices?” October 30, 2014. http://www.eia.gov/

analysis/studies/gasoline/. Accessed April 1, 2015.

12. Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure 

(Vol 1–3).” September 2014. http://energy.gov/epsa/qer-document-library. 

13. Energy Information Administration. “Exports.” http://www.eia.gov/dnav/pet/pet_move_exp_a_EPLLE_EEX_mbbl_m.

htm. Accessed December 2014.

14. Melaina, M.W. et al. “Alternative Fuel Infrastructure Expansion: Costs, Resources, Production Capacity, and Retail 

Availability for Low-Carbon Scenarios.” National Renewable Energy Laboratory. 2013.

15. Association of American Railroads. “Railroads and Ethanol.” May 2014. https://www.aar.org/BackgroundPapers/

Railroads%20and%20Ethanol.pdf. Accessed February 12, 2015.

16. Bunting, B. et al. “Fungible and Compatible Biofuels: Literature Search, Summary, and Recommendations.” Oak 

Ridge National Laboratory. 2010.

17. Department of Transportation, Maritime Administration. “The Economic Importance of the U.S. Shipbuilding and 

Repairing Industry.” http://www.marad.dot.gov/documents/MARAD_Econ_Study_Final_Report_2013.pdf. Accessed 

February 1, 2015.

18. Department of Transportation, Maritime Administration. “The Jones Act Moves Industry and America’s Economic 

Prosperity.” October 9, 2014. http://www.dot.gov/blog/jones-act-moves-industry-and-americas-economic-prosperity. 

Accessed February 1, 2015. 
4-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IV: Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

19. Lind, M. “Who’s Afraid of Industrial Policy?” January 31, 2012. http://www.salon.com/2012/01/31/whos_afraid_of_

industrial_policy/. Accessed January 16, 2015.

20. Maritime Activity Reports, Inc. “The Future of American Shipbuilding.” http://www.marinelink.com/article/

shipbuilding/the-future-american-shipbuilding-805. Accessed March 19, 2015.

21. Globalsecurity.org. “Ship Building 1981-89 - Reagan, Ronald.” http://www.globalsecurity.org/military/systems/ship/scn1981-reagan.htm. Accessed March 17, 2015.

22. The Industrial College of the Armed Forces National Defense University. “Shipbuilding.” 2005. www.dtic.mil/get-trdoc/pdf?AD=ADA449541. 

23. Shipbuilding History. “Merchant Ship Construction Since WWII.” http://www.shipbuildinghistory.com/history/

merchantships.htm#MERCHANT_SHIP_CONSTRUCTION_SINCE_WWII. Accessed March 17, 2015.

24. The Industrial College of the Armed Forces National Defense University. “Shipbuilding.” 2005. www.dtic.mil/get-trdoc/pdf?AD=ADA449541.

25. Stopford, M. “World Shipbuilding.” Clarkson Research. Presentation for the SMM Press Conference. September 

8, 2014. http://www.smm-hamburg.com/fileadmin/user_upload/4-1_Martin_Stopford_SMM_Press_Conference_8_

Sept_2014_Final.pptx. Accessed March 17, 2015.

26. The Industrial College of the Armed Forces National Defense University. “Shipbuilding.” 2005. www.dtic.mil/get-trdoc/pdf?AD=ADA449541. 

27. Lind, M. “Who’s Afraid of Industrial Policy?” January 31, 2012. http://www.salon.com/2012/01/31/whos_afraid_of_

industrial_policy/. Accessed January 16, 2015.

28. Energy Information Administration. “Mexico Country Analysis.” April 24, 2014. http://www.eia.gov/countries/cab.

cfm?fips=mx. Accessed February 6, 2015.

29. Army Corps of Engineers. “Great Lakes Harbor Fact Sheet.” March 2014. http://www.lre.usace.army.mil/Portals/69/

docs/Navigation/FY2015/mar19factsheets.pdf. Accessed January 27, 2015.

QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-1

Chapter V

This chapter examines the use—for transporting, storing, and delivering 

energy—of transportation modes shared by other major commodities.  These 

modes include railroads, highways, waterways, ports, and the intermodal 

facilities that connect them together. The discussion is divided into four major 

sections. The first focuses on rail transport of energy commodities, with a 

consideration of ancillary use of highways. The second focuses on waterways, 

ports, and their connectors to other transportation infrastructure.  The third 

section addresses conflicts due to the increased transport of energy supplies, 

materials and components. The final section focuses on gaps in data and 

analytical methods needed to understand the rapid changes occurring in the 

use of these transport infrastructures for energy.  Each major section concludes 

with a discussion of major Administration initiatives underway to address the 

issues—especially in rail transport—and recommendations for further action.

IMPROVING 

SHARED TRANSPORT 

INFRASTRUCTURES
5-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

FINDINGS IN BRIEF: 

Improving Shared Transport Infrastructures

Rapid crude oil production increases have changed the patterns of flow of North American midstream 

(pipelines, rail, and barge) liquids transport infrastructure. Pipelines that previously delivered crude oil from the Gulf 

of Mexico to Midcontinent refineries have now changed direction to deliver domestic and Canadian oil to the Gulf of Mexico. 

In addition, oil produced in North Dakota is now being shipped to refineries on the East and West Coasts of the United States. 

As a result, modes of transport other than pipelines are being employed to move crude oil, including a significant increase in 

crude oil unit trains and barge shipments.

Limited infrastructure capacities are intensifying competition among commodities, with some costs passed 

on to consumers. Until new additional capacity becomes available, the competition among commodity groups for existing 

capacity will intensify. The proximity of Bakken crude oil movements and Powder River Basin coal movements, along with 

agricultural shipments in the region, affect Midwest power plants and the food industry. Typically, rail and barge service 

are the most cost-effective shipping methods available for moving grain and other relatively low-value, bulk agricultural 

commodities, and the Department of Agriculture has indicated that disruptions to agricultural shipments caused by recent 

unexpected shifts in supply and demand for rail services exceed even those caused by Hurricane Katrina. 

Rail, barge, and truck transportation are crucial for ethanol shipment. Ethanol production in the United States has 

increased over the last few decades. Ethanol is typically shipped from production plants by rail and then delivered by truck (or 

directly by rail or barge) to petroleum product terminals. Ethanol is likely to rely on shared infrastructure for its transport for 

the foreseeable future.

The ability to maintain adequate coal stockpiles at some electric power plants has been affected by rail 

congestion. The Surface Transportation Board recently acted to require weekly reports of planned versus actual loadings of 

coal trains.

Funding for the U.S. freight transportation system is complex and involves a combination of Federal, state, 

local, and private investments. Railroad infrastructure is primarily owned and maintained by the private sector. The marine 

transportation infrastructure involves a mix of Federal, state, local, and private investments, and roadways are owned and 

maintained by a range of Federal, state, local, and—in some cases—even private entities.

Navigable waterways are essential for the movement of energy commodities, equipment, and materials, 

especially petroleum and refined petroleum products. Investments in construction, rehabilitation, and maintenance of 

this infrastructure must be balanced against other investments, including other water resource investments, such as flood and 

coastal storm damage reduction projects and aquatic ecosystem restoration. 

Increased transportation of crude oil by rail and barge has highlighted the need for additional safeguards. 

For rail transport, in particular, the Federal Government has a number of efforts underway, including a rulemaking on 

improving the safety of rail transport of crude oil, including more robust tank car standards and operational requirements, to 

address these concerns.

Multi-modal shared transportation infrastructure is stressed by increased shipments of energy supplies, 

materials, and components. Wind turbine blades, for example, have more than tripled in length since the 1980s. 

Transporting components of this size (and others of significant weight and size, such as large power transformers) creates 

a range of challenges, including stress on roads, many of which are rural; the need to coordinate movement through ports, 

tunnels, overpasses, and turning areas; and additional permitting and police escort requirements.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-3

Increased Use of Shared Transport Infrastructures for Energy

Changes in the U.S. energy marketplace are stressing the Nation’s infrastructures that move energy from where 

it is produced to both processing and demand centers, particularly in the case of oil where the rapid increase 

in U.S. tight oil production is transforming conventional patterns and modes of petroleum transport in North 

America. 

While pipelines traditionally have been the preferred mode for transporting large amounts of oil and 

refined products within the United States, expanded development in regions distant from refineries, where 

existing petroleum infrastructure is minimal, has increasingly shifted energy products to other modes of 

transportation. The movement of shipment of oil from the wellhead to a refinery may employ a combination 

of trucks, pipelines, railcars, barges, and other marine vessels—giving oil transportation in the United States 

an increasingly multi-modal character. Since these alternatives have been, and continue to be, used for 

transporting other commodities, they are considered in the Quadrennial Energy Review (QER) to be “shared 

transport infrastructures” for energy commodities. 

The increased utilization of rail, barge, and truck for oil transport, as well as other energy supplies and 

materials, is contributing to increased competition among commodities on these shared transport 

infrastructures. This has contributed to delays in the delivery of other commodities, such as crops, fertilizers, 

and chemicals.1 The same constraints have recently affected the delivery of coal to electric generators.2

While modal shifts are responsible for a share of the energy sector’s impact on the shipment of goods 

around the Nation, the dramatic increases in shale oil and gas production have put additional pressure on 

transportation infrastructure in other ways as well. For example, developing a single well pad in the Marcellus 

Shale region is estimated to require roughly between 1,600 and 4,900 truck trips,3 resulting in $13,000 to 

$23,000 in roadway maintenance costs per well.4 Likewise, most of the nearly fivefold growth in rail shipments 

of industrial sand since 2009 can be attributed to sand used for hydraulic fracturing.5

 Drilling operations in 

the Marcellus region also produce significant quantities of wastewater. Disposal of this wastewater close to 

production sites is hindered by factors such as inappropriate geology and lack of capacity at local municipal 

and industrial wastewater facilities to treat adequately the high level of total dissolved solids in wastewater 

generated from Marcellus wells. As a result, there has been a shift to the use of underground injection wells 

to dispose of this wastewater, with most of those injection wells located in Ohio.6 Truck and rail transport are 

options for transporting wastewater, but higher costs for those modes and the ability to move large volumes of 

wastewater by barge have made waterborne transport of wastewater attractive to the natural gas industry.7 The 

Coast Guard is considering regulations to allow barge operators to carry produced wastewater from drilling 

operations.8

This chapter explores the impact of these changes, particularly on railroads and waterborne infrastructure 

(including ports). The rapid shifts in the use of shared infrastructure also raise new questions about system 

resilience and environmental impacts. These have been addressed in the broader discussions of those topics in 

Chapters II (Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure) and VII 

(Addressing Environmental Aspects of TS&D Infrastructure).
5-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Rail Transport of Liquid Fuels: Status and Trends

Among all the shared freight transport infrastructures, the rail network may have experienced the most 

significant changes in the past several years. Increases in oil transport by rail are occurring on an existing 

system—a $60 billion plus freight rail industry that includes 140,000 rail miles operated by 7 large national 

(Class I) railroads,a 21 regional railroads, and 510 local railroads.9

Growth in Rail Transportation of Crude Oil

The dramatic increases in the use of rail to transport oil over the last four years can be seen in the volume of 

shipments, as represented by number of originated railcars carrying crude oil. In 2009, roughly 10,800 carloads 

of crude oil originated on U.S. Class I railroads.10 By 2014, the volume of rail shipments had grown to more than 

493,000 originated carloads of crude oil11—an increase of roughly 4,400 percent in 5 years (see Figure 5-1). The 

Energy Information Administration (EIA) estimates that, on average, more than 1,022,000 barrels of domestic 

and Canadian crude were moved in the United States by rail per day in 2014.12,13

Figure 5-1. Originated Class I Railcars of U.S. Crude Oil (2009–2014, Quarterly)14

The rapid increase in crude by rail is a function of the growth in new source of new oil production, particularly in North Dakota, as well as limited 

pipeline capacity for moving this oil to refiners on the East and West Coasts. 

a Class I railroads are the Nation’s largest railroads. For purposes of the accounting and reporting requirements of the Surface 

Transportation Board, railroads are divided into three classes. Class I is defined as those railroads with annual operating revenues 

(after being adjusted to compensate for inflation by a railroad revenue deflator formula) of more than $250 million. There are 

seven Class I railroads in the United States: Union Pacific Railroad, BNSF Railway, CSX Transportation, Norfolk Southern Railway, 

Canadian Pacific Railway, Canadian National Railway, and Kansas City Southern Railway.

2009 2010 2011 2012 2013 2014

0

20

40

60

80

100

120

140

Thousands
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-5

There are several reasons for this phenomenal growth in such a short time. Railroads have an extensive 

existing track infrastructure, so new movements of crude oil by rail generally require only the construction 

of crude loading and unloading terminals and the expansion of the tank car fleet. This can be done relatively 

quickly compared to the time required to build or expand a pipeline. Rail also uses shorter-term contracts 

than the multi-year commitments required for pipeline construction, increasing the attractiveness of rail for 

oil producers and refiners who value such flexibility. While pipeline transport has substantially expanded to 

ship Midcontinent oil to the Gulf of Mexico, recent light oil production in Texas (where there has been an 

even larger increase than that of North Dakota) is competing for the available Gulf Coast refining capacity. 

Thus, East and West Coast refiners have become increasingly important customers for North Dakota oil, and 

this oil can travel by rail and barge to those destinations. Given these and other factors, as well as the difficulty 

and expense of pipeline build-out, crude by rail has become an important new component of the U.S. oil 

midstream, and it is anticipated that this new modal shift will have a place in the industry in the long-term.15

Rail shipment of oil has increased in most U.S. production areas, but it has been of particular importance 

for the Bakken Formation in North Dakota. As of mid-2014, rail accounted for more than 60 percent of total 

oil shipments from the Bakken and 100 percent of Bakken-to-West-Coast deliveries (from North Dakota to 

Washington State and then by barge to California).16

As a result of these factors, the number of crude oil loading, unloading, and barge transfer points in the United 

States and Canada has grown markedly in the past few years (see Figure 5-2). In 2010, there were only six rail 

loading facilities for oil, and no barge loading facilities. Three years later, in 2013, there were more than 60 rail 

loading facilities and a host of new barge loading facilities—an enormous change.
5-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Figure 5-2. Crude Oil by Train Loading, and Offloading, and Rail-to-Barge Facilities for 2010 and 201317

SSran

PADD 5

PADD 4

PADD 3

PADD 2

PADD 1

Existing Terminals

Rail to Barge

Crude by Train Loading 

Crude by Train Off-Loading

Note: Regional capacities are at least what are listed in this figure as some rail facility capacities are unknown

Canadian Loading 

Operational YE 2013 Facilities - 26

Estimated YE 2013 Capacity - 665,000 bpd

Canadian Off-Loading 

Operational YE 2013 Facilities - 4

Estimated YE 2013 Capacity - 230,000 bpd

PADD 1 Off-Loading

YE 2013 Facilities - 11

2013 Capacity - 945,000 bpd

PADD 2 Rail to Marine Transloading Terminals

YE 2013 Facilities - 5

2013 Capacity - 210,000 bpd

PADD 2 Stroud to Crushing Loading/

Transloading/Off-Loading Terminals

2013 Capacity - 150,000 bpd

PADD 2 Non-Bakken Loading 

YE 2013 Facilities - 11

2013 Capacity - 160,000 bpd

PADD 2 Non-Bakken Loading 

YE 2013 Facilities - 21

2013 Capacity - 1,005,000 bpd

PADD 4 Loading

YE 2013 Facilities - 12

2013 Capacity - 400,000 bpd PADD 4 Off-Loading

YE 2013 Facilities - 6

2013 Capacity - 210,000 bpd

PADD 3 Loading

YE 2013 Facilities - 21

2013 Capacity - 815,000 bpd PADD 3 Off-Loading

YE 2013 Facilities - 24

2013 Capacity - 985,000 bpd

PADD 5

PADD 4

PADD 3

PADD 2

PADD 1

"

"""

Stampede, ND

Stanley, ND

New Town, ND

Stroud, OK

St. James, LA (3)

Zap, ND

Minot, ND

Donnybrook, ND

In 2010, the United States and Canada had six rail loading facilities for crude oil and four offloading facilities. By year-end 2013, crude oil by rail 

capacity had grown to include 65 loading facilities in Petroleum Administration Defense Districts II, III, and IV. Rail-to-barge facilities also increased. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-7

Congestion and Competition among Commodities 

This rapid increase in rail usage to transport oil has exacerbated existing capacity constraints in the rail systems, which 

are determined by multiple factors, including the throughput on the rails themselves, the operation of loading and 

unloading facilities, the number of locomotives and rail cars, train speed, and the availability of qualified employees. 

The overlap of crude oil movements from the Bakken with coal moving out of the adjacent Powder River 

Basin, along with high volume of rail shipments of agricultural commodities from the region, present a 

singular set of challenges. Just as crude oil is transported to major ports for refining and export, so too are 

other commodities. Figure 5-3 shows the range of commodities shipped by rail in 2013, by percent of tonnage 

and revenue. The shipments of a number of these (such as crude petroleum, petroleum products, and sand 

used in hydraulic fracturing for oil and gas production, known as frac sand) have been influenced strongly 

by increased shale oil production in the West and development of natural gas resources in the East. For every 

new well, the Nation’s railroads move approximately 40 rail cars of drilling material.18 While most of the 

sand transported by rail is used for cement production, road building, and other construction purposes,19

industrial sand, which includes frac sand, makes up about one-third of total carloads in this category, and this 

subcategory is growing about twice as fast as other sand and aggregate cargoes.20 Frac sand makes up the bulk 

of this increase.21 The need to move frac sand and other drilling inputs is a significant factor in the multi-year 

backlog of the production of various types of rolling stock—with back orders reaching 124,000 rail cars as of 

late 2014, an increase of 25 percent between June and December 2014.22

Figure 5-3.Class I Railroad Commodities, Percentage by Weight and Gross Revenue (2013)23, 24

Coal

Chemicals & allied products

Non-metallic minerals

Farm products 

Misc. mixed shipments

Food & kindred products

Metallic ores

Metals & products

Refined petroleum & coke 

Other commodities

19.9%

13.9%

4.5%

7.2%

13.0%

3.9%

7.8%

3.4%

3.1%

2.6%

25.4%

1.0%

Crude petroleum, nat. gas

Stone, clay & glass products

Total - $72.1 billion

39.5%

8.1%

7.4%

6.6%

5.7%

4.1%

2.9%

2.6%

2.6%

2.2%

8.3%

10.0%

Total - 1.76 Billion tons

Energy commodities and associated products account for a large portion of rail traffic. Crude oil has grown to 3 percent of national (Class I) rail 

revenues and more than 2 percent of tonnage. Transport of crude oil and petroleum products, chemicals, crushed stone, sand, and gravel, all of which 

are strongly influenced by shale oil production growth, are more significant on a regional basis, and, in those regions, tend to perturb both other 

energy and non-energy commodity movements on a constrained rail network.
5-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

While crude by rail may be a relatively small part of the national rail picture, on a regional basis, the 

constrained capacity created by oil movements emerges as a more significant issue. BNSF Railway is the largest 

rail carrier for both Bakken crude oil and Powder River Basin coal. BNSF currently carries about 75 percent 

of Bakken oil moving by rail.25 Meanwhile, BNSF also is a major carrier for coal. More than 90 percent of coal 

carried by BNSF originates in the Powder River Basin.26

Economic Effects of Capacity Constraints 

Agricultural product shippers have expressed concern that oil and coal shipments will crowd out their 

commodities on the already constrained rail network through the Plains States.27 Rail service is particularly 

important for U.S. agriculture, as it is often the most cost-effective shipping mode available for moving 

grain and other relatively lower-value, bulk agricultural commodities from production areas to markets or 

transfer points for waterborne transportation.28 Grain and oilseed shippers in Montana and North Dakota are 

particularly dependent on rail transportation because of their distance to inland waterways and the prohibitive 

cost of hauling grain long distances to markets by truck.29

In 2013 and 2014, the demand for rail service increased for most commodities, including coal, oil, intermodal 

containers, sand, and gravel. Near-record harvests in those years of corn, soybeans, and wheat in the 

Northern Plains States (Minnesota, Montana, North Dakota, and South Dakota) put additional stress on 

the rail transportation system, which was already operating with limited excess capacity.30 The 2013 harvest 

was followed shortly by a severe winter, compounding the rail service interruptions grain shippers were 

experiencing. Smaller harvests in 2014 were met by improved rail service in the region.31

Many shippers, unable to pay the additional premiums for service, diverted more grain into storage or used 

alternative transportation at a higher-than-normal cost.32 The growing imbalance between supply and demand 

for rail service was manifested as backlogged grain shipments and higher-than-average prices for empty 

grain cars sold in the secondary auction markets.33 Based on an analysis of these markets, the Department 

of Agriculture’s (USDA’s) Agricultural Marketing Service concluded in October 2014 that “The past year was 

marked by both higher than anticipated demand for service and rail service disruptions....The current rail 

service problems have exceeded previous events in terms of both magnitude and duration, including Hurricane 

Katrina, which caused major disruptions throughout the entire agricultural transportation network.”34

Prompted mainly by the financial struggles of U.S. railroads in a heavily regulated, economically inefficient 

environment, Congress passed the Staggers Rail Act in 1980. The Staggers Act has been successful in improving 

the financial health of the railroads, in part because carriers have become more efficient, eliminating excess 

capacity and redundancy and streamlining operations. Over the last 30 years (from 1980 to 2011), the number 

of ton-miles transported by rail has doubled, while Class I revenues per ton-mile have declined almost 40 

percent in real terms.35, 36

The last several years, however, tell a different story. According to USDA, “Even though a recession started in 

December 2007, railroads continued to raise rail rates, partly to support record railroad capital investments 

and higher costs. Average real rail rates per ton-mile for all commodities increased 36 percent between 2004 

and 2011. Real rail costs adjusted for railroad productivity increased 29 percent during the same. This indicates 

that most of the increase in rail rates was due to increased rail cost, but the increased rail rates also contributed 

to record rail profits. In comparison, real truck rates have increased 27 percent since 2004.”37 Protecting rail 

consumers from service disruptions is another prime factor in passage of the Staggers Act; a more streamlined 

rail system with limited excess capacity can, however, become overburdened when demand spikes, as it did in 

2013 to 2014, which can leave shippers vulnerable to service deficiencies.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-9

Coal Transportation by Rail

Coal represents 39.5 percent of total tonnage moved by rail and 19.9 percent of total revenues for the railroad 

industry, and it is viewed by many in the industry as its most important single commodity.38 Sixty-eight 

percent of coal used to generate electricity is delivered to power plants by rail. Approximately 40 percent of 

all U.S. coal is produced in Wyoming, which is more than is produced by the next three highest-producing 

states combined.39 The vast majority of Wyoming’s coal is sent to power plants in 34 states, almost all of this 

by rail. Eight states obtain more than 90 percent of their domestic coal from Wyoming,40 giving these states an 

enormous interest in ensuring reliable rail deliveries of coal. Figure 5-4 illustrates the reach of transport from 

the Powder River Basin to coal-fired units across the Nation.

Figure 5-4. Coal-Fired Power Plants Supplied by the Powder River Basin41

Service Layer Credits:

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b Coal Fired Power Plant Supplied by the Powder River Basin

Powder River Basin

0 220110 Miles

The vast majority of Powder River coal is sent out of Wyoming to power plants in 34 other states. 

The EIA’s recent analysis of coal stockpile levels at electric power plants (see Figure 5-5)42 confirms that 

stockpiles are low in both absolute levels and days of burn compared to recent norms—both nationally and 

regionally (particularly in the Upper Midwest where rail congestion has been problematic). The EIA attributes 

this to several causes, including record grain harvests and transport of crude oil. 
5-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Figure 5-5. Monthly U.S. Coal Stockpile Levels at Electric Power Plants, 2009–201443

Stockpiles of coal at power plants in 2013 and 2014 were either at the lower end of, or below, the 5-year range of stockpile levels from 2009 to 2013. 

Of those coal-fired plants served by rail, most are served 

by only one Class I railroad (these plants are referred to as 

“captive” to the single railroad).b The power producers that 

own these plants have been concerned for decades about 

service and rate problems based on this lack of competition. 

The issue of coal delivery shortfalls in some regions has 

recently become more pronounced as Bakken crude and 

other rail traffic has increased.44 There have been numerous 

instances where coal-fired units have been left with a week’s 

worth of coal or less.45 Four small plants in Minnesota 

shutdown in fall 2014 to conserve coal stocks; grid operators were able to dispatch from non-coal units for 

use during the peak winter demand period,46 demonstrating the value of diversity to reliable energy systems.

The railroad companies are aware of the issues concerning adequate service and have responded to service 

performance issues. Some of the steps they are taking to address these issues include significant orders 

for additional rolling stock and double tracking in some locations. On November 20, 2014, BNSF Railway 

announced plans for record capital spending in 2015 of $6 billion for rail updates, track replacements, and 

expansion projects. “Nearly $500 million of that expansion work will occur in the Northern region, which is 

where BNSF is experiencing the fastest growth. That region primarily serves agriculture, coal, crude oil, and 

materials related to crude oil exploration and production.”47 

b Many agricultural shippers are also captive to one railroad. According to the Department of Agriculture, “only about five percent of 

grain elevators are served by more than one railroad.” See: Department of Agriculture and Department of Transportation. “Study of 

Rural Transportation Issues.” April 2010. ntl.bts.gov/lib/32000/32800/32855/STELPRDC5084108.pdf.

200

150

100

250

Million Short Tons

50

0

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec

2009-13 Range

2013

2014

In recognition of the importance of ensuring adequate 

coal reserves for electricity, on December 30, 2014, 

the Surface Transportation Board issued a decision 

on Docket No. EP 724: “The Board directs BNSF 

Railway Company to submit a detailed description of 

the contingency plans the carrier would use to help 

mitigate an acute coal inventory shortage at one or 

more generating stations in a region.”
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-11

Ethanol Transportation by Rail

Ethanol production in the United States has increased steadily over the last few decades, reaching a historically 

high level in 2011. By 2012, ethanol displaced approximately 10 percent of U.S. gasoline demand by volume. 

Ethanol production is primarily located in the Midwest where most of the corn feedstocks are grown.48 Ethanol 

blending into gasoline takes place at petroleum product distribution terminals across the country, so large 

amounts of ethanol must be transported from production plants to the distribution terminals. These shipments 

from production plants to distribution terminals typically occur by rail, which accounts for around 70 percent 

of ethanol transport,49 with the final product then delivered by truck to retail outlets. 

Roads, rail, and waterborne infrastructures are used extensively for ethanol transport because fuel quality 

specifications, ethanol’s water-absorbing properties, and the complications presented by multiple owners 

of pipelines prevent the transport of ethanol in the same pipelines as petroleum products. Ethanol is likely 

to rely on shared infrastructure for its transport for the foreseeable future. Attempts to construct dedicated 

transportation infrastructure have not been successful—a $4-billion ethanol pipeline project from the Midwest 

to the Northeast was explored by POET and Magellan Midstream Partners, but the project was abandoned in 

2012 after it was determined to be economically infeasible. 

Safety of Rail Transport of Liquid Fuels

Rail safety has become a key issue as rail transport of liquid fuels has grown. Several high-profile crude-byrail accidents occurred since 2013, the most devastating of which killed 47 people in Lac-Mégantic, Quebec. 

Others, such as those in Aliceville, Alabama; Casselton, North Dakota; Lynchburg, Virginia; and Mount 

Carbon, West Virginia, resulted in significant environmental and property damage after tank cars derailed, 

ruptured, and the oil caught fire. Similar accidents involving ethanol rail shipments have also raised concerns 

about the safety of rail tank cars and the shipment of these flammable hazardous commodities across the 

United States. These accidents have highlighted the need for additional monitoring, enforcement, and 

inspection, as well as setting new safety design requirements for tank cars.50

The rail transport infrastructure for liquid fuels also faces reliability and resilience challenges, which are 

described in more detail in Chapter II (Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D 

Infrastructure).
5-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Administration Activities and Plans 

The Surface Transportation Board (STB) is an independent entity within the Department of Transportation that is the successor 

to the Interstate Commerce Commission. It is charged with resolving railroad rate and service issues and rail restructuring 

transactions (such as mergers, line sales, line construction, and line abandonments). The Pipeline and Hazardous Materials 

Safety Administration at the Department of Transportation (DOT) regulates the transportation of hazardous materials by all 

modes, including rail, while the Federal Railroad Administration is responsible for rail safety.

Congestion and service. In light of the problems of rail congestion affecting shipments of key commodities:

• STB issued a decision requiring all Class I railroads to publicly file weekly data reports regarding service performance 

of unit trains carrying coal, crude oil, ethanol, and grain. Railroads began filing performance data in October 2014 in 

addition to reports on coal, grain, and intermodal trains. 

• STB has begun informal interactions with the Energy Information Administration to share data and insights on overall 

energy flows among major U.S. regions.

• On December 30, 2014, STB issued a decision directing the BNSF Railway Company “to submit a detailed description 

of the contingency plans the carrier would use to help mitigate an acute coal inventory shortage at one or more 

generating stations in a region.”c

• On December 30, 2014, STB initiated a formal notice and comment rulemaking proceeding for weekly performance data 

reporting by the Class I railroads and also the freight railroads serving the Chicago gateway. The purpose of the reporting 

requirements, in part, is to give both STB and shippers/stakeholders greater transparency into railroad operating conditions. 

• STB has two ongoing proceedings on rail business practices. EP 711 concerns competitive access in the railroad 

industry and whether to revise agency rules governing shipper requests for competitive access to another railroad. 

EP 665 would ensure that STB’s rate complaint procedures are accessible to grain shippers and provide effective 

protection against unreasonable freight rail transportation rates.

Safety. DOT and other Federal agencies have been taking action to respond to heightened awareness and concern over rail 

shipments of crude oil from the Bakken and ethanol. 

• To raise awareness of local emergency responders to oil/rail accident, in July 2014 DOT released a “Lessons Learned 

Roundtable Report,” providing key findings from a meeting of DOT and Virginia’s Department of Fire Programs to 

affected fire chiefs and emergency management officials.

• The Federal Emergency Management Agency assessed training needs and requirements in 28 states with oil rail routes 

identified by DOT. Eight of these states indicated a need for training, and the Federal Emergency Management Agency 

is working with these states to prioritize and ensure their participation in currently available programs.

• The Pipeline and Hazardous Materials Safety Administration issued a Notice of Proposed Rulemaking on August 1, 

2014, which contains comprehensive proposed standards to improve the rail transportation safety of flammable 

liquids, including unit trains of crude oil and ethanol. A final rule is anticipated to be issued in mid-2015.d

• The Pipeline and Hazardous Materials Safety Administration and the Department of Energy have entered into an 

agreement to conduct research and development on the properties (including behavior in fires) of unconventional crudes. 

• The interagency National Response Team Training Subcommittee launched Emerging Risks Responder Awareness 

Training for Bakken Crude Oil to help responders better prepare for these incidents.e The training is available online.

* Average coal unit train loadings versus planned loadings, by coal production region.

c Department of Transportation, Surface Transportation Board. “United States Rail Service Issues.” p. 1. Docket No. EP-724. 

December 30, 2014. http://www.stb.dot.gov/decisions/readingroom.nsf/WebDecisionID/43733. Accessed February 22, 2015.

d 79 Fed. Reg. 45016. “Hazardous Materials: Enhanced Tank Car Standards and Operational Controls for High-Hazard Flammable 

Trains.” August 1, 2014. http://www.gpo.gov/fdsys/pkg/FR-2014-08-01/pdf/2014-17764.pdf. Accessed April 1, 2015.

e National Response Team. “Emerging Risks Responder Awareness Training: Bakken Crude Oil.” 2015. http://www.nrt.org/

production/NRT/NRTWeb.nsf/AllPagesByTitle/SP-EmergingRisksResponderAwarenessTrainingBakkenCrudeOil%282015

%29?Opendocument. Accessed March 17, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-13

Waterways, Ports, and Connectors: Status and Trends

The greater Mississippi Basin and Intracoastal Waterways have more miles of navigable internal waterways 

than the rest of the world combined, and the U.S. Atlantic Coast has more major ports than the rest of 

the Western Hemisphere. The Nation’s coastal ports and inland waterways are part of a larger waterborne 

transportation network, sometimes called the Marine Transportation System (MTS).f The MTS includes 25,000 

miles of navigable channels and related infrastructure, such as publicly and privately-owned marine terminals, 

intermodal connections, shipyards, and related repair facilities.g

f Connecting land-side infrastructure includes more than 174,000 miles of rail in the 48 contiguous states, as well as Canada and 

Mexico; more than 45,000 miles of interstate highway, supported by more than 115,000 miles of other roadways; and more than 1,400 

designated intermodal connections.  Source: DOT. 

g The 25,000 miles of navigable channels includes 12,000 miles of inland waterways (including two intracoastal waterways) with 229 

lock chambers at 187 sites; and 926 coastal and inland ports (including the ports of the Great Lakes) with 13,000 miles of channels 

and 12 locks (not including the locks of the St. Lawrence Seaway). 

QER Recommendations

RAIL TRANSPORT

In light of the significant activity undertaken by the Administration in recent years, and the fact 

that some of these proceedings and relevant interagency research projects are still in progress, 

additional major recommendations should await finalization of these initiatives before next steps can 

be determined. In the interim, recognizing the crucial role that rail will continue to play in energy 

commodity transport, we recommend continued focus on the following:

Enhance the understanding of important safety-related challenges of transport of crude oil 

and ethanol by rail and accelerate responses: The cooperative work of the Department of Energy 

(DOE) and the Pipeline and Hazardous Materials Safety Administration, as well as the forward 

movement of strengthened safety regulations at the Department of Transportation (DOT), should be 

strongly supported.

Further analyze the effects of rail congestion on the flow of other energy commodities, such 

as ethanol and coal: DOE, the Surface Transportation Board, and the Federal Energy Regulatory 

Commission should continue to develop their understanding of how rail congestion may affect the 

delivery of these energy commodities. 

Analyze the grid impacts of delayed or incomplete coal deliveries: In assessing these issues, DOE, 

in coordination with relevant Federal agencies, should examine the role of freight rail in utility 

operations, the growing complications created by freight infrastructure constraints on multiple 

energy products and other bulk commodities, and whether a minimum coal stockpile for electricity 

reliability should be established for each coal-fired unit.

Address critical energy data gaps in the rail transport of energy commodities and supplies: This 

should include data on monthly movements of crude by rail. The Surface Transportation Board and 

the EIA should continue their cooperative work to share data and insights to improve the ability of 

both agencies to better understand the changes underway in energy shipments by rail. Congress 

should provide the EIA with the funding increase requested in the President’s Budget Request for 

Fiscal Year 2016 to support this activity.
5-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Waterborne transportation of commodities and other goods is critical to international trade and the U.S. 

energy economy. The Nation’s coastal ports and inland waterways handle almost 2.3 billion tons of commerce 

annually.  According to DOT, coastal deep-water ports alone handle 70 percent of our Nation’s imports 

and exports by weight. The expected growth over the next 30 years in the volume of imports and exports 

transported by sea will have “dramatic implications for America’s ports and transportation system and will lead 

to greater congestion at America’s coastal ports.”51

Unlike railways or pipelines, much of the waterway infrastructure is federally maintained; landside port 

and connector infrastructure used in conjunction with these waterways is often operated by state and local 

governments and private industry. The Army Corps of Engineers (USACE) is responsible for managing and 

maintaining most of the Inland Marine Transportation System, including navigation locks and dams. Some 

locks are federally owned and maintained by DOT’s Saint Lawrence Seaway Development Corporation in 

cooperation with the Canadian government. 

Energy commodities make up the largest proportion of U.S. waterborne cargo traffic, and waterborne commerce 

is essential to the energy sector. In 2012, crude oil, refined petroleum products, and coal were 55 percent of all U.S. 

waterborne cargo traffic by weight.  Nearly 15 percent of all petroleum products consumed in the United States 

are shipped on inland waterways.h

 Sixty percent of the oil Americans consume arrives in a U.S. port, including all 

of Alaska’s crude.52

Growth in Waterborne Transport of Energy 

Similar to the trends in rail transport, new domestic energy production is spurring rapid growth in the 

waterborne transport of energy commodities and related products, increasing the demands on the existing 

system. Shippers of those commodities seeking options for low-cost, high-volume transport are turning to 

the Nation’s network of navigable costal ports and inland waterways.53 In the near future, additional drivers 

of waterborne transport of energy commodities will likely include the exports of liquefied natural gas, the 

expansion of existing refineries, and the development of new petrochemical plants. Some estimates show 

greater than $125 billion in planned petrochemical plant investments, most of which will occur along the Gulf 

Coast and other U.S. waterways.54

U.S. ports and inland waterways transported nearly 7 billion barrels of crude and petroleum products in 

2012.55 Of that total, 2.5 billion barrels were transported on barges on the inland waterways from port to port 

along the coast or on the Great Lakes—or in intra-port transfers.i

 Utilization of barges for petroleum transport 

has risen dramatically, as shown by the sharp increase in refinery receipts by barge from 46 million barrels of 

domestic crude in 2010 to more than 210 million barrels in 2013 (see Figure 5-6). Despite a decrease in oil 

imports, barge deliveries of foreign crude have risen more than 60 percent since 2011.56 Barge transport of oil 

typically is inter-modal, where oil may travel by pipeline or rail to a terminal and then be dispatched on barges 

to cover the last segment of the trip to refineries.j

 This configuration is particularly important for refineries 

without rail access. 

h Calculated based on 2012 data. The total petroleum products consumed are 18,000 to 19,000 barrels per day. Source: Energy 

Information Administration. “US Weekly Product Supplied.” www.eia.gov/dnav/pet/pet_cons_wpsup_k_w.htm. Accessed January 

21, 2015. The total petroleum products moved on inland waterways in 2012 was 111,129 tons. Source: Army Corps of Engineers. 

“Waterborne Commerce of the United States: Calendar Year 2012.” Table 2-1. November 20, 2013. OMB No. 0704-0188. www.

navigationdatacenter.us/wcsc/pdf/wcusnatl12.pdf. Conversion from tons to barrels based on an average product density of 8 

barrels per ton.

i Domestic shipments by barrel were estimated using data on domestic shipment by short ton reported by the Army Corps of 

Engineers. Based on the composition of petroleum products in domestic shipments, average densities from the Energy Information 

Administration (www.eia.gov/cfapps/ipdbproject/docs/unitswithpetro.cfm) were used to estimate an average conversion of 7.0–

7.5 barrels per short ton.

j Therefore, while refinery-receipts-by-mode is a useful metric for showing utilization of a specific mode over the last miles traveled to 

the refinery, it is not necessarily accurate for cross-modal comparisons.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-15

Figure 5-6. Annual Refinery Receipts of Domestic Crude Oil by Barge57

0

50

100

150

200

250 Increases largely in 

Texas and North Dakota 

crude production

1981 1985 1989 1993 1997 2001 2005 2009 2013

Million Barrels of Crude Oil

Refinery receipts of crude oil by barge have increased by more than 300 percent since 2010.

Expanded use of inland waterways for the transportation of energy commodities and a corresponding increase 

in rail transport of many of those same products is one of the factors in the increased rates for barge shipments 

of grain and other commodities.k While barges have the lowest per-ton prices, they are geographically limited 

by access to navigable waterways and seasonal availability. Also, timeliness is a critical variable; it can, for 

example, take 11 days to move grain by barge from Minneapolis, Minnesota, to New Orleans, Louisiana, by 

barge but only 4 days by rail.58

Total domestic movements of crude oil, including coastal ocean shipping, have also risen in recent years.59

Most of the Nation’s refining capacity is located near a coastline. This allows refineries to receive, via 

waterborne transport, crude from foreign sources, domestic offshore production, and other port facilities, as 

well as to export refined products. Coastal barges and tankers, while less direct options than rail, could soon 

play a bigger role in moving domestic oil to East Coast or West Coast refineries.60 The cost of using domestic 

port-to-port transport routes is subject to the Jones Act.l Utilization rates of Jones Act tankers and barges are 

reported to now range from 90 percent to near the maximum achievable rate of 95 percent.61

k The Mississippi River and the Illinois Waterway are the primary inland waterways for moving agricultural products by barge. They 

are especially important for transporting bulk grains and oilseeds from the Midwest to export ports in the New Orleans region. Other 

important waterways for agriculture include the Columbia River in the Pacific Northwest. Source: Department of Agriculture. “Study 

of Rural Transportation Issues.” December 2010. Alternative overland routes by rail to ports are also available and heavily used, with 

shippers choosing depending on price and distance to a commercial waterway. 

l The Jones Act refers to the Merchant Marine Act of 1920, which states that merchandise shipped between U.S. ports must be on a ship 

that was built in the United States, is flagged as a U.S. ship, and is owned and operated by U.S. citizens. Waivers have been issued for 

certain provisions of the act during national emergencies (e.g., Hurricane Katrina, Hurricane Sandy, etc.). The Jones Act also applies to 

merchandise transport on the Great Lakes.
5-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

The 10 U.S. ports and port systems with the most energy-related commodity shipments (coal, crude oil, and 

petroleum products), measured by tonnage, are shown in Table 5-1.m

Table 5-1. Top 10 Port Systems by Total Energy Commodity Shipments, 2013 (millions of short tons)62

Energy shipment is concentrated on the Gulf Coast, but half of the 10 ports moving the most energy commodities are found elsewhere in the United 

States. The inland waterways are also important to the shipment of energy commodities to and from coastal ports.

The changes in energy commodity traffic are occurring as waterborne cargo volumes are increasing at some 

ports, a trend that will continue as the completion of the Panama Canal expansion project brings even larger 

“Post-Panamax”n cargo vessels to U.S. harbors.63 Overall marine freight by tonnage through coastal ports is 

expected to increase domestically between 2010 and 2020,64 while over the next 20 years, the total volume of 

imports and exports through U.S. ports could double.65

Future Investments in Waterborne Transportation Infrastructure

These relatively recent and rapid increases in energy-related demands for waterborne transport have brought a 

new focus on the Nation’s port and related infrastructure. DOT’s “Beyond Traffic 2045” report66 concludes that 

“Looking to the future, several critical trends will have a major impact on the performance of critical marine 

links in our transportation systems.” They include the following:

• Increasing imports and exports and containerized freight will lead to greater congestion on America’s 

coastal and inland ports.

• Investment in ports, harbors, and waterways will be essential to meet the demand of increased trade and 

competition.” 

m For this analysis, Port Channel Systems refer to a group of ports on a single Federal navigation channel. Houston/Galveston 

comprises Houston, Galveston, Texas City, and Victoria. Lower Mississippi comprises New Orleans, Baton Rouge, Plaquemines, and 

the Port of South Louisiana. Port of New York/New Jersey comprises New York City; Albany; and Newark, New Jersey. Delaware River 

comprises Philadelphia; Marcus Hook, Pennsylvania; Paulsboro, New Jersey; Camden-Gloucester, New Jersey; New Castle, Delaware; 

and Wilmington, Delaware. Port of Virginia comprises Newport News and Norfolk Harbor. 

n Post-Panamax ships are those that cannot fit through the current size of the Panama Canal. Expansion of the canal now underway 

will significantly increase the size of ships that can pass through it.

Port Channel System

Crude and 

Petroleum 

Products

Coal Total Energy

Energy as a 

Percent of 

Shipments

Lower Mississippi (LA) 161 47 208 48

Houston/Galveston (TX) 200 3 203 69

Beaumont/Port Arthur (TX) 115 0 115 89

Port of NY/NJ 80 <1 80 59

Delaware River 62 0 62 82

Corpus Christi (TX) 58 0 58 77

Port of Virginia 2 50 52 66

Lake Charles (LA) 49 0 50 88

LA and Long Beach (CA) 46 2 47 33

Huntington - Tristate (WV) 8 32 41 87
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-17

Funding mechanisms for maintaining or improving coastal ports, inland waterways, and related infrastructure 

is a shared responsibility. The available funding sources depend in part on the nature of the investment and the 

type of infrastructure involved.67

Under current law, the Federal Government is authorized to pay all operations and maintenance costs for 

inland waterways and generally for half the cost of the construction, replacement, rehabilitation, and expansion 

of locks and dams on these waterways. The other half is paid for with an excise tax on diesel fuel used on the 

27 fuel-taxed inland waterways, which in effect is deposited in the Inland Waterways Trust Fund.68

The Federal Government is authorized to pay 100 percent of the cost of eligible operations and maintenance at 

coastal ports for all work at depths up to 50 feet depth. For channels at coastal ports, the Federal Government 

provides a 50 percent to 90 percent cost share for new construction (this varies by channel depth needs and 

contributions by sponsors).69 There are two port channel systems in use or under construction that exceed 50 feet 

depth—Los Angeles/Long Beach and Seattle/Tacoma—both of which have limited needs for maintenance 

dredging. Additional ports have been authorized to depths greater than 50 feet and may require non-Federal 

maintenance dredging expenditure, but construction has not yet begun. 

Improving Inland Waterways

The largest categories of tons of commodities shipped on U.S. inland waterways are coal and petroleum (by 

tonnage). Together, these energy commodities were 57 percent of goods transported on inland waterways in 

2012.70 In addition, a significant proportion of chemicals and crude materials shipped on inland waterways are 

energy related (see Figure 5-7). 

Figure 5-7. Inland Waterborne Shipments by Commodity, 2012 (by weight)71

Petroleum 

Coal

Crude Materials

Food and Farm Products

Chemical & Related Products

Primary Manufactured Goods

Other

27%

1%

15%

5%

9%

30%

13%

Energy commodities are the dominant commodity group in U.S. waterborne cargo traffic. In 2012, crude oil, refined petroleum products, and coal 

were 56 percent of all shipments by weight on U.S. inland waterways. Energy commodities were a similarly large portion by weight of all domestic 

and international waterborne shipments in the United States. 
5-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Inland locks and dams are a critical component of the Nation’s inland waterways system. More than 55 percent 

of the navigation lock chambers were built in the 1960s or earlier, yet almost half of the overall tonnage 

moving on the inland system passes through them.72 According to a joint USDA/DOT study, “Although aging, 

the locks and dams on the river system are generally reliable. As locks age, however, repairs and maintenance 

becomes more extensive and expensive.”73 The Corps gives priority to the structures that support the most 

commercial traffic, and invests heavily in their maintenance and periodic rehabilitation. Maintaining the 

locks and dams of the inland waterways is becoming more costly over time, due primarily to two factors – the 

condition of some of the components, as well as cost increases in the broader economy. 

The Administration has made progress in reducing time losses from lock closures in recent years. Due in 

part to Federal investment, the number of main lock chamber closures on high and moderate commercial 

use waterways (those that carry at least 1 billion ton-miles of traffic annually) due to preventable mechanical 

breakdowns and failures lasting longer than 1 day and lasting longer than 1 week has decreased significantly 

since fiscal year 2010. Non-mechanical failures—such as weather, drought, floods, ice, and current conditions—

also create unscheduled lock outages, so impacts from climate change may play a role in inland waterway 

availability in the future (see Figure 5-8). 

Figure 5-8. Hours of Lock Unavailability on U.S. Inland Waterways, 2000–201474

200

Hours (thousands)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

180

160

140

120

100

80

60

40

20

0

Sched Non-Mech Sched Mech Unsched Non-Mech Unsched Mech

Progress in reversing the trend of increasing outages due to unscheduled mechanical breakdown must continue for the inland waterways to remain 

a reliable and affordable transportation option for shippers.

A typical round trip from New Orleans to the Upper Midwest and back on the inland waterways can take up 

to 30 days. Although shippers expect to encounter occasional delays due to weather and equipment related 

conditions, according to USACE, “Shippers recognize that the inland waterways are a low-cost method of 

transportation...they will encounter a delay on some trips due to a weather or equipment related conditions 

but they remain uneasy about the reliability of this system, noting observed trends in availability. To the extent 

that system outages disrupt waterborne service, shippers and carriers will experience additional, sometimes 

unexpected, costs.”75 In spite of these risks, shippers move roughly 600 million tons of cargo annually on the 

inland waterways.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-19

Inland shippers that want to move a product more quickly over long distances generally have the option to 

use rail. However, strong demand for rail due to increased oil, petroleum products, sand, ethanol, and more 

recently, coal (after a decline coal transport is on the upswing again), combined with track delays and rail speed 

reductions, has reduced rail transport options. According to USDA, in 2013–2014, “rail service in the United 

States is currently operating near full capacity as the United States recovers from the recession and production 

of ethanol and unconventional oil and gas are near record highs. Because railroads are operating near full 

capacity, transportation disruptions (e.g., adverse weather conditions or an unexpected sudden surge in 

demand) are likely to cause performance problems for rail transport. In addition, routine track maintenance by 

an individual railroad may result in longer-than-anticipated disruptions in certain areas and can lead to delays 

that spill over to the larger parts of the connected rail system.”76

On the principal inland waters, which carry 90 percent of the traffic, additional capital investment beyond 

current funding levels will be needed to maintain the current level of performance into the future. To address 

this concern, the Administration has proposed legislation to reform the way that the Federal Government 

finances capital investment on these waterways.77 Funding for water infrastructure is split between Federal and 

users of these waterways. The changing domestic energy landscape presents an opportunity for Federal and 

private sector investment to accommodate new needs that are not reflected in current project plans.

Port and Harbor Infrastructure Investments 

On November 12, 2014, Vice President Biden issued a call to action for greater investment in U.S. port facilities, 

noting, “We are investing less than 1 percent of our gross domestic product in transportation infrastructure...

ranking 28th in the world among advanced nations. That is simply unacceptable...we need to do everything we 

can to ensure that the whole infrastructure system is connected, especially to our ports.”

Large ports generally are able to successfully handle today’s levels of cargo at the current funding levels 

for harbor maintenance and related work, although, as noted, port traffic is expected to grow over the next 

decades. However, some carriers may need to proceed more slowly due to hazards, or to light load their vessels, 

or offload some cargo to smaller vessels. Depending on the channel conditions, tankers or other vessels may 

encounter arrival or departure delays (e.g., until another ship has moved through that section of the channel, 

or until high tide) or restrictions that reduce the recommended vessel draft (which can affect how much cargo 

some ships can hold). 

An example can be found in Louisiana’s Calcasieu Ship Channel, which provides access to the Port of Lake 

Charles—the 13th largest deep sea port in the Nation and an important maritime hub for the U.S. energy 

industry—and could be used in the near future by liquefied natural gas tankers to access federally approved 

gas export terminals. In 1968, USACE deepened and otherwise improved the Calcasieu River and Pass to 

the current authorized Federal dimensions of the channel, which are 400 feet wide and 40 feet deep. USACE 

dredges the most critical reaches of the channel annually, but shoaling reduces the channel to less-thanauthorized dimensions (see Figure 5-9). To help address reduced depths and channel narrowing, which reduces 

the efficiency of commercial operations, the Calcasieu River and Pass Federal navigation project received 

$27.7 million of fiscal year 2015 Operation and Maintenance funds, which will allow the Corps to dredge the 

most vital portions of the channel to optimize safety and efficiency.
5-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

40

ft.

400 ft.

Authorized Dimensions

Figure 5-9. Calcasieu River Ship Channel, Illustration (not to scale) of Authorized Dimensions and Example 

Conditions Where Shoaling Occurs78

40

ft.

100 ft.

Illustrative Current Conditions

Inadequate dredging can lead to shoaling and narrowing of channels, forcing tankers and other large vessels to reduce cargos, idle until high tide, or 

be subjected to one-way traffic restrictions.

Another example of the role of maintenance dredging is the main channel of the lower Mississippi River 

between Baton Rouge and the Gulf of Mexico. In 2011, shoaling in some areas led those who are responsible 

for vessel operation to place restrictions on certain parts of the river, until USACE addressed the concern by 

performing additional maintenance dredging.79

USACE is working to develop better analytical tools to help determine the appropriate spending level for 

harbor maintenance and related work at coastal ports, based on the economic and safety return, as well 

as a comparison with other potential uses of available funds. The sufficiency of a channel for commercial 

navigation depends upon the economic and safety return from an additional potential increment of 

maintenance work, which in turn is a function of actual traffic utilization patterns, the condition of the 

channel, and other factors.

Dredging varies from port to port. Due to geographic differences, Gulf Coast ports generally silt in more 

quickly—and thus require much more maintenance dredging—than many ports on the East Coast or West 

Coast.80 Ports in the Great Lakes region also require significant maintenance and account for a major portion 

of the Corps’ dredging activities. Regardless of where a port is located, the proper placement of dredged 

material can be a significant portion of the total cost of dredging. A discussion of the environmental aspects of 

dredging materials is contained in Chapter VII (Addressing Environmental Aspects of TS&D Infrastructure).

Port Connector Infrastructure Improvement

Getting crude oil from the wellhead to refineries or terminals on the coasts has become increasingly multimodal, often utilizing a combination of pipe, truck, rail, barge, and tanker transport. These infrastructure 

systems already play a major role in moving petroleum products, coal, biofuels, wind components, and other 

energy-related materials and equipment through the Nation’s system of public and private ports and related 

facilities. In addition to the navigation-related maintenance and construction, the landside port connector 

infrastructures that provide largely “first and last mile” access between ports and the national freight network 

need investment to accommodate the increased intermodal movement of domestic petroleum. Because of the 

variety of infrastructures involved, however, stewardship of port connectors is complex, with improvements 

that may be funded through a combination of Federal, state, local, and private investments.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-21

DOT reports that connecting roads to ports had twice the percent of mileage with deficient pavement than 

other non-interstate Federal highway routes, and connectors to rail terminals had 50 percent more mileage in 

the deficient category.81 In a recent survey of port authorities, more than one-third of respondents said that 

intermodal connector congestion over the last 10 years has caused port productivity to decline by 25 percent to 

50 percent.82

 Port Connector Congestiono

The head of the American Association of Port Authorities recently described road congestion at the Port of Baltimore.

“In Baltimore, thousands of cargo-laden trucks annually travel an extra 5.3 million miles over some of the city’s most 

congested roads and release an extra 175,000 tons of carbon dioxide to move cargo from the Maryland Port Administration’s 

busy Seagirt and Dundalk marine terminals. These extra miles and emissions could be eliminated after construction of the 

proposed Broening Highway Corridor Improvement Project that would replace the city’s Colgate Creek Bridge and create a 

new primary transportation link between the port and Interstate 95. The project’s price tag is estimated at $32 million.” 

o Nagle, K. “Port Intermodal Connections Crucial to Supply Chain Logistics Flow.” Travel & Industry Development. November 

4, 2014. http://www.tradeandindustrydev.com/industry/logistics-warehousing-distribution/port-intermodal-connectionscrucial-supply-chain-l-9738.

The surge in waterborne and rail shipments of crude may be a factor in delays at some inland and coastal ports. 

For example, freight traffic through the Port of Albany has experienced delays, reportedly due largely to a new 

influx of trains carrying domestic crude oil.83 Port congestion in Baltimore is increasing the time that vessels, 

trains, and trucks idle, thus exacerbating air quality conditions in the area.84 While the situation in Baltimore 

appears to be temporary (the port has plans to address the concernp), these examples show how the condition 

of port and related infrastructure can sometimes compromise public safety and air quality or degrade natural 

environments. 

A more efficient system of port connectors could help address these and other problems and is discussed in the 

recommendations for this chapter. Funding for better emissions control technologies and strategies in ports is 

discussed in Chapter VII (Addressing Environmental Aspects of TS&D Infrastructure).

Economic Return from Investments in Coastal Ports, Inland Waterways, and Connectors

The Nation’s coastal ports, inland waterways, and related infrastructure are part of the national freight 

transportation network and contribute to the economy. The condition of this infrastructure can affect 

the competitiveness of the U.S. economy, including the energy sector. As the level of traffic in waterborne 

commerce has increased, the Federal Government, states, local governments, local port authorities, and 

the private sector have made investments to maintain and improve the performance of this infrastructure, 

promoting economic efficiency. However, external analyses have found that delays due to inadequate 

infrastructure in inland waterways and ports have impacts on business sales and jobs; these losses are expected 

p See, for example, the Broening Highway Corridor Improvement Project. archive.baltimorecity.gov/Government/

AgenciesDepartments/Transportation/TIGER/BroeningHighwayCorridorImprovementProject.aspx.
5-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

to increase absent a focus on reversing the deterioration of inland waterways and ports.q Targeted high-return 

investments in this part of the national freight transportation network could strengthen the overall U.S. 

economy.

In addition, an assessment of the state of waterborne infrastructure also raises concerns about its reliability and 

resilience, which are described in more detail in Chapter II (Increasing the Resilience, Reliability, Safety, and 

Asset Security of TS&D Infrastructure). 

The analysis of potential investments can change due to several factors. For example, USACE will need to 

consider the changing domestic energy landscape in some of its project plans, such as where an increase in 

energy-related commodities through one or more of the ports, locks, and dams has occurred that may be large 

enough to affect an investment decision; also, energy is only one of many factors to consider when making 

decisions about infrastructure investments.

Opportunities for Public-Private Partnerships in Ports and Waterways

In his call to action, Vice President Biden noted that after years of underinvestment, more than $90 billion 

in improvements are needed to prepare for a significant increase in shipping over the next several years, 

saying that “Ports can expect to ship 50 percent more cargo by 2020 than they do now, and that’s probably a 

low estimate.” He also highlighted the opportunity that ports have to deliver projects through public-private 

partnerships.85

As noted, there is a distinction between responsibilities for landside and waterside facilities at ports. Landside 

facilities at ports are generally under the control of local port authorities. The Federal Government, however, has 

substantial responsibility for many waterside activities, in particular, for maintenance of the authorized Federal 

portion of the main channels and associated features such as turning basins, and for related work. The National 

Research Council, in a study of USACE funding for water projects, found that “Future Corps water resources 

activity will be less dedicated to construction of major new civil works, and more heavily focused on operating, 

maintaining, rehabilitating, and upgrading existing infrastructure...[and] deferred costs for maintaining...

commercial navigation are considerable.”86 Some cases of deferred maintenance, however, reflect decisions to 

perform channel maintenance dredging when the incremental costs are lower with more material to dredge, or 

when a channel’s traffic levels do not justify use of limited funds over other potential uses at that time.

Increasing demands by the users and others for more Federal investment in coastal ports, inland waterways, 

and related infrastructure highlight the need for additional and innovative funding mechanisms and publicprivate partnerships. The National Research Council’s analysis of these and other issues concludes, among 

other things, that “The modern context for water resources management involves smaller budgets, cost sharing, 

an expanded range of objectives, and inclusion of more public and private stakeholders in management 

decisions. Two important implications of these conditions are (1) given current budget realities, the Nation 

may have to consider more flexible, innovative, and lower-cost solutions to achieving water-related objectives; 

and (2) USACE will by necessity work in settings with more collaboration and public and private partnerships 

than in the past.”87

q A report prepared for the American Society of Civil Engineers estimated that waterborne shipping delays due to inadequate 

infrastructure in inland waterways and ports imposed $33 billion in costs on U.S. products in 2010; the report projected those costs 

(in constant 2010 dollars) to increase to nearly $49 billion in 2020 and $68 billion in 2040. Further, the report calculated that by 

jeopardizing the U.S. ability to provide the low-cost transportation needed to remain competitive in a global economy, the cumulative 

economic shortfall from deterioration of the inland waterways and ports will result in $1.3 trillion in lost business sales from 2012 to 

2020; $270.0 billion in lost exports from 2012 to 2020; almost $2.0 trillion in lost exports from 2012 to 2040; 738,000 fewer jobs by 

2020; and 1.4 million fewer jobs by 2040. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-23

Uncertainty in U.S. Coal Exports

U.S. coal exports peaked in 2012;88 in that record year, East Coast ports alone shipped 68 million tons, which 

was only about 65 percent of potential export capacity.89 Exports have declined since then, dropping in the last 

seven quarters ending in Quarter 3 of Calendar Year 2014.90 Notwithstanding this decrease in exports (and 

currently low global coal prices), companies that own and manage export terminals continue with long-range 

plans for expansion, focused on the potential for continued demand in Europe, Asia, and South America.91

Shifts in coal export destinations have produced associated shifts in the locations of ports serving the 

international coal trade. As shown in Figure 5-10, exports to Canada have sharply declined since 2008, 

which has reduced coal tonnage passing through Great Lakes customs districts (including Duluth, Detroit, 

and Cleveland),92 while rising exports to Europe and the Far East have increased tonnage through Norfolk, 

Baltimore, New Orleans, and Seattle.93

Figure 5-10. U.S. Coal Exports by Destination94

60

40

100

80

120

140

U.S. Coal Exports (million tons)

20

0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

All Other Countries Spain Belgium Morocco France Japan Germany

Mexico Italy Canada China South Korea Brazil Netherlands United Kingdom

Overall export volumes of U.S. coal have declined from recent record levels, despite growth in coal exports to countries in Europe and Asia.
5-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Impact of Energy and Energy Component Transport on Multi-Modal 

Systems

The introduction of unprecedented levels of domestic and Canadian crude into interconnected pipeline, rail, 

barge and tanker, and roadway systems not only provides flexibility to shippers, but it has also introduced new 

intermodal stresses on the freight system and associated regulatory bodies. 

Roadways, Short Hauls, and Energy Production 

The domestic energy production boom is increasing roadway traffic for transport of both energy products 

and the materials and tools required to produce those energy products. For instance, a typical Bakken well 

completion requires roughly 2,300 drilling-related truck trips for machinery, sand, and injection fluids.95 

Trucks are also used for short-haul drayage of crude oil from the wellhead to gathering pipelines or rail loading 

terminals for long-distance transport. In North Dakota, well drilling has outstripped the development of 

gathering systems, leaving about 40 percent of Bakken production to be delivered to pipeline and rail terminals 

by truck. Demand for trucks has also increased downstream of production, as illustrated by the threefold 

increase from 2004 to 2013 in refinery receipts of crude oil by truck,96 a substantial portion of which—because 

of the location of refineries—occurs on roads and highways near ports and waterways. 

As a result of this new demand, trucking firms have reported a shortage of trained drivers, and firms in 

non-energy producing regions of the country are losing experienced drivers to the higher wages available 

in producing areas.97 Trucks fill a very specific role that other transport modes are not well-suited to fill. 

According to the American Association of State Highway and Transportation Officials, “Local and regional 

cargo mostly moves by truck, since trucks are generally more efficient at short distances and provide doorto-door service to almost all freight shippers and receivers. At longer distances, typically beyond 400 to 600 

miles, intermodal rail becomes increasingly more competitive and can be used as a substitute for long-haul 

trucking.”98 While port-related truck traffic may represent a low-share of total truck traffic in a region, it tends 

to be highly concentrated on certain corridors and highly visible, and—unlike rail and waterborne transport—

trucks share the infrastructure with the general public, thus making it of particular importance to adjacent 

communities. 

Another example of multi-modal stress from transporting energy supplies is found in transporting large 

quantities of sand for oil and gas production. In one county in Wisconsin alone, a 2012 forecast suggested that 

supplying sand to meet oil and gas production demand could require transport of 5 million tons to 7 million 

tons of sand by truck and rail, compared to 137,000 tons just 4 years earlier; 7 million tons translates into 

280,000 one-way truck trips and 500 unit trains.99 The impact of such traffic on roads, rail crossings, and tracks 

is significant. 

Moving Large Energy Components on Shared Infrastructure

Shared infrastructure systems are also strained by movement of large components associated with other energy 

resources beyond petroleum, ethanol, and coal. An example is found in transport of wind turbine components. 

Large wind components are both domestically manufactured and imported; in 2012, 40 percent of the total 

value of component imports moved through the Houston-Galveston area alone,100 placing additional burdens 

on the port facilities and connectors that are responsible for moving these very large components. In 2012, an 

estimated 689 truckloads, 140 railcars, and 8 vessels were required to carry the turbines, blades, and related 

components needed to complete a moderately sized 150-megawatt (MW) wind project.101 

Turbines have increased in size to maximize generation capacity, raising a range of complications for 

transportation and logistics.102 Typical turbine blade lengths in the 1980s were 5 meters to 15 meters. In 

the last several years, typical turbine blades have grown to 38 meters to 50 meters in length for generating 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-25

capacities of 1.5 MW to 2.5 MW,103 and many blades deployed today exceed this length. Figure 5-11 shows the 

transport of an 80-meter blade bound for a 7-MW offshore test turbine in Scotland. The limits of the existing 

transportation infrastructures are now constraining component designs as manufacturers try to balance 

optimal energy production with transportability.104 

Figure 5-11. Transport of Large Wind Turbine Blade105

As wind turbines continue to grow in size, project developers will face greater challenges in transporting components. This 80-meter blade is being 

transported to a 7-MW test turbine in Scotland. 

Transporting components of this size requires coordination of movement through ports, tunnels, overpasses, 

and turning areas,106 and often puts significant stress on small and rural roads. The larger and more complex 

wind projects become, the more developers will be challenged by Federal vehicle weight limitsr and differing 

state and local requirements for issuing permits for oversize and overweight vehicles. Nacelless

 for new turbines 

can weigh more than 80 tons107 and, according to the American Wind Energy Association, “A truck carrying a 

tower section must be able to support a load ... that is over 30 meters long and weighs over 150,000 pounds.”108

In addition to limited availability of specialized trailers for blade transport, projects are also challenged by the 

availability of the large mobile cranes capable of lifting the very heavy components onto tall towers, and the 

cranes alone may require more than 100 semi-tractor trailers to move between projects.109

The National Energy Renewable Laboratory has underscored these logistical concerns, noting that “The 

challenges and costs associated with transporting taller towers and very long blades with wide chord lengths 

also affects wind plant deployments and will become more constraining as wind turbines increase in size 

and height. Similarly, trucking heavy nacelles and blades with larger root diameters could become challenges 

meriting additional attention.”110 Increasingly complex logistical challenges are requiring shippers to use a 

variety of land transportation methods and modes, resulting in increased project costs of up to 10 percent of 

capital costs for some projects.111

r Federally mandated maximum weights for the National System of Interstate and Defense Highways and reasonable access thereto (23 

C.F.R. § 658.17): 80,000 pounds gross vehicle weight; 20,000 pound single axle weight; 34,000 pound tandem axle weight.

s A nacelle is the box-like component that sits atop the tower that contains the majority of the approximately 8,000 components of the 

wind turbine, such as the gearbox, generator, main frame, etc.
5-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

There are similar logistical issues associated with moving large power transformers. Like wind turbine 

components, transformers require special permits for transport over highways. Though trailers for road 

transport are generally only around 70 feet long, large transformer units can weigh up to 400 tons.112 Transport 

via rail requires a specialized car of which only roughly 30 are available in North America.113 Estimates suggest 

that transportation and logistics costs represent 3 percent to 20 percent of the total cost of a large transformer.114

Administration Activities and Plans

New per-vessel user fee to double the size of the Inland Waterways Trust Fund. This fund currently pays 50 percent 

of the Federal cost for construction, replacement, rehabilitation, and expansion for inland waterways (the other 50 percent is 

derived from the General Fund of the Treasury). Inland Waterways Trust Fund funding is derived from a fuel tax on commercial 

transportation on most of the inland waterways. In December 2014, Congress authorized an increase in the fuel tax from the 

current $0.20 per gallon to $0.29 per gallon, to take effect after March 31, 2015. The President’s Fiscal Year 2016 Budget 

proposes a new per-vessel user fee that will raise an additional $1.1 billion over the next 10 years from the users, effectively 

doubling the level of resources available in the Waterways Trust Fund. These increased resources are allocated through annual 

Appropriations acts (and would be matched by General Fund revenues). As such, the level of investment in inland waterways 

infrastructure can continue to be expanded to the extent that it is matched by appropriations from the General Fund. 

Department of Transportation/Maritime Administration StrongPorts initiative. This program is developing tools 

and initiatives helpful to port authorities that are pursuing modernization projects, including those interested in public-private 

partnerships. StrongPorts initiatives include a Port Planning and Investment Toolkit that provides port authorities with a 

how-to guide for performing due diligence and developing an investment-grade project; a new “PortTalk” initiative aimed 

at helping ports to integrate these projects into state transportation department and metropolitan planning organizations’ 

transportation infrastructure planning and funding processes; and direct technical assistance to ports interested in taking 

advantage of Federal grant assistance. While the StrongPorts initiative does not provide direct financial assistance, the recently 

released guide provides an additional resource regarding financing for ports. More information can be found at

www.marad.dot.gov/ports_landing_page/StrongPorts/StrongPorts.htm.

GROW AMERICA Act multi-modal freight grant program. The Administration’s Fiscal Year 2016 Budget includes a new 

transportation Infrastructure financing proposal—the Generating Renewal, Opportunity, and Work with Accelerated Mobility, 

Efficiency, and Rebuilding of Infrastructure and Communities throughout America Act (GROW AMERICA Act). This proposal 

includes $18 billion over 6 years to establish a new multi-modal freight grant program to fund innovative rail, highway, and 

port facilities that will improve the efficient movement of goods across the country. The GROW AMERICA Act also will give 

shippers and transportation providers a stronger role in working with states to collaborate and establish long-term freight 

strategic plans.

Expanded funding for the Department of Transportation TIGER grant program. The Transportation Investment 

Generating Economic Recovery (TIGER) program is a competitive grant program that funds state and local transportation 

projects across the United States. TIGER’S broad eligibility criteria make it ideal for multi-modal, multi-jurisdictional projects, 

such as landside infrastructure for ports and waterways, which can be difficult to fund under state block grants. Since 2009, 

Congress has dedicated $4.2 billion for TIGER projects, of which $400 million has gone to port-related projects. However, 

TIGER is currently oversubscribed; in its most recent funding round, only 72 of 797 eligible applications were funded, and 15 

times the available $600 million was requested. The Administration’s GROW AMERICA Act proposal will provide $7.5 billion 

over 6 years, more than doubling the TIGER competitive grant program.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-27

QER Recommendations

PORTS, HARBORS AND CONNECTORS

The shared infrastructures in inland waterways and ports that are important for waterborne transport 

of energy commodities need to be strengthened, both to accommodate the increased use of waterborne, 

rail, and road transport to move energy commodities and to recognize the key role these infrastructures 

play in domestic commerce, generally. Accordingly, we recommend the following:

Support alternative funding mechanisms for waterborne freight infrastructure: Recognizing that 

no one entity or program can fully address the scale and diversity of investment requirements, the 

Administration should examine alternative financing arrangements for waterborne transportation 

infrastructure. The working group should develop strategies for public-private partnerships to

finance port and waterway infrastructure. It should also coordinate and integrate Federal investment 

programs through DOT and USACE and consider new user fee arrangements that better allocate 

costs to beneficiaries, as well as potential tax incentives. The Administration should also work to 

encourage non-Federal involvement in ports and inland waterways, targeting the beneficiaries of 

infrastructure investment identified in the needs assessment. Options would be informed by findings 

of the one-time comprehensive energy needs assessment for coastal ports, inland waterways, and 

connectors, which would establish the foundation for providing additional support for projects at 

energy-intensive port and harbors. 

Support a new program of competitively awarded grants for shared energy transport systems: 

Reducing congestion from additional movement of energy commodities to and from coastal 

ports and inland waterways, improving air quality, and enhancing public safety in and around 

ports and waterways will help meet competiveness, environmental, and security goals. The DOT

Transportation Investment Generating Economic Recovery (TIGER) program has successfully 

targeted investment in port connectors but it is not specific to energy and is heavily oversubscribed; 

only 10 percent of past TIGER awards have gone to port connectors. A similar grant program—

Actions to Support Shared Energy Transport Systems, or ASSETS—should be established and 

supported at DOT, operated in close cooperation with DOE; this program would be dedicated to 

improving energy transportation infrastructure connectors. The ASSETS program could provide 

significant benefits as a stand-alone measure while a new, more comprehensive infrastructure 

investment framework takes shape. 

The estimated scale of ASSETS investment could be on the order of $2.0 billion to $2.5 billion over the 

next 10 years, which would likely mobilize $4.0 billion to $5.0 billion in non-Federal investment, based 

on typical TIGER cost shares. 

Support public-private partnerships for waterborne transport infrastructure: The U.S. freight 

transport system is a complex blend of Federal, state, and local government and private sector assets, 

as well as operation and maintenance investments. Developing a set of shared investment priorities 

can ensure that both public and private needs are met.
5-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

Data, Modeling, and Analysis

Policymakers, investors, managers, and users of shared transportation systems require better information 

in order to plan new infrastructure investments and optimize current operations to minimize the cost of 

congestion, limit environmental impacts, and ensure safety. However, the increase in multi-modal transport 

of energy and other commodities presents new complexities in understanding the interplay among rail, 

highway, and waterborne freight transportation. Furthermore, significant gaps exist in the data collected by 

various Federal agencies and, even where the data is collected, there are often long lags between commodity 

movements and the publication of data.

As one example, the most granular source of multi-modal commodity, route, and origin and destination 

data now available is the Freight Analysis Framework.115 However, as a mechanism for understanding energy 

commodity flows, the framework has significant limitations. For instance, it is based on the Commodity Flow 

Survey, a joint effort of the Bureau of Labor Statistics and the Department of Commerce’s Census Bureau.116 

The survey is derived from data collected every 5 years—a frequency that does not adequately capture the 

rapid changes in the energy sector. 

QER Recommendations

MODELING, ANALYSIS, AND DATA COLLECTION

Coordinate data collection, modeling, and analysis: DOE should lead an interagency effort with 

DOT, USDA, USACE, and the Coast Guard—in cooperation with other relevant agencies with 

data regarding marine, rail, and other energy transport modes—to improve and coordinate their 

respective data collection, analytical, and modeling capabilities for energy transport on shared 

infrastructures. For example, DOE, leveraging the technical resources and expertise of the national 

laboratories, should work with DOT and USACE to develop new modeling and analytical tools 

to establish a more comprehensive systems framework for analysis of MTS infrastructure issues. 

This modeling and analysis effort should apply the improvements in data on shared transportation 

systems recommended elsewhere in the QER and the ongoing efforts of the Committee on the 

MTS to improve maritime data. A concerted effort should also be made to improve the data in the 

Freight Analysis Framework and the Commodity Flow Survey and make this tool more useful as 

a mechanism for understanding energy commodity flows. This effort will enable better informed 

investment decisions by both government and industry through a better understanding of energyrelated supply chain issues. 

Assess the impacts of multi-modal energy transport: DOE, working with DOT and USACE, 

should conduct a one-time comprehensive needs assessment of investment needs and opportunities 

to upgrade the Nation’s energy-related shared water transport infrastructure. The assessment should 

take advantage of the new analytics and modeling tools previously recommended to assess and 

prioritize investments from a systems perspective, taking into account the dramatic changes and 

projections of future use of shared water transport infrastructures due to changes in domestic energy 

markets, increases in vessel size, and other factors. The infrastructure investment analysis should 

identify the costs and benefits (including beneficiaries) in order to guide capital investment planning 

and identify equitable partnerships among the Federal Government, state and local governments, 

and the private sector infrastructure users.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-29

QER Recommendations (continued)

MODELING, ANALYSIS, AND DATA COLLECTION

Assess energy component transportation: DOE, in coordination with relevant agencies, should 

examine logistical challenges in the transportation of oversized or high-consequence energy 

materials, equipment, and components. The study will assess the capacity of infrastructure systems, 

such as roadways, waterways, and railroads, to safely accommodate more frequent and larger 

shipments where energy analyses indicate such transport will be required. The study will also 

examine opportunities for coordination of Federal, state, and local permitting and other regulatory 

processes along affected transportation routes, as well as the role of private sector infrastructure 

owners and users in enhancing the safety and reliability of transporting certain energy-related 

materials components.  
5-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

RECOMMENDATIONS IN BRIEF: 

Improving Shared Transport Infrastructures

Enhance the understanding of important safety-related challenges of transport of crude oil and ethanol by 

rail and accelerate responses. Key activities at the Department of Energy (DOE) and Department of Transportation (DOT) 

should be strongly supported.

Further analyze the effects of rail congestion on the flow of other energy commodities, such as ethanol and 

coal. DOE, the Surface Transportation Board, and the Federal Energy Regulatory Commission should continue to develop their 

understanding of how rail congestion may affect the delivery of these energy commodities. 

Analyze the grid impacts of delayed or incomplete coal deliveries. In assessing these issues, DOE and other relevant 

Federal agencies should examine whether a minimum coal stockpile for electricity reliability should be established for each 

coal-fired unit.

Address critical energy data gaps in the rail transport of energy commodities and supplies. Congress should 

fund the President’s Fiscal Year 2016 Budget request for the Energy Information Administration to address critical energy 

transportation data gaps and continued data sharing with the Surface Transportation Board. 

Support alternative funding mechanisms for waterborne freight infrastructure. The Administration should form 

an ongoing Federal interagency working group to examine alternative financing arrangements for waterborne transportation 

infrastructure and to develop strategies for public-private partnerships to finance port and waterway infrastructure.

Support a new program of competitively awarded grants for shared energy transport systems. A new grant 

program—Actions to Support Shared Energy Transport Systems, or ASSETS—should be established and supported at DOT, in 

close cooperation with DOE. This program should be dedicated to improving energy transportation infrastructure connectors. 

The estimated scale of ASSETS investment should be on the order of $2.0 billion to $2.5 billion over the next 10 years, which 

would likely mobilize $4.0 billion to $5.0 billion in non-Federal investment, based on typical TIGER cost shares.

Support public-private partnerships for waterborne transport infrastructure. Developing a set of shared priorities 

for investment ensures that public and private sector needs are met.

Coordinate data collection, modeling, and analysis. DOE should lead an interagency effort with DOT, the Department 

of Agriculture, the Army Corps of Engineers, and the Coast Guard—in cooperation with other relevant agencies with data 

regarding marine, rail, and other energy transport modes—to improve and coordinate their respective data collection, 

analytical, and modeling capabilities for energy transport on shared infrastructures. 

Assess the impacts of multi-modal energy transport. DOE, working with DOT and the Army Corps of Engineers, should 

conduct a one-time comprehensive needs assessment of investment needs and opportunities to upgrade the Nation’s energyrelated shared water transport infrastructure. 

Assess energy component transportation. DOE, in coordination with relevant agencies, should examine routes for 

transportation of system-related equipment, materials, and oversized components. The assessment would include the capacity 

of the Nation’s transportation infrastructure systems to safely accommodate more frequent and larger shipments where 

analyses indicate such transport will be required. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-31

Endnotes

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5-32 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures

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99. University of Wisconsin–Madison, Department of Civil and Environmental Engineering College of Engineering, 

National Center for Freight & Infrastructure Research & Education. “Transportation Impacts of Frac Sand Mining in 

the MAFC Region: Chippewa County Case Study White Paper Series: 2013.” http://midamericafreight.org/wp-content/

uploads/FracSandWhitePaperDRAFT.pdf. Accessed April 2, 2015.

100.National Renewable Energy Laboratory. “Supply Chain and Blade Manufacturing Considerations in the Global Wind 

Industry.” Presentation by Ted James and Alan Goodrich. December 2013. http://www.nrel.gov/docs/fy14osti/60063.

pdf. Accessed April 3, 2015. 

101.American Institute of Marine Underwriters Technical Services Committee. “Wind Turbine Paper.” January 2012. 

http://www.aimu.org/aimupapers/AIMUWindTurbinefinal7.24.pdf. Accessed March 20, 2015.

102.Department of Energy. “Wind Vision Report: Chapter 2- Wind Technology and Performance.” 2015. http://www.

energy.gov/windvision. Accessed March 24, 2015.

103.Business Wire. “Research and Markets: Wind Turbine Rotor Blade Market by Material & Blade Size - Global Trends 

and Forecasts to 2019.” January 12, 2015. http://www.businesswire.com/news/home/20150112005313/en/ResearchMarkets-Wind-Turbine-Rotor-Blade-Market. Accessed April 3, 2015.

104.Department of Energy. “Wind Vision Report: Chapter 2- Wind Technology and Performance.” 2015. http://www.

energy.gov/windvision. Accessed March 24, 2015.

105.Department of Energy. “Wind Vision: A New Era for Wind Power in the United States.” Chapter 2. March 2015. http://

www.energy.gov/sites/prod/files/wv_chapter2_wind_power_in_the_united_states.pdf. Accessed March 24, 2015.

106.National Renewable Energy Laboratory. “Supply Chain and Blade Manufacturing Considerations in the Global Wind 

Industry.” Presentation by Ted James and Alan Goodrich. December 2013. http://www.nrel.gov/docs/fy14osti/60063.

pdf. Accessed April 3, 2015 

107.Department of Energy. “Wind Vision Report: Chapter 2- Wind Technology and Performance.” 2015. http://www.

energy.gov/windvision. Accessed March 24, 2015.

108.American Wind Energy Association. “Anatomy of Wind Turbine.” http://www.awea.org/Issues/Content.

aspx?ItemNumber=5083. Accessed March 24, 2015.

109.Department of Energy. “Wind Vision Report: Chapter 2- Wind Technology and Performance.” 2015. http://www.

energy.gov/windvision. Accessed March 24, 2015.

110.J. Cotrell, T. Stehley, J. Johnson, J.O. Roberts, Z. Parker, G. Scott, and D. Heimiller. “Analysis of Transportation and 

Logistics Challenges Affecting the Deployment of Larger Wind Turbines: Summary of Results.” National Renewable 

Energy Laboratory. January 2014. http://www.nrel.gov/docs/fy14osti/61063.pdf. Accessed April 3, 2015
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 5-37

111.Department of Energy. “Wind Vision Report: Chapter 2- Wind Technology and Performance.” 2015. http://www.

energy.gov/windvision. Accessed March 24, 2015.

112.Department of Energy. “Large Power Transformers and the U.S. Electric Grid.” June 2012. http://energy.gov/sites/prod/

files/Large%20Power%20Transformer%20Study%20-%20June%202012_0.pdf. Accessed March 24, 2015.

113.Pentland, W. “Schnabel Cars: Another Reason Large-Power Transformers Are The Weakest Link In The Bulk Power 

Grid.” Forbes Magazine. May 5, 2014. http://www.forbes.com/sites/williampentland/2014/05/05/schnabel-cars-anotherreason-large-power-transformers-are-the-weakest-link-in-the-bulk-power-grid/. Accessed April 3, 2015

114.Department of Energy, Office of Electricity Delivery and Energy Reliability, “Large Power Transformers and the 

U.S. Electric Grid,” June 2012, http://energy.gov/sites/prod/files/Large%20Power%20Transformer%20Study%20-%20

June%202012_0.pdf. Accessed April 3, 2015

115.Oak Ridge National Laboratory, Center For Transportation Analysis. “Freight Analysis Framework.” February 24, 

2015. http://faf.ornl.gov/fafweb/Default.aspx. Accessed February 24, 2015.

116.Census Bureau. “Commodity Flow Survey.” http://www.census.gov/econ/cfs/. Accessed February 24, 2015.
5-38 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter V: Improving Shared Transport Infrastructures
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-1

Chapter VI

This chapter takes a broader look at the current energy trade and the 

continuing integration of energy markets and infrastructure in the North 

American region. Its discussion includes cross-border infrastructure with 

Canada and Mexico, impacts of climate change on energy infrastructure in the 

Arctic, and the evolving energy needs of the Caribbean region. For each major 

geographic focus of this chapter, the status of Administration initiatives is 

discussed and recommendations for further action are presented.

INTEGRATING NORTH 

AMERICAN ENERGY MARKETS
6-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

FINDINGS IN BRIEF: 

Integrating North American Energy Markets

Overall North American Findings

• The United States has significant energy trade with Canada and Mexico, including oil and refined 

products, gas, and electricity. Canada is the largest energy trading partner of the United States, with energy trade 

valued at $140 billion in 2013. Mexican energy trade was valued at $65 billion in 2012. Both countries are reliable 

sources of secure energy supplies.

• Greater coordination will improve energy system efficiency and build resiliency to disruptions of the 

North American energy market, data exchanges, and regulatory harmonization.

Findings on Canada

• The electricity systems of the United States and Canada are fully interconnected. There are currently 

more than 30 active major transmission connections between the United States and Canada, trading approximately

$3 billion worth of electricity in 2014. If the transmission projects filed with the Department of Energy in the last 5 years 

are constructed, they would add approximately 4,100 megawatts of additional hydropower to the U.S. electricity mix.

• Canadian natural gas production is expected to slightly outpace consumption with exports rising 

slowly over the projection period. Oil production is anticipated to continue to grow over the next 30 years.

Findings on Mexico

• Mexico has reformed its energy sector. Mexico amended its constitution and reformed its energy sector in 2013, 

retaining government control over its assets while opening oil and gas resources to private sector exploration and 

development. These reforms provide an opportunity for increased trade with the United States.

• Increasing U.S. natural gas exports may help Mexico generate more gas-fired electricity and achieve its 

environmental goals.

Findings on the Arctic

• Changing climate conditions in the Arctic are expected to continue with the melting of permafrost and 

reduced sea ice extent, which will affect increasing energy development that is underway. This presents 

both an opportunity for greater cooperation between the United States and Canada, but also a need for both countries 

to undertake risk mitigation.

Findings on the Caribbean

• There is an opportunity to lower Caribbean electricity costs and emissions. The Caribbean is largely 

reliant on foreign sources of oil with little energy resources of its own. Energy demand is driven largely by electricity 

generation, mostly from fuel oil. A 30-percent decrease in carbon dioxide emissions could be achieved by displacement 

of fuel oil by natural gas—and even more if this were combined with renewable energy.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-3

Benefits of North American Energy System Integration 

The United States has a robust energy trade with both Canada and Mexico and the potential to increase its 

energy trade with the Caribbean region. Policymakers throughout North America understand and value the 

benefits derived from our common energy market, our shared environmental and security goals, and the 

infrastructure that undergirds our economies. Individual projects and policies will continue to be evaluated 

by each government. This chapter considers the role of transmission, storage, and distribution (TS&D) 

infrastructure as part of a broader discussion of past energy trade relationships; current developments and 

trends in both Canadian and Mexican energy systems; ongoing initiatives for better market integration; and 

future challenges and opportunities, especially in the Arctic and the Caribbean.

Energy trade in North America has a long history. The first recorded international electricity interconnection 

crossed the U.S.-Canada border near Niagara Falls in 1901.1

 For several decades, the United States largely 

has been a recipient of energy resources (whether for internal consumption or for refining and re-export). 

Developments in energy production, processing, and consumption in the past 10 years have dramatically 

altered North American energy flows. At the same time, U.S. electricity demand has fallen, and all three 

countries have begun implementing policies to reduce greenhouse gas emissions from their energy sectors. 

This changing North American energy landscape presents opportunities for increased integration of markets 

and policies to further energy, economic, and environmental objectives. 

In 2013, energy trade between the United States and Canada reached approximately $140 billion,2, 3 and energy 

trade with Mexico exceeded $65 billion in 2012.4 Electricity, liquid fuels, and natural gas cross U.S. borders with 

Canada and Mexico at many points and in large quantities on an annual basis (see Figure 6-1).

The 1994 implementation of the North American Free Trade Agreement—which prohibits most import 

and export restrictions, including those placed on energy commodities—did not apply to Mexico for energy 

commodities due to its constitutional provisions.5

 As a result, while the North American Free Trade Agreement 

has promoted U.S. and Canadian energy market integration, it has been less successful in achieving energy 

market integration between the United States and Mexico. Recent regulatory reforms undertaken by Mexico in 

both the hydrocarbon and electricity sectors are anticipated to open its energy market to foreign investment, 

to present an opportunity for increased integration with the broader North American energy system, and to 

elevate the importance of its energy commodities in trade with the United States and Canada via the North 

American Free Trade Agreement.6
6-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

Figure 6-1. North American Energy Flows7

Energy trade between Canada and the United States dominates the North American market, but Mexico’s reforms provide an opportunity for 

increased integration and trade. The size of the arrows is roughly equivalent to the quads of energy of the imports or exports.

Energy system integration is in the interest of all North American countries, as it expands the size of energy 

markets, creates economies of scale to attract private investment, lowers capital costs, and reduces energy costs 

for consumers. Expanding energy systems may also allow for the development of a more diverse mix of energy 

resources (including renewable energy), processing facilities, and end uses—all of which increase energy 

security.

2,579

Mbbl/d

850

Mbbl/d

532

Mbbl/d

68

Mbbl/d

68

Mbbl/d

1.8

Bcf/d

1.6

GWh/d

3.5

GWh/d

133

Mbbl/d

563

Mbbl/d

563

Mbbl/d

415

Mbbl/d

2.5

Bcf/d

158.4

GWh/d

31.1

GWh/d

31.1

GWh/d

Crude Oil (Mbbl/d, 2013)

Refined Products (Mbbl/d, 2013)

Natural Gas (Bcf/d, 2013)

Electricity (GWh/d, 2012)

7.6

Bcf/d

7.6

Bcf/d
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-5

TS&D infrastructure already plays an important role in integration of North American energy markets. This 

infrastructure allows these markets to operate more efficiently and with greater resilience to disruptions. 

For example, the integration of the U.S. and Canadian electric reliability systems considerably enhances 

performance and resilience. Bilateral and trilateral collaboration among the U.S., Canadian, and Mexican 

governments, as well as each country’s participation in multilateral energy initiatives, has also contributed to 

establishing and harmonizing the policies and programs most useful to the efficiency and resilience of the 

North American energy system. 

Energy Trade with Canada

The energy relationship between the United States and Canada is highly intertwined. For many purposes, 

the energy sectors of the two countries are considered as one market. There are more than 80 transboundary 

pipelines and more than 30 electricity transmission lines (69 kilovolts or greater) that transport crude oil, 

refined products, natural gas, and electricity across the border.8, 9 Although the predominant flow of trade is 

from north to south, it is not entirely one-sided. Canada is an overall net exporter of energy to the United 

States, but the roles are reversed in certain regions, particularly where there are infrastructure constraints.

The Energy Information Administration (EIA) reported Canadian production of petroleum and other liquid 

fuels grew to more than 4 million barrels per day in 2013, an increase of more than 930,000 barrels per day 

from a decade ago (see Figure 6-2) and including 3.3 million barrels per day of crude oil and a small amount 

of lease condensate.10 Canada is the largest supplier of crude oil and refined products to the United States, 

exporting 3.1 million barrels per day in 2013.11 EIA’s 2014 International Energy Outlook forecasts that Canada’s 

petroleum production will experience 2.1 percent annual growth between 2010 and 2040, which would lead to 

a 51 percent growth by 2030.12

Figure 6-2. Canadian Oil Production and Consumption, 2004–201513

With production growing and consumption flat, Canada’s exports have increased over the last several years. Canada is the largest supplier of foreign 

oil to the United States.

5,000

3,500

4,000

2,500

1,500

4,500

3,000

2,000

1,000

500

0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Thousand Barrels per Day

Forecast

Oil Production

Oil Consumption

Net Exports
6-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

Canada’s National Energy Board projects that, starting in 2017 and continuing through the forecast period, 

natural gas production and consumption will closely track one another (see Figure 6-3).14 However, the price 

for U.S. gas may influence this; according to some analysts, the low cost and increasing supply of Marcellus 

production could price western Canadian gas out of the market.15 EIA projects that net pipeline imports from 

Canada will drop 80 percent in the next 15 years, from 2.0 trillion cubic feet in 2012 to 0.4 trillion cubic feet 

in 2030.16 This in turn could limit the need for new transborder natural gas pipeline development between the 

United States and Canada. 

The Dawn Hub, located in southeastern Ontario, illustrates the multiple benefits of U.S.-Canadian regional 

natural gas system integration. Able to store supplies from western Canada, the U.S. Northeast, Midwest, and 

Gulf Coast, the underground storage facilities in the Dawn area held 221.9 billion cubic feet in December 

2014,17 and they are used to balance seasonal peak demand in Ontario and supply downstream markets in the 

United States.18

Figure 6-3. Canadian Natural Gas Production, Domestic Demand, and Net Available Exports through 203519

While Canadian natural gas production and demand are roughly equivalent in the 2017 to 2022 time frame, natural gas available for exports 

increases steadily after that through 2035. 

Both the United States and Canada benefit from a relatively seamless border that allows grid managers to 

optimize electricity generation assets on both sides of the border in order to improve electric reliability and 

efficiency. Currently, there are more than 30 active major transmission connections (69 kilovolts or greater) 

between the two countries, trading approximately $3 billion (U.S. dollar) of electricity in 2013.20, 21 Three of 

eight North American Electric Reliability Corporation regions span the U.S.-Canadian border, coordinating 

among and setting standards for U.S. and Canadian utilities and regulators to assure electric reliability.22 Most 

Canadian electricity exports to the United States go to New England, New York, and the Upper Midwest, 

mainly from Quebec, Ontario, and Manitoba.23 Most U.S. electricity exports to Canada (about 75 percent) go 

to British Columbia, but U.S. exports made up only 18 percent of electricity trade between the two countries 

in 2014.24 Applications filed with the Department of Energy (DOE) in the last 5 years for Presidential permits 

20

15

10

5

Bcf/d

Marketable Production

0

Net Available Exports Domestic Demand

2000 2005 2010 2015 2020 2025 2030 2035
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-7

for electric transmission facilities crossing the U.S.-Canada border suggest an increased interest in utilizing 

Canadian hydropower to meet demand in the United States. If these projects were to be constructed, they 

would add approximately 4,100 megawatts of additional hydropower to the U.S. electricity mix.a, 25 This carbonfree generation has the potential to help the United States achieve its long-term greenhouse gas reduction 

goals.

As noted, the United States and Canada share one of the world’s great inland lake and waterway systems in the 

Great Lakes and St. Lawrence Seaway. The Army Corps of Engineers lists more than 60 commercial harbors on 

the U.S. Great Lakes coast alone.26 In 2013, nearly one-quarter of all shipments in and out of U.S. ports in the 

Great Lakes system were energy commodities moving between the United States and Canada. In that year, 

7.4 million tons of coal and petroleum products moved across the Great Lakes.27 U.S. coal exports to Canada 

have fallen approximately two-thirds between 2003 and 2013, even as overall U.S. coal exports have grown 

more than 170 percent—in part as a result of Canadian energy policies limiting coal use in the power sector. 

Imports of Canadian coal have also fallen by approximately one-half, from more than 2 million short tons in 

2003; although, their share of total U.S. coal imports has grown from 8 percent to 13 percent over the same 

time period.28

Energy Trade with Mexico

In December 2013, Mexico amended its constitution and reformed its energy sector. The principal factors 

driving these decisions were, in part, Mexico’s declining oil production over the past decade (see Figure 6-4), as 

well as its interest in promoting economic growth. Mexico’s reforms retain government control and ownership 

of assets while opening oil and gas resources to private exploration and development. They also include new 

governance structures for Petróleos Mexicanos and the Federal Electricity Commission and four new contract 

structures for oil development that align with international standards. The reforms establish Independent 

System Operators to manage electricity transmission. The reforms also will gradually adjust the retail fuel 

market. In August 2014, the Mexican Ministry of Energy announced “Round Zero” fields that Petróleos 

Mexicanos will retain, as well as “Round One” in which foreign companies will be allowed to participate for 

bidding through July 2015.29

a Recent Presidential Permit applications received by DOE’s Office of Electricity Delivery and Energy Reliability, National Electricity 

Delivery Division, indicate certain companies’ intentions to import hydropower from Canada. Specifically, Champlain Hudson 

Power Express, Northern Pass Transmission, and New England Clean Power Link would each deliver electricity from Hydro Quebec 

facilities. Great Northern Transmission Line would deliver electricity from Manitoba Hydro.
6-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

Figure 6-4. Mexico’s Oil Production and Consumption30

Recent trends in Mexican oil production and consumption indicate a decline in production and largely stable consumption. The Mexican energy 

reforms seek, in part, to reverse these declines in production. 

Mexico’s energy reforms present an opportunity to increase energy trade with the United States and enhance 

energy security for the region. 

The main cross-border infrastructure needs, particularly over the last decade, have been natural gas pipelines. 

Since 2000, U.S. exports of natural gas have increased six-fold and are projected to continue to increase 

through 2030 (see Figure 6-5).31, 32 More than 5 billion cubic feet per day of new pipeline export capacity 

has been added during this time period, with about half that amount in the form of expansions of existing 

pipelines.33 By 2016, EIA projects that the United States will be exporting more than 1 trillion cubic feet of 

natural gas to Mexico annually, and, by 2030, that amount is expected to almost double.34 This growth will be 

driven by continued increases in the use of natural gas for electric power generation, by demand for natural gas 

from Petróleos Mexicanos, and from consumers switching to natural gas when the infrastructure is in place to 

deliver additional volumes of natural gas.

Oil Production

20002001

5,000

4,000

3,000

2,000

1,000

0

Oil Consumption

2002

2003

2004

2005

2006

2007

20082009

2010

2011

20122013

Thousand Barrels per Day
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-9

Figure 6-5. U.S. Natural Gas Exports to Mexico35, 36

Mexican demand for U.S. natural gas is projected to grow through 2030, in large part driven by continued increases in the use of gas for electric 

power generation and residential use. 

If Mexico’s energy reforms achieve the goal of reversing the decline in its oil production, it is possible that 

Mexico will serve as a larger source of U.S. oil imports in 2030. Alternatively, if Mexico’s refinery capacity 

expands, more of its oil may stay in the country, and Mexico may export refined petroleum products instead of 

crude oil—most likely overseas. 

U.S. coal exports to Mexico have doubled between 2003 and 2013, but their share of total U.S. coal exports 

remained below 5 percent throughout this period.37

Currently, there is very little cross-border electricity trade between the United States and Mexico. Between 

southern California and Baja California, electricity is imported from a few power plants on the Mexican side to 

supply demand in the San Diego area, and a small portion of the grid in Baja California, Mexico, participates 

in the Western Electric Coordinating Council. At even lower voltage levels, a few ties connect southern and 

western Texas with the Mexican States of Tamaulipas and Chihuahua. Here, the transmission systems on either 

side operate independently, and trade mainly occurs during periods of constrained supply.38

There is potential for greater exchange of electricity between the United States and Mexico, particularly from 

natural gas-fired or renewable generation on both sides of the border.

U.S. Exports

2,500

Bcf

2,000

1,500

1,000

500

0

Projected U.S. Exports

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030
6-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

TS&D Infrastructures: Cooperation among the United States, Canada, and 

Mexico to Achieve Common Objectives

Going forward, enhanced system integration holds the potential to advance several objectives, including more 

efficient and smoothly integrated markets and protection of the environment.

Enhanced coordination on energy data, which is important for the proper function of energy markets, 

including the planning, construction, and operation of TS&D infrastructure, requires that market participants 

and policymakers have reliable, transparent, and comparable data on the overall energy system. The benefits of 

integration would be greatly enhanced by harmonizing and improving the availability of relevant energy data.

In addition, there are opportunities to build on past collaboration involving regulatory and industry 

counterparts to promote harmonization of relevant regulations, both with respect to energy overall and with 

respect to infrastructure specifically. Opportunities for further regulatory harmonization with both Canada 

and Mexico exist across different resources, types of infrastructure, modes of transport, market structures, 

energy security, and environmental protection. Engagement on these topics may be particularly important on 

regional and local levels, where it has been limited in the past. Regulatory harmonization benefits regulated 

parties by eliminating duplicative requirements and generating savings in time or cost. It benefits consumers 

by lowering costs and making products available in both countries. It benefits regulators by enabling joint 

approaches to common risks. 

The near-seamless integration of the U.S.-Canadian electricity grid has occasionally resulted in blackouts 

spanning the border, but in regional crises, cooperation among Federal, state, provincial and local governments, 

utilities, and regulators has provided benefits and enabled faster recoveries. Cross-border assistance for 

emergency response happens regularly in the electric sector. 

Superstorm Sandy (2012) stands out among recent examples of North American cross-border emergency 

response to power outages and other extreme weather impacts on energy infrastructure. Due to the storm, 

2.7 million customers were left without power in New Jersey alone.39 Approximately 800 Canadian utility 

workers traveled to New Jersey to help restore power in the aftermath of Superstorm Sandy. New Jersey 

Governor Chris Christie declared December 6, 2014, “Canadian Utility Workers Appreciation Day” in response 

to their volunteered support.40

In late January 2015, Hydro-Quebec dispatched 180 employees and 75 trucks to the Boston area to assist with 

power outages due to the snowfall there in response to mutual aid requests coordinated through the North 

Atlantic Mutual Assistance Group (NAMA).41 The group includes 21 utilities among 13 states, the District of 

Columbia, and 4 Canadian provinces, and it represents 1 of 7 Regional Mutual Assistance Groups organized by 

the Edison Electric Institute.42

Emergency response to electrical outages includes wheeling power through the grid to cover outages. A recent 

example of this practice occurred when Mexico supplied electricity to Texas to support Texas system operators 

threatened by blackouts.43

In addition to collaboration on preparedness and resilience, there are significant opportunities for the 

United States, Canada, and Mexico to cooperate on multiple initiatives, projects, and in international fora 

that promote clean energy and environmental responsibility. As Mexico develops its natural gas resources, 

better coordination of actions to mitigate methane emissions from natural gas systems, including TS&D 

infrastructures, could address climate concerns on both sides of the border. Similarly, to the extent that 

transmission projects enable access to new, existing, or expanded hydropower projects, the use of Canadian 

hydroelectric generation and pumped hydropower storage could help achieve U.S. clean energy goals by 

providing a low-cost addition to current state Renewable Portfolio Standard programs and by smoothing 

variable supply from renewable energy.44, 45 A 2014 Argonne National Laboratory study indicated that advanced 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-11

pumped hydropower storage could provide a range of grid management and cost reduction services to the 

Western Interconnection, including the Canadian provinces of British Columbia and Alberta and some areas 

of northern Mexico.46

Such initiatives have precedent: the Columbia River Treaty, ratified in 1964, has for more than 50 years 

provided coordinated operational benefits for the U.S. Federal Columbia River Power System and the Province 

of British Columbia hydro system. The reservoir storage authorized by the treaty allows the United States and 

Canada to optimize clean, renewable hydroelectric power generation.47 More recently, the Western Area Power 

Administration approved financing a portion of the Montana-Alberta Tie Line project—a 300-megawatt, 

230-kilovolt electrical transmission line allowing the movement of power between Montana and Alberta, 

Canada. The 214-mile (345-kilometer) line ties into the Alberta grid at a new substation located 9 miles 

(15 kilometers) northeast of the City of Lethbridge. The project supports ongoing development of a rich windpowered generation resource and allows much-needed energy to flow in both directions, ensuring increased 

availability of supply of electricity into the U.S. Pacific Northwest and Alberta. Northern Montana and 

southern Alberta are home to some of the best wind energy sources in North America.48

In addition to specific projects and regional programs, the United States, Canada, and Mexico have active 

governmental bilateral and trilateral engagements. At the 2014 North American Leaders Summit, leaders 

affirmed that energy is a trilateral priority and directed the three Energy Ministers to meet in 2014. Under 

a bilateral agreement between DOE and the Canadian Ministry of Natural Resources, signed September 

18, 2014, one of the five areas of cooperation between the two agencies is “safe and modern infrastructure, 

including cyber security.” Cooperative activities the agencies agreed to pursue are “sharing knowledge and 

exploring options to enhance reliability and security of the North American energy infrastructure.” Under the 

U.S.-Mexico High-Level Economic Dialogue, the United States and Mexico agreed to enhance communication 

and collaboration between our energy agencies and improve data and information sharing on U.S.-Mexico 

energy flows. In March 2015, the United States and Mexico also launched a high-level bilateral clean energy 

and climate policy task force to further deepen policy and regulatory cooperation and coordination. 

This cooperation is further extended through participation in multilateral efforts. The United States, Canada, 

and Mexico also participate in the Energy and Climate Partnership of the Americas, a flexible mechanism 

through which governments in the Western Hemisphere cooperate to accelerate clean energy development 

and deployment, advance energy security, meet climate challenges, and reduce poverty in the region. Mexico 

will host the second Energy and Climate Partnership of the Americas Ministerial on May 25–26 and chairs the 

Energy Efficiency Working Group. Canada chairs the Heavy Oil Working Group.

In May 2015, Mexico will host the sixth Clean Energy Ministerial (CEM) in Mérida.49 CEM is a high-level 

forum of the world’s major and forward-leaning countries working together to promote policies and share 

best practices to accelerate the transition to a global clean energy economy. Mexico participates in nine CEM 

initiatives, and through that work, it has developed voluntary standards for cool (reflective) roofs, including a 

national study on the energy savings potential of cool roof deployment across the country,50 and it has drawn 

on international expertise on power system transformation to support its energy reform agenda. The CEM 

Clean Energy Solutions Center Ask-An-Expert service, which provides policymakers in emerging economies 

with up to 40 hours of free technical assistance from policy experts in CEM countries, has assisted Mexico 

with developing appliance standards and labeling programs, building certification rating incentives, and 

developing a clean energy policy database. Canada and Mexico have participated in CEM initiatives advancing 

efficiency through municipal lighting system replacements and the International Smart Grid Action Network, 

which has gathered and shared in-depth case studies on advanced metering infrastructure and demand-side 

management. All three countries have collaborated on CEM-led initiatives to support implementation of the 

ISO 50001 International Energy Management Systems Standards.
6-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

Canada and Mexico also participate in the Carbon Sequestration Leadership Forum, a Ministerial-level 

international initiative focused on developing improved cost-effective technologies for the separation and 

capture of carbon dioxide for its transport and long-term storage. Canada currently participates in eighteen 

projects, including the completed Alberta Enhanced Coal-Bed Methane Recovery Project, which aimed at 

demonstrating the feasibility of coal-bed methane production and simultaneous carbon dioxide storage in 

deep unmineable coal seams.51

The United States, Canada, and Mexico also cooperate in other fora, including the Asia-Pacific Economic 

Cooperation, the Major Economies Forum, and the International Partnership for Energy Efficiency 

Cooperation. 

Administration Activities and Plans

Engagement on further integration of U.S., Canadian, and Mexican energy systems has led to a number of concrete outcomes, 

including the following:

Data Exchange. The United States, Canada, and Mexico are creating a framework for the sharing of publicly available 

information and data on their respective energy systems. This initiative was formalized in a memorandum of understanding 

(MOU) signed by the Department of Energy, Canada’s Ministry of Natural Resources, and Mexico’s Ministry of Energy on 

December 15, 2014. The trilateral MOU covers data, information, maps, and statistics that are publicly available (it excludes 

any information considered confidential, strategic, or fundamental for national security and sovereignty reasons). Areas 

of cooperation include comparing energy-flow data between countries; geospatial information related to infrastructure; 

projections for cross-border flows of natural gas, electricity, crude oil, and refined products; and sector terminology. The MOU 

is expected to facilitate further dialogue, comparisons, and joint and individual work products on each country’s energy 

outlooks and information.b

The President’s Fiscal Year 2016 Budget provides an increase of $1 million to the Energy Information Administration for the 

purpose of collaboration with Canada and Mexico to increase the quality, transparency, and integration of energy-related data. 

DIALOGUE WITH CANADA AND MEXICO ON THE QER

Development of the Quadrennial Energy Review (QER) has provided an opportunity to engage Canada and Mexico in a deeper 

dialogue on the integrated nature of North American energy systems—including transmission, storage, and distribution 

infrastructure. This engagement included contacts with energy ministries in Canada and Mexico, invitations to public entities 

in those countries to submit comments through the QER process, and two formal dialogues: one with the Ministry of Natural 

Resources of Canada (September 19, 2014) and the other with the Ministry of Energy of Mexico (December 4, 2014). The 

formal dialogues with Canada and Mexico included participation from multiple relevant government agencies, industry, nongovernmental organizations, and academic institutions. The input received from these sessions and through the formal public 

comment process (as described in Chapter X, Analytical and Stakeholder Process) has been considered in developing this 

section of the QER. 

Secretary Moniz, Secretary Joaquín Coldwell, and Minister Rickford met on December 15, 2014, in response to the call of the 

North American Leaders. They discussed in depth a strategic vision for North America’s energy sector and signed a trilateral 

memorandum of understanding. Key topics included public energy data and statistics collaboration; Mexico’s energy reform, 

its vision, perspectives, and opportunities for trilateral cooperation; and creating resilient infrastructure for North America.

b Department of Energy. “Memorandum of Understanding among the Department of Energy of the United States of America 

and the Department of Natural Resources of Canada and the Ministry of Energy of the United Mexican States Concerning 

Cooperation on Energy Information.” December 2014.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-13

Energy Security and the Arctic 

Energy delivery to remote areas in the Arctic—including diesel fuel for electricity generation and heating in 

remote communities, industrial uses in mining and other industrial operations, and military installations—

increases costs due to the broadly dispersed market and challenges of transporting energy products. Through 

its Power Cost Equalization program for rural communities, the Alaska Energy Authority reported serving 

more than 190 remote or rural communities, which used nearly 28 million gallons of diesel for electricity 

generation at an average price of $4.21 per gallon in fiscal year 2014.52

Impacts of Climate Change on TS&D Infrastructure in the Arctic

The entire Arctic is undergoing rapid changes on land and at sea due to the changing climate. Climate change 

is specifically affecting TS&D infrastructure in the North American Arctic region, including Alaska and 

U.S. territorial waters in the Bering, Chukchi, and Beaufort Seas, as well as Canada and its territorial waters. 

Warming in the Arctic region is resulting in increased risk of land subsidence from thawing permafrost, 

which threatens infrastructure.53 It also leads to a reduction in late-summer sea ice extent, which increases 

QER Recommendations

NORTH AMERICAN ENERGY MARKET INTEGRATION

There are opportunities to build on past accomplishments in further enhancing North American energy 

integration. Accordingly, we recommend that all three countries carry out the following:

Continue advances that have been made in the North American energy dialogue: All three 

countries should encourage further business exchanges and regular minister-level engagement.

Increase the integration of energy data among the United States, Canada, and Mexico: Provide 

resources for EIA to collaborate with its Canadian and Mexican counterparts to systematically compare 

their respective export and import data, validate data, and improve data quality. In addition, efforts 

should be taken to better share geographic information system data to develop energy system maps 

and review forward-looking assessments and projections of energy resources, flows, and demand.

Undertake comparative and joint energy system modeling, planning, and forecasting: All three 

countries should enhance comparative and joint modeling, planning, and forecasting among U.S., 

Canadian, and Mexican energy ministries and related governmental agencies. The current scale 

of activities has aided bilateral and individual goals; however, increasing trilateral engagement on 

planning, modeling, or forecasting activities would capture greater efficiencies and enhance each 

country’s ability to reach economic, security, and environmental goals. DOE’s Offices of Energy Policy 

and Systems Analysis and International Affairs should lead modeling workshops with their Canadian 

and Mexican counterparts to share methodologies and collaborate on North American analysis.

Establish collaborative programs in each country for academic institutions and not-for-profits 

to develop legal, regulatory, and policy roadmaps for harmonizing regulations across borders: In 

partnership with universities, qualified not-for-profits, and relevant U.S. energy regulatory authorities, state/

provincial, local, and national energy regulations will be compared to identify gaps, best practices, and 

inconsistencies with regulations in Canada and/or Mexico with the goal of harmonization.

Coordinate training and encourage technical dialogue: This coordinated training and enhanced 

dialogue of technical staff in government agencies of the three North American countries that share 

similar responsibilities to evaluate and implement cross-border energy projects.
6-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

opportunities for offshore hydrocarbon and mineral exploration and extraction. The combination of these 

effects will likely affect Alaska and Canadian Arctic energy infrastructure onshore and offshore over the next 

several decades.54 These changes are becoming more significant as both the United States and Canada increase 

energy production in the region. Cooperation between the United States and Canada on a range of issues from 

Arctic energy infrastructure to climate and ocean science may become an important new dimension to the 

U.S.-Canadian energy relationship. 

Climate impacts—including primarily land subsidence caused by thawing permafrost, but also coastal 

impacts—are estimated to add between $3.6 billion and $6.1 billion (10 percent to 20 percent) to current costs 

of maintaining public infrastructure in Alaska over the next 20 years. Road, harbor, and airport maintenance 

comprise 57 percent of these projected additional maintenance costs through 2030.55 The design of the TransAlaska Pipeline System illustrates the challenges posed by building on permafrost. Elevated above the tundra 

for approximately 400 miles with supports that allow for extensive vertical and horizontal movement to 

prevent damage from seismic or subsidence incidents, the Trans-Alaska Pipeline System cost $8 billion to build 

in 1977—a sum that indicates the expense that such adaptive measures entail. A 2008 U.S. Geological Survey 

study estimated that major disruptions caused by subsidence activity requiring replacement of the TransAlaska Pipeline System pipeline sections could result in $1.25 million per kilometer in repair costs.56

Climate changes affect energy exploration, development, and infrastructure for access to resources. It also 

creates more unpredictable work seasons and transportation conditions. For example, since the 1970s, 

permafrost changes have led to a 50-percent decrease in the length of time during which oil and gas 

exploration on tundra is allowed.57 As transmission and storage facilities and vessels are increasingly employed 

to access Arctic energy resources, safety and spill and leak-prevention standards or regulations will also need to 

be tailored to the region given its changing climate and harsh conditions. 

Administration Activities and Plans

The Administration is committed to taking a thoughtful and balanced approach to oil and gas leasing and exploration in the 

Arctic, recognizing its substantial oil and gas potential, as well as the marine and coastal resources that Native communities 

depend on for subsistence and the unique and sensitive ecosystems that it harbors. In early 2015, the Department of the 

Interior took steps to resolve judicial concerns that had prevented a final decision on whether to award leases in the Chukchi 

Sea under a 2008 oil and gas lease salec and released a Proposed 5-Year Plan for additional offshore oil and gas exploration 

that solicited comment on three additional lease sales in waters offshore Alaska during the 2017 to 2022 period.d The 

Administration also moved to protect some sensitive undersea areas in the Beaufort and Chukchi Seas by withdrawing them 

from future leasing for oil or gas exploration and development.e The Administration’s policy is to develop scientific information 

and stakeholder feedback to proactively determine, in advance of any potential offshore lease sale, which specific areas 

offer the greatest resource potential while minimizing potential conflicts with environmental, subsistence, and multiple use 

considerations.f

c Department of the Interior. “Department Releases Updated Assessment for Chukchi Sea Lease Sale.” February 12, 2015. http://

interior.gov/news/pressreleases/interior-department-releases-updated-assessment-for-chukchi-sea-lease-sale.cfm. 

Accessed February 26, 2015.

d Department of the Interior, Bureau of Ocean Energy Management. “2017–2022 Outer Continental Shelf Oil and Gas Leasing 

Draft Proposed Program.” January 2015. http://www.boem.gov/2017-2022-DPP/. Accessed February 26, 2015.

e The White House. “Presidential Memorandum – Withdrawal of Certain Areas of the United States Outer Continental Shelf 

Offshore Alaska from Leasing Disposition.” January 27, 2015. http://www.whitehouse.gov/the-press-office/2015/01/27/

presidential-memorandum-withdrawal-certain-areas-united-states-outer-con. Accessed February 6, 2015.

f Department of the Interior, Bureau of Ocean Energy Management. “2017–2022 Outer Continental Shelf Oil and Gas Leasing 

Draft Proposed Program.” p. S-6. January 2015. http://www.boem.gov/2017-2022-DPP/. Accessed February 26, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-15

Administration Activities and Plans (continued)

On February 20, 2015, the Department of the Interior released proposed regulations to ensure that future exploratory drilling 

on the U.S. Arctic Outer Continental Shelf is conducted safely and responsibly, guided by the highest operational standards. 

The proposed rule for Arctic standards focuses solely on the Beaufort Sea and Chukchi Sea Planning Areas. The regulations 

seek to ensure that operators take the necessary steps to plan and safely operate through all phases of offshore exploration in 

the Arctic environment, including mobilization, drilling, maritime transport, and emergency response. The enhanced regulatory 

framework would ensure that operators and their contractors are appropriately prepared for Arctic conditions and that 

operators have developed an integrated operations plan to cover all operations. The proposed regulations released incorporate 

some of the lessons learned from Shell’s 2012 operations and recommendations from the Department’s review.

In addition to these steps, at the request of Secretary of Energy Moniz, the National Petroleum Council undertook a study on 

Arctic research requirements and the technology constraints that must be addressed to ensure prudent oil and gas resource 

development, advance U.S. energy and economic security, and ensure environmental stewardship there. The study focused on 

technology constraints for offshore oil and natural gas liquids development, primarily in shallow depths.g

In response to energy needs in Arctic communities, the Department of Energy’s National Renewable Energy Laboratory, in 

partnership with the Department of the Interior, developed the Remote Communities Renewable Energy partnership, which 

aims to develop, demonstrate, and deploy smaller-scale, hybridized, modular platforms to harvest energy from local renewable 

energy resources, reduce diesel fuel dependence and distribution requirements, and create an independent microgrid 

operation.h

Beginning in April 2015, the United States will assume the chairmanship of the Arctic Council for a 2-year term and will 

propose collaborative initiatives for the council to implement in such areas as addressing the impact of climate change and 

Arctic Ocean stewardship and scientific research. In advance of the chairmanship, President Obama issued an Executive Order 

on January 21, 2015, establishing an Arctic Executive Steering Committee led by the Director of the White House Office of 

Science and Technology Policy.i, j

Within the U.S. Arctic Council agenda under the Sustainable Arctic Communities pillar, the State Department has proposed 

a suite of renewable energy programming to address region-specific barriers to project deployment and convening best 

practices. These projects include constructing a high-penetration wind-diesel hybrid system based on the Remote Community 

Renewable Energy partnership design in a rural Arctic community. The Arctic Council’s Sustainable Development Working 

Group is also sponsoring an Arctic Energy Summit in Fairbanks, Alaska, this September that will address energy challenges 

including renewables, oil and gas development, remote and rural heat and power, and energy transmission and transportation. 

The State Department also plans to sponsor an Arctic Renewable Energy business plan challenge through our Arctic embassies.

g National Petroleum Council, Committee on Arctic Research. “Arctic Potential: Realizing the Promise of U.S. Arctic Oil and 

Gas Resources.” March 31, 2015. http://www.npcarcticpotentialreport.org/pdf/AR_Exec_Summary.pdf. Accessed April 2, 

2015.

h National Renewable Energy Laboratory. “Remote Community Renewable Energy Partnership.” 2014. http://

alaskarenewableenergy.org/wp-content/uploads/2010/09/HighPenetrationModularSystem_BrianHirsch_NREL.pdf. 

Accessed February 26, 2015.

i Executive Order No. 13,689. “Enhancing Coordination of National Efforts in the Artic.” 80 Fed. Reg. 4191. January 26, 2015. 

http://www.gpo.gov/fdsys/pkg/FR-2015-01-26/html/2015-01522.htm.

j The member states of the Arctic Council are Canada, Denmark, Finland, Iceland Norway, the Russian Federation, Sweden, and 

the United States. Other countries have observer status on the council. Recent U.S. and European Union sanctions may affect 

coordination with Russia over the next few years.
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Chapter VI: Integrating North American Energy Markets

QER Recommendations

ARCTIC ENERGY TS&D INFRASTRUCTURE

Through the U.S. chairmanship of the Arctic Council and in partnership with Canada, the U.S. 

government should provide leadership on energy safety, reliability, and environmental protection in 

Arctic regions, and on improving energy availability in remote areas, through the following: 

Partner with Canada and the Arctic Council on Arctic energy safety, reliability, and 

environmental protection: DOE, the Department of the Interior, the Coast Guard, and the State 

Department should partner with Canada and other Arctic Council members, including the Arctic 

Regulators Forum, to emphasize research and information sharing on the effects of spills and the 

effectiveness of countermeasures, the identification and mobilization of the resources necessary 

to mitigate the effects of a pollution incident, and the development of international guidelines for 

preparedness and response in this logistically challenging region. 

Partner with Canada and the Arctic Council on energy delivery to remote areas: Additionally, 

under the Arctic Council, and domestically, DOE, the Department of the Interior, and the State 

Department should promote the Remote Community Renewable Energy partnership: first by 

developing, testing, and demonstrating its proposed modules in the United States and second by 

seeking avenues to deploy small-scale, hybridized conventional fuel-renewable generation platforms 

in other Arctic Council countries.

Infrastructures for Diversification of Caribbean Energy Supply

The Caribbean energy market is not large, but, given its proximity to the North American markets and energy 

systems, it could be a beneficiary of the North American energy renaissance. Current dependence on highcost fuel imports for transportation and electricity generation is a major challenge for Caribbean islands, 

has local environmental and affordability impacts, and raises regional energy security and market concerns. 

Several strategies have emerged throughout the Caribbean to address the economic, environmental, and energy 

security issues associated with reliance on oil imports for electricity and transportation there.

The principal cause of high energy prices for electricity and transportation is the reliance of many Caribbean 

islands on oil imports. Currently, much of the Caribbean’s oil imports come from Venezuela through its Petrocaribe 

organization, financed in part by deferred payment structures.k

 From June 2005 through the first quarter of 2009, 

Venezuela delivered approximately 90.5 million barrels of crude oil and refined products at an estimated $14 per 

barrel price reduction from market price among receiving countries.58 Recently, Venezuela has been cutting the oil it 

supplies under these terms, which, in some cases, is leading to supply shortages on the islands. 

k On June 29, 2005, 14 Caribbean and Central American nations signed the Energy Cooperation Agreement, establishing Petrocaribe 

during the First Energy Meeting of Heads of State/Government of the Caribbean on Petrocaribe. Presently, the now 18-member 

energy alliance consists of Antigua and Barbuda, the Bahamas, Belize, Cuba, Dominica, the Dominican Republic, Grenada, 

Guatemala, Guyana, Haiti, Honduras, Jamaica, Nicaragua, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Saint Lucia, 

Suriname, and Venezuela. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-17

Risk and Resilience in the Caribbean

Recent history has illustrated the potentially devastating consequences of natural disasters in the Caribbean. Small Island 

Developing States, including many Caribbean nations, face high risks and potential losses due to their size, location, economic 

characteristics, capital stock, and investment ability. For example, the United Nations reported that climate change leads to an 

additional $1.4 billion in the expected average annual losses associated with wind damage alone in the Caribbean through 

2055.l

Apart from volatile energy prices, which affect Caribbean electricity generation and transportation, Caribbean islands face 

climate impacts to their energy infrastructure. Changes in precipitation may impact water availability on larger islands, 

including Jamaica, Haiti, and the Dominican Republic, for hydroelectric and thermal plants. Additionally, sea-level rise 

projections indicate greater impacts in the Caribbean due to gravitational and geophysical factors, and these impacts may 

affect coastal facilities, including power plants, oil refineries, and port facilities that receive oil and gas deliveries. Tropical 

storms represent a current and significant threat to Caribbean islands, and recent storms have resulted in the damage to 

energy production and distribution infrastructure, including damage to offshore platforms, pipelines, railways, roads, and 

bridges. Given the region’s current reliance on oil for electricity generation, disruptions to transportation infrastructure also 

impact energy reliability.m

Since its establishment in 2007, the Caribbean Catastrophe Risk Insurance Facility (CCRIF), the world’s first multi-country 

risk pool, has made nine payouts for extreme weather events (tropical cyclones, excess rainfall, and trough systems), totaling 

nearly $27 million to six member countries.n, o, p The CCRIF also performs regional tropical cyclone risk modeling in order to 

produce country profiles for its members. For example, using historic data, exposure assessment, and tropical cyclone risk 

modeling, the CCRIF profile of the Bahamas estimates a national loss of nearly $2.5 billion for a tropical cyclone with a 20-

year return period. 

l United Nations International Strategy for Disaster Relief. “Making Development Sustainable: The Future of Disaster Risk 

Management, Global Assessment Report on Disaster Risk Reduction.” 2015. http://www.preventionweb.net/english/hyogo/

gar/2015/en/home/GAR_2015/GAR_2015_1.html. Accessed March 26, 2015.

m Martin, R. et al. “An assessment of the economic and social impacts of climate change on the energy sector in the Caribbean.” 

United Nations Economic Commission for Latin America and the Caribbean. February 2013. http://www.cepal.org/

portofspain/noticias/documentosdetrabajo/8/49708/Energy.pdf. Accessed March 26, 2015.

n Caribbean Catastrophe Risk Insurance Facility. “Annual Report 2013-2014.” October 2014. http://www.ccrif.org/sites/

default/files/publications/CCRIF_Annual_Report_2013_2014.pdf. Accessed March 26, 2015.

o Caribbean Catastrophe Risk Insurance Facility. “About Us.” January 2015. http://www.ccrif.org/content/about-us. Accessed 

March 26, 2015.

p Current members include Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Belize, Bermuda, Cayman Islands, 

Dominica, Grenada, Haiti, Jamaica, St. Kitts and Nevis, Saint Lucia, St. Vincent and the Grenadines, Trinidad and Tobago and 

Turks and Caicos Islands

Opportunities for Clean Energy Supplies for Caribbean Nations and Territories

Recognizing the need for tailored approaches to energy infrastructure in the region, the United States (with 

a delegation led by Vice President Biden) and several Caribbean partners developed the Caribbean Energy 

Security Initiative, which promotes and finances clean energy technologies in the region (see box on Current 

Administration Activities and Plans). 

Recent increases in U.S. natural gas production—as well as longstanding natural gas production in Trinidad 

and Tobagoq

—may also provide opportunities to export liquefied natural gas (LNG) to Caribbean islands. 

This could lower energy costs, address the variability of renewable electricity generation resources, and reduce 

emissions from existing fuel oil-fired electricity generation.59 Making natural gas a viable fuel source in the 

q Trinidad and Tobago is unique among the Caribbean island nations in its significant fossil energy resource base. It has long been an 

oil and gas producer, and it exports significant quantities of LNG—approximately 675 billion cubic feet of LNG in 2012.
6-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

Caribbean would require the TS&D infrastructure associated with LNG imports. To date, Caribbean demand 

has been too small to justify the expense of the necessary infrastructure. However, a 2014 study commissioned 

by the Inter-American Development Bank determined that establishing a natural gas supply chain in the 

Caribbean (based on small-scale LNG transport and floating regasification infrastructure) presented an 

economical method of displacing fuel oil as a method for energy delivery to eight Caribbean region nations.r, 60

The study estimated a 30 percent decrease in carbon dioxide emission by 2032, resulting from the displacement 

of fuel oil by natural gas in current generation.61

Other proposals to displace fuel oil have gained traction, including the use of propane, other liquid fuels, and 

renewable sources for electricity generation. In July 2013, the U.S. Virgin Islands Water and Power Authority 

began the process to design and construct propane TS&D infrastructure for two electricity generation units in 

St. Croix and St. Thomas. To produce the same amount of electricity as the fuel oil plants they are replacing, the 

propane generators will emit on average 96 percent less sulfur dioxide, 84 percent less coarse particulate matter, 

85 percent less carbon monoxide, 24 percent less nitrogen oxide, and 17 percent less greenhouse gases.62

r The Inter-American Development Bank study discussed the Bahamas, Barbados, Belize, the Dominican Republic, Guyana, Haiti, 

Jamaica, and Suriname.

Administration Activities and Plans

U.S.-CARICOM Summit—Deepening Energy Cooperation. In April 2015, President Obama met with Caribbean 

leaders in a U.S.-CARICOM Summit in Kingston, Jamaica, to reaffirm the importance of our relationship with the region 

and the United States’ commitment to partner with Caribbean countries to advance economic development, security, and 

good governance. Leaders discussed a broad range of issues, from our important trade and investment linkages to security 

cooperation, including the importance of improving energy security, reducing energy costs, and fighting climate change. This 

follows robust engagement on these issues over the last year, including the White House Caribbean Energy Security Summit 

hosted by the Vice President in January 2015 and the launch of the Caribbean Energy Security Initiative (CESI) coordinated 

by the State Department. The United States is deepening this collaboration through a Clean Energy Finance Facility for the 

Caribbean and Central America; an Energy Security Task Force, driving clean energy finance to support renewable energy 

and clean energy technology collaboration to promote energy efficiency and storage; spurring a clean energy transition; 

greening tourism through a new Clean Energy Program to establish the pre-conditions for clean energy development, optimize 

renewable energy integration, and accelerate private-sector clean energy investment. 

Caribbean Energy Security Initiative. In 2014, Vice President Biden announced CESI, which recognizes the diversity of 

Caribbean nation economies, natural resources, and energy constraints. Led by the State Department, in coordination with 

the U.S. Overseas Private Investment Corporation, DOE, and other agencies, CESI seeks to improve energy sector governance, 

to increase access to affordable finance, and to improve communication and coordination among regional governments and 

their development partners. CESI also is aimed at the full spectrum of the Caribbean energy sector, from production and 

generation through transmission, storage, and distribution to end uses. This scope is broader than the transmission, storage, 

and distribution focus of this Quadrennial Energy Review, but infrastructure will play a key role in the success of the projects 

under CESI. 

On January 26, 2015, the Vice President, Energy Secretary Moniz, Deputy Secretary of State Blinken, and other senior 

Administration officials joined Caribbean heads of government, multilateral development banks, and other international 

partners in a Caribbean Energy Security Summit in Washington, D.C. The summit highlighted ongoing CESI efforts, such as 

improved governance of the energy sector, and recognized the continuing need for legal and regulatory reforms to introduce 

a broad range of clean energy technologies into the Caribbean. A variety of other commitments to promote and finance clean 

energy projects were announced. Administration engagement to promote energy security in the Caribbean, including through 

support for the necessary transmission, storage, and distribution infrastructure, will continue to be a priority.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-19

QER Recommendations

CARIBBEAN ENERGY TS&D INFRASTRUCTURE

The Department of Energy recommends that, as part of a larger Caribbean strategy, the United States 

should support the diversification of energy supplies, including actions to facilitate the introduction of 

cleaner forms of energy and the development of resilient energy infrastructure in the Caribbean.
6-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

RECOMMENDATIONS IN BRIEF: 

Integrating North American Energy Markets

Continue advances that have been made in the North American energy dialogue. All three countries should 

encourage further business exchanges and regular minister-level engagement.

Increase the integration of energy data among the United States, Canada, and Mexico. Provide resources for the 

Energy Information Administration to collaborate with its Canadian and Mexican counterparts to systematically compare their 

respective export and import data, validate data, and improve data quality. In addition, efforts should be taken to better share 

geographic information system data to develop energy system maps and review forward-looking assessments and projections 

of energy resources, flows, and demand. 

Undertake comparative and joint energy system modeling, planning, and forecasting. Enhance comparative 

and joint modeling, planning, and forecasting activities among U.S., Canadian, and Mexican energy ministries and related 

governmental agencies. The current scale of activities has aided bilateral and individual goals; however, increasing trilateral 

engagement on planning, modeling, or forecasting activities would capture greater efficiencies and enhance each country’s 

ability to reach economic, security, and environmental goals. The Department of Energy’s Offices of Energy Policy and Systems 

Analysis and International Affairs would lead modeling workshops with their Canadian and Mexican counterparts to share 

methodologies and collaborate on North American analysis.

Establish programs for academic institutions and not-for-profits to develop legal, regulatory, and policy 

roadmaps for harmonizing regulations across borders. In partnership with universities, qualified not-for-profits, and 

relevant U.S. energy regulatory authorities, state/provincial, local, and national energy regulations will be compared to identify 

gaps, best practices, and inconsistencies with regulations in Canada and/or Mexico with the goal of harmonization. 

Coordinate training and encourage professional interactions. This should involve the technical staff in government 

agencies of the three North American countries that share similar responsibilities to evaluate and implement cross-border 

energy projects.

Partner with Canada and the Arctic Council on Arctic energy safety, reliability, and environmental 

protection. Joint work should emphasize research and information sharing on the effects of spills and the effectiveness of 

countermeasures, the identification and mobilization of the resources necessary to mitigate the effects of a pollution incident, 

and the development of international guidelines for preparedness and response in this logistically challenging region.

Partner with Canada and the Arctic Council on energy delivery to remote areas. This should be done through 

promoting and disseminating the work of the Remote Community Renewable Energy partnership.

Promote Caribbean energy transmission, storage, and distribution infrastructure. As part of a larger Caribbean 

strategy, the United States should support the diversification of energy supplies, including actions to facilitate the introduction 

of cleaner forms of energy and the development of resilient energy transmission, storage, and distribution infrastructure in the 

Caribbean.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-21

Endnotes

1. Molburg, J.C., J.A. Kavicky and K.C. Picel. “The Design, Construction, and Operation of Long-Distance HighVoltage Electricity Transmission Technologies.” Argonne National Laboratory. November 2007. http://solareis.anl.gov/

documents/docs/APT_61117_EVS_TM_08_4.pdf. Accessed January 14, 2015.

2. Natural Resources Canada. “Energy Market Fact Book: 2014-15.” p. 5. July 2014. http://www.nrcan.gc.ca/sites/www.

nrcan.gc.ca/files/energy/files/pdf/2014/14-0173EnergyMarketFacts_e.pdf. Accessed February 25, 2015. 

3. X-RATES. “Monthly Average.” http://www.x-rates.com/average/?from=CAD&to=USD&amount=1.00&year=2013. 

Accessed February 25, 2015.

4. Energy Information Administration. “Mexico Week: U.S. is Mexico’s primary energy trade partner amid shifting trade 

dynamics.” Today in Energy. May 13, 2013. http://www.eia.gov/todayinenergy/detail.cfm?id=11231. Accessed February 

25, 2015.

5. North American Free Trade Agreement, Chapter 6, Annex 602.3. https://www.nafta-sec-alena.org/Home/Legal-Texts/

North-American-Free-Trade-Agreement. Accessed February 6, 2015.

6. Starr, P.K. and M.C. Camuñez. “A Second Mexican Revolution? Energy Reform and North American Energy 

Independence.” Foreign Affairs. August 17, 2014. http://www.foreignaffairs.com/articles/141887/pamela-k-starr-andmichael-c-camunez/a-second-mexican-revolution. Accessed February 25, 2015.

7. Energy Information Administration. “U.S. Imports by Country and Exports by Destination for Petroleum and Other 

Liquids, Natural Gas, and Electricity, 2012 & 2013.” http://www.eia.gov/petroleum/data.cfm#imports; http://www.eia.

gov/naturalgas/data.cfm#imports; and http://www.eia.gov/electricity/data.cfm#traderel. Accessed January 15, 2015.

8. Natural Resources Canada. “Frequently Asked Questions Concerning Federally-Regulated Petroleum Pipelines in 

Canada.” December 2, 2014. http://www.nrcan.gc.ca/energy/infrastructure/5893#h-1-4. Accessed March 2, 2015. 

9. Canadian Electricity Association. “The Integrated Electric Grid: Maximizing Benefits in an Evolving Energy 

Landscape.” 2013. http://www.electricity.ca/media/pdfs/CanadaUS/CEA_US%20Policy%20Paper_EN.pdf. Accessed 

February 28, 2015.

10. Energy Information Administration. “Canada.” http://www.eia.gov/countries/cab.cfm?fips=ca. Accessed January 27, 

2015.

11. Energy Information Administration. “Canada.” http://www.eia.gov/countries/cab.cfm?fips=ca. Accessed January 27, 

2015.

12. Energy Information Administration. “International Energy Outlook.” 2014. http://www.eia.gov/forecasts/ieo/pdf/

ieotab_4.pdf. Accessed March 7, 2015.

13. Energy Information Administration. “Canada.” http://www.eia.gov/countries/cab.cfm?fips=ca. Accessed January 27, 

2015.

14. National Energy Board. “Canada’s Energy Future 2013: Energy Supply and Demand Projections to 2035.” November 

2013. https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/2013/index-eng.html. Accessed February 25, 2015.

15. James, C. “Alberta Gas – All Dressed Up and No Place to Go?” Oil and Gas Investment Bulletin. December 5, 2014. 

http://oilandgas-investments.com/2014/investing/the-very-bearish-case-for-canadian-natural-gas/. Accessed February 25, 

2015. 

16. Energy Information Administration. “Annual Energy Outlook.” 2014. http://www.eia.gov/forecasts/aeo/MT_naturalgas.

cfm. Accessed March 7, 2015.

17. Ontario Energy Board. “Ontario Energy Report.” 2014. http://ontarioenergyreport.ca/pdfs/OEQ%20Oil%20N%20

Gas%20Q4%202014.pdf. Accessed March 24, 2015.
6-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

18. HSB Solomon Associates Canada, Ltd. “Ontario Natural Gas Background Report.” March 2014. http://www.

ontarioenergyboard.ca/html/oebenergyeast/documents/Background_Report_Ontario_Natural_Gas_Ziff_201403.pdf. 

Accessed March 24, 2015.

19. Canadian National Energy Board. “Canada’s Energy Future 2013: Energy Supply and Demand Projections to 2035.” 

November 2013. https://www.neb-one.gc.ca/nrg/ntgrtd/ftr/2013/index-eng.html. Accessed January 14, 2015.

20. National Energy Board of Canada. “Exports and Imports of Electricity, Summary: Canada.” 2014. https://apps.nebone.gc.ca/CommodityStatistics/Statistics.aspx?language=english. Accessed February 1, 2015. 

21. X-RATES. “Monthly Average.” 2013. http://www.x-rates.com/average/?from=CAD&to=USD&amount=1.00&year=2014ht

tp://www.x-rates.com/average/?from=CAD&to=USD&amount=1.00&year=2013. Accessed February 1, 2015.

22. North American Electric Reliability Corporation. “Key Players.” http://www.nerc.com/AboutNERC/keyplayers/Pages/

default.aspx. Accessed February 1, 2015.

23. National Energy Board of Canada. “Export Sales Summary Report by Destination and Source.” December 2014. 

https://apps.neb-one.gc.ca/CommodityStatistics/Statistics.aspx. Accessed February 1, 2015.

24. National Energy Board of Canada. “Import Purchases Summary Report by Source and Destination.” December 2014. 

https://apps.neb-one.gc.ca/CommodityStatistics/Statistics.aspx. Accessed February 1, 2015.

25. Department of Energy, Office of Electricity Delivery and Energy Reliability, National Electricity Delivery Division. 

“Presidential Permit: Champlain Hudson Power Express, Inc.” Docket no. PP-362. Permit issued October 6, 2014. 

http://energy.gov/sites/prod/files/2014/10/f18/PP-362%20CHPE%20FINAL.pdf. Accessed February 2, 2015.; Northern 

Pass Transmission LLC. “Application of Northern Pass Transmission LLC for Presidential Permit.” United States of 

American before the Department of Energy. Docket no. PP-371. Applied October 14, 2010. http://energy.gov/sites/

prod/files/oeprod/DocumentsandMedia/Northern_Pass_Presidential_Permit_Application.pdf. Accessed February 25, 2015.; 

TDI New England. “Application for Presidential Permit.” Docket no. PP-400. Applied May 20, 2014. http://energy.

gov/oe/pending-applications. Accessed February 2, 2015.; Minnesota Power. “Minnesota Power’s Presidential Permit 

Application to the United States Department of Energy for the Great Northern Transmission Line.” Docket no. PP398. Applied April 15, 2014. http://energy.gov/sites/prod/files/2014/05/f16/PP-398%20Great%20Northern%20Trans%20

Line.pdf. Accessed February 2, 2015. 

26. Army Corps of Engineers. “Great Lakes Harbor Fact Sheet.” March 2014. http://www.lre.usace.army.mil/Portals/69/docs/

Navigation/FY2015/mar19factsheets.pdf. Accessed January 27, 2015. 

27. Army Corps of Engineers. “Waterborne Commerce of the United States, 2013 Preliminary Data.” December 22, 2014.

28. Energy Information Administration. “Coal Data Browser, Quantity and Price of Coal Imports and Exports.” 2013. 

http://www.eia.gov/coal/data/browser/. Accessed February 1, 2015.

29. Goldwyn, D L., N.R. Brown and M.R. Cayten. “Mexico’s Energy Reform: Ready to Launch.” Atlantic Council. August 

2014. http://www.atlanticcouncil.org/images/files/MexEnRefReadytoLaunch_FINAL_8.25._1230pm_launch.pdf. Accessed 

February 25, 2015.

30. Energy Information Administration. “Mexico: Country Analysis Brief Overview.” April 2014. http://www.eia.gov/

countriecountrydata.cfm?fips=mx#pet. Accessed January 15, 2015.

31. Energy Information Administration. “U.S. Natural Gas Exports and Re-exports by Country.” 2014. http://www.eia.gov/

dnav/ng/ng_move_expc_s1_a.htm. Accessed March 7, 2015.

32. Energy Information Administration. “Annual Energy Outlook 2014, Natural Gas Imports and Exports.” May 7, 2014. 

http://www.eia.gov/forecasts/aeo/supplement/suptab_134.xlsx. Accessed February 27, 2015.

33. Energy Information Administration. “Natural Gas Pipeline Projects.” 2014. http://www.eia.gov/naturalgas/pipelines/EIANaturalGasPipelineProjects.xls. Accessed March 9, 2015. 

34. Energy Information Administration. “Annual Energy Outlook 2014, Natural Gas Imports and Exports.” May 7, 2014. 

http://www.eia.gov/forecasts/aeo/supplement/suptab_134.xlsx. Accessed February 27, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 6-23

35. Energy Information Administration. “U.S. Natural Gas Exports and Re-export by Country.” 2014. http://www.eia.gov/

dnav/ng/ng_move_expc_s1_a.htm. Accessed March 7, 2015.

36. Energy Information Administration. “Annual Energy Outlook 2014, Natural Gas Imports and Exports.” May 7, 2014. 

http://www.eia.gov/forecasts/aeo/supplement/suptab_134.xlsx. Accessed February 27, 2015. 

37. Energy Information Administration. “Coal Data Browser, Quantity and Price of Coal Imports and Exports.” 2013. 

http://www.eia.gov/coal/data/browser/. Accessed February 1, 2015.

38. Energy Information Administration. “Mexico Week: U.S.-Mexico Electricity Trade Is Small, with Tight Regional 

Focus.” http://www.eia.gov/todayinenergy/detail.cfm?id=11311. Accessed February 25, 2015. 

39. Federal Emergency Management Agency. “6 Months Report: Superstorm Sandy from Pre-Disaster to Recovery.” 

April 25, 2013. https://www.fema.gov/disaster/4086/updates/6-months-report-superstorm-sandy-pre-disaster-recovery. 

Accessed March 26, 2015.

40. Arco, M. “Christie thanks Canadian utility workers for Sandy response.” NJ.com. December 6, 2014. http://www.

nj.com/politics/index.ssf/2014/12/christie_personally_thanks_canadian_utility_workers_for_sandy_response.html. Accessed 

March 24, 2015.

41. Transmission and Distribution World. “Hydro-Quebec Crews Head to the Greater Boston Area.” January 28, 2015. 

http://tdworld.com/energizing/hydro-qu-bec-crews-head-greater-boston-area. Accessed March 24, 2015.

42. Edison Electric Institute. “Understanding the Electric Power Industry’s Response and Restoration Process.” May 2014. 

http://www.eei.org/issuesandpolicy/electricreliability/mutualassistance/Documents/MA_101FINAL.pdf. Accessed March 24, 

2015.

43. Department of Energy, Office of Electricity Delivery and Energy Reliability, Infrastructure Security and Energy 

Restoration. “ERCOT Orders Rotating Outages in Rio Grande Valley in Texas October 8; 120,000 AEP Texas 

Customers Without Power at Peak of Outages.” Energy Assurance Daily. October 9, 2014. https://www.oe.netl.doe.gov/

docs/eads/ead100914.pdf. Accessed February 1, 2015.

44. “Statement of the Province of Manitoba, the Québec Government Office in Washington, Manitoba Hydro, and the 

Canadian Hydro Association, submitted to the U.S. Senate Committee on Energy and Natural Resources on S. 2146, 

The Clean Energy Standard Act of 2012.” May 17, 2012. http://www.wilsoncenter.org/sites/default/files/Canadian%20

Hydropower%20Senate%20CES%20Testimony.pdf. Accessed February 26, 2015. 

45. Connecticut Department of Energy and Environmental Protection. “Restructuring Connecticut’s Renewable Portfolio 

Standard.” April 26, 2013. http://www.ct.gov/deep/lib/deep/energy/rps/rps_final.pdf. Accessed March 19, 2015.

46. Argonne National Laboratory. “Modeling and Analysis of Value of Advanced Pumped Storage Hydropower in the 

United States.” June 2014. http://energyexemplar.com/wp-content/uploads/2014/08/ANL-DIS-14-7_Advanced_PSH_Final_

Report.pdf. Accessed March 19, 2015.

47. Army Corp of Engineers and Bonneville Power Administration. “Columbia River Treaty: History and 2014/2024 

Review.” 2009. http://www.bpa.gov/news/pubs/GeneralPublications/crt-Columbia-River-Treaty-History-and-2010-2024-

Review.pdf. Accessed March 24, 2015.

48. Department of Energy, Office of Electricity Delivery and Energy Reliability. “Notice, Record of Decision, Montana 

Alberta Tie Ltd.” 73 Fed. Reg. 67860. November 17, 2008. http://energy.gov/sites/prod/files/2014/09/f18/EIS-0399-

ROD-2008.pdf. Accessed March 26, 2015.

49. Clean Energy Ministerial. “Sixth Clean Energy Ministerial Flyer.” March 13, 2015. http://www.cleanenergyministerial.

org/Portals/2/pdfs/CEM6-promographic-flyer.pdf. Accessed March 24, 2015.

50. Del Socorro Alvarez Garcia, G. et al. “Assessing energy savings from ‘Cool Roofs’ on residential and non-residential 

buildings in Mexico.” May 16, 2014. http://www.cleanenergyministerial.org/Portals/2/pdfs/GSEP-Mexico-Cool-RoofImpact-Study-English.pdf. Accessed March 24, 2015.
6-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets

51. Carbon Sequestration Leadership Forum. “Summary of Active and Completed CSLF-Recognized Projects.” November 

2014. http://www.cslforum.org/publications/documents/CSLFRecognizedProjectsNovember2014.pdf. Accessed March 24, 

2015.

52. Alaska Energy Authority. “Statistical Report of the Power Cost Equalization Program: Fiscal Year 2014.” March 

2015. http://www.akenergyauthority.org/Content/Programs/PCE/Documents/FY14PCEStatisticalRptByUtyAmended.pdf. 

Accessed April 2, 2015.

53. Quadrennial Energy Review Analysis: Los Alamos National Laboratory, Sandia National Laboratories, Argonne 

National Laboratory. “Synthesis of Impacts/Disruptive Events on TS&D Infrastructure (Vol 1-3: Electricity, Liquid 

Fuels, Natural Gas).” 2014 (forthcoming at http://energy.gov/epsa/qer-document-library). 

54. Chapin, F.S., III. et al. “Climate Change Impacts in the United States: The Third National Climate Assessment – 

Chapter 22: Alaska.” 2014. Melillo, J.M., T.C. Richmond and G.W. Yohe, eds. Global Change Research Program. p. 

514–536. http://nca2014.globalchange.gov/report/regions/alaska. Accessed February 26, 2015.

55. Larsen, P.H. et al. “Estimating future costs for Alaska public infrastructure at risk from climate change.” 

Global Environmental Change. 8. p. 442–457. August 2008. http://www.sciencedirect.com/science/article/pii/

S0959378008000216. Accessed January 27, 2015. 

56. U.S. Geological Survey. “Landslides and Land Subsidence Hazards to Pipelines.” p. 58. Open-File Report 2008-1164. 

http://pubs.usgs.gov/of/2008/1164/pdf/OF08-1164_508.pdf. Accessed February 26, 2015.

57. Chapin, F.S., III. et al. “Climate Change Impacts in the United States: The Third National Climate Assessment – 

Chapter 22: Alaska.” 2014. Melillo, J.M., T.C. Richmond and G.W. Yohe, eds. Global Change Research Program. p. 

514–536. http://nca2014.globalchange.gov/report/regions/alaska. Accessed February 26, 2015.

58. Petrocaribe. “About Petrocaribe.” http://www.petrocaribe.org/. Accessed on January 14, 2015.

59. Castalia Strategic Advisors. “Natural Gas in the Caribbean—Feasibility Studies.” Final Report to the Inter-American 

Development Bank. August 10, 2014. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=39205253. Accessed 

February 26, 2015.

60. Castalia Strategic Advisors. “Natural Gas in the Caribbean—Feasibility Studies.” Final Report to the Inter-American 

Development Bank. August 10, 2014. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=39205253. Accessed 

February 26, 2015.

61. Castalia Strategic Advisors. “Natural Gas in the Caribbean—Feasibility Studies.” Final Report to the Inter-American 

Development Bank. August 10, 2014. http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=39205253. Accessed 

February 26, 2015.

62. U.S. Virgin Islands Water and Power Authority. “Report to the Public Service Commission on WAPA’s LPG Project 

Status.” November 23, 2014. http://www.viwapa.vi/Libraries/PDFs/Propane_Project_Status_-_PSC--11-23-14.sflb.ashx. 

Accessed February 26, 2015.
6-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VI: Integrating North American Energy Markets
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-1

Chapter VII

This chapter focuses on the impacts of transmission, storage, and distribution 

(TS&D) infrastructure on the environment, complementing the discussion in 

Chapter II (Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D 

Infrastructure) of the effect of the environment on TS&D infrastructure. After a brief 

introduction discussing the range of environmental effects of TS&D infrastructure, 

the chapter briefly discusses land-use and ecosystem issues that commonly arise in 

connection with constructing and maintaining TS&D infrastructure. Actions to improve 

the siting and permitting processes that address these issues are discussed in greater 

detail in Chapter IX (Siting and Permitting of TS&D Infrastructure). The next two 

sections discuss air pollution from TS&D infrastructure, first focusing on greenhouse 

gas (GHG) emissions and then discussing conventional air pollutants. The following 

section deals with other environmental issues associated with TS&D infrastructure, 

including liquid fuel spills, water use, dredging, and the need for better data and 

analyses on environmental impacts of TS&D infrastructure. The final section of the 

chapter discusses how carbon dioxide (CO2

) pipelines can help enable the reduction 

of GHG emissions. The sections on GHG emissions, conventional air pollution, other 

environmental issues, and CO2

 pipelines each conclude with recommendations for 

further action.

ADDRESSING 

ENVIRONMENTAL ASPECTS OF 

TS&D INFRASTRUCTURE
7-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

FINDINGS IN BRIEF: 

Addressing Environmental Aspects of TS&D Infrastructure

Transmission, storage, and distribution (TS&D) infrastructure can serve as a key enabler for—or barrier to—

better environmental outcomes. Certain types of TS&D infrastructure enable improvements in system-wide environmental 

performance at lower cost, such as electric transmission and distribution infrastructure to access renewable energy resources 

and interstate natural gas pipelines, which can facilitate carbon dioxide (CO2) emission reductions from the electric power 

sector.

TS&D infrastructure contributes a relatively small share of total air and water pollution from the energy sector. TS&D infrastructure covered by this installment of the Quadrennial Energy Review contributes to nearly 10 percent of U.S. 

greenhouse gas emissions. Many of the environmental issues related to TS&D infrastructure are subject to rules established by 

existing statute and regulation. 

Energy infrastructure can have direct, indirect, and cumulative land-use and ecological impacts. The nature and 

magnitude of those impacts depend on a number of factors, including whether construction of a facility will affect endangered 

species or sensitive ecological areas, or cause land-use impacts such as top-soil erosion or habitat fragmentation.

Energy transport, refining, and processing infrastructure contribute to emissions of criteria air pollutants that 

pose risks to public health and the environment. Ports and rail yards with high densities of vehicles and congestion often have high concentrations of pollutants and increase risks to nearby urban communities. Reducing emissions of particulate 

matter from aircraft, locomotives, and marine vessels would have public health benefits. Low-income and minority households 

are two to three times more likely to be affected by freight-based diesel particulate pollution than the overall U.S. population.

Transportation of crude oil by pipeline, rail, and waterborne vessels has safety and environmental impacts.

The Federal Government has a number of efforts underway to mitigate these impacts, including a rulemaking on rail transport 

of crude oil. 

The United States currently has a network of more than 4,500 miles of carbon dioxide (CO2) transportation 

pipelines that can be a critical component of a low-carbon future. The pipelines mostly transport naturally occurring CO2

, but new projects are increasingly linking captured CO2 from electric power plants and other industrial sources to a 

productive use in oil fields (through CO2 enhanced oil recovery) and potentially safe storage in deep saline formations.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-3

The Range of Environmental Effects Associated with TS&D 

Infrastructure

Energy TS&D infrastructure affects the environment in a variety of ways. On the positive side, TS&D 

infrastructure can often enable better environmental performance of the overall energy system by providing 

access to cleaner energy supplies. 

There is also the potential for harmful environmental effects, though, which need to be addressed. On a 

nationwide basis, siting, constructing, and maintaining TS&D infrastructure may have negative land-use 

and ecosystem impacts—especially habitat fragmentation—that are significant. While TS&D infrastructures 

are relatively minor sources of total air and water pollution compared to energy production and end use 

(which are not being addressed in this installment of the Quadrennial Energy Review [QER]), air and water 

pollution from TS&D infrastructure can be significant on a regional and local basis. For example, some vehicle 

engines used in energy transport produce particulate matter, posing local and regional public health concerns. 

Existing statutes and regulations address these concerns, in part. Some TS&D infrastructures also contribute 

to GHG emissions. Addressing leakage and venting of methane—a powerful GHG—requires a range of 

additional actions, including prudent regulation; research, development, and demonstration; and public-private 

partnerships to reduce methane emissions, promote efficiency, and improve safety. Many of these actions 

are underway as part of the President’s “Climate Action Plan,”1

 including the Strategy to Reduce Methane 

Emissions.2

Land-Use and Ecosystem Impacts of Constructing and Maintaining 

TS&D Infrastructure

Given their size and complexity, many major TS&D infrastructure projects have unavoidable direct and 

indirect impacts on the Nation’s landscapes and natural and cultural resources. The magnitude of these 

potential environmental impacts of TS&D infrastructure depend on a number of factors, including whether 

the proposed location of the facility will affect endangered species, involve sensitive ecological areas, impact 

cultural or historic resources, give rise to visual or aesthetic concerns, or open new areas to development. 

As energy infrastructures continue to expand, there is an opportunity to address these issues by improving 

how TS&D infrastructure is sited, built, and maintained, particularly infrastructure that enables better 

environmental performance. 

Some of the most common land-use and ecosystem impacts of TS&D infrastructure described in this section 

are analyzed as part of the environmental and historic preservation review processes for energy infrastructure 

siting. They include those effects most often considered in the context of the National Environmental Policy Act 

of 1969 (NEPA) and its framework for assessing environmental impacts during the planning process before a 

Federal agency decides whether to fund, conduct, permit, or otherwise approve proposed TS&D infrastructure.a

In its analysis, the permitting agency must consider mitigation requirements that may be imposed as conditions 

for unavoidable environmental harms.3

a Under NEPA and the Council on Environmental Quality Regulations Implementing the Procedural Provisions of the National 

Environmental Policy Act, any TS&D infrastructure proposal requiring a Federal agency to take an action (such as funding, 

permitting, or otherwise approving a pipeline or electricity transmission project) requires preparation of an environmental review 

that considers the environmental impact of the proposed action and any reasonable alternatives prior to the agency proposed action 

(42 U.S.C. §§ 4321–4347 and 40 C.F.R. §§ 1500–1508). 
7-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Cultural Resources

Cultural resources generally include important archaeological, historic, and architectural sites; structures; or 

places with important public and scientific uses. Section 106 of the National Historic Preservation Act requires 

Federal agencies to consider the effects on historic properties of projects, activities, or programs (referred to in 

the act as undertakings) that they carry out, assist, permit, license, or approve.4 Resources considered as part 

of compliance with Section 106 are those that meet the criteria for listing on the National Register of Historic 

Places, which can include properties of traditional and religious importance to an Indian tribe.5 The presence 

of cultural resources can present challenges for the siting of new energy transmission infrastructure.b Impacts 

are typically related to the project footprint and altered access to the area. Surveys must be conducted to 

identify potential archaeological and historic sites.c

 The identification of cultural resources within a proposed 

right of way may require moving the proposed route to avoid such resources or mitigation measures to address 

potential impacts to such resources.6

Special Status Wildlife, Fish, and Plant Species

Special status species include threatened or endangered plants or animals, the presence of which may pose a 

barrier to siting.7 They also may include non-listed wildlife, fish, and plants that require special management 

consideration.8, 9 The potential for impacts on threatened and endangered species of construction and 

operation of energy transport systems within corridors are related to the amount of land disturbance, the 

duration and timing of construction periods, and the habitats crossed by the corridors. In order to comply with 

NEPA and the Endangered Species Act, agencies may conduct inventories to ensure that they have sufficient 

information available to adequately assess the effects of proposed actions on special status species. 

Habitat Fragmentation/Land Cover

Ecological habitats (including rangeland, forests, woodlands, wetlands, lakes, reservoirs, riparian areas, and 

fishable streams) may become fragmented when crossed by transmission lines or pipelines that divide the 

continuous natural habitat into smaller patches. Even though physical barriers are not normally erected along 

the majority of transmission corridors, fragmentation occurs when the habitat or land cover type in the 

transmission corridor is altered from its surroundings. By changing the habitat, land cover change can alter the 

species makeup of the local ecosystem—favoring some species and disadvantaging others.10

Environmental Justice

Environmental justice is the fair treatment and meaningful involvement of all people regardless of race, 

color, national origin, or income with respect to the development, implementation, and enforcement 

of environmental laws, regulations, and policies.11 The responsibility of Federal agencies to consider 

environmental justice is set out in Executive Order No. 1289812, 13 and typically implemented in conjunction 

with NEPA review, as described in the Council on Environmental Quality guidance for environmental justice.14

Seismic Hazards

Significant risk of ground shaking can pose a threat to human health and safety in areas where energy 

transmission infrastructure—particularly natural gas pipelines—exists. This risk can pose a barrier to siting 

new transmission. Seismic hazards include earthquakes; ground faulting; and secondary effects, such as 

b New transmission facility proposals initiate agency collaboration to determine an Area of Potential Effect (APE). The APE may be 

hundreds of feet wide or many miles wide depending on the resources, potential impacts, and decisions under consideration. Once 

the APE is established, the agencies review existing data and collect new data, as appropriate, within the APE. 

c A low number of National Register of Historic Places sites for a proposed corridor may seem to indicate few siting challenges, but 

if only a small percent of the corridor has been surveyed, this low number of sites may not be indicative of the actual number of 

cultural resources present. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-5

liquefaction and related slope failures.15 Measurement of seismic risk depends on the chosen intensity and 

probability thresholds for a damaging event.d

Visual Resources, Specially Designated Areas, and Recreation

Negative impacts to the visual surroundings of specially designated Federal areas can create barriers to 

the siting of energy transmission facilities nearby (even if the proposed right of way does not intersect the 

designated area).16 These specially designated areas can include, but are not limited to, national parks, national 

monuments, national recreation areas, national conservation areas, national park service areas, national natural 

landmarks, national historic landmarks, national scenic trails, national historic trails, national scenic highways, 

national scenic areas, national scenic research areas, national wild and scenic rivers, and national wildlife 

refuges. Numerous state-designated areas that are sensitive to visual disturbance also exist. 

Aviation

NEPA analyses consider overhead electrical transmission wires, as they pose a threat to the low-level flight 

activity.17 Special-use airspace is established in Federal regulations18, 19 and can also involve low-altitude flight. 

When less than 200 feet above ground level, electric transmission lines often do not require marking or 

lighting, thus posing a particular hazard to aviation in areas where low-altitude flight is expected.

Cumulative Impacts

Under NEPA, cumulative impact is defined as the impacts on the environment that result from the incremental 

impact of the action when added to other past, present, and reasonably foreseeable future actions regardless 

of what agency (Federal or non-Federal) or person undertakes such other actions.20 Cumulative impacts 

can result from individually minor but collectively significant actions taking place over a period of time.21

Guidance issued by the Council on Environmental Quality specifies how to carry out cumulative effects 

analysis for identified impacts.22 Cumulative effects should be considered for all environmental impacts in an 

assessment. 

Additional Considerations

Additional considerations under NEPA that can create challenges for siting of TS&D infrastructure or require 

mitigation, minimization, or compensation for impact include Native American concerns; acoustics; air 

quality; land use; paleontological resources; proximity to hazardous materials; proximity to Department of 

Defense operations and facilities; socioeconomics; soils and geologic resources; waste management areas; and 

water resources, including groundwater, waterbody crossings, and wetlands. Water quality can also be affected 

by excavations that lead to erosion.23 Additionally, herbicides applied to maintain clearings can have adverse 

effects on aquatic life.24

d An event with a peak acceleration of 0.18 g or higher is considered potentially damaging. See: Wald, D.J. et al. “Shake 

Map® Manual — Technical Manual, Users Guide, and Software Guide.” U.S. Geological Survey. June 19, 2006. The area 

of TS&D infrastructure where there is a moderate or higher potential for damage from seismic activity is defined as a 2 

percent risk of a ground-shaking event exceeding 0.18 g peak acceleration in the next 50 years). See: Petersen, M.D. et 

al. “Documentation for the 2008 Update of the United States National Seismic Hazard Maps: Open-File Report 2008–

1128.” U.S. Geological Survey. 2008. pubs.usgs.gov/of/2008/1128/. Accessed February 25, 2015. See also: Federal Energy 

Regulatory Commission. “Final Environmental Impact Statement on Ruby Pipeline Project (Docket No. CP09-54-000): 

Chapter 4.” p. 4–16. January 10, 2010. www.ferc.gov/industries/gas/enviro/eis/2010/01-08-10.asp. Accessed March 9, 2015.
7-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Mitigation of Environmental Impacts

Decades of experience with siting energy infrastructure have resulted in the development of various 

measures and methods for offsetting impacts to affected communities and ecosystems, including avoidance, 

minimization, and compensation.e

 Mitigation is an important mechanism for agencies to use to avoid, 

minimize, rectify, reduce, or compensate the adverse environmental impacts associated with their actions.25, 26 

Federal agencies typically rely upon mitigation to reduce environmental impacts through modification of 

proposed actions and consideration and development of mitigation alternatives during the NEPA process.f

Resource-specific mitigation measures can be applied to avoid or minimize impacts from a pipeline or an 

electric transmission project. In order to identify and implement appropriate mitigation measures, first the 

potential impacts of a project on a specific resource must be assessed. Then, project-specific and site-specific 

factors must be evaluated to determine whether the impact can be avoided or mitigated, what action can be 

taken, how effective the mitigation measure will be, and the cost effectiveness of the measure.27

Mitigation is of particular importance to Federal agencies that manage hundreds of millions of acres of public 

lands, which comes with a responsibility to sustain a vast array of resources, values, and functions. For example, 

public lands contain important wildlife habitat and vegetative communities—in addition to recreational 

opportunities and ecosystem services, cultural resources, and special status species. These lands are managed 

for the use and enjoyment of present and future generations. The location, construction, and maintenance 

of energy infrastructure should avoid, minimize, and, in some cases, compensate for impacts to these public 

resources, values, and functions. Mitigation is also of critical importance to those agencies responsible 

for protecting the Nation’s waters.28 Applying this mitigation hierarchy early in the planning for TS&D 

infrastructure will help provide better outcomes for the impacted resources, values, and functions.29

The issues described in this section are not the only factors considered during the environmental and historic 

preservation review processes for energy infrastructure development. A more detailed description of the 

siting, permitting, and review process for infrastructure projects and approaches for avoiding, minimizing, or 

compensating for potential impacts of those projects is found in Chapter IX (Siting and Permitting of TS&D 

Infrastructure).

Emissions from TS&D Infrastructure

Air pollution can be associated with all stages of construction and operations of TS&D infrastructure; however, 

the severity of the pollution—both in type of pollutant and overall environmental load—differs significantly 

across the scope of infrastructure covered in the QER. Certain components within the TS&D infrastructure are 

sources of both conventional air pollutants and GHG emissions. The following discussion is not intended to be 

a comprehensive catalog of air pollution impacts from energy TS&D infrastructure, but rather a discussion of 

areas where actions could lead to emissions reductions. For example, analyses for the QER on GHG emissions 

focused on natural gas TS&D systems because there are opportunities for relatively low-cost emissions 

reductions, and this infrastructure is expanding significantly. 

e This mitigation hierarchy of “avoid, minimize, and compensate” has been developed through implementation of both NEPA (40 C.F.R. 

§ 1508.20) and the Clean Water Act (33 U.S.C. §§ 1251–1387). See: “Memorandum for Heads of Federal Departments and Agencies.” 

February 18, 2010. ceq.doe.gov/nepa/regs/Mitigation_and_Monitoring_Draft_NEPA_Guidance_FINAL_02182010.pdf. The final 

step in the hierarchy seeks to repair, rehabilitate, or restore the affected environment or resource and ultimately to compensate for, or 

offset, any impacts that remain. This is typically described as “compensatory mitigation.”

f The Council on Environmental Quality’s NEPA regulations require agencies to identify in their Record of Decision 

any mitigation measures that are necessary to minimize environmental harm from the alternative selected (40 C.F.R. § 

1505.2(c)). The NEPA analysis can also consider mitigation as an integral element in the design of the proposed action. 

The regulations further state that a monitoring and enforcement program shall be adopted where applicable for any 

mitigation (40 C.F.R. § 1505.3).
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-7

TS&D infrastructure covered by this installment of the QERg contributes to nearly 10 percent of U.S. GHG 

emissions.30 For conventional air pollutants, the TS&D systems considered in the QER are also relatively small 

contributors to national pollutant loads, but may have significant local and regional impacts on air quality. The 

facilities of the greatest concern include petroleum refineries; ethanol plants; natural gas and natural gas liquids 

processing plants; and natural gas compressor stations, which are located along transmission and gathering 

pipelines. The transportation of energy commodities also leads to air pollution, particularly in transportation 

hubs like ports and rail yards. 

GHG Emissions from Natural Gas Systems

The two primary GHGs emitted from natural gas systemsh are CO2 and methane. Emissions of methane 

throughout the natural gas system have been declining,31 but are expected to increase if additional action is 

not taken.32 As discussed in this section, analysis for the QER identified significant opportunities for reducing 

these emissions in the coming decades. Methane—the primary component of natural gas—is a potent GHG, 

with an atmospheric lifetime of only 10 to 12 years. When integrated over 100 years, methane is more than 25 

times more effective than CO2 at trapping heat in the atmosphere.33, i The Environmental Protection Agency’s 

(EPA’s) national Greenhouse Gas Inventory (GHGI) estimates that, in 2012, methane contributed to roughly 

10 percent of gross GHG emissions (on a CO2

-equivalent basis) from U.S. anthropogenic sources, nearly onequarter of which were emitted by natural gas systems.34

While 80 percent of GHG emissions from natural gas occur at the end-use stage (from combustion by 

consumers),35, 36, 37 significant methane and CO2

 emissions occur throughout natural gas infrastructures (not 

including end use) in almost equal amounts on a CO2-equivalent basis. As shown in Figure 7-1, 155 million 

metric tons of CO2 equivalent of methane were emitted in 2012 through routine venting,j

 as well as inadvertent 

leakage.k In the same year, a roughly equal amount of CO2 (approximately 164 million metric tons of CO2 

equivalent) was emitted at production, processing, transmission, and storage facilities, primarily from the 

combustion of natural gas that is used as a fuel for compression, but also when non-hydrocarbon gases are 

removed during the processing stage, as well as from flaring. Figure 7-1 shows these emissions in detail from 

natural gas infrastructures; GHG emissions that are in scope for the QER include only those from processing, 

transmission and storage, and distribution segments. Methane emissions from the petroleum sector are not 

covered in this installment of the QER because they are almost entirely from production-stage operations.

g Sources of GHG emissions that are in scope for the QER include petroleum refineries; biofuel refineries; liquid fuel pipelines; natural 

gas processing plants; natural gas pipelines; natural gas compressor stations; and the transport of energy by pipeline, truck, rail, and 

marine vessel. 

h Throughout this chapter, the term “natural gas system” refers broadly to natural gas production, processing, transmission, storage, 

distribution, and end-use consumption; the term “natural gas infrastructure” refers to all aspects of the natural gas system except for 

end-use consumption.

i Considering these impacts over such a period leads to what is called the Global Warming Potential (GWP) of a GHG. The 100-year 

GWP for methane from the “Intergovernmental Panel on Climate Change Fourth Assessment Report” is 25. A 20-year GWP can be 

used to measure the shorter-term impacts of methane emissions. GWPs compare GHGs by equating the warming potential of gases 

other than CO2

 to the equivalent amount of CO2 emissions needed to achieve the same warming.

j Examples of routine “venting” include blowdowns (when gas is evacuated from a section of pipeline for the purpose of conducting 

tests, repairs, or maintenance). Natural gas is vented by a number of sources, including pneumatic devices, which operate natural gasdriven controllers and natural gas-driven pumps, both of which are used extensively throughout the oil and natural gas industry—

emitting natural gas as a function of routine operation.

k Natural gas “leakage,” also commonly referred to as “fugitive emissions,” includes those emissions that occur inadvertently as a result 

of malfunctioning equipment (e.g., damaged seals, cracked pipelines).
7-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Figure 7-1. 2012 GHG Emissions from Natural Gas Production, Processing, Transmission, Storage, and Distribution38

Both CO2 (top of diagram) and methane (bottom of diagram) are emitted in roughly equal amounts from various sources and processes upstream of 

end-use consumers. Eighty percent of the GHG emissions from the natural gas system result from consumer end use of natural gas. However, these 

emissions are omitted from this figure to enable a more detailed picture of emissions from natural gas infrastructure.

Data from the Energy Information Administration39 indicate that fuel use—and therefore CO2 emissions—

by natural gas processing and transmissionl increased by 35 percent between 2005 and 2013. As natural gas 

infrastructure continues to expand, the Energy Information Administration projects that natural gas fuel use 

by TS&D systems will continue to increase in the coming decades,40 leading to greater CO2

 and potentially 

other combustion-related air emissions from these facilities. Methane emissions from natural gas processing, 

transmission, and storage have increased by 13 percent from 2005 to 2012,41 which is slower than increases in 

fuel use because new infrastructure is less prone to leakage. 

Opportunities to Reduce GHG Emissions from Gas Systems

CO2 emissions from processing, transmission, and storage facilities stem primarily from natural gas fuel 

consumed by compressor units during natural gas transport.42 Most methane emissions from the processing, 

transmission, and storage of natural gas result from leakage and venting by compressor stations.43 Methane 

emissions from natural gas distribution result mainly from leaks in meters, regulators, and distribution 

l This includes U.S. natural gas “plant fuel consumption” and “pipeline and distribution use.”

64.7 MMT

163.7

154.7 

13.7 MMT

Production CO2

 Emissions

Production Methane Emissions

Processing

CO2

 Emissions

Processing

Methane Emissions

Transmission & Storage

CO2

 Emissions

Transmission & Storage

Methane Emissions

Distribution

Methane Emissions

Total CO

23.9 MMT

2

Emissions

Total Methane

Emissions

40.0 MMT

30.8 MMT

51.8 MMT

22.3 MMT

49.8 MMT

21.4 MMT

CO2 Emissions

from Flaring

CO2 Emissions

from Natural Gas

Combustion

CO2 Emissions

from Acid Gas Removal

Methane Emissions
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-9

pipelines.44 Examples of cost-effective options for reducing methane emissions from the natural gas system 

include (1) changing operations and maintenance practices, (2) increasing leak detection and repair, and (3) 

upgrading equipment (see Figure 7-2).45, 46, 47

There are economic, environmental and safety benefits associated with modernizing the natural gas TS&D 

system. Policies are needed to ensure that private companies can recover costs of such investments to improve 

safety and reduce emissions.48 In addition, while a number of actions may not have net benefits when only 

accounting for the monetary value of conserved gas, some of these can be cost effective if the climate change 

and safety benefits are taken into account. To achieve these societal benefits, there is an important role for 

government—often in partnership with industry—to advance new technologies and encourage investments. 

A combination of ongoing Administration actions and QER recommendations meet this need for Federal 

action.

Figure 7-2. Total Emissions Abatement Potential (million metric tons CO2-equivalent per year)49, m

Assuming full revenue recovered from the sale of captured natural gas, an estimated 40 million metric tons CO2-equivalent of methane emissions 

abatement could be achieved at a negative marginal cost; under this scenario, at a marginal cost below the Social Cost of Carbon, all segments of 

natural gas infrastructure have potential opportunities for cost-effective methane abatement. Acronyms: intermittent (intermit.); pneumatic (pneum.); 

local distribution company (LDC); liquefied natural gas (LNG); reciprocating (recip.).

m The social cost of carbon is a metric that monetizes the societal benefits and costs of emitting an additional ton of carbon. The social 

cost of carbon at a 3 percent discount rate in year 2015 and in 2015 dollars is $43 per ton CO2. Source: Interagency Working Group 

on Social Cost of Carbon, 2013. Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact 

Analysis – Under Executive Order 12866. May. U.S. Government.

Centrifugal compressors (wet seals)

Gas fueled engines and turbines

LDC meters and regulators

Gas fueled engines and turbines

Well fugitives

Recip. compressor rod packing

Recip. compressor rod packing

Recip. compressor rod packing

Recip. compressor rod packing

Recip. compressor rod packing

Intermit. bleed pneum. devices

Intermit. bleed pneum. devices

Intermit. bleed pneum. devices

Liquids unloading - uncontrolled

Chemical Injection pumps

Gas fueled engines and turbines Condensate tanks w/o cntrl. devices

Intermit. bleed pneum. devices

Pipeline venting

Centrifugal compressors (wet seals)

Centrifugal compressors (wet seals)

Centrifugal compressors (wet seals)

Transmission station venting

Kimray pumps

Kimray pumps

Kimray pumps

High bleed pneum. devices

High bleed pneum. devices

High bleed pneum. devices

High bleed pneum. devices

Compress. station fugitives

Compress. station fugitives

Compress. station fugitives

Recip. compressor fugitives

Recip. compressor fugitives

Recip. compressor

fugitives

Recip. compressor fugitives

Recip. compressor fugitives

55

50

45

Production Gathering & boosting Processing Transmission Storage LNG Distribution

40

35

30

25

20

15

10

5

0

-5

-10

-15

40

Total Emissions Abatement Potential (Million Metric Tons CO2

e/yr)

0 20 60

Mariginal Cost (2013$/Metric Ton CO2

e)
7-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

GHGI and Methane Measurement 

The White House’s Strategy to Reduce Methane Emissions calls for the U.S. government to assess current 

emissions data and address identified data gaps.50 The U.S. natural gas profile has dramatically changed in the 

last 10 years. Ongoing efforts to update the data used to calculate GHGI emissions estimates are being privately 

and federally funded and carried out by several researchers, including large multi-stakeholder efforts.51 Under 

the 2014 “Climate Action Plan” Strategy to Reduce Methane Emissions, EPA will continue to update and 

enhance the data published in its annual GHGI as new scientific evidence and data sources emerge.

Improving the efficiency of equipment operating along the natural gas supply chain, especially compressors, 

would reduce GHG emissions and other combustion-related emissions of criteria air pollutants and ozone 

precursors. Additional opportunities for technical efficiency improvements include pipeline operations, sizing, 

layout, cleaning, and interior coatings, as well as opportunities for waste heat recovery. While the greatest 

opportunities for efficiency improvement lie in new systems, options do exist for improving the efficiency of 

existing systems as well.52

Reducing GHG Emissions from Refineries and Energy Transport

Petroleum refineries are among the most energy-intensive manufacturing facilities in the United States,53

which results in substantial CO2 emissions—both onsite and offsite of these facilities. Onsite emissions of CO2

from petroleum refineries accounted for more than 30 percent of CO2

 emissions from U.S. manufacturing54

and 4 percent of total CO2 emissions from fossil energy combustion.n The combination of all other TS&D 

infrastructure—including biofuel refineries,55 liquid fuel pipelines, and vehicles that transport energy56 directly 

or indirectly (i.e., through the use of electricity)—contribute to CO2 emissions in relatively smaller amounts. 

The primary means for reducing CO2 emissions from refineries is through efficiency improvements. Analysis 

has also consistently found that there remain opportunities for additional efficiency improvement.57, 58

n This compares direct CO2

 emissions from refineries in 2012 (210 million metric tons) with the Energy Information Administration’s 

estimate of total CO2

 emissions from fossil fuels in 2012 (5,255 million metric tons). More information can be found on the Energy 

Information Administration’s Environment website at www.eia.gov/environment/. 

Administration Activities and Plans to Reduce Greenhouse Gas Emissions from 

Transmission, Storage, and Distribution Infrastructures

Building on the 2014 interagency Strategy to Reduce Methane Emissions, in January 2015, the President announced a national goal to reduce methane emissions from the oil and gas sector 40–45 percent from 2012 levels by 2025, as well as a set of 

actions to put the United States on a path to achieve this ambitious goal. These goals include the following: 

Common-sense standards for methane emissions from new and modified sources. The Environmental Protection 

Agency (EPA) will initiate a rulemaking effort to set standards for methane and volatile organic compound emissions from new 

and modified oil and gas production sources and natural gas processing and transmission sources. EPA will issue a proposed 

rule in the summer of 2015, and a final rule will follow in 2016. 

New guidelines to reduce volatile organic compounds. EPA will develop new guidelines to assist states in reducing 

ozone-forming pollutants from existing oil and gas systems in areas that do not meet the ozone health standard and in states 

in the Ozone Transport Region—an added benefit will be methane emissions reductions. 

Enhancing leak detection and emissions reporting. EPA will continue to promote transparency and accountability for 

existing sources by strengthening its Greenhouse Gas Reporting Program to require reporting in all segments of the industry. 

In addition to finalizing updates to the program, by the end of 2015, EPA will explore potential regulatory opportunities for 

applying remote-sensing technologies and other innovations in measurement and monitoring technology to further improve 

the identification and quantification of emissions and improve the overall accuracy and transparency of reported data in a 

cost-effective manner.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-11

Administration Activities and Plans to Reduce Greenhouse Gas Emissions from 

Transmission, Storage, and Distribution Infrastructures (continued) 

Leading by example on public lands. The Department of the Interior’s Bureau of Land Management will update decades-old standards to reduce wasteful venting, flaring, and leaks of natural gas—primarily methane—from oil and gas wells. 

These standards, to be proposed in spring of 2015, will address both new and existing oil and gas wells on public lands. 

Reducing methane emissions while improving pipeline safety. The Department of Transportation’s Pipeline and 

Hazardous Materials Safety Administration will propose natural gas pipeline safety standards in 2015. While the standards will 

focus on safety, they are expected to lower methane emissions as well.

Modernizing natural gas transmission and distribution infrastructure. Following on its methane roundtables, the 

Department of Energy will continue to take steps to encourage reduced greenhouse gas emissions, including the following:

• Issuing energy efficiency standards for natural gas and air compressors 

• Advancing research and development to bring down the cost of detecting leaks

• Implementing an Advanced Natural Gas System Manufacturing Research and Development Initiative

• Partnering with the National Association of Regulatory Utility Commissioners to help modernize natural gas distribution 

infrastructure

• Providing loan guarantees for new methane reduction technologies

• Developing a clearinghouse of information on effective technologies, policies, and strategies 

Industry actions to reduce methane emissions. Several voluntary industry efforts to address these sources are underway, including EPA’s plans to expand on the successful Natural Gas STAR Program by launching a new partnership in collaboration with key stakeholders later in 2015. EPA will work with the Department of Energy, the Department of Transportation, 

and leading companies—individually and through broader initiatives such as the One Future Initiative and the Downstream 

Initiative—to develop and verify robust commitments to reduce methane emissions. 

Other Federal actions. The Federal Energy Regulatory Commission has issued a policy statement that will allow interstate 

natural gas pipelines to recover certain investments made to modernize pipeline system infrastructure in a manner that 

enhances system reliability, safety, and regulatory compliance. Also, in December 2014, the Council on Environmental Quality 

released revised draft guidance for public comment that describes how Federal departments and agencies should consider 

greenhouse gas emissions and climate change in their National Environmental Policy Act reviews. 

QER Recommendations

REDUCING GHG EMISSIONS

Reducing GHG emissions from TS&D infrastructure includes a number of win-win opportunities from 

climate change and public safety perspectives. Among these are opportunities for modernizing natural 

gas distribution infrastructure, as discussed in Chapter II (Increasing the Resilience, Reliability, Safety, 

and Asset Security of TS&D Infrastructure). In addition to the measures already put in place, to further 

reduce methane emissions from TS&D infrastructure, we recommend the following: 

Improve quantification of emissions from natural gas TS&D infrastructure. An effective 

strategy to significantly improve methane emission estimates in the GHGI requires additional 

Federal funding for new measurements to update emission factors and activity data. That is why the 

President’s Fiscal Year 2016 Budget Request proposes $10 million to launch a Research and Analysis 

Program at the Department of Energy (DOE) to enhance the quantification of emissions from 

natural gas infrastructure to include in the national GHGI in coordination with EPA. 
7-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

QER Recommendations (continued)

Specific research areas for consideration that are downstream of natural gas production include 

emission estimates from pneumatic devices, leaks, and the natural gas gathering and boosting sectors. 

Congress should approve this funding. DOE and EPA should undertake a coordinated approach, 

building on stakeholder input, to ensure that new research and analysis is targeted toward knowledge 

gaps that are not already addressed by existing databases or other ongoing measurement studies. 

Expand natural gas transmission and distribution research and development programs. 

DOE should continue to develop and demonstrate cost-effective technologies to detect and reduce 

losses from natural gas transmission and distribution systems. The President’s Fiscal Year 2016 

Budget Request proposes $15 million in funding for DOE’s midstream natural gas infrastructure 

subprogram to focus on reducing methane leaks and enhancing operational efficiencies of pipelines, 

storage facilities, and compressor stations, as well as on communicating results to stakeholders 

to mitigate methane emissions. Congress should approve this funding. DOE should leverage its 

research and development efforts in this area to facilitate broader air quality benefits—reducing 

methane losses and improving midstream infrastructure efficiency to reduce nitrogen oxides and 

other ozone precursors, which will help states to meet national air quality standards. 

Invest in research and development to lower the cost of continuous emissions monitoring 

equipment. Continuous emissions monitoring can be a valuable component of leak detection and 

repair programs, which serve to improve safety and the operational improvement of natural gas 

systems. The Advanced Research Projects Agency-Energy’s MONITOR program is providing $30 

million for breakthrough technologies to measure methane emissions from natural gas systems. DOE 

should provide the additional funding needed to ensure that the most successful MONITOR projects 

are field tested and deployed. 

Conventional Air Pollution from TS&D Infrastructure

Beyond GHGs, TS&D infrastructure also contributes to conventional air pollutants such as ozone and 

particulate matter. Overall, air quality in the United States has been improving for decades, and additional 

improvements are expected in the coming decades as a result of existing and new regulations.59 However, 

given that higher temperatures are known to contribute to the formation of ground-level ozone, continued 

progress will be increasingly challenged by climate change.60 Persistent challenges remain in certain areas of the 

country where concentrations of pollutants in the atmosphere exceed national limits set by EPA. In addition, 

hazardous air pollutants are regulated through different Clean Air Act requirements. Reducing emissions of 

these air pollutants has significant benefits for human health and the environment across broad regions of the 

country—particularly in populated, urban areas, where they are found in relatively high concentrations in the 

lower atmosphere.61, 62 In 2012, EPA issued standards for volatile organic compounds (VOCs) from the oil and 

gas industry. These standards, when fully implemented, are expected to annually reduce 190,000 tons to 290,000 

tons of emissions of VOCs, which pose risks to public health and the environment.63
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-13

Figure 7-3. Criteria Air Pollutant and Precursor Emissions from Stationary TS&D Facilities in 201164, o

Refineries are the primary source of particulate matter, sulfur oxide, and VOC emissions, while natural gas compressor stations are the leading source 

of ozone precursor emissions (nitrogen oxides, carbon monoxide, and VOCs). Nitrogen oxides emissions shown here for refineries and natural gas 

processing and compression accounted for roughly 30 percent of total nitrogen oxides emissions from all industrial processes and industrial fuel 

combustion in 2011. 

Stationary Sources of Conventional Air Pollutants from TS&D Infrastructure

In the context of emissions from TS&D infrastructure, the facilities of the greatest concern include petroleum 

refineries, ethanol plants, natural gas and natural gas liquids processing plants, and natural gas compressor 

stations, which are located along transmission and gathering pipelines. While these sources generally only 

account for a small portion of total U.S. emissions of each pollutant, they still are significant, particularly for 

surrounding areas. Nitrogen oxides emissions from these facilities (see Figure 7-3) added up to roughly 30 

percent of nitrogen oxides emissions from industrial processes and industrial fuel combustion in 2011.65 In 

2013, more than 53 million people lived in U.S. counties with ground-level ozone levels above the current 

o Air emissions from each source category were drawn from EPA’s National Emissions Inventory as follows: “Petroleum Refineries” 

(NAICS 324110); “Natural Gas and Natural Gas Liquid Processing Plants” (NAICS 211112); “Biofuel Refineries” (NAICS 325193); 

and “NG Compressors” (includes emissions from all facilities listed under Pipeline Transport of Natural Gas (NAICS 486210); plus 

compressor station facilities listed under Natural Gas Distribution (NAICS 221210); plus county total nonpoint compressor engines 

(source classification codes 2310020600, 23100211(01,02,03), 23100212(01,02,03), 23100213(01,02,03), and 23100214(01,02,03)). Emissions (thousand metric tons/year)

PM2.5 PM10 SOx

NOx CO VOC

Petroleum Refineries NG & NGL Processing Plants Biofuel Refineries NG Compressor Stations

0

5

10

15

20

25

0

5

10

15

20

25

0

10

20

30

40

50

0

100

200

300

400

500

600

0

50

100

150

200

250

300

350

0

10

20

30

40

50

60

70

80
7-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

National Ambient Air Quality Standards,66 and nitrogen oxides, carbon monoxide, and VOCs are all precursors 

to ozone. Natural gas compressors can be electrified to reduce emissions in regions with air quality problems;67

to the degree this is done, however, interdependencies and potential vulnerabilities grow as gas transmission 

becomes more reliant on electricity (see discussion in Chapter II, Increasing the Resilience, Reliability, Safety, 

and Asset Security of TS&D Infrastructure). 

While overall emissions have been declining for decades, trends are inconsistent across different sectors. For 

example, though still only 5 percent of the national total, nitrogen oxides emissions from the oil and natural 

gas sectorsp

 have increased by roughly 94 percent between 2005 and 2011.68 This is particularly striking, as EPA 

trends data69 show that vehicle and power plant emissions have declined considerably.q

In addition to emissions of criteria air pollutants and their precursors, the petroleum and gas sectors contribute 

significantly to emissions of hazardous air pollutants. In particular, the petroleum sector is responsible for 

roughly 5 percent of industrial sources of hazardous air pollutants released annually (according to the Toxic 

Release Inventory).70 A proposed rule (Proposed Petroleum Refinery Sector Risk and Technology Review and 

New Source Performance Standards) was published in the Federal Register71 for public comment on June 30, 

2014.r

  The rule proposes additional emission controls for storage tanks, flares, and coking units, in addition to 

fence-line air quality monitoring, to ensure standards are being met and that neighboring communities are not 

being exposed to unintended emissions. If the final rule is identical to the proposed rule and fully implemented 

(i.e., 3 years from the promulgation of the final rule), EPA estimates that these and other provisions will result 

in a reduction of 5,600 tons per year of toxic air pollutants and 52,000 tons per year of VOCs.72

Air Pollution from the Transport of Energy Commodities

The transportation of energy commodities also contributes to air pollution. Of particular concern is diesel 

exhaust—a complex mixture of pollutants and a likely carcinogen—which has health effects that include 

premature mortality, increased hospital admissions, and heart and lung diseases.73 Oak Ridge National 

Laboratory estimates74 that transport of energy products, as a portion of total freight transport, amounts to 

28.6 percent of the total ton-miles of freight transported by rail, 5.2 percent of the total ton-miles of freight 

transported by truck, and 32.4 percent of the total ton-miles of freight transported by vessel. Therefore, 

emission estimates presented in Figure 7-3 are scaled from national totals, according to these proportions.

Among the primary energy transportation options (other than pipelines), 2011 emissions from marine vessels 

were higher than from other modes (see Figure 7-4), particularly with respect to nitrogen oxides, sulfur 

dioxide, and fine particulate matter. This is largely because ocean-going marine vessels have historically used 

residual (or bunker) fuel,75 which is a less-refined energy product. Meanwhile, barges propelled by tugboats 

that operate on inland waterways exclusively use diesel fuel, resulting in less pollution from these vessels than 

from ocean-going vessels.76 Emissions from marine vessels overall are rapidly declining, in large part due to 

new regulations discussed below.

As with stationary sources, while the criteria air pollutant emissions presented in Figure 7-3 generally account 

for only a small portion of total U.S. emissions of each pollutant, they can contribute significantly to air quality 

problems in certain regions and localities. For example, diesel exhaust from rail, heavy-duty trucks, and marine 

vessels are significant contributors to local and regional air quality problems. To help address these issues, EPA 

p This is based on EPA National Emissions Inventory estimates of nitrogen oxides emissions for the combination of two sectors—

“petroleum and related industries” and “storage and transport”—with roughly half of these emissions coming from natural gas 

compressors.

q EPA estimates that nitrogen oxides emissions from highway vehicles have declined by 50 percent since 1990, while electric power 

sector nitrogen oxides emissions are more than 70 percent lower than 1990 levels. 

r This rulemaking is under consent decree with Air Alliance Houston and several other litigants. The consent decree requires the EPA 

Administrator to sign the final rule no later than June 16, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-15

has put in place the SmartWay® Program—a public-private initiative between EPA, large and small trucking 

companies, rail carriers, logistics companies, commercial manufacturers, retailers, and other Federal and 

state agencies. Starting in 2004, the program’s purpose is to improve fuel efficiency and the environmental 

performance (reduction of both GHG emissions and air pollution) of the goods movement supply chains. 

SmartWay-designated tractors and trailers can save upward of 4,000 gallons of fuel each year. To date, 

SmartWay partners report saving more than 120 million barrels of fuel and eliminating 51.6 million metric 

tons of CO2 and almost 740,000 tons of nitrogen oxides through their participation in the program.77

In March 2010, the International Maritime Organization officially designated North America and the 

Caribbean coastal waters as emission control areas.78 Beginning in 2015, ships are to reduce their emissions of 

nitrogen oxides, sulfur oxides, and fine particulate matter through use of cleaner fuels or engine technologies 

(e.g., scrubbers). These standards will dramatically reduce air pollution and deliver substantial air quality and 

public health benefits that extend hundreds of miles inland.79

Figure 7-4. Air Emissions from the Transportation of Coal and Liquid Fuels, by Transport Mode80, s

s Since energy products only represent a portion of total freight transported by rail, truck, and marine vessel, emissions data shown 

here were scaled (on a ton-mile basis) in proportion to the fraction of total freight transport that is represented by energy products 

(according to the Oak Ridge National Laboratory’s “FAF Provisional Annual Data for 2012: Freight Analysis Framework”). Emissions (thousand metric tons/year)

PM2.5 PM10 SOx

NOx CO VOC

Rail Truck Marine Vessel

0

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15

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25

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Among the primary energy transportation options (not including pipelines), marine vessels have the highest total emissions, particularly with respect 

to nitrogen oxides, sulfur oxide, and particulate matter. These emissions are largely the result of ocean-going marine vessels’ greater reliance on residual (or bunker) fuel, which is a less-refined energy product. An important caveat is that barge transport via inland waterways can be substantially 

less polluting than tanker vessels; however, emissions from these two vessel types are not distinguishable in available inventory data.
7-16 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Figure 7-5 shows the relative scale of energy transport by vehicle type, accounting for the relative travel 

distances of each energy product.t It does not reflect the observed sharp increase in liquid fuel transport by rail 

and barge since 2012; it illustrates the relative importance of different transport modes for the movement of 

different fuel types.

Figure 7-5. Quantities of Energy Transported by Mode (other than pipeline) in 2012, by Fuel Type and Accounting for 

Distance Traveled (metric ton-miles per year)81, u

Freight by rail is the dominant mode for transporting coal within the United States. Energy freight (which does not include pipelines) for liquid fuel 

products is dominated by truck and marine transport modes. 

Another significant area of interest related to air quality and TS&D infrastructure is criteria air pollutants in 

the vicinity of ports and rail yards, where the density of vehicles leads to high concentrations of pollutants and 

greater risks to nearby communities.82 Studies have found that communities living in close proximity to rail 

yards83 and ports84 are exposed to significantly higher concentrations of diesel particulate matter—including 

fine particulate matter (PM2.5)—which is harmful to public health. When compared with the overall U.S. 

population, research also has found that low-income and minority households are overrepresented in the 

aggregate affected population, often by a factor of two or three.85

t Data are presented as metric ton-miles to enable comparison between the relative scale of liquid fuels and coal transport. This is 

necessary because some energy products are transported over very short distances (e.g., liquid fuels) while others are transported 

over much greater distances (e.g., coal).

u “Gasoline” includes gasoline, aviation turbine fuel, and ethanol. “Fuel oil” include diesel and bunker fuels. 

Metric Ton-Miles/Yr

Coal Fuel Oil Gasoline Crude Oil

0

50,000

100,000

150,000

200,000

Rail Truck Marine

Vessel
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-17

Vehicles that transport energy as freight—primarily coal for electric power generation, but also liquid fuels—

include locomotives, as well as truck and marine vessels. Their emissions are primarily due to diesel engine 

combustion of diesel fuel and residual fuel oil (in the case of marine engines). Health effects from short-term 

exposures to diesel exhaust, a likely carcinogen, include premature mortality, increased hospital admissions, 

and heart and lung diseases.86

A recent study87 found that each ton of PM2.5 reductions from aircraft, locomotives, and marine vessels 

yielded very substantial estimated monetized benefits (in comparison to reduction of PM2.5 in other sectors). 

One reason for this is that transportation hubs are often located in relatively close proximity to urban areas; 

therefore, emission reductions from these sources would have immediate health benefits for onsite workers and 

neighboring communities (see Figure 7-6). 

The California Air Resources Board has issued regulations requiring a 50 percent reduction in berthed ship 

emissions from large ports by 2014, and an 80 percent reduction by 2018.88 Most large California ports are 

implementing shore power projects as a compliance mechanism.89 Similar regulatory efforts are underway in 

the European Union, which is expected to encourage retrofitting ships to use shore power.90

Figure 7-6. Panel A: Estimated Monetized Benefits of Reductions in PM2.5 and PM2.5 Precursors. Panel B: Estimated 

Annual Mean PM2.5 Levels Attributable to Aircraft, Locomotives, and Marine Vessels in 2016.91

The benefits of reducing a ton of PM2.5 or PM2.5 precursor sulfur dioxide from certain TS&D sources result in relatively high monetized benefits to 

society, in part because these pollution sources are commonly close to human populations. 

Fuel use and emissions from locomotives could be reduced by improving rail operations and infrastructure 

and reducing congestion—one of the biggest concerns for rail traffic—as idling and stop-and-go traffic lead 

to increased fuel consumption.92 If capacity is not improved by 2035, 25 percent of rail corridors could be 

running near or at capacity, and 30 percent of rail corridors could be running above capacity, thus leading to 

increased botlenecks and fuel consumption.93

<0.020

0.021 - 0.050

0.051 - 0.100

0.101 - 0.250

0.251 - 0.500

0.501 - 0.750

0.751 - 1.000

1.001 - 2.000

2.001 - 5.000

>5.000

$800,000

Monetized benefits ($/ton reduced)

$600,000

$400,000

$200,000

PM2.5 (directly emitted) SO2

0

Aircraft, Refineries

locomotives and

marine vessels

Electricity

generating

units

A B
7-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Administration Activities and Plans

A number of Administration initiatives reduce greenhouse gas emissions, as well as other forms of air pollution from transmission, storage, and distribution infrastructure. Examples of this include the Environmental Protection Agency’s guidelines to 

states to reduce ozone precursors from oil and gas systems;v the Department of Energy’s work to improve the energy efficiency 

of equipment powering natural gas transmission systems and other transmission, storage, and distribution infrastructure; and 

efforts to shift to less polluting fuels.w

With respect to ports and rail yards, a number of Federal programs provide grant funding for transportation-related projects that 

can improve air quality in ports and rail yards, including the following: 

Congestion Management and Air Quality (CMAQ) program. The Department of Transportation’s Federal Highway 

Administration manages the CMAQ program,x which funds state and local programs that reduce air emissions. Under the 

current transportation bill, the CMAQ program is funded at about $2 billion annually.y Typical CMAQ programs include diesel 

retrofits, diesel idle reduction projects, Intelligent Transportation Systems, alternative fuel vehicle projects, and intermodal freight 

projects.z

Transportation Investment Generating Economic Recovery (TIGER) grants. The Department of Transportation’s TIGER 

programaa is a competitive grant program that funds state and local transportation projects across the Nation. TIGER grants 

have aimed at addressing key national freight rail bottlenecks and reducing truck traffic by funding improved rail access to 

ports, as well as many other port, rail, and road projects aimed at alleviating freight congestion. Since 2010, annual appropriations for TIGER have ranged from $475 million to $600 million.ab

National Clean Diesel Campaign. First authorized by the Diesel Emissions Reduction Act in 2008, the National Clean Diesel 

Campaign issues grants to eligible entities for projects to reduce emissions from existing diesel engines. The projects meet critical local air quality needs by deploying both proven and emerging technologies much earlier than would otherwise occur.ac Past 

annual appropriations for the Diesel Emissions Reduction Act have ranged from $20 million to $60 million.ad

GROW AMERICA Act. The Administration’s proposed transportation legislation includes several provisions aimed at increasing investments that will improve freight performance and reduce criteria air pollutant and precursor emissions. These include the following:

• A 6-year, $18-billion competitive grant program targeted at freight infrastructure projects identified by state and local 

governments and key transportation stakeholders

• A collaborative freight strategic planning process, which will permit the use of formula grant funds for “game-changing” 

freight transportation projects

• A sharper focus for the CMAQ program on reducing emissions of fine particulates, as well as the criteria pollutants with 

the greatest impact on human health, and expansion of the TIGER grant program to $1.25 billion per year. 

v The White House. “Fact Sheet: Administration Takes Steps Forward on Climate Action Plan by Announcing Actions to Cut 

Methane Emissions.” http://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-stepsforward-climate-action-plan-anno-1. Accessed March 2, 2015.

w Department of Energy. “DOE Launches Natural Gas Infrastructure R&D Program.” September 8, 2014. http://energy.gov/fe/

articles/doe-launches-natural-gas-infrastructure-rd-program-enhancing-pipeline-and-distribution. Accessed February 27, 

2015.

x Federal Highway Administration. “CMAQ- Air Quality.” http://www.fhwa.dot.gov/environment/air_quality/cmaq/. Accessed 

February 27, 2015.

y Department of Transportation. “Fiscal Year 2014 Apportionments, Allocations and Program Information.” March 2014. 

http://www.fta.dot.gov/printer_friendly/12910_15867.html. Accessed February 27, 2015.

z Federal Highway Administration. “CMAQ- Air Quality.” http://www.fhwa.dot.gov/environment/air_quality/cmaq/

Accessed February 27, 2015.

aaDepartment of Transportation. “TIGER Discretionary Grants.” http://www.dot.gov/tiger. Accessed February 27, 2015.

ab Department of Transportation. “TIGER Discretionary Grants.” http://www.dot.gov/tiger. Accessed February 27, 2015.

ac Environmental Protection Agency. “National Clean Diesel Campaign: Funding Sources.” 

http://www.epa.gov/cleandiesel/grantfund.htm. Accessed February 27, 2015.

adEnvironmental Protection Agency. “Second Report to Congress Highlights of the Diesel Emissions Reduction Program.” 

http://www.epa.gov/cleandiesel/documents/420r12031.pdf. Accessed February 27, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-19

While the QER scope is limited to energy freight, expanding any program that reduces freight congestion 

would achieve emissions reductions from freight transport more broadly, with direct benefits of improved air 

quality for nearby urban communities and workers. 

Other Environmental Issues

In addition to GHG emissions, conventional air pollution, and land-use issues, there are also other environmental 

issues related to TS&D infrastructure, such as spills, dredging materials disposal, and CO2

 pipelines. 

Liquid Fuel Spills

All forms of TS&D infrastructure for petroleum and refined petroleum products present some risk of spills 

into the environment. It is challenging to compare marine, rail, truck, and pipeline spill statistics due to 

several data limitations and inherent differences between modes. For example, there is large interannual 

variability in the volume of reported releases of crude oil from marine and rail vessels; for rail, it ranges from 

less than 5 barrels to nearly 25,000 barrels per year—with the increase in shipments of crude by rail, there 

has been a concomitant increase in oil releases from this mode.94 In terms of recorded impacts relevant to the 

environment and public health, the simplest comparative metrics are total reported incidents and volumes of 

spills. In general, available data indicate that releases from pipelines are relatively more significant than spills 

from rail transport, and the total oil spilled by pipelines is greater than that from other sources. Between 2004 

and 2013, pipelines released an average of 63,06995 barrels of oil per year. In comparison, for 1998 to 2007, 

average annual releases of oil by rail (1,400 barrels per year96), truck (9,200 barrels per year97), and all marine 

vessels (9,593 barrels per year98) were all considerably lower. This comparison is dominated by the fact that 

each mode transports different total volumes of energy product over different average distances, with pipelines 

carrying far larger volumes than other modes. Better data on barrels spilled per barrel-miles moved would 

improve our ability to compare spill statistics across modes on a common basis. This is particularly important 

for assessing how relative risks are changing during this dynamic period of growing domestic production of 

crude oil and shifting patterns of energy transport.

The environmental effects of any spill will depend on the vulnerability of the region where the spill takes place 

and the ease (and therefore speed) of response. Rail and marine spills result in the spill of a relatively small 

volume, typically aboveground. Pipeline spills, however, can go undetected for relatively long periods of time 

QER Recommendations

REDUCING CONVENTIONAL AIR POLLUTION

Current Administration activities and proposals before Congress have the potential to broadly benefit 

both communities and workers affected by conventional air pollution from TS&D infrastructures. In 

order to build on these ongoing activities, we recommend the following:

Provide funding to programs that reduce diesel emissions. To protect workers and nearby 

communities through further reductions in diesel particulate matter emissions from ports and 

rail yards, we recommend providing funding for the successful Diesel Emissions Reduction 

Act program and other Federal programs that fund complementary activities that reduce diesel 

emissions. Grant funding should support projects that deploy emissions control technologies, 

reduce bottlenecks and congestion of freight in the vicinity of these facilities, and use other methods 

to reduce diesel emissions. 
7-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

and result in higher spill volumes, typically underground. Other factors that affect the severity of a spill, both 

for the environment and public safety, include the season and weather, proximity to densely populated areas 

and sensitive ecological areas, and the type of liquid involved in the spill (see Figure 7-7). 

Figure 7-7. Conditions Affecting Liquid Fuels Spill Severity99

Assessing risks associated with oil transport involves the consideration of a number of factors, including the variety of landscapes that could potentially be affected, the vulnerability of those landscapes to damaging impacts, and the type and extent of the incident.

Administration Activities and Plans

Environmental Protection Agency (EPA) Oil Spill Program. The EPA protects U.S. waters by preventing, preparing for, 

and responding to oil spills in navigable waters. This program is authorized by Section 311 of the Clean Water Act and the 

Oil Pollution Act of 1990. The oil pollution prevention regulations require each owner or operator of a regulated facility to 

prepare a Spill Prevention, Control, and Countermeasures Plan that addresses the facility’s design, operation, and maintenance 

procedures established to prevent oil spills, as well as countermeasures to control, contain, cleanup, and mitigate the effects of 

an oil spill that could affect navigable waters. In addition, high-risk facility owners and operators are also required to prepare 

Facility Response Plans that identify response actions for discharges of oil that pose substantial harm to the environment. EPA 

is responsible for inland oil spills that either impact or threaten water. Typically, EPA monitors oil spills to ensure that Responsible Parties take necessary steps to contain and cleanup oil spills. EPA does have authority to direct a Responsible Party’s 

cleanup activities or take oil spill response actions if there is no viable Responsible Party, or if a Responsible Party is unwilling 

to take appropriate actions. EPA utilizes the Oil Spill Liability Trust Fund to fund its actions. 

Crude Oil

Refined 

Product

NGLs

Ethanol

Types of 

Liquid Fuels

Population 

Density

Land or Water

Ecologically

Sensitive

Ease of 

Detection 

(remote, 

underground, 

etc.)

Landscape 

Factors

High

Medium

Low

Volume

Pipelines

Railroads

Ships/Barges

Trucks

Pipelines

Railroads

Ships/Barges

Trucks

Mode of Transport

Transshipment

Points
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-21

Administration Activities and Plans (continued) 

EPA Superfund Emergency Response and Removal Program. This program trains, equips, and deploys resources in 

order to contain and remove contaminants. Under the program, EPA personnel respond to or oversee the cleanup by Responsible Parties of thousands of releases, regardless of their cause. EPA manages and/or provides support for a variety of emergency responses, removal assessments, site stabilizations, and cleanup response actions. EPA maintains national and regional 

response centers for 24-hour reporting of hazardous material or petroleum releases. EPA deploys many advanced technologies 

and other assets during disaster responses, such as the Chemical, Biological, Radiological, and Nuclear Consequence Management Advisory Team; the portable laboratories; or the airborne sensor platform (which is called ASPECT). 

Department of Transportation Proposed Rules. The Department of Transportation’s Pipeline and Hazardous Materials 

Safety Administration (PHMSA) is finalizing a proposed rule on Pipeline Safety—Safety of On-Shore Hazardous Liquid Pipelines. This rulemaking would address effective procedures that hazardous liquid operators can use to improve the protection 

of high-consequence areas and other vulnerable areas along their hazardous liquid onshore pipelines. PHMSA is considering 

whether changes are needed to the regulations covering hazardous liquid onshore pipelines, whether other areas should be 

included as high-consequence areas for integrity management protections, what the repair time frames should be for areas 

outside of the high-consequence areas that are assessed as part of the integrity management program, whether leak-detection standards are necessary, and whether valve spacing requirements are needed on new construction or existing pipelines. 

PHMSA should extend regulation to certain pipelines currently exempt from regulation. The Department of Transportation also 

published an Advanced Notice of Proposed Rulemaking on requiring oil spill response plans for high-hazard flammable trains.ae

This was a companion to a proposed rule setting out comprehensive standards to improve the rail transportation of flammable 

liquids, including unit trains of crude oil and ethanol, discussed in Chapter V (Improving Shared Transport Infrastructures).af

National Oceanic and Atmospheric Administration (NOAA) oil spill programs. NOAA’s Office of Response and Restoration is charged with responding to oil spills in coastal and marine environments, and it provides scientific support to the 

Federal on-scene coordinator. NOAA employs a number of tools to preemptively reduce potential risks from marine oil spills, 

including providing expertise on oil spill response plans, environmental sensitivity index maps, and trajectory analysis models. 

In addition, NOAA works with the Bureau of Ocean Energy Management, the Coast Guard, and other Federal and state actors 

to identify particularly sensitive marine environments in siting of energy facilities and shipping lanes. NOAA also plays a lead 

role in restoration efforts in the event of a marine spill.

ae Department of Transportation. “U.S. DOT Announces Comprehensive Proposed Rulemaking for the Safe Transportation of 

Crude Oil, Flammable Materials.” July 23, 2014. http://www.dot.gov/briefing-room/us-dot-announces-comprehensiveproposed-rulemaking-safe-transportation-crude-oil. Accessed February 19, 2015.

af Department of Transportation. “U.S. DOT Announces Comprehensive Proposed Rulemaking for the Safe Transportation of 

Crude Oil, Flammable Materials.” July 23, 2014. http://www.dot.gov/briefing-room/us-dot-announces-comprehensiveproposed-rulemaking-safe-transportation-crude-oil. Accessed February 19, 2015.

Water Use and Wastewater

Petroleum refineries consume the most water and produce the most wastewater discharge of any segment of 

the energy TS&D infrastructure. Despite data limitations, the relative quantities are known:  

• Annual water consumption by petroleum refineries in 2005 was about 1.3 billion gallons per day100  

compared to about 4.3 billion gallons per day of total water consumed by thermoelectric power 

generation in 2008.ag

• Water withdrawals by both petroleum refineries and thermoelectric power generation are substantially 

greater, meaning that only a fraction of withdrawn water is consumed, while the remainder is 

discharged to the environment. 

ag Based on total annual water use of 1,570 billion gallons by thermoelectric power plants in: Averyt, K. et al. “Water use for electricity in the 

United States: an analysis of reported and calculated water use information for 2008.” Environmental Research Letters. 8(1). 2013.
7-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

• Fresh water withdrawals by petroleum refineries in 2005 were approximately 6 billion to 19 billion 

gallons per day,101 while fresh and saline water withdrawals by thermoelectric power generation in 2011 

were approximately 196 billion gallons per day.102

Discharges from refineries can also affect water quality (particularly water temperature). Such discharges are 

subject to EPA permitting requirements under the Clean Water Act, which requires system controls for any direct 

discharges to surface waters.103

Biofuel refineries can also consume large volumes of water. However, the quantity of water consumed during the 

biorefining processes is modest compared to the water consumed to grow bioenergy feedstocks in cases where 

irrigation is required.104  To produce 1 gallon of ethanol, up to 1,000 gallons of irrigation water is consumed, while 

producing 1 gallon of biodiesel from soybeans consumes up to 750 gallons of irrigation water.105  Meanwhile, 

ethanol refineries consume as much as 3 gallons of water to produce 1 gallon of ethanol,106 which is greater on a 

per-gallon production basis than petroleum refining. Biodiesel refineries consume less than 1 gallon of water per 

gallon of biodiesel produced.107, 108

Nationally, total water use and wastewater production from processing of natural gas and natural gas liquids 

is low, although natural gas liquids facilities can have large local water withdrawal impacts. The construction 

and operation of TS&D infrastructure can also cause significant watershed-level changes in local and regional 

hydrology. 

Dredging Materials

The Army Corps of Engineers oversees 25,000 miles of channels—comprising 13,000 miles of coastal harbors 

and channels and 12,000 miles of inland and intracoastal waterways—and dredges 225 million cubic yards of 

material from U.S. harbors, channels, and waterways annually.109 The proper placement of dredged material is 

often a significant portion of the total cost of dredging, particularly if dredged material contains contaminants. 

Dredged material is typically tested, and the method of placement is chosen to minimize costs and environmental 

impacts. Placement of dredged material in open water is regulated by Section 404 of the Clean Water Act, and 

placement in ocean waters is regulated by Section 103 of the Marine Protection, Research, and Sanctuaries Act of 

1972. Many techniques exist for reusing dredged material or removing potentially hazardous components from it, 

and dredged material is increasingly being employed for beneficial uses under Section 204 of the Water Resources 

Development Act of 1992. The Army Corps of Engineers has conducted research and development on treating 

and beneficially using or placing dredged material since the 1970s. The Corps will continue to conduct research 

and development on dredging and dredged material placement operations under its Dredging Operations and 

Environmental Research program.110

Environmental Data Related to TS&D Infrastructures

Finally, data that are important for understanding the environmental characteristics and impacts of TS&D 

infrastructures often are not available or are only available in highly aggregated formats (temporally and spatially). 

Furthermore, these data are often outdated and sometimes not conducive to identifying trends (e.g., they are only 

released every 4 years, or methodologies change so that time series are difficult to compile or are of questionable 

value). These limitations exist with respect to many public health, safety, and environmental quality issues, 

including oil spills and water use, consumption, and waste. In a 2015 report,111 the National Transportation Safety 

Board noted that many types of basic data necessary for comprehensive probabilistic risk modeling of natural gas 

pipelines are not currently available. The Board’s recommendations included the development of better-quality 

spatial data on pipelines that can be more easily accessed by regulators and operators. Limitations also exist with 

respect to data on the age of certain equipment (e.g., compressors) and infrastructure (e.g., pipelines), as well as 

emissions at a granular level (e.g., from different types of vessels—such as barges versus tankers—or from different 

kinds of compressor motors—such as reciprocating engines versus centrifugal turbines). These latter data are 

important to have so that appropriate priorities can be set for both research and policy.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-23

CO2 Pipelines: Enabling Infrastructure for GHG Emissions Reductions

CO2 pipelines are an important enabling infrastructure for reducing GHG emissions in the future. Carbon 

dioxide sequestration, particularly in connection with enhanced oil recovery (EOR),ah may involve moving 

CO2

 significant distances from power plants (or other sources) to the sequestration site or EOR field. 

Spanning across more than 12 U.S. states and into Saskatchewan, Canada, a safe and regionally extensive 

network of CO2

 pipelines has been constructed over the past four decades. Consisting of 50 individual 

CO2

 pipelines, with a combined length of more than 4,500 miles (see Figure 7-8), these CO2 transportation 

pipelines represent an essential building block for linking the capture of CO2 from electric power plants 

and other industrial sources with its productive use in oil fields and its safe storage in saline formations. 

The Pipeline and Hazardous Materials Administration (PHMSA)ai is responsible for overseeing the safe 

construction and operation of CO2 pipelines, which includes technical design specifications and integrity 

management requirements. 

ahThe injection of CO2

 gas into oil reservoirs at high pressure forces the CO2 to mix with oil, which reduces the viscosity of the oil and 

ultimately increases the total cumulative volume of oil produced, thus the percentage of oil-in-place that is recovered.

ai While CO2

 is not considered a hazardous material by the Department of Transportation, CO2 transportation pipelines are regulated 

under 49 C.F.R. § 195, Transportation of Hazardous Liquids by Pipeline.

QER Recommendations

OTHER ENVIRONMENTAL ISSUES

As noted above, the Administration has a broad range of activities and proposed rules underway in 

the area of addressing oil spills, so further recommendations in that area are not needed at this time. 

Similarly, environmental controls on wastewater discharges from TS&D infrastructure are adequate. 

To continue to make progress on the handling and disposal of dredging materials and to address issues 

involving environmental data, we recommend the following:

Conduct research needed on dredging materials. The Army Corps of Engineers, in collaboration 

with other appropriate Federal agencies, should continue to undertake research and development on 

treating dredged material and then either beneficially using or disposing of it. As efforts continue—

by the Federal Government and other stakeholders—to enhance shared infrastructures for energy 

commodity transport, focusing on waterway and port improvements, the amount of such material 

may grow substantially and pose a barrier to enhancing waterborne TS&D infrastructure. 

Improve environmental data collection, analysis, and coordination. DOE should work with other 

Federal agencies to improve data and analysis on the environmental characteristics and impacts of 

TS&D infrastructures. This work should be designed to fill the host of data gaps on environment, 

safety, and public health issues with respect to TS&D infrastructure. DOE’s activities should take 

into account the recent recommendations by the National Transportation Safety Board on data gaps 

related to natural gas pipelines.
7-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Figure 7-8. Current CO2-EOR Operations and Infrastructure112

The current CO2 pipeline system has been built to deliver CO2 for CO2-EOR to oil fields in the Permian Basin of west Texas and eastern New Mexico. 

This system spans across more than a dozen U.S. states and into Saskatchewan, Canada. 

The vast majority of the CO2 pipeline system is dedicated to CO2-EORaj and connects natural and industrial 

sources of CO2

 with EOR projects in oil fields. In 2014, roughly 1,250 billion cubic feet of CO2 (or 68 million 

metric tons) flowed through U.S. pipelines—roughly 80 percent of which is from natural (geologic) sources. 

In the next few years, several new industrial CO2-capture facilitiesak are expected to bring online another 1,100 

billion cubic feet of CO2, with nearly 600 miles of new pipeline by 2020. At that point, the portion of CO2 from 

industrial sources would nearly exceed that from natural sources.

Currently, just more than 4 percent of total U.S. crude oil production is produced through EOR, and this is 

projected to increase to 7 percent by 2030.113 Additionally, as recent trends114 in CO2

 pipeline planning and 

construction have shown, there is considerable potential for low-cost CO2

 capture from ethanol refineries, 

other industrial facilities, and EOR in nearby oil production basins in regions of the country that do not 

yet have CO2

 pipeline networks in place. However, given the upfront capital costs associated with pipeline 

construction and the absence of policy incentives for reducing industrial carbon pollution, financial support 

would likely be needed to spur private investments in some regions.

A national carbon policy would create investment certainty and spur significant new investment in CO2

pipeline infrastructure, creating incentives for electric power plants and other industrial facilities to reduce 

CO2

 emissions through carbon capture technologies and improving the economics for oil production through EOR. 

aj A small fraction is used for other industrial uses, such as delivering CO2

 to the beverage industry.

ak For example, Air Products’ PCS Nitrogen plant in Louisiana and Southern Company’s integrated gasification combined cycle plant in 

Kemper County, Mississippi.

Riley Ridge

LaBarge Gas Plant

Val Verde Gas 

Plants

Enid Fertilizer Plant

14

9

77 19

2

1

2

2

McElmo Dome/

Doe Canyon

Bravo Dome

Sheep Mountain

Jackson Dome

Conestoga Ethanol Plant

Agrium Nitrogen Plant

Century 

Gas Plant

Greencore Pipeline

Denbury/Green Pipeline

No. of U.S. CO2-EOR 

Projects

Natural CO2 Source

Industrial CO2 Source

CO2 Pipeline

CO2 Proposed Pipeline 

138

Dakota Coal

Gasification Plant

2

1 9

Coffeyville 

Fertilizer Plant

Conestoga Bonanza

Air Products 

Hydrogen Plant

PCS Nitrogen Plant

Mississippi 

IGCC Plant

U.S. regions with largescale CO2

 pipeline systems 

currently in operation

Miles of 

Pipeline

Permian Basin

(W. TX, NM, and S. CO)

2,320

Rocky Mountains

(N. CO, WY and MT)

810

Gulf Coast

(MS, LA and E. TX) 740

Mid-Continent

Other

(OK and KS) 480

(ND, MI, Canada) 215

CO2-EOR Region
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-25

In a low-carbon scenario analysis case analyzed for the QER,115 construction through 2030 would more than 

triple the size of current U.S. CO2 pipeline infrastructure through an average annual build rate of nearly 1,000 

miles per year.al

The regulation of CO2 pipelines is currently a joint responsibility of Federal and state governments.116

CO2 transportation pipelines are subject to Federal safety regulations that are administered by PHMSA.am  

PHMSA directly oversees pipeline safety for all interstate lines, while intrastate pipelines are subject to state 

agency oversight (as long as the standards are at least as stringent as the Federal rules).an  The Federal Energy 

Regulatory Commission and the Surface Transportation Board have determined that CO2 pipelines are not 

within their jurisdiction.117, 118  Otherwise, requirements for siting (including the use of eminent domain), 

construction, and operations of CO2 pipelines are largely handled at the state level. If a pipeline crosses Federal 

land, permits from the relevant Federal agencies (e.g., rights of way) and the accompanying environmental 

review under NEPA are required prior to siting and construction.ao

State laws that are specific to CO2

 pipelines, EOR, and underground storage are varied and generally limited to 

those regions with CO2-EOR projects. Texas, for example, has several laws that pertain specifically to CO2 for 

EOR and geologic sequestration. A CO2

 pipeline operator in Texas may exercise its right of eminent domain 

if it has declared itself a common carrier, which deems the CO2 pipeline open to transport for hire by the 

public.ap  Texas also has policy incentives, including a reduction in its severance tax rate by 50 percent for oil 

produced from EOR using anthropogenic CO2.

119  The Wyoming Pipeline Authority has begun to plan for 

and establish corridors for future CO2

 pipelines.aq  Rather than leave future pipeline planning up to individual 

operators, the Wyoming Pipeline Authority is seeking to assist pipeline developers through the pipeline 

construction process by serving as a facilitator and information provider to industry, state government, and the 

public.120, 121 

al The model projects 11,000 miles of new pipeline construction, which is more than half the scale that would potentially be needed 

by 2050, to accommodate climate stabilization scenarios modeled by Dooley et al. “Comparing Existing Pipeline Networks with the 

Potential Scale of Future U.S. CO2

 Pipeline Networks.” Energy Procedia. 1(1). p. 1,595–1,602. February 2009. 

am While CO2

 is not considered a hazardous material by the Department of Transportation, CO2 transportation pipelines are 

regulated under 49 C.F.R. § 195, Transportation of Hazardous Liquids by Pipeline. This distinction is made due to the nature of 

the transportation pipelines, which carries the highly pressurized CO2 in a liquid phase similar to other hazardous material 

transportation pipelines. Smaller CO2 distribution lines, which transport the CO2 from the trunk line to individual wells, generally are 

not subject to Federal safety standards.

anOther Federal agency requirements, depending upon the area involved, can include threatened and endangered species consultations 

and permits for wetlands fill. Currently, the Bureau of Land Management regulates CO2

 pipelines under the Mineral Leasing Act as a 

commodity shipped by a common carrier. See: 30 U.S.C. § 185(r); Buys and Associates, Inc. “Environmental Assessment for Anadarko 

E&P Company L.P. Monell CO2 Pipeline Project.” Prepared for the Department of the Interior, Bureau of Land Management. February 

2003. See also: U.S. Court of Appeals. “970 F. 2d 757 – Exxon Corporation v. Lujan.” July 23, 1992.

aoCurrently, the Bureau of Land Management regulates CO2

 pipelines under the Mineral Leasing Act as a commodity shipped by a 

common carrier. See: 30 U.S.C. § 185(r); Buys and Associates, Inc. “Environmental Assessment for Anadarko E&P Company L.P. 

Monell CO2 Pipeline Project.” Prepared for the Department of the Interior, Bureau of Land Management. February 2003. See also: U.S. 

Court of Appeals. “970 F. 2d 757 – Exxon Corporation v. Lujan.” July 23, 1992.

apTexas Natural Resources Code Annotated § 111.019(a) (West); Texas Natural Resources Code Annotated § 111.002(6) (West).

aqThe Wyoming Pipeline Authority recently announced its application to the Bureau of Land Management for a Wyoming Pipeline 

Corridor Initiative.  See: Wyoming Pipeline Authority. “Wyoming Pipeline Corridor Initiative.” www.wyopipeline.com/projects/

wpci/. Accessed January 26, 2015. As described by the Wyoming Pipeline Authority, the initiative is a proposed pipeline right-of-way 

network designed to connect sources of CO2

 to oil fields that are suitable for EOR. The initiative, as proposed to the Bureau of Land 

Management, would establish 1,150 miles of corridors on Federal lands in Wyoming. The Wyoming Pipeline Authority would be the 

project proponent receiving the right of way, which would then be assigned to individual project proponents, which would construct 

and operate pipelines. See: Wyoming Pipeline Authority. “Wyoming Pipeline Corridor Initiative Plan of Development.” May 2014. 

www.wyopipeline.com/wp-content/uploads/2014/06/WPCI_POD_may_2014.pdf. Accessed January 27, 2015.).
7-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

QER Recommendations

CO2 PIPELINES

Meeting U.S. GHG emission goals will require a more concerted Federal policy, involving closer 

cooperation among Federal, state, and local governments. The development of a national CO2 pipeline 

network capable of meeting Federal policy initiatives should build on state experiences, including 

lessons learned from the effectiveness of different regulatory structures, incentives, and processes that 

foster interagency coordination and regular stakeholder engagement. To expand current Federal efforts 

to meet these challenges, we recommend the following:

Work with states to promote best practices for siting and regulating CO2

 pipelines. Improving 

CO2

 pipeline siting will improve safety and environmental protection. Several states have 

made substantial progress on this front and provide potential models for other states. DOE, 

in cooperation with Federal public land agencies, should take a convening role to promote 

communication, coordination, and sharing of lessons learned and best practices among states that 

are already involved in siting and regulating CO2

 pipelines, or that may have CO2 pipeline projects 

proposed within their borders in the future.

Enact financial incentives for the construction of CO2

 pipeline networks. Expanding and 

improving CO2 pipeline infrastructure could enable GHG reductions through carbon capture, 

utilization, and storage, while promoting domestic oil production through EOR. Providing 

incentives such as grants or tax incentives will spur activity to link low-cost CO2 from industrial 

sources to nearby oil fields and saline storage formations. The President’s Fiscal Year 2016 Budget 

Request proposes the creation of a Carbon Dioxide Investment and Sequestration Tax Credit in 

order to accelerate commercial deployment of carbon capture, utilization, and storage, as well as to 

catalyze the development of new carbon capture, utilization, and storage technologies. Specifically, 

the proposal, part of the President’s POWER+ Plan to invest in coal communities, would authorize 

$2 billion in refundable investment tax credits for carbon capture technology and associated 

infrastructure (including pipelines) installed at new or retrofitted electric generating units that 

capture and permanently “sequester” CO2.

122 Congress should enact this proposed tax credit.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-27

RECOMMENDATIONS IN BRIEF: 

Addressing Environmental Aspects of TS&D Infrastructure

(Including environmental recommendations discussed elsewhere in this report)

Improve quantification of emissions from natural gas transmission, storage, and distribution (TS&D) 

infrastructure. Congress should approve the $10 million requested in the Fiscal Year 2016 Budget to help update 

Greenhouse Gas Inventory estimates of methane emissions from natural gas systems. The Department of Energy (DOE) and the 

Environmental Protection Agency should undertake a coordinated approach, building on stakeholder input, to ensure that new 

research and analysis is targeted toward knowledge gaps unaddressed by other researchers. 

Expand research and development (R&D) programs at DOE on cost-effective technologies to detect and 

reduce losses from natural gas TS&D systems. DOE should leverage its R&D efforts in this area to facilitate broader air 

quality benefits. 

Invest in R&D to lower the cost of continuous emissions monitoring equipment. To further improve safety and 

reduce emissions from natural gas systems, additional R&D—as proposed in the Fiscal Year 2016 Budget—is needed to 

reduce costs and enable deployment of continuous emissions monitoring technologies.

Support funding to reduce diesel emissions. To protect workers and nearby communities through further reductions 

in diesel particulate matter emissions from ports and rail yards, the Administration proposed and Congress should provide 

funding for the Diesel Emissions Reduction Act and other related programs.

Collaborate on R&D on the beneficial use and/or disposal of dredging material. The Army Corps of Engineers 

and other appropriate Federal agencies should undertake collaborative R&D on treating and then either beneficially using or 

disposing of dredging material. 

Improve environmental data collection, analysis, and coordination. DOE should work with other Federal agencies to 

improve data and analysis on the environmental characteristics and impacts of TS&D infrastructures. 

Work with states to promote best practices for regulating and siting carbon dioxide (CO2

) pipelines. Building 

on successful state models for CO2 pipeline siting, DOE, in cooperation with Federal public land agencies, should take a 

convening role to promote communication, coordination, and sharing of lessons learned and best practices among states 

that are already involved in siting and regulating CO2 pipelines, or that may have CO2 pipeline projects proposed within their 

borders in the future.

Enact financial incentives for the construction of CO2 pipeline networks. Congress should enact the 

Administration’s proposed Carbon Dioxide Investment and Sequestration Tax Credit, which would authorize $2 billion in 

refundable investment tax credits for carbon capture technology and associated infrastructure (including pipelines) installed at 

new or retrofitted electric generating units that capture and permanently “sequester” CO2. 

Enhance TS&D resilience to a variety of threats, including climate change and extreme weather (discussed in Chapter II, 

Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure).

Enhance natural gas safety, efficiency, and lower emissions by reducing natural gas leakage and improving the 

efficiency and safety of the natural gas infrastructure through support for innovative programs to upgrade natural gas 

distribution system performance through targeted funding to low-income consumers (discussed in Chapter II, Increasing the 

Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure).

Accelerate current development of uniform methods for measuring energy savings and promote widespread 

adoption of these methods in public and private efficiency programs (discussed in Chapter III, Modernizing the Electric Grid).

Partner with the Arctic Council on Arctic energy safety, reliability, and environmental protection (discussed in 

Chapter VI, Integrating North American Energy Markets).
7-28 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

Endnotes

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3. 40 C.F.R. § 1508.20.

4. 54 U.S.C. § 306108.

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QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-29

18. 14 C.F.R. § 77. 

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7-30 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure

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18, 2015.

104. Environmental Protection Agency. “Biofuels and the Environment: First Triennial Report to Congress.” 2012. 

http://www.epa.gov/ncea/biofuels/index.htm. Accessed January 16, 2015.

105. Department of Energy. “The Water-Energy Nexus: Challenges and Opportunities.” June 2014. http://www.energy.gov/

sites/prod/files/2014/06/f16/Water%20Energy%20Nexus%20Report%20June%202014.pdf. Accessed January 16, 2015.

106. Environmental Protection Agency. “Biofuels and the Environment: First Triennial Report to Congress.” p. 3–19.

2012. http://www.epa.gov/ncea/biofuels/index.htm. Accessed January 16, 2015.

107. Environmental Protection Agency. “Biofuels and the Environment: First Triennial Report to Congress.” p. 3–19. 2012. 

http://www.epa.gov/ncea/biofuels/index.htm. Accessed January 16, 2015. 

108. Department of Energy. “The Water-Energy Nexus: Challenges and Opportunities.” Table 2.2. June 2014. http://www.

energy.gov/sites/prod/files/2014/06/f16/Water%20Energy%20Nexus%20Report%20June%202014.pdf. Accessed 

January 16, 2015.

109. Army Corps of Engineers. “Overview of Corps National Dredging Program and Regulations.” 2009. http://www.

nwp.usace.army.mil/Portals/24/docs/navigation/2013%20Dredging%20and%20Resource%20Agency%20meeting.pdf. 

Accessed January 16, 2015.

110. Army Corps of Engineers. “Dredging Operations and Environmental Research (DOER).” http://el.erdc.usace.army.mil/

dots/doer/doer.html. Accessed March 18, 2015.

111. National Transportation Safety Board. “Safety Study; Integrity Management of Gas Transmission Pipelines in High 

Consequence Areas.” 2015. http://www.ntsb.gov/news/events/Documents/2015_Gas_Transmission_SS_BMG_Abstract.

pdf. Accessed February 25, 2015.

112. Quadrennial Energy Review Analysis: Wallace W. et al. “A Review of the CO2 Pipeline Infrastructure in the U.S.” 

National Energy Technology Laboratory. DOE/NETL-2014/1681. April 2015. http://energy.gov/epsa/qer-documentlibrary. 

113. Energy Information Administration. “Annual Energy Outlook 2014.” April 2014. http://www.eia.gov/forecasts/aeo/

pdf/0383(2014).pdf. Accessed January 15, 2015.

114. Quadrennial Energy Review Analysis: Wallace W. et al. “A Review of the CO2 Pipeline Infrastructure in the U.S.” 

National Energy Technology Laboratory. DOE/NETL-2014/1681. April 2015. http://energy.gov/epsa/qer-documentlibrary.

115. Quadrennial Energy Review Analysis: Wallace W. et al. “A Review of the CO2 Pipeline Infrastructure in the U.S.” 

National Energy Technology Laboratory. DOE/NETL-2014/1681. April 2015. http://energy.gov/epsa/qer-documentlibrary.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 7-35

116. Congressional Research Service. “Carbon Dioxide (CO2) Pipelines for Carbon Sequestration: Emerging Policy Issues.” 

p. 10. January 17, 2008. http://assets.opencrs.com/rpts/RL33971_20080117.pdf. Accessed January 21, 2015.

117. Cortez Pipeline Co. 7 FERC ¶ 61,024. 1979 (holding that CO2 is not a natural gas within the meaning of the Natural 

Gas Act). 

118. Cortez Pipeline Co. “Petition for Declaratory Order — Commission Jurisdiction Over Transportation of Carbon 

Dioxide by Pipeline.” 45 Fed. Reg. 85177. December 24, 1980.

119. Railroad Commission of Texas. “Present Texas Severance Tax Incentives.” http://www.rrc.state.tx.us/oil-gas/

publications-and-notices/texas-severance-tax-incentives-past-and-present/presenttax/. Accessed January 31, 2015.

120. Wyoming Pipeline Authority. “Wyoming Pipeline Corridor Initiative.” https://www.wyopipeline.com/projects/wpci/. 

Accessed January 21, 2015.

121. Wyoming Pipeline Authority. “Home.” https://www.wyopipeline.com/. Accessed January 16, 2015.

122. Executive Office of the President. “Investing in Coal Communities, Workers, and Technology: The POWER+ Plan.” 

The President’s Budget for Fiscal Year 2016. https://www.whitehouse.gov/sites/default/files/omb/budget/fy2016/assets/

fact_sheets/investing-in-coal-communities-workers-and-technology-the-power-plan.pdf. Accessed April 1, 2015.
7-36 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VII: Addressing Environmental Aspects of TS&D Infrastructure
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-1

Chapter VIII

This chapter gives an overview of current and projected employment in and 

related to the energy sector and discusses programs to assist in meeting the 

demand for new workers going forward. The first section provides estimates 

of jobs in energy transmission and distribution and jobs related to energy 

systems overall, with forecasts out to 2030 for jobs supported by the energy 

industry. The second section discusses the impact of an aging workforce. The 

third section discusses specific energy workforce demands related to electricity, 

natural gas, and shared infrastructures. The remainder of the chapter discusses 

potential responses to address the demand for new energy workers. A number 

of data challenges in understanding employment in the energy sector are also 

discussed. The chapter concludes with a description of current Administration 

activities and plans, as well as a number of recommendations for further action.

ENHANCING EMPLOYMENT 

AND WORKFORCE TRAINING
8-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

FINDINGS IN BRIEF:

Enhancing Employment and Workforce Training

Approximately 1 million people were employed in energy transmission and distribution jobs in 2013. This 

represented almost 0.75 percent of U.S. civilian jobs. An additional 900,000 jobs were indirectly supported by energy 

transmission and distribution activity. 

Projections indicate that, by 2030, the energy sector overall, including the transmission, storage, and 

distribution segment, will employ an additional 1.5 million workers. Most of these jobs will be in construction, 

installation and maintenance, and transportation, and approximately 200,000 more workers with computer and mathematics 

skills will be in demand. 

Changes in the electricity sector, in particular, affect the number and types of energy jobs. New technologies are 

changing the skill sets in demand in the electricity workforce, creating opportunities that include utility management positions 

for smart grid programs, meter installers and service providers, intelligent transmission and distribution automation device 

producers, communications system products and services providers, and software system providers and integrators.

Accelerating methane abatement actions in the natural gas transmission, storage, and distribution system is 

projected to support a significant number of jobs. One study projects that an accelerated replacement timeline along 

with other measures could support 313,000 jobs throughout the economy.

New job-driven training strategies, reflecting a broader range of needed skills, will be required to meet the 

challenges of the future. Whether it is by expanding training curricula to use the latest educational tools and techniques, 

moving to a competency-based system of evaluating educational and training outcomes, or engaging new pools of potential 

talent (such as veterans), innovation in methods to attract and train the transmission, storage, and distribution infrastructure 

workforce of the future will be required.

Defining priorities in the area of jobs and workforce training and establishing effective programs requires 

good data. It is challenging both to define and quantify jobs in the energy industry because of how employment data in the 

United States are organized and published. This lack of information is especially critical in job categories experiencing high growth 

and rapid technological change, such as those dealing with infrastructure associated with the solar industry.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-3

Estimates of Transmission and Distribution Jobs 

Significant new investment in U.S. energy infrastructure is anticipated over the next few decades. The 

resulting changes in the transmission, storage, and distribution (TS&D) infrastructure—discussed throughout 

this report—will create new job opportunities for skilled workers. At the same time, the current TS&D 

infrastructure will need to be maintained. These factors, expansion of the energy sector, requirements for 

workers with new skills, and anticipated workforce retirements will create demand for new workers in energyrelated jobs. 

An analysis of jobs in the TS&D sectors performed to inform the Quadrennial Energy Review (QER)found that 

approximately 1 million people were employedin direct jobs and 900,000 in indirect jobs (see box for definitions), 

totaling just over 1 percent of U.S. civilian jobs (see Table 8-1).1

 An additional 2.0 million direct and 1.5 million 

indirect jobs were supported by the other energy industry sectors.a, b

Table 8-1. Total U.S. Direct and Indirect Jobs in Energy T&D in 20132

Approximately 1 million people were employed in direct jobs and 900,000 in indirect jobs in energy-related sectors considered in the QER analysis, 

totaling just over 1 percent of U.S. civilian jobs.

Projections indicate that, by 2030, the full energy sector will support 

1.5 million additional direct jobs—most of which will be in construction, 

installation and maintenance, and transportation—and an additional 

1.8 million indirect jobs. Due to the technical nature of the energy 

workforce, a number of these employment opportunities will be open to 

workers with science and engineering backgrounds. Forecasts suggest 

that, by 2030, about 200,000 workers with skills in computers and 

mathematics and roughly an equal number of architects and engineers 

will be in demand.3, c

As with any transformation, employment in some occupations will 

decline as some infrastructures transition or become obsolete, while new employment opportunities will exist 

in both more established industries (e.g., oil and gas) and newer industries (e.g., renewable energy and the 

smart grid). 

a To obtain the estimate of 1.9 million jobs, the direct jobs were identified through Bureau of Labor Statistics Quarterly Census of 

Employment and Wages data and Railroad Retirement Board data. The Bureau of Labor Statistics data includes employment in U.S.-

based establishments, including, for example, oil rigs in U.S. territorial waters. The indirect jobs were output from the IMPLAN model. 

b Jobs in energy storage are not as clearly defined, as what encompasses storage is sector and technology dependent. For this reason, 

this report only examined transmission and distribution jobs.

c Due to data and other limitations, these findings are approximations. These estimates cover industries categorized as electricity 

generation, electricity transmission and distribution, fuels, extraction and production, fuel sales, and fuel transmission and 

distribution. This is imprecise, as it does not include energy efficiency or emerging industries that are not well covered in existing 

statistics, and it may include some jobs that do not count as energy jobs. This analysis is also limited by the fact that the skill mix 

of energy industries is based on historic data. Nonetheless, these data can provide guidance about the need for future training 

requirements in the energy industry. 

Sector Direct Indirect Total

Electricity T&D 506,882 441,963 948,845

Fuel T&D 470,204 436,087 906,291

Total Energy T&D Employment 977,086 878,050 1,855,136

Direct Jobs: Jobs created from 

economic activity associated with the 

investment or operation of the entity 

under consideration. 

Indirect Jobs: Jobs created in 

directly affected businesses and 

other supply chain entities as a result 

of the investment or entity operation. 
8-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

Aging and Retiring Energy Workforce

In 2006, a consortium of energy utilities and trade associations created the Center for Energy Workforce 

Development to “work together to develop solutions to the coming workforce shortage in the utility industry.”4

The Center has developed a set of activities aimed at identifying gaps in the workforce pipeline, including 

general jobs skills (e.g., interpersonal skills and critical and analytical thinking) and industry-specific technical 

competencies (e.g., non-nuclear generation). According to a 2013 Center for Energy Workforce Development 

survey, 38 percent of the employees in the electric and gas utility sector may retire in the next decade 

(see Figure 8-1), creating demand for skilled technicians and engineers.5

 The oldest group of employees is 

composed of electric transmission and distribution technicians. The industry has, however, seen an increase in 

younger employees, especially in line workers and engineers, which the Institute of Electrical and Electronics 

Engineers credits to progress made in workforce development efforts across the industry.6

 While surveys of all 

U.S.-based occupations are not available, 38 percent is approximately 1.5 times the percentage reported in a 

related study for all U.S. occupations.7

Energy Sector Workforce Demands

The transformation of the energy economy; the need for enhancing resilience, reliability, and safety; and the 

need for managing dramatic changes in the current U.S. energy profile are resulting in shifting demands for 

skills across energy sectors. Some examples are provided in this section. 

Electricity

The grid of the future will require a full spectrum of skills, including “utility management positions of smart 

grid programs (project office leadership, program support, quality assurance, planning, functional support, 

implementation operations and support, functional specialists), meter installers and service providers, intelligent T&D automation device producers, communications system products and services providers, and software system providers and integrators.”9

Figure 8-1. Workforce Age Distribution in the Electric and Natural Gas Utilities by Percentage of Total Employees8

20

18-22 23-27 28-32 33-37 38-42 43-47 48-52 53-57 58-62 63-67 67+

Age

15

25

% of Employees 

10

5

0

2006 2007 2010 2012

The largest percentages of utility employees are in the 48–52 and 53–57 age groups; 38 percent of electric and natural gas employees will be 

eligible to retire in the next decade. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-5

External analyses10 have identified industry demand for employees with both information technology and 

operational technology skills. For example, new skills are in demand for distribution-level grid operators 

to respond to increasing complexity in the networked and information technology-intensive system. 

Deployment of advanced metering technology in the transmission and distribution system requires two-way 

communication between the utility and each customer and/or the multitude of intelligent devices that will 

live on the grid. This, in turn, creates demand for many more network and radio engineers than utilities have 

employed in the past. Additionally, the resulting ‘big data’ challenges will create a demand for employees with 

data management, network management, and cybersecurity skills at the same time that other industries are 

demanding the same skills.11

Maintaining reliability in the electricity sector will also drive demand for skilled workers. The Department 

of Energy (DOE) Electricity Advisory Committee, in a 2012 memorandum to the DOE Assistant Secretary 

for Electricity Delivery and Energy Reliability, noted the North American Electric Reliability Corporation’s 

concern that “reliability is at risk if the workforce lacks the necessary skills and knowledge or if workers are 

overtaxed by their responsibilities.”12 

The modernization of the electricity sector is changing the employment opportunities available. For example, 

automated metering will vastly reduce the number of meter readers, while the demand for meter technicians 

will rise. Retraining employees to take higher-skilled positions will be critical. 

Oil and Gas

An analysis of employment by IHS in the oil and gas sectors identified 919,000 direct jobs in 2010. The same 

analysis estimates that the number of jobs in the upstream and midstream oil and gas sectors will grow 11 

percent (84,000 jobs) between 2010 and 2020 and 20 percent (155,000) between 2010 and 2030. An additional 

227,000 job opportunities were projected due to replacements of existing employees in the upstream, 

midstream, and downstream oil and gas sectors between 2010 and 2020 and 503,000 opportunities between 

2010 and 2030 were projected.13

In addition to an increase in the number of employment opportunities, the oil and gas sectors are also 

experiencing a shift in required skills as the nature of extraction and production becomes more complex 

and regulatory and technical requirements become more sophisticated. One study14 identified petroleum 

engineering faculty retirements as a cause for concern in maintaining a pipeline of qualified engineers over the 

next 20 years. Notably, a survey of petroleum engineering faculty indicated that approximately 37 percent were 

over 60 years of age in 2013, while another one-third were between 50 and 59 years old. 

Natural Gas Pipelines

Improving safety and environmental management for natural gas TS&D could support a significant number of 

jobs. A BlueGreen Alliance analysis on the employment implications of public and private sector investments 

in methane abatement and infrastructure modernization within natural gas TS&D found that accelerated 

pipeline replacement (10-year time frame) could support 313,000 jobs throughout the economy. This number 

is sizable compared to the 63,000 jobs supported in the “business-as-usual” 30-year replacement timeline.

Shared Infrastructures 

Employment profiles for shared freight transport modalities—rail, barge, ports, and trucks—are also 

increasingly important to the energy sector. The Bureau of Labor Statistics (BLS) indicates that 26 percent of 

the trucking workforce, 20 percent of the rail workforce, and 21 percent of the maritime workforce are aged 55 

or older, compared to 22 percent in all U.S. industries (see Figure 8-2); although, individual occupations can 
8-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

have an older workforce.15 BLS also projects that overall employment in select freight transport occupationsd

will increase by 200,000 from 1.9 million to 2.1 million between 2012 and 2022. Replacing employees that are 

either exiting the workforce or moving to other occupations would create a demand for approximately 210,000 

additional workers in these occupations, according to BLS experimental data and analysis being conducted in 

coordination with the Departments of Education, Labor, and Transportation.16

Workforce Training Strategies

Job-driven training strategies will vary by energy industry sector, but there are a number of common themes, 

including the following.

Assess Required Skills

In the future, many of the jobs in the energy industry, which include jobs in TS&D systems, will require a much 

more diverse set of skills than similar jobs in the past. It is difficult to assess exactly what skills will be in demand 

because new classes of jobs (e.g., smart grid designers and operators, cybersecurity experts, and smart building 

designers and operators) have not developed nationally accepted certifications. Industry-led skill assessments are 

critical to ensuring that private and public sector support is targeted to the highest-priority areas.

Expand Training Curricula and “Hands-On” Learning

Better use of the latest educational tools and techniques could assist in the training of new workers. Modern 

information technology tools enhance teaching methods, allowing individualized training that makes direct 

connections between abstraction and concrete problems using simulations and other tools. States, in particular, 

may benefit from access to specialized Federal technical programs and better coordination with Federal 

economic development resources to deploy these curricula and technologies.

d Select occupation codes are for water transportation, rail transportation, and heavy tractor-trailer truck drivers: 53-3032, 53-4011, 53-

4012, 53-4013, 53-4021, 53-4031, 53-5011, 53-5021, and 53-5031. 

Figure 8-2. Age Distribution of Select Transportation Workers (2014)17

The percentage of transportation workers in rail and maritime positions over 45 years old exceeds the national average; the percentage of workers 

over the age of 55 in these occupations is comparable to the national average. While age information on tractor-trailer drivers is not available, BLS 

data indicate that the trucking workforce is older, on average, than other occupations. Numbers may not add to 100 due to rounding. 

7%

2%

3%

4%

6%

33%

5%

6%

9%

13%

10%

28%

15%

17%

13%

16%

22%

39%

20%

26%

15%

24%

38%

23%

21%

23%

30%

28%

11%

33%

25%

27%

22%

20%

40%

11%

15%

17%

25%

20%

17%

2%

2%

4%

5%

6%

5%

Locomotive engineers

 and operators

Railroad brake, signal, and

 switch operators

Railroad conductors

 and yardmasters

Sailors and marine oilers

Ship and boat captains

 and operators

Ship engineers

Truck drivers, drivers/sales

 workers

Total employed

16 to 19 years 20 to 24 years 25 to 34 years 35 to 44 years 45 to 54 years 55 to 64 years 65+ years
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-7

Move to Competency-Based Evaluations

There is growing interest in defining education and training goals not in terms of inputs (semester hours) but 

in terms of outputs (“competency-based evaluations”). Information technologies offer powerful new tools for 

measuring a wide range of skills using simulations and other methods. They also offer interesting opportunities 

for increasing the efficiency and quality of learning systems, in part, by tailoring instruction to the revealed 

skills and interests of each student. 

Engage Veterans and Facilitate Their Entry into Energy Jobs

At a time when 200,000 veterans are leaving the military annually, recruiting and training them for energy 

jobs can reduce the skills gap in a critical set of industries. A shift to competency-based credentialing would be 

particularly useful for veterans because they enter the civilian workforce with a unique set of skills—skills that 

may not be recognized by civilian certifications (e.g., military time at sea is not recognized toward merchant 

marine requirements). As a result, veterans are often required to go through courses where they already know 

a large fraction of what is needed. As certifications and evaluations are developed for new energy skills, veteran 

engagement needs to be at the forefont. 

Data Challenges

Defining priorities in the area of jobs and workforce training and establishing effective programs requires good 

data. It is challenging both to define and quantify jobs in the energy industry because of how employment data 

in the United States are organized and published. Employment data in the United States are usually organized 

and aggregated according to what industries produce or according to individual worker occupations. Even at 

the greatest possible level of employment data detail, it is not easy or straightforward to identify what portion 

of jobs in an industry or occupation is involved in energy. 

BLS employment data are reported according to the North American Industry Classification System, which 

represents different types of economic activity. North American Industry Classification System data lack 

the specificity to identify what portion of jobs fall under an industry or occupation involved in energy. For 

example, the code for power and communication line and related structures construction includes workers 

primarily engaged in the construction of power lines and towers; power plants; and radio, television, and 

telecommunications transmitting/receiving towers.18 This kind of breadth encompasses multiple skill sets and 

is insufficiently detailed for jobs planning or workforce training assessments.

The lack of information is especially critical in categories experiencing high growth and rapid technological 

change. For instance, a recent BLS19 report counted 4,800 solar installer jobs in the solar industry at a time 

when the Solar Foundation’s annual jobs census identified more than 84,000 solar installers.20 This large 

difference results from the fact that solar installation jobs are classified as “construction” under current BLS 

definitions. Energy generation, distribution, and consumption jobs have become embedded in so many 

different sectors of the economy and in so many ways that jobs that are primarily energy focused are attributed 

to the sector where they are housed. As a result, energy jobs are classified with traditional job skills identifiers—

making the role that energy is playing in the American economy difficult to measure, understand, and plan for. 

The North American Industry Classification System, managed jointly by the United States, Canada, and 

Mexico, is updated every 5 years to reflect changes in the North American economies.  As part of that process, 

BLS is currently soliciting comments on new classifications for oil and gas production. Future changes may 

need to be incorporated as the energy sector continues to evolve.
8-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

Select Industry and Labor Energy Workforce Training/Development Resources 

The fundamental shifts in the Nation’s energy landscape extend to the workforce that constructs and operates the energy 

infrastructure. Changes can be seen in both traditional, direct energy-related fields jobs, as well as in a host of nontraditional 

energy occupations and sectors, including some where energy had not previously played a major role. A wide range of 

initiatives to build and train a competitive domestic energy workforce can be found throughout energy-relevant industry and 

labor organizations, colleges, trade schools, and state and local governments. The following examples are of industry- and 

labor-sponsored workforce resources: 

The Center for Energy Workforce Development is a nonprofit consortium of electric natural gas and nuclear utilities 

and their associations. Working with contractors, unions, and educational institutions, the Center for Energy Workforce 

Development focuses on building a skilled workforce pipeline to meet future industry demands. Information can be found at 

www.cewd.org. The Center for Energy Workforce Development also operates the Troops to Energy Jobs websites, which 

help military veterans map military occupational specialties to energy industry jobs. Information can be found at 

www.troopstoenergyjobs.com.

The Solar Energy Industries Association’s member-led Installer Safety & Workforce Development Working 

Group provides guidance and information to members regarding training opportunities, certifications, and more. Additionally, 

the Solar Energy Industries Association coordinates with training providers and certification organizations to provide 

information and guidance to members. Information can be found at www.seia.org/policy/health-safety/workforcedevelopment.

The American Petroleum Institute hosts the API–U Training resource, which sponsors training programs and 

provides continuing education for oil and gas professionals, as well as courses for new entrants into the industry. Information 

can be found at www.api.org/events-and-training/api-u-training. The American Petroleum Institute has also developed the 

Oil and Gas Workforce portal to connect applicants with job opportunities in the industry. Information can be found at

www.oilgasworkforce.com.

The Institute of Electrical and Electronics Engineers offers an array of education, career, and job-placement

resources for technical professionals, as well as an analysis on workforce demands in energy and non-energy fields. 

Information can be found at www.ieee.org/education_careers.

The Association of American Railroads maintains resources, including videos and profiles of rail employees with military 

service, job fair listings, job boards, and websites where railroads advertise openings, as well as websites developed by 

railroads to connect with men and women in the military. Information can be found at www.aar.org/jobs.

Helmets to Hardhats is a nonprofit program that connects military veterans with training and career opportunities in the 

building trades, most of which are connected to federally recognized apprenticeship programs with trade organizations. 

Information can be found at www.helmetstohardhats.org.

The Utility Workers Union of America represents workers in the electric, gas, water, and nuclear industries. The Utility 

Workers Union of America’s Power 4 America Training Trust Fund is used to recruit and train workers, with an associated 

online resource center that serves to track training and certification progress and provide access to apprenticeship and 

continuing education programs. Information can be found at www.power4america.org.

The North America’s Building and Construction Trades Unions funds and operates an extensive workforce 

development, training, and craft apprenticeship infrastructure in a range of energy-related fields. This includes state-of-theart construction training centers, mobile training centers, and welding booths. Information can be found at www.bctd.org.

Members of North America’s Building and Construction Trades Unions that also have energy-related workforce training trust 

funds include the International Brotherhood of Electrical Workers; the Laborers’ International Union of North America; the 

United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry of the United States, Canada and 

Australia; and the International Union of Operating Engineers.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-9

Examples of Administration Activities for Energy-Related Employment and Workforce 

Training 

• The Administration’s Ready to Work Initiative, led by the Office of the Vice President, and passage in 2014 of the Workforce 

Innovation and Opportunity Act have led to several important efforts in the energy sector. In addition to the significant investments in energy and advanced manufacturing workforce training described in this section, the newly formed Skills Working 

Group, an interagency task force of 13 Federal agencies chaired by the Secretary of Labor, has focused on the energy sector 

as one of six key opportunity areas for expanding apprenticeships, building career pathways to the middle class, and initiating 

place-based initiatives to expand opportunities to underserved communities.

• The President’s Fiscal Year 2016 Budget proposed the POWER+ Plan to help these communities adapt to the changing energy 

landscape and build a better future. The POWER+ Plan invests in workers and jobs, addresses important legacy costs in coal 

country, and drives development of coal technology. This year, the Administration will make a down payment on the POWER+ 

Plan by beginning to implement a key part of the effort—the Partnerships for Opportunity and Workforce and Economic Revitalization initiative. The initiative will be a coordinated effort involving multiple Federal agencies, with the goal of effectively 

aligning, leveraging, and targeting a range of Federal economic and workforce development programs and resources to assist 

communities negatively impacted by changes in the coal industry and power sector.

• Through First Lady Michelle Obama and Dr. Jill Biden’s Joining Forces initiative, businesses have hired nearly 700,000 veterans and military spouses, including energy companies, and 49 states have removed credentialing impediments for separating 

service members.

• In April 2015, the Department of Energy (DOE), in partnership with the Department of Defense, launched a Solar Ready Vets 

program at 10 military bases across the country. The program also includes participation from Camp Pendleton in California, 

Fort Carson in Colorado, and Naval Station Norfolk in Virginia—all of which announced pilot initiatives earlier this year and are 

serving as models for the Solar Ready Vets program—and Hill Air Force Base in Utah. The program will support DOE in meeting 

its goal to train 75,000 people to enter the solar workforce by 2020, some of whom will be veterans.

• DOE’s technical and financial resources, primarily focused on the development and deployment of energy technology, are 

playing a significant role in the Skills Working Group. Those activities include identifying new opportunities for apprenticeships 

and career pathways, such as in the solar industry where DOE’s SunShot Initiative worked with the industry to develop the Solar 

Instructors Training Network. The network created a training curriculum for teaching photovoltaic installation in community 

colleges and then successfully trained 800 faculty members in 400 institutions who in turn graduated 30,000 students.

• The Department of Labor has granted $450 million in Trade Adjustment Assistance Community College and Career Training 

grants to nearly 270 community colleges across the country, including a concentration on energy and associated advanced 

manufacturing. Additionally, in December 2014, the Department of Labor announced the American Apprenticeship Grants 

Competition—a $100-million grant program to launch apprenticeship models in high-growth fields, such as energy, and 

expand apprenticeship models that work. This initiative to expand “hands-on” learning is part of a broader goal to double the 

number of apprenticeships in the United States in the next 5 years. 

• DOE has created its new Jobs Council, which brings together the diverse energy programs of the Department with its laboratories and technology resources to accelerate job creation across all energy sectors in partnership with other Federal agencies, the 

private sector, and state and local governments. Along with the SunShot Initiative, other successful programs in this area include 

the Carbon Fiber Consortium (a partnership of laboratories, materials companies, and educational institutions) and the Clean 

Energy Manufacturing Initiative (a crosscutting initiative focused on clean energy products and processes), among many others.

• DOE has been deeply engaged with both traditional and new energy sectors, developing curricula and/or certification standards 

for the solar, unconventional natural gas extraction, and building energy efficiency industries, for instance. For example, DOE’s 

partnership with the National Institute of Building Sciences is working to establish a common certification for five specific 

energy management positions by establishing the Better Buildings Workforce Guidelines through the Commercial Workforce 

Credentialing Council. DOE’s National Energy Technology Laboratory, based in Pittsburgh, Pennsylvania, partnered with Westmoreland Community College to develop an industry-specific initiative, ShaleNet, which utilized a three-dimensional simulator 

for use in training for the natural gas industry. This effort succeeded in graduating and placing thousands of new employees in 

that rapidly growing industry. In addition, through DOE’s Office of Economic Impact and Diversity and its new Jobs Council, the 

Department’s programs have focused on driving energy opportunities to traditionally underserved communities, as well as to 

veterans and other specific populations.
8-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

QER Recommendations

The challenges facing workforce training for jobs associated with TS&D infrastructure mirror the 

broader issues facing the energy sector as a whole. For this reason, current Administration activities 

and the QER recommendations described below have the potential to broadly benefit the entire energy 

sector beyond their benefits to workers associated with TS&D infrastructure. In order to build on the 

ongoing Administration-wide activities, we recommend the following:

Support an energy-job skills training system: As part of the interagency Skills Working Group 

with the Departments of Energy, Labor, and Education, the Administration should support actions 

for a national job-driven skills training system in the United States by providing new energy 

and advanced manufacturing curricula; designing new and enhanced apprenticeship programs; 

establishing industry-based credentialing standards for new technologies; and implementing 

innovative online learning systems, such as the National Training and Education Resource Webbased learning platform.

Expand support for an open-source learning community: DOE should develop, facilitate, and 

expand use of state-of-the art courses in energy-related fields through a competition to solicit 

proposals from organizations that would maintain and continuously improve the National Training 

and Education Resource. The National Training and Education Resource platform can help colleges 

lacking sophisticated resources to build and deliver courses using state-of-the-art methods. It can 

provide a full set of tools, including course authoring, a three-dimensional world builder, a traditional 

learning and content management system, and support for multiple content types—including images, 

text, and multimedia—all within a course.

Coordinate efforts to accelerate the development of high-quality energy education programs: DOE 

should coordinate efforts to accelerate the development of energy and manufacturing curricula and 

apprenticeship programs with existing Department of Labor or National Science Foundation programs 

to (1) develop and deliver courses in energy and advanced manufacturing topics; and (2) provide 

technical support in the form of simulations, visualization tools, cognitive tutoring, and other resources 

in energy and manufacturing. 

Facilitate national credentials for energy occupations: DOE should support and, as necessary, 

facilitate an industry-led process of defining needed skills in a number of emerging occupations. This 

would build on DOE’s experience in the building retrofit space. These needed skills can be translated 

into specific certifications, including “stacked credentials” modeled after competency-based education.

Facilitate the transition of military veterans into the energy sector: DOE, in conjunction with 

the Department of Labor and the Department of Defense, should work with industry and other 

stakeholders to standardize the applicability of Military Occupation Codes to civilian jobs in energy 

sectors.

Reform energy employment data collection systems: DOE should establish an interagency working 

group—to include the Departments of Labor and Commerce—to reform existing data collection 

systems to provide consistent and complete definitions and quantification of energy jobs across all 

sectors of the economy. Because employment data is collected by the State Employment Security 

Agencies, the success of this initiative will necessarily require their engagement, as well as identifying 

and mitigating barriers to implementation.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-11

RECOMMENDATIONS IN BRIEF: 

Enhancing Employment and Workforce Training

Support an energy-job skills training system through the interagency Skills Working Group. The training system 

should include new curricula, apprenticeship programs, industry-based credentialing standards, and innovative online learning 

systems.

Expand support for an open-source learning community to develop, facilitate, and expand use of state-ofthe art courses in energy-related fields. These efforts should work to maintain and improve the National Training and 

Education Resource platform.

Coordinate efforts to accelerate the development of high-quality energy and manufacturing curricula and 

apprenticeship programs. The Department of Energy (DOE) should coordinate with existing Department of Labor and 

National Science Foundation programs. 

Facilitate national credentials for energy occupations. DOE should support and facilitate an industry-led process of 

defining needed skills in a number of emerging occupations. 

Facilitate the transition of military veterans into the energy sector. DOE should work with the Departments of Labor 

and Defense and stakeholders to standardize the applicability of Military Occupation Codes to civilian jobs in energy sectors.

Establish an interagency working group to reform existing energy jobs data collection systems. DOE should 

convene a group with the Departments of Labor and Commerce to provide complete and consistent definitions and 

quantification of energy jobs across all sectors of the economy.
8-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training

Endnotes

1. Quadrennial Energy Review Analysis: Keyser, D. “Energy-Related Employment in 2013: Methodology, Estimates, and 

Comparison to Other Recent Studies.” National Renewable Energy Laboratory. 2015 (forthcoming).

2. Quadrennial Energy Review Analysis: Keyser, D. “Energy-Related Employment in 2013: Methodology, Estimates, and 

Comparison to Other Recent Studies.” National Renewable Energy Laboratory. 2015 (forthcoming).

3. Quadrennial Energy Review Analysis: Keyser, D. “Estimates of Potential Energy Workforce Needs in 2020 and 2030.” 

National Renewable Energy Laboratory. 2015 (forthcoming). 

4. Center for Energy Workforce Development. “About Us.” http://www.cewd.org/about/. Accessed February 2, 2015.

5. Center for Energy Workforce Development. “Gaps in the Energy Workforce Pipeline: 2013 Survey Results.” 2014. 

http://www.cewd.org/Documents/2013CEWDSurveyExecutiveSummary.pdf. Accessed February 26, 2015.

6. Institute of Electrical and Electronics Engineers. “IEEE Report to DOE QER on Priority Issues.” p. 83. IEEE Power and 

Energy Society. IEEE Joint Task Force on Quadrennial Energy Review. September 5, 2014. http://www.ieee-pes.org/

images/pdf/IEEE%20QER%20Report%20September%205%202014%20HQ.pdf. Accessed February 26, 2015.

7. Wang, X. “Transportation Industry Employment and Skills Data and Implications for Workforce Development.” Draft 

Presentation. Transportation Learning Center. October 7, 2014.

8. Center for Energy Workforce Development. “Gaps in the Energy Workforce Pipeline: 2013 Survey Results.” 2014. 

Reproduced with permission.

9. Saha, D. “Enhancing State Clean Energy Workforce Training to Meet Demand.” National Governor’s Association 

Center for Best Practices. 2010. http://www.nga.org/files/live/sites/NGA/files/pdf/1011CLEANENERGYWORKFORCE.PDF. 

Accessed January 27, 2015.

10. GridWise Alliance. “The Future of the Grid: Evolving to Meet America’s Needs.” December 2014. http://energy.gov/oe/

downloads/future-grid-evolving-meet-america-s-needs-december-2014. Accessed February 26, 2015.

11. GridWise Alliance, KEMA. “The U.S. Smart Grid Revolution: Smart Grid Workforce Trends 2011.” p. 11. July 25, 2011. 

http://www.gridwise.org/documents/GWA_2011_SG_Workforce_Trends_Overview.pdf. Accessed January 27, 2015.

12. Electricity Advisory Committee. “Memorandum to the Honorable Pat Hoffman, Recommendations on Electricity 

Workforce.” October 17, 2012. http://energy.gov/sites/prod/files/EAC%20Paper%20-%20Recommendations%20on%20

Electricity%20Workforce%20-%20Final%20-%208%20Nov%202012.pdf. Accessed February 26, 2015.

13. IHS. “Minority and Female Employment in the Oil & Gas and Petrochemical Industries.” 2014. http://www.api.org/

policy-and-issues/policy-items/jobs/minority-and-female-employment-in-the-oil-gas-petrochemical-industries. Accessed 

March 31, 2015.

14. Chase, R. and C. Reece. “2013 SPE Forum Series: 2020 Foresight - Ensuring Educational Excellence for Upstream 

Engineering Resources.” Society of Petroleum Engineers. January 1, 2013.

15. Department of Labor, Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey: 

Household Data Annual Averages, Table 11b. Employed persons by detailed occupation and age.” 2014. http://www.

bls.gov/cps/cpsaat11b.htm.

16. Department of Labor, Bureau of Labor Statistics, Employment Projection Program. “Occupational Separations 

Methodology.” 2013. http://www.bls.gov/emp/ep_separations.htm. Accessed March 31, 2015.

17. Department of Labor, Bureau of Labor Statistics. “Labor Force Statistics from the Current Population Survey: 

Household Data Annual Averages, Table 11b. Employed persons by detailed occupation and age.” 2014. http://www.

bls.gov/cps/cpsaat11b.htm.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 8-13

18. Standard Industrial Classification Code. “NAICS Code 237130 Power and Communication Line and Related 

Structures Construction.” http://siccode.com/en/naicscodes/237130/power-and-communication-line-andrelated-structures-construction-1#en/naicscodes/237130/power-and-communication-line-and-related-structuresconstruction-1?&_suid=142197145372004438448118787652. Accessed February 26, 2015.

19. Department of Labor, Bureau of Labor Statistics. “Occupational Outlook Handbook, 2014-15.” http://www.bls.gov/

ooh/transportation-and-material-moving/home.htm. Accessed March 10, 2015.

20. Solar Foundation. “National Solar Jobs Census 2013.” January 2014. http://pre.thesolarfoundation.org/sites/

thesolarfoundation.org/files/TSF%20Solar%20Jobs%20Census%202013.pdf. Accessed February 26, 2015.
8-14 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter VIII: Enhancing Employment and Workforce Training
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-1

Chapter IX

This chapter is devoted to issues surrounding the siting and permitting of 

transmission, storage, and distribution (TS&D) infrastructure, building on the 

general identification of those issues in Chapter VII (Addressing Environmental 

Aspects of TS&D Infrastructure). The first section highlights the multiple 

jurisdictions involved in permitting. The second section describes the need for 

close collaboration with governments at a variety of levels. The third section 

focuses on the need for public engagement on siting issues. The fourth section 

discusses timetables for siting and permitting. The chapter concludes with a 

description of current Administration activities and plans and a number of 

recommendations for further action.

SITING AND PERMITTING OF 

TS&D INFRASTRUCTURE
9-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

FINDINGS IN BRIEF: 

Siting and Permitting of TS&D Infrastructure

The involvement of multiple jurisdictions adds time to siting, permitting, and review of infrastructure 

projects. As major infrastructure projects are proposed, Federal, state, local, and tribal governments must work to consider 

and minimize potential impacts on safety and security, as well as environmental and community resources (e.g., air, water, 

land, and historic and cultural resources). These entities often have overlapping and sometimes conflicting statutory 

responsibilities for siting and permitting projects. The interplay among the diverse sets of participants and statutorily defined 

responsibilities is challenging, and for particularly large and complex infrastructure projects, multiple permits and approvals 

can lead to inefficiencies and delay.

Close collaboration with tribal, state, and local governments is critical to siting, permitting, and review of 

infrastructure projects. Most infrastructure siting and permitting decisions are made at the state and local levels; some also 

require consultation with affected Indian Tribes. The bulk of Federal review and permitting responsibilities are also handled 

at regional offices rather than agency headquarters. The local nature of decision making requires close interaction between 

local and tribal governments and Federal agencies, and appropriate knowledge of resource concerns to be addressed in the 

permitting process.

Robust public engagement is essential for the credibility of the siting, permitting, and review process. Major 

infrastructure projects, such as high-voltage transmission lines and pipelines, are likely to trigger potentially conflicting 

stakeholder interests and have the potential to produce significant impacts on local communities and the environment due 

to their complexity and scale. Robust stakeholder engagement is necessary to avoid, minimize, and mitigate these potential 

impacts and is likely to reduce delays in reaching a decision. 

Siting timetables vary widely, and processes for siting energy infrastructure differ by sector. Major infrastructure 

projects typically involve multi-year design, development, and construction timelines with complex approval processes. 

Timelines and processes for approval vary depending on the scope and type of project. 

The Federal Government is taking steps to modernize its siting, permitting, and review processes. The 

complexity and pace of the Federal permitting and review processes for proposed infrastructure projects has been identified as 

a key challenge to building U.S. infrastructure for transporting, transmitting, and delivering energy. The Obama Administration 

has taken steps within and across Federal agencies to modernize the Federal permitting and review process for major 

infrastructure projects to reduce uncertainty for project applicants, to reduce the aggregate time it takes to conduct reviews 

and make permitting decisions by half, and to produce measurably better environmental and community outcomes. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-3

A New Urgency to Improve Siting and Permitting

The domestic oil-and-gas boom, expanding renewable energy production, actions to mitigate climate change, 

and ongoing steps to maintain electricity grid reliability are changing our energy infrastructure needs and 

driving demand for new TS&D energy infrastructure. Actions to expand both renewable and traditional 

energy production over the past decade have exposed the gap between typical permitting times for generation 

and production sources and the much longer times for midstream energy infrastructure. The discrepancy 

in permitting time frames makes it more challenging to plan, site, permit, finance, and construct midstream 

energy infrastructure projects. Given these challenges, it is essential to promote more timely permitting 

decisions while protecting our Nation’s environmental, historic, and cultural resources. 

While building much of this infrastructure depends on state and local decisions, the Federal Government plays 

a central role in reviewing and approving applications to site certain projects, including interstate gas pipelines 

and those that cross Federal lands, or have impacts to wildlife, cultural and historic resources, or waters of the 

United States. This chapter focuses on that Federal role and the actions taken across the Federal Government to 

permit and approve energy infrastructure projects and increase the efficiency of the permitting process while 

improving environmental and community outcomes.

Since 2009, the Department of the Interior’s Bureau of Land Management (BLM) has approved 90 major 

transmission line projects, spanning approximately 3,000 total miles, approximately 1,600 miles of which cross 

BLM-managed lands. Since that time, BLM also has authorized more than nine major pipeline projects for oil, 

water, and natural gas, with nearly 1,050 miles on BLM lands. The Federal Energy Regulatory Commission 

(FERC) has authorized about 4,500 miles of pipeline since 2009, and about 6,200 miles of pipeline have been 

put in service. Since 2009, the Department of Agriculture’s Rural Utilities Service has financed 5,591 total miles 

of transmission line, 3,316 miles of which are new transmission line and 2,275 miles are line upgrade and 

improvements. During the same time period, the Department of Agriculture’s Forest Service has approved and 

reauthorized on National Forest System lands 4,921 power line projects covering 31,678 miles; 2,160 natural 

gas and oil pipelines covering 12,907 miles; and 158 water transmission projects covering 847 miles. 

For the vast majority of projects, the environmental review and permitting requirements are accomplished 

effectively and efficiently. For particularly large and complex infrastructure projects, however, the diverse and 

often divergent sets of agency permit and decision-making responsibilities can lead to friction and create 

inefficiencies, as well as extend the time frame for the Federal permitting and review process.

To drive additional progress in Federal reviews of significant midstream infrastructure projects, the 

Administration launched a government-wide initiative to modernize the Federal permitting and review 

process. President Obama issued a Presidential Memorandum on August 31, 2011, and an Executive Order on 

March 22, 2012.1, 2 In those executive actions, the President directed Federal agencies to improve the efficiency 

and transparency of Federal permitting and review processes for infrastructure projects,a

 as well as to cut 

through red tape and get more timely decisions, while producing measurably better outcomes for communities 

and the environment.

Under that initiative, Federal agencies have expedited the review and permitting of more than 50 selected 

infrastructure projects, including 11 energy projects.b

 Thirty-two of these projects have completed the Federal 

review process, 29 remain under active Federal review, and 1 project was denied. Estimated time savings range 

from several months to several years in many cases.

a As defined in the Presidential Memorandum, infrastructure projects include electricity transmission, pipelines, renewable energy 

infrastructure, water resource projects, ports and waterways, transit systems, broadband Internet, roads, bridges, railways, and 

airports.

b More information about these projects is posted online on the Federal Infrastructure Projects Permitting Dashboard, which was 

established pursuant to a 2011 Presidential Memorandum on Speeding Infrastructure Development through More Efficient and 

Effective Permitting and Environmental Review. See: Federal Infrastructure Projects Permitting Dashboard. “Projects Under Active 

Review.” www.permits.performance.gov/projects/active-projects.
9-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

SUMMARY OF SELECT TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE SITING, 

PERMITTING, AND REVIEW AUTHORITIES

Multiple Federal, state, local, and tribal governments have jurisdiction over siting, permitting, and review of proposed 

transmission, storage, and distribution infrastructure. Projects that involve Federal funds, are proposed on Federal lands, cross 

Federal land or water, or will affect the air or water quality that is regulated by Federal law are subject to some kind of Federal 

permitting or review process. The following is a brief summary of some of these legal authorities. 

ELECTRIC TRANSMISSION LINES 

Federal Jurisdiction: 

• The Federal Energy Regulatory Commission has limited siting authority pursuant to Section 216 of the Federal Power Act, 

under limited circumstances within corridors designated by the Department of Energy. Implementation of this authority 

has been impacted by court decisions.c, d

• The Department of Energy has jurisdiction under Section 216(h) of the Federal Power Act (16 U.S.C. § 824p(h)) to 

coordinate applicable Federal authorizations and related environmental reviews for transmission projects. 

• The Department of Energy has the authority under Section 1222 of the Energy Policy Act of 2005 (42 U.S.C. § 16421) 

to engage in or to participate with other entities in designing, developing, constructing, operating, maintaining, or 

owning (1) electric power transmission facilities and related facilities needed to upgrade existing transmission facilities 

owned by the Western Area Power Administration or Southwestern Area Power Administration, or (2) new electric power 

transmission facilities and related facilities located within any state in which either operates.

• The Department of the Interior’s Bureau of Land Management (BLM) and the Department of Agriculture’s Forest Service 

(USFS) have the authority under the Federal Land Policy and Management Act (43 U.S.C. §§ 1761–1771) to issue rights 

of way for electric transmission lines crossing their Federal lands.

State Jurisdiction:

• States have primary authority over siting, permitting, and review of electric transmission projects. Each state has different 

procedures to follow for approving a transmission line. Interstate lines must comply with the legal requirements of each 

state. 

NATURAL GAS PIPELINES

Federal Jurisdiction:

• The Federal Energy Regulatory Commission has jurisdiction under Section 7 of the Natural Gas Act to regulate interstate 

natural gas pipelines, including siting (15 U.S.C. § 717f(c)). The Federal Energy Regulatory Commission is also required as 

a lead agency to coordinate the environmental review and processing of all Federal authorizations related to natural gas 

infrastructure with other Federal agencies (15 U.S.C. § 717n(b)).e

• BLM has the authority to issue permits under the Mineral Leasing Act for natural gas pipelines that cross Federal lands 

(30 U.S.C. § 185). If a proposed pipeline crosses more than one Federal agency’s lands, BLM issues the right-of-way 

permit (30 U.S.C. § 185(c) and 43 C.F.R. § 2882). If the pipeline crosses only USFS lands, USFS issues a special use permit 

(36 C.F.R. § 251).

State Jurisdiction:

• States have jurisdiction over lines that do not carry gas in interstate commerce. 

c California Wilderness Coal v. U.S. Dep’t of Energy, 631 F.3d 1072 (9th Cir. 2011). 

d Piedmont Envtl. Council v. FERC 558 F.3d 304 (4th Cir. 2009).

e The Department of the Army, et al. “Interagency Agreement on Early Coordination of Required Environmental and Historic 

Preservation Reviews Conducted in Conjunction with the Issuance of Authorizations to Construct and Operate Interstate 

Natural Gas Pipelines Certificated by the Federal Energy Regulatory Commission.” May 2002. http://www.ferc.gov/

industries/gas/enviro/gas_interagency_mou.pdf. Accessed January 30, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-5

SUMMARY OF SELECT TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE SITING, 

PERMITTING, AND REVIEW AUTHORITIES (continued)

OIL PIPELINES 

Federal Jurisdiction: 

• There is no comprehensive Federal siting and permitting process for interstate or intrastate oil pipelines. 

• BLM and USFS authority for oil pipelines crossing Federal lands mirrors that for gas pipelines set forth above (30 U.S.C. § 

185).

State Jurisdiction: 

• State and local laws govern approval of an oil pipeline route, other than the portions crossing Federal lands. Interstate 

lines must comply with the legal requirements of each state.

CARBON DIOXIDE PIPELINES

Federal Jurisdiction:

• There is no comprehensive Federal siting and permitting process for interstate or intrastate carbon dioxide pipelines on 

non-Federal lands. 

• BLM regulates carbon dioxide pipelines under the Mineral Leasing Act as a commodity shipped by a common carrier (30 

U.S.C. §185(r)).f, g

State Jurisdiction:

• Oversight of siting, construction, and operations of carbon dioxide pipelines is largely handled at the state level.h

RAIL LINES

Federal Jurisdiction:

• The Surface Transportation Board, created in the 1995 Interstate Commerce Commission Termination Act, regulates 

construction of rail lines.i

State Jurisdiction:

• State and local governments retain the power to protect public health and safety, such as regulating potentially harmful 

waste disposal, to the extent that regulation does not interfere with the Surface Transportation Board’s exclusive 

jurisdiction over interstate rail operations.j,k

f Environmental Assessment for Anadarko E&P Company L.P. Monell CO2

 Pipeline Project.

g Exxon Corp. v. Lujan, 970 F.2d 757 (10th Cir. 1992).

h Congressional Research Service. “Carbon Dioxide (CO2

) Pipelines for Carbon Sequestration: Emerging Policy Issues.” p. 10. 

January 17, 2008. http://assets.opencrs.com/rpts/RL33971_20080117.pdf. Accessed January 21, 2015. 

i Surface Transportation Board. “Overview of the STB.” http://www.stb.dot.gov/stb/about/overview.html. Accessed January 

20, 2015.

j See e.g., Norfolk Southern Railway Co. v. City of Toledo, 2015 WL 45537 (N.D. Ohio January 2, 2015).

k See e.g., Green Mountain Railroad Corp. v. Vermont, 404 F.3d 638, 643 (2d Cir, 2005).
9-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

The Federal Government’s Role in Siting, Permitting, and Review of 

Infrastructure Projects

Permitting and siting of the majority of TS&D infrastructure projects depends on state and local decisions.3, 4, 5

Federal agencies have siting authority over proposed infrastructure projects that cross Federal land or water; 

interstate natural gas pipelines; and, to a limited extent, interstate electricity transmission projects. In states 

where most of the land is Federal land, Federal agencies make the key siting decisions. Federal approval will 

include environmental protection requirements, as well as required reviews that Federal agencies must follow 

and which may lead to decisions that ensure the protection of the environment and cultural and historic 

resources.l

 Applications for pipelines and power lines that cross tribal lands must also be approved by the tribal 

government and Federal Government.6

The number and type of permits and reviews required, as well as the process and the timelines, vary depending 

on the nature of the project. For example, Congress has granted FERC siting authority over interstate natural 

gas pipelines.7, m In contrast, there is no comprehensive Federal process for obtaining a permit for the routing of 

an interstate oil pipeline.n

 Rather, state and local laws govern approval of an oil pipeline’s route. Similarly, states 

(with limited exceptions provided under the Energy Policy Act of 2005)o have siting authority over electricity 

infrastructure.p The regulation of carbon dioxide (CO2) pipelines is currently a joint responsibility of Federal 

and state governments.q Four Federal agencies maintain a role in cross-border Presidential permitting and/or 

export authorization of energy infrastructure that crosses the international borders with Canada or Mexico—

the Department of State has delegated authority for oil and refined product pipelines;8 FERC is the authorizing 

l A full inventory of required Federal permits and approvals, as well as National Environmental Policy Act reviews and milestones 

relating to major infrastructure projects, is available on the Federal Infrastructure Projects Permitting Dashboard. See: Federal 

Infrastructure Projects Permitting Dashboard. “Permit Inventory.” www.permits.performance.gov/permit-inventory.

m The Natural Gas Act also provides FERC the authority to grant private companies that transport natural gas in interstate commerce 

the rights of eminent domain (15 U.S.C. § 717f(c)).

n FERC has no oversight authority over construction of interstate oil pipelines, nor does it have jurisdiction over wholly intrastate 

pipelines. There is also no eminent domain authority for liquid pipelines.

o FERC has limited siting authority pursuant to Section 216 of the Federal Power Act, under limited circumstances within corridors 

designated by the Department of Energy. Implementation of this authority has been called into question in recent court decisions. In 

the Energy Policy Act of 2005, Congress also added provisions addressing Federal Government jurisdiction over and processes for 

siting electricity transmission. Under Section 216(h) of the Federal Power Act (16 U.S.C. § 824p(h)), Congress granted DOE authority 

to coordinate applicable Federal authorizations and related environmental reviews for transmission projects. In 2009, pursuant to 

Section 216(h)(4)(C), nine Federal agencies signed a memorandum of understanding to expedite the siting and construction of 

qualified onshore electric transmission infrastructure projects in the United States. See: “Memorandum of Understanding Among 

the U.S. Department of Agriculture, Department of Commerce, Department of Defense, Department of Energy, Environmental 

Protection Agency, the Council on Environmental Quality, the Federal Energy Regulatory Commission, the Advisory Council on 

Historic Preservation, and Department of the Interior, Regarding Coordination in Federal Agency Review of Electric Transmission 

Facilities on Federal Land.” October 23, 2009. www.whitehouse.gov/files/documents/ceq/Transmission%20Siting%20on%20

Federal%20Lands%20MOU.pdf. Accessed January 21, 2015.

p In almost all states, public utility commissions regulate siting of electricity infrastructure. Each state has different procedures to follow 

for approving a transmission line. Some states require the developer to demonstrate the necessity of new transmission capacity, and 

some states require the consideration of non-transmission alternatives. Some states mandate that all types of transmission lines be 

fully permitted before construction can start, while others only have siting requirements above certain voltage levels.

q CO2

 transportation pipelines are subject to Federal safety regulations that are administered by the Department of Transportation’s 

Pipeline and Hazardous Materials Safety Administration (49 C.F.R. § 195). It directly oversees pipeline safety for all interstate lines, 

while intrastate pipelines are subject to state agency oversight (as long as the standards are at least as stringent as the Federal rules).  

If a pipeline crosses Federal land, then, prior to construction, permits from the relevant Federal agency and compliance with the 

National Environmental Policy Act are required.  Otherwise, the power of oversight of siting (including the use of eminent domain), 

construction, and operations of CO2 pipelines is largely handled at the state level. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-7

agency for natural gas pipelines and liquefied natural gas facilities located onshore and in state waters;9, 10, r and 

the Department of Energy (DOE) is the authorizing agency for cross-border electric transmission lines,11, 12

exports of electricity,13 and imports and exports of natural gas.14, 15 The Department of Commerce exercises 

export authorities not granted to the preceding agencies.16

In all cases, projects that involve Federal funds, are proposed on Federal lands, require passage across Federal 

lands, or will affect the air or water quality that is regulated by Federal and state law are subject to some kind of 

Federal and state permitting or review process.s

Multiple Jurisdictions for the Siting, Permitting, and Review Process

Large infrastructure siting and permitting in the United States is uniquely challenging in our Federal 

system of government because it often involves multiple state and Federal agencies and tribal governments 

with overlapping jurisdictions and different, sometimes conflicting statutory responsibilities. While this 

interdisciplinary system can help foster appropriate project siting decisions that reduce project impacts, there 

are often structural and cultural barriers to timely project siting and permitting decisions. Taken together, 

solely at the Federal level, there are “more than 35 distinct permitting and review responsibilities across more 

than 18 Federal agencies and bureaus, implemented by staff at headquarters and hundreds of regional and field 

offices” located across the country.17 

Federal Collaboration with Tribal, State, and Local Governments

Most infrastructure siting and permitting decisions are made at the state and local levels; some also require 

consultation with affected Indian Tribes on projects that impact traditional cultural properties and certain 

other historic and cultural resources.18, 19 The local nature of permitting decisions requires close stakeholder 

interaction and appropriate knowledge of local resource concerns to be addressed in the permitting process.20

Effective collaboration between Federal agency regional leadership and the state, tribal, and local governments 

that share permitting and review responsibilities for infrastructure projects is essential to moving a project 

quickly and efficiently from planning to review and permitting. However, cooperation with state and local 

governments and consultation with tribes requires additional levels of coordination in the context of large, 

complex infrastructure permitting decisions and can create significant delays in project approval. State agencies 

can also lack incentives to act on multi-state linear infrastructure projects, especially when the projects’ 

primary beneficiaries are located elsewhere. 

r Pursuant to the Deepwater Port Act (33 U.S.C. § 1501 et seq.), the Maritime Administration within the Department of Transportation 

has responsibility for permitting liquefied natural gas terminals located beyond state waters. 

s Depending on the areas through which a pipeline or transmission line is proposed, there are a variety of Federal permitting or review 

processes that may apply in addition to state and local permits: Clean Water Act Section 401 water quality certificates (33 U.S.C. §§ 

1251–1387), Section 402 National Pollutant Discharge Elimination System Permits (33 U.S.C. § 1342), Section 404 dredge and fill 

permits from the Army Corps of Engineers (33 U.S.C. § 1344), permits under Section 10 of the Rivers and Harbors Act of 1899 (33 

U.S.C. § 403), Clean Air Act permits (42 U.S.C. § 7401 et seq.), the Endangered Species Act (16 U.S.C. §§ 1531–1544), and the National 

Historic Preservation Act (16 U.S.C § 470). In addition, compliance with the National Environmental Policy Act is always required 

when a proposed TS&D infrastructure project necessitates Federal action (such as funding, permitting, or otherwise approving a 

pipeline or electricity transmission project). 
9-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

Cross-Border Presidential Permitting and Export Authorities

Four Federal agencies currently maintain a role in cross-border Presidential permitting and/or export authorization of energy 

commodities. The Department of Energy (DOE) oversees permits for cross-border electric transmission lines, exports of 

electricity, and imports and exports of natural gas. The Department of State permits cross-border oil and refined product 

pipelines. The Federal Energy Regulatory Commission permits natural gas pipelines and liquefied natural gas (LNG) facilities. 

The Department of Commerce exercises export authorities not granted to the preceding agencies. These authorities arise from 

the following statutes and Executive Orders:

PETROLEUM, PETROLEUM PRODUCTS, COAL, OR OTHER FUELS

Infrastructure: Pipelines, Land Transportation, Other

• Executive Order No. 11423 (1968), Executive Order No. 13337 (2004): Permitting authorities regarding pipelines, 

conveyor belts, bridges, and border crossings for land transportation, including motor and rail vehicles, delegated to the 

Secretary of State for a national interest determination.t, u

Export Authority

• Energy Policy and Conservation Act (1975): Delegates Presidential authority to restrict exports of coal, crude oil, 

petroleum products, natural gas, or petrochemical feedstocks, or related materials or equipment, for domestic use to the 

Secretary of Commerce.v

t Executive Order No. 10485. “Providing for the Performance of Certain Functions Heretofore Performed by the President 

with Respect to Electric Power and Natural Gas Facilities Located On The Borders Of The United States.” 18 Fed. Reg. 5397. 

September 9, 1953. http://www.archives.gov/federal-register/codification/executive-order/10485.html. Accessed January 

20, 2015.

u Executive Order No. 12038. “Relating to Certain Functions Transferred to the Secretary of Energy by the Department of 

Energy Organization Act.” 43 Fed. Reg. 4957. February 7, 1978. http://www.archives.gov/federal-register/codification/

executive-order/12038.html. Accessed January 20, 2015.

v 42 U.S.C. § 6212.

Engagement of the Public in Energy Infrastructure Siting and 

Permitting

The complexity and scale of major infrastructure projects, such as high-voltage transmission lines and 

pipelines, are likely to trigger potentially conflicting stakeholder interests and have the potential to produce 

significant impacts on local communities and the environment, which must be addressed and mitigated 

through avoidance, minimization, or compensation. Under the National Environmental Policy Act (NEPA),21, 22

and the Council on Environmental Quality Regulations for Implementing the Procedural Provisions of NEPA, 

any Federal action (such as funding or approving a major pipeline or electricity transmission project) requires 

the responsible official to consider the potential environmental impacts of the proposed action and any 

reasonable alternatives.23, 24 Federal agencies work to prepare a categorical exclusion, environmental assessment, 

or environmental impact statement, which—depending upon the scope and complexity of the project and the 

intensity of potential impacts on communities and the environment—can take time to address community and 

environmental impacts. Affected residential communities, nonprofit organizations, and other stakeholders also 

participate in the NEPA process through public comment opportunities.25 Public outreach and engagement 

with diverse sets of stakeholders is essential to reduce the risks associated with uncertainty and potential 

challenges. Early and robust public engagement is a recognized best practice and can reduce delays and 

improve projects.26, 27, 28
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-9

Cross-Border Presidential Permitting and Export Authorities (continued)

NATURAL GAS

Infrastructure: Pipelines, Onshore or Near-Shore LNG Facilities, Other

• Natural Gas Act Sections 3 and 7 (1938) and DOE Organization Act (1977): Permitting for natural gas pipelines, LNG 

terminals located onshore and in state waters, and related facilities assigned to Secretary of Energy (subsequently 

delegated in part to the Federal Energy Regulatory Commission Chair; see below).w,x

• DOE Delegation Order No. 00-004.00A (2006): Permitting authority for construction and operation of natural gas import/

export facilities delegated to the Federal Energy Regulatory Commission Chair.y

• Coast Guard and Maritime Transportation Act of 2012: Responsibility for permitting LNG terminals located beyond state 

waters assigned to the Maritime Administration within the Department of Transportation.

Export Authority

• Natural Gas Act Section 3 (1938): Permitting authority for exports and imports of natural gas granted to the Secretary of 

Energy.z,aa

ELECTRICITY

Infrastructure and Export Authority

• Federal Power Act (1935) and DOE Organization Act (1977): Permitting and export authority assigned to the Secretary of 

Energy.ab

• Executive Order No. 10485 (1953), Executive Order No. 11423 (1968), Executive Order No. 12038 (1978): Permitting 

authority for cross-border electric transmission lines delegated to the Secretary of Energy.ac, ad

w 42 U.S.C. § 7151(b). 

x 15 U.S.C. § 717b(a).

y Department of Energy. “Delegation Order No. 00-004.00A.” 2006. http://www.ferc.gov/industries/electric/indus-act/siting/

doe-delegation.pdf. Accessed January 20, 2015.

z Executive Order No. 10485. “Providing for the Performance of Certain Functions Heretofore Performed by the President 

with Respect to Electric Power and Natural Gas Facilities Located On The Borders Of The United States.” 18 Fed. Reg. 5397. 

September 9, 1953. http://www.archives.gov/federal-register/codification/executive-order/10485.html. Accessed January 

20, 2015.

aa Executive Order No. 12038. “Relating to Certain Functions Transferred to the Secretary of Energy by the Department of 

Energy Organization Act.” 43 Fed. Reg. 4957. February 3, 1978. http://www.archives.gov/federal-register/codification/

executive-order/12038.html. Accessed January 20, 2015.

ab 16 U.S.C. § 824a(e).

ac Executive Order No. 10485. “Providing for the Performance of Certain Functions Heretofore Performed by the President 

with Respect to Electric Power and Natural Gas Facilities Located On The Borders Of The United States.” 18 Fed. Reg. 5397. 

September 9, 1953. http://www.archives.gov/federal-register/codification/executive-order/10485.html.

adExecutive Order No. 12038. “Relating to Certain Functions Transferred to the Secretary of Energy by the Department of 

Energy Organization Act.” 43 Fed. Reg.4957. February 7, 1978. http://www.archives.gov/federal-register/codification/

executive-order/12038.html.
9-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

Variability in Siting and Permitting Timetables

Large and complex infrastructure projects typically involve multi-year design, development, and construction 

timelines with complex approval processes. Timelines for approval vary,29, 30, 31 and hurdles exist across the 

process. Proposed infrastructure projects that cross state boundaries require the developer to obtain site 

permits from each state involved, each with its own timeline and process.32, 33, 34 Some Federal agencies will not 

begin their approval processes until state and local permitting processes are completed.35 Schedules are also 

affected by incomplete applications to the Federal agencies, as well as the multiple agency reviews required at 

the local, state, and Federal levels.36, 37 Numerous other risks—such as policy and regulatory uncertainty—and 

commercial conditions—such as the availability of capital—can jeopardize project timelines and permitting 

schedules.38, 39 Project applicants are ultimately responsible for project development and play a critical role in 

establishing and maintaining project time frames and changes in applicant priorities, or available funding can 

delay or cancel projects. The interplay among these factors can impact decision making and extend the time 

frame for the Federal permitting and review process, especially for large and complex infrastructure projects.40

Administration Actions to Modernize Siting, Permitting, and Review 

Processes 

Building a 21st century infrastructure in a manner that safeguards our communities and the environment is 

an important component of President Obama’s effort to strengthen our Nation’s economy, create new jobs, 

and improve U.S. competitiveness in the global market. Federal agencies seek to ensure that as these major 

infrastructure projects are proposed, potential impacts on safety, security, and environmental and community 

resources, such as air, water, land, and historical and cultural assets, are considered and minimized. Over 

time, the process and legal requirements for the permitting and review of major infrastructure projects have 

developed in a siloed and ad-hoc way, creating complex processes that in some cases have taken years or 

longer to complete.  Although there are several reasons why a major infrastructure project may be delayed 

(including applicant funding uncertainty and state and local reviews), over the past 3 years, the Administration 

has undertaken an ambitious effort to modernize the Federal Government’s role in permitting and review 

processes.

To ensure his Administration took action to modernize these permitting and review processes, the President 

signed Executive Order No. 13604, Improving Performance of Federal Permitting and Review of Infrastructure 

Projects, on March 22, 2012, and subsequently a Presidential Memorandum on May 17, 2013, charging an 

interagency steering committee to lead the development of a plan to turn best practices into standard practice.  

To date, agencies have expedited the review and permitting of more than 50 selected major infrastructure 

projects, including bridges, transit projects, railways, waterways, roads, and renewable energy generation 

projects. More information about these projects is posted online on the Federal Infrastructure Projects 

Permitting Dashboard. As of the date of this plan, 32 of these projects have completed the Federal review 

process, with 1 project denied. Estimated time savings range from several months to several years in many 

cases. Federal agencies have also identified a set of best practices for infrastructure permitting and review, 

ranging from expansion of information technology tools to strategies for improving collaboration and 

synchronizing processes across Federal agencies. These practices are reflected in the June 2012 “Federal Plan 

for Modernizing the Federal Permitting and Review Process for Better Projects, Improved Environmental and 

Community Outcomes, and Quicker Decisions” and individual agency plans at www.permits.performance.gov. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-11

The Obama Administration has issued several subsequent executive directives to improve the Federal 

permitting and review process.

• The President also issued a memorandum on May 17, 2013, directing an interagency steering 

committee to develop a plan to turn permitting and review best practices identified by the Federal 

agencies—focused on early collaboration, increased transparency and accountability, and greater 

consideration of citizens’ interests—into standard practice for all major infrastructure projects.ae

• On June 7, 2013, the President issued a separate but related memorandum, directing Federal agencies 

to “develop an integrated, interagency pre-application process for significant onshore electric 

transmission projects requiring Federal approval.”41 That 2013 memorandum also lays out principles 

for designation of energy right-of-way corridors on Federal lands under Section 368 of the Energy 

Policy Act of 2005; it also directs Federal agencies to re-evaluate existing energy rights-of-way corridor 

designations to determine the necessity for revisions, deletions, or additions to those energy corridors 

and to develop interagency mitigation plans, where appropriate, for environmental and cultural 

resources potentially impacted by projects sited in energy corridors.

The following highlights some of the key actions taken by the Administration to modernize the Federal 

Government’s siting, permitting, and review processes and provides a summary of the areas that could be 

enhanced. 

Developing Pre-Application Procedures

Pre-application permitting and review procedures can result in more efficient processing of final applications 

for energy infrastructure siting—particularly when such applications require multiple Federal authorizations 

(although, care must be taken that such procedures do not create an unnecessary additional hurdle to project 

approval or unnecessary additional bureaucratic delay).42 Pre-application procedures can include meetings 

with appropriate agencies and project sponsors in advance of formal application submissions to help expedite 

the process.af, 43

In 2013, DOE—through the Council on Environmental Quality and the Administration’s Rapid Response 

Team for Transmission—developed and sought public input on a proposed Integrated Interagency PreApplication Process required under a June 2013 Presidential Memorandum.ag, 44 DOE is now considering 

issuing a revised regulation under Section 216(h) of the Federal Power Act, a section through which 

Congress granted DOE authority to coordinate applicable Federal authorizations and related environmental 

ae The Administration released the “Implementation Plan for the Presidential Memorandum on Modernizing Infrastructure Permitting” 

on May 14, 2014. The plan can be accessed at www.permits.performance.gov/pm-implementation-plan-2014.pdf. “Major” is used 

in the plan to refer to projects that:

• Involve multiple Federal agencies and potentially tribal, state, or local government permit decision making or review actions 

 associated with their development 

• Provide regional (rather than localized) economic, cultural, or environmental benefits, or are directly linked to other critical

 infrastructure projects (e.g., rail to port) 

• May have significant impacts on communities or the environment 

• Involve resources and permitting actions that are not routine and necessitate focused attention and enhanced coordination

• Are otherwise classified as major by law or regulation.

af For example, FERC has regulations requiring a “pre-filing procedures and review process” for applications for interstate natural gas 

facilities under its jurisdiction (18 C.F.R. § 157.21). See: Government Accountability Office. “Interstate Natural Gas Pipelines: Process 

& Timing of FERC Permit Application Review.” p. 6. February 15, 2013. fas.org/sgp/crs/misc/R43138.pdf. Accessed February 

10, 2015. Other Federal agencies, including the Army Corps of Engineers, BLM, and the Department of Agriculture, also require 

applicants for certain projects to participate in multi-agency pre-application meetings. 

ag DOE is piloting this pre-application process for the proposed Great Northern Transmission Line. See: The White House. “Fact Sheet 

– Building a 21st Century Infrastructure: Modernizing Infrastructure Permitting.” May 14, 2014. www.whitehouse.gov/the-pressoffice/2014/05/14/fact-sheet-building-21st-century-infrastructure-modernizing-infrastructu. Accessed January 21, 2015.
9-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

reviews for transmission projects. In August 2013, BLM issued a proposed rule that would, consistent with 

the Integrated Interagency Pre-Application process, require all applicants for rights of way across public 

lands for transmission lines of 100 kilovolts or greater and pipelines 10 inches or more in diameter to hold 

pre-application meetings to coordinate with appropriate Federal and state agencies and tribal and local 

governments. The BLM rule would also require proponents to pay reasonable or actual costs associated with 

the pre-application process.45

Cost Recovery for Review of Certain Project Applications

The lack of budgetary resources often constrains agencies’ ability to promptly review permits. Mechanisms by 

which project sponsors can fund agency overhead costs associated with the review of an application are critical 

to their implementation capacity by ensuring that the agencies can dedicate sufficient resources to permit 

infrastructure projects in a timely fashion, especially if the funding happens in the earliest stages of agency 

involvement.46, 47 While cost-recovery procedures must be rooted in statutory authority, departments and the 

SELECT ADMINISTRATION SITING AND PERMITTING INITIATIVES 

The following is a list of select Administration actions taken both across and within Federal agencies to reduce the aggregate 

permitting and review time for infrastructure projects, while improving environmental and community outcomes. 

Coordinated Project Review

The Interagency Steering Committee established under Executive Order No. 13604 and the Interagency Infrastructure 

Permitting Improvement Team housed at the Department of Transportation are currently developing a Policy for Coordinated 

Review of infrastructure project applications among Federal agencies and with project sponsors. 

Pre-Application Procedures and Cost Recovery for Project Reviews

In 2013, the Department of Energy (DOE)—through the Council on Environmental Quality and the Administration’s Rapid 

Response Team for Transmission—developed a proposed Integrated Interagency Pre-Application Process for onshore electric 

transmission lines. DOE is now considering issuing a revised regulation under Section 216(h) of the Federal Power Act that 

would incorporate that process. In September 2014, the Bureau of Land Management issued a proposed rule that would 

require all applicants for rights of way across public lands for electric transmission lines of 100 kilovolts or greater and 

pipelines 10 inches or more in diameter to hold pre-application meetings to coordinate with appropriate Federal and state 

agencies and tribal and local governments. It would also require proponents to pay reasonable or actual costs associated with 

the pre-application process.

Expanding Online Project Tracking and Developing Metrics

The Administration launched a Federal Infrastructure Project Permitting Dashboard to track designated infrastructure project 

schedules. The dashboard also hosts a “Permit Inventory”—a searchable database of required permits and approvals—as 

well as National Environmental Policy Act (NEPA) reviews and milestones relating to major infrastructure projects.

Expanding Availability and Sharing of Data and Geographic Information System Tools

The Administration has identified a number of actions and policies to facilitate adequate collection, integration, and sharing 

of the best available data to assist project sponsors in siting projects in order to minimize resource impacts and to support 

Federal decision making, including (1) NEPAnode; (2) the Fish and Wildlife Service Information, Planning, and Conservation 

Tool; (3) the Environmental Protection Agency’s NEPAssist; (4) the Eastern Interconnection States Planning Council Energy 

Zones Mapping Tool; (5) the Army Corps’ Federal Support Toolbox; (6) the Western Governors’ Associations’ Crucial Habitat 

Assessment Tool; and (7) the National Oceanic and Atmospheric Administration’s Social Vulnerability Index.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-13

agencies under them can use regulatory processes to apply that authority in intelligent and innovative ways.ah

Some agencies do not have the statutory authority to recover such costs; others do not have authority to accept money 

until the application is “complete,” which puts a strain on resources and also discourages early coordination. BLM 

has addressed the challenge of the cost of early coordination by requiring in its recent proposed rule that applicants 

for rights of way for transmission lines of 100 kilovolts or greater and pipelines 10 inches or more in diameter pay 

reasonable or actual costs associated with the pre-application process for these projects.48

Expanding Online Project Tracking and Developing Metrics

The development and publication of timely metrics and milestones for project permitting enables public 

scrutiny, provides agencies with information to identify and improve permitting and siting processes, and 

increases accountability and predictability.49, ai Moreover, consistent, government-wide data will provide 

actionable insight into current Federal permit and review practices, as well as inform discussions on ways to 

further improve the effectiveness and efficiency of these processes. Budgetary concerns have affected efforts 

to expand the Federal Infrastructure Projects Permitting Dashboard,aj to develop and collect permitting and 

review time-frame metrics, and to pilot environment and community outcome metrics.50 Lack of funding also 

ah In its proposed rule, BLM has proposed expanding the regulatory definition of reimbursable “management overhead costs” to include 

costs incurred by other Federal agencies in reviewing the same project application (79 Fed. Reg. 59022; September 30, 2014). The cost 

reimbursement measures are intended to coincide with a Secretarial Order for delegation of Federal Land Policy Management Act 

cost-recovery authority to other agencies and offices of the Department of the Interior.

ai DOE has such an online dashboard for electricity transmission projects. This dashboard, known as e-Trans, serves as the online 

database containing pertinent project information about each project, including, but not limited to, the physical aspects of the line, 

lead agency contact information, project schedules, and required permits. The e-Trans dashboard can be accessed at trackingsystem.

nisc-llc.com/etrans/utility/Search.seam. 

aj The Federal Infrastructure Permitting Dashboard was launched in October 2011 and is used by all Steering Committee agencies and 

hosted by the Department of Transportation. See: Steering Committee on Federal Infrastructure Permitting and Review Process 

Improvement. “Implementation Plan for the Presidential Memorandum on Modernizing Infrastructure Permitting.” www.permits.

performance.gov/pm-implementation-plan-2014.pdf. Accessed January 20, 2015. It features a public website that displays project 

schedules with key milestones for more than 50 infrastructure projects and an internal site with an information technology platform that 

supports effective government-wide collaboration and the development of interagency project schedules. See: Federal Infrastructure Projects 

Permitting Dashboard. “Projects Under Active Review.” www.permits.performance.gov/projects/active-projects.

SELECT ADMINISTRATION SITING AND PERMITTING INITIATIVES (continued)

Designating Corridors for Pipelines, Electric Transmission Lines, and Related Infrastructure

The Department of the Interior and the Department of Agriculture are conducting a periodic review of the Western energy 

rights-of-way corridors designated in 2009. As directed in the June 2013 Presidential Memorandum, DOE issued two 

reports—one for assessing potential corridors in the West, as proposed by the Western Electricity Coordinating Council, 

and one for the rest of the United States that looks at current and potential crossings for transmission lines and oil and gas 

pipelines on federally protected national trails.

Landscape and Watershed Level and Mitigation and Conservation Planning

Federal land management agencies have begun to implement mitigation and conservation planning at the landscape, 

ecosystem, or watershed level. For example, in March 2014, the Department of the Interior released the Solar “Regional 

Mitigation Strategy for the Dry Lake Solar Energy Zone,” and in April 2014, Secretary Jewell issued the “Strategy for Improving 

the Mitigation Practices of the Department of the Interior.” 
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Chapter IX: Siting and Permitting of TS&D Infrastructure

limits the promise of more widely accessible geographic information system (GIS) and information technology 

tools that would supplement the Federal Permit Inventoryak and provide more transparency and clarity to 

project sponsors and public stakeholders.

Expanding Availability and Sharing of Data and GIS Tools

Careful project planning and selection of an appropriate project site before a permit application is filed can 

minimize uncertainty and significantly reduce the overall time frame for completing necessary permits and 

reviews.51 The Administration has identified a number of actions and policies to facilitate adequate collection, 

integration, and sharing of the best available data to assist project sponsors in siting projects in order to 

minimize resource impacts and support Federal decision making.52 The Administration has also emphasized 

the importance of providing such data, information, and decision-support tools for climate preparedness and 

resilience to agencies and project sponsors.53 Key Federal and state data sharing, GIS, and other information 

technology tools already in use for agencies and public stakeholders include (1) NEPAnode, a geospatial and 

document management system made freely available to Federal staff and contractors to implement NEPA and 

related environmental review and permitting processes;al (2) the Information, Planning, and Conservation 

Tool developed by a partnership between the Fish and Wildlife Service and the U.S. Geological Survey;am

(3) the Environmental Protection Agency’s NEPAssist;an (4) the Eastern Interconnection States Planning 

Council’s Energy Zone Mapping Tool;ao (5) the Army Corps’ Federal Support Toolbox;ap (6) the DOE-funded 

Western Governors’ Crucial Habitat Assessment Tool;aq (7) the Department of Commerce’s National Oceanic 

and Atmospheric Administration’s Social Vulnerability Index;ar and (8) Climate.Data.Gov and the Climate 

akThe Permit Inventory is a searchable database of required permits and approvals, as well as NEPA reviews and milestones relating to 

major infrastructure projects. The inventory can be accessed at www.permits.performance.gov/permit-inventory. 

al This interactive mapping tool contains 278 data sets/layers. It can be accessed at nepanode.anl.gov. 

amThe Information, Planning, and Conservation Tool system is an interactive, Web-based tool illustrating the natural resources for 

which the Fish and Wildlife Service has trust or regulatory responsibility. The tool allows interested parties to access a public website 

to determine if there are any Fish and Wildlife Service trust resources, including endangered and threatened species, in a potential 

project area before beginning the project design. In addition, project sponsors can get information about a species and its needs, as 

well as measures they can take to help protect and conserve the species when designing and constructing their project. The tool can 

be accessed at ecos.fws.gov/ipac.0

anNEPAssist is a Web-based mapping tool to facilitate efficient and effective environmental reviews and project planning. The tool is 

part of an initiative developed by the Environmental Protection Agency and selected as a pilot by the Council of Environmental 

Quality to showcase its potential to modernize and reinvigorate Federal agency implementation of NEPA through innovation, public 

participation, and transparency. The tool can be accessed at www.epa.gov/compliance/nepa/nepassist-mapping.html.

aoThe Energy Zone Mapping Tool, funded by DOE, is a free online mapping tool that identifies potential clean energy resource areas 

within the Eastern Transmission Interconnection. This website provides information about the study, background on the energy 

resources, and details on the data layers used in the tool. The tool includes 263 GIS data layers and links to policies and regulations, 

printable maps, and related documents. The tool can be accessed at eispctools.anl.gov.

apThe Federal Support Toolbox, launched in May 2013, is a comprehensive “one-stop-shop” online water resources data portal with 

direct links to valuable data, state-of-the-art models, and tools for utilization in information sharing and collaboration for the water 

resources community in the United States and internationally. It serves as a single point of entry to comprehensive information about 

water resources programs, initiatives, legislation, policies, regulations, collaborations, partnerships, databases, tools, models, data, 

research and development, education, and leadership that is housed on a participating agency’s or organization’s own server. 

aqThe Western Governors’ Crucial Habitat Assessment Tool is an online system of maps that displays crucial wildlife habitat based on 

commonly agreed upon definitions developed by the Western Governors’ Wildlife Council. The tool provides information across 16 

Western states and links to five state-level Crucial Habitat Assessment Tools; it will link to new state Crucial Habitat Assessment Tools 

as they become available. The tool can be accessed at www.westgovchat.org. 

ar The Social Vulnerability Index measures the social vulnerability of U.S. counties to environmental hazards and the ability of those 

counties to prepare for, respond to, and recover from hazards. The tool was developed through a partnership with the University of 

South Carolina and funding via South Carolina Sea Grant and the National Oceanic and Atmospheric Administration’s Office for 

Coastal Management. The tool can be accessed at coast.noaa.gov/digitalcoast/data/sovi. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-15

Resilience Tool Kit.as The Desert Renewable Energy Conservation Plan (DRECP), a draft of which was issued 

in September 2014,54 employed sophisticated integration of GIS and resource data across four agencies—two 

Federal agencies (BLM and the Fish and Wildlife Service) and two states—allowing them to plan development 

and conservation areas in 22.5 million acres in the California desert.at

Designating Corridors for Pipelines, Electric Transmission Lines, and Related 

Infrastructure

Section 368 of the Energy Policy Act of 2005 required the Departments of Interior, Agriculture, Commerce, 

Defense, and Energy—in consultation with FERC and tribal entities—to work together to designate energy 

rights-of-way corridors for oil, gas, and hydrogen pipelines and electricity transmission and distribution 

facilities on Federal lands—first in 11 Western contiguous states (Section 368(a)) and later, if warranted, in 

the remaining states (Section 368(b)).au, 55 The Departments of Interior and Agriculture designated more than 

6,000 miles of these corridors in 2009 for 11 Western states56, 57, av and are currently undertaking a periodic 

corridor review for the Western states that may lead to revised or new corridor designations.aw While their 

use is voluntary, project developers and relevant Federal agencies have, to varying extents, used portions of 

the Western energy transport corridors for projects since 2009. Unless funding resources are provided to the 

Federal agencies to continue this work, it is likely any new corridor decisions will be delayed.

Expanding Landscape and Watershed-Level Mitigation and Conservation 

Planning

Federal land management agencies can implement mitigation and conservation planning at the landscape, 

ecosystem, or watershed level to provide environmental, cost, and time-saving benefits to energy infrastructure 

siting and mitigation.58, 59 Through proper analysis and application of applicable GIS technologies, potential 

as Climate.data.gov includes data related to climate change that can help inform America’s communities, businesses, and citizens. 

Initially, users can find data and resources related to coastal flooding, food resilience, and water and ecosystem vulnerability. Over 

time, users will be able to find additional data and tools relevant to other important climate-related impacts, including risks to energy 

infrastructure and human health. The site can be accessed at www.data.gov/climate. The U.S. Climate Resilience Toolkit provides 

scientific tools, information, and expertise to help people manage their climate-related risks and opportunities and improve their 

resilience to extreme events. The site is designed to serve interested citizens, communities, businesses, resource managers, planners, 

and policy leaders at all levels of government. The site can be accessed at toolkit.climate.gov/tools. 

at The DRECP is intended to advance state and Federal conservation goals in the Mojave and Colorado Desert regions of California—

an area covering more than 22 million acres of private, local, state, and Federal land—while also facilitating the timely permitting of 

renewable energy projects and related electric transmission projects under applicable state and Federal laws.

auDesignation of energy corridor on Federal lands may help expedite the siting, permitting, and review process for projects within the corridors.

av For the rest of the United States, which includes 37 Eastern states, Alaska, and Hawaii, a 2008 public request for interest in energy 

transport corridors showed a relatively indifferent and minor public response, with only one request for a designation, which was 

subsequently withdrawn. Therefore, the Departments of Energy, Interior, Agriculture, Defense, and Commerce collectively decided 

at that time not to take actions to designate energy transport corridors in those states. See: Argonne National Laboratory. “Energy 

Transport Corridors: The Potential Role of Federal Lands in States Identified by the Energy Policy Act of 2005, Section 368(b).” 

August 2011. eastcorridoreis.anl.gov/documents/docs/Section368bReport.pdf. 

awThe corridor review is part of a court settlement to a complaint filed in 2009 and pursuant to the June 2013 Transmission Presidential 

Memorandum. See: Department of the Interior, Bureau of Land Management. “Electric Transmission Facilities & Energy Corridors.” www.

blm.gov/wo/st/en/prog/energy/transmission.html. Supporting the Western corridor review is a 2014 DOE report that assesses potential 

energy corridors proposed by the Western Electricity Coordinating Council. See: Department of Energy. “Analysis of Potential Energy 

Corridors Proposed by the Western Electricity Coordinating Council.” March 4, 2014. www.ipd.anl.gov/anlpubs/2014/02/103660.pdf. 

Pursuant to the 2013 Transmission Presidential Memorandum, DOE issued another report in 2014 for these same states, which looked at 

current and potential crossings by electricity transmission lines and oil and gas pipelines of the thousands of miles of 20 federally protected 

national trails. The report gives new baseline information available for use by interested parties to study routing scenarios for new projects 

that could mitigate impacts on national trails. The report also describes the 2008 work. See: Department of Energy. “Electricity Transmission, 

Pipelines, and National Trails: An Analysis of Current and Potential Intersections on Federal Lands in the Eastern United States, Alaska, and 

Hawaii.” March 25, 2014. www.ipd.anl.gov/anlpubs/2014/03/104083.pdf.
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Chapter IX: Siting and Permitting of TS&D Infrastructure

conflicts in project siting that can create substantial barriers to project completion can be avoided and 

minimized.60 Determining compensatory mitigation requirements as an integrated part of project planning 

can expedite development and increase certainty for interested stakeholders.61, 62, 63 The preparation of advanced 

mitigation strategies, which pre-identify potential mitigation measures, can facilitate important collaboration, 

reduce project costs, and substantially streamline the project review process through minimization of conflicts 

with other resource values, especially if advanced mitigation actions have taken place and provide credits that 

can be used to offset future project needs.64, 65

Federal land management agencies are implementing such initiatives. For example, in April 2014, Secretary 

of the Interior Jewell released the Strategy for Improving the Mitigation Practices of the Department of the 

Interior. Through the implementation of this strategy, the Department will work to advance landscape-scale, 

science-based management approaches that both encourage infrastructure development and protect natural 

and cultural resources.66 DRECP (mentioned above) and the Solar “Regional Mitigation Strategy for the Dry 

Lake Solar Energy Zone” are two additional examples of ambitious Federal-state landscape-level planning. 

When completed, DRECP is expected to provide binding, long-term endangered species permit assurances 

for project development within specified areas, while also reserving 13.7 million acres of the California Desert 

for conservation.ax The Dry Lake Solar Energy Zone, developed pursuant to the Western Solar Programmatic 

Environmental Impact Statement, is designed to encourage project applicants to invest in conservation 

opportunities on a landscape scale, thereby maximizing the value of their mitigation dollars.67

Another particularly relevant initiative aimed at implementing landscape-scale and watershed-scale 

approaches nationwide is “Eco-Logical: An Ecosystem Approach to Infrastructure Development.”68 Eco-Logical 

is the outcome of a partnership among eight Federal agenciesay to deliver a step-wise approach to “ecosystembased mitigation.”az Since 2008, these agencies have continued to work together and in parallel to realize 

the vision laid out in Eco-Logical through regular meetings and individual agency programs. Support for 

landscape-scale and watershed-scale approaches also appears in the 2008 Environmental Protection Agency 

and Army Corps of Engineers Final Compensatory Mitigation Rule,69 which formally established a mitigation 

hierarchy with a strong preference for mitigation banking and in-lieu fee programs for unavoidable impacts to 

wetlands, streams, and other aquatic resources.

Establishing Regional and State Partnerships and Dedicated CrossDisciplinary Energy Infrastructure Teams

Federal partnerships with state and regional actors—such as a Transmission Siting Task Force that the Western 

Governors’ Association and its member state siting agencies created, which includes Federal siting agencies 

on an ex-officio basis70—may prove helpful in speeding up the development of infrastructure projects because 

much of the review and permitting decisions for such projects occurs in regional and field offices of Federal 

agencies and within and across states.71, 72 When building capacity or making other energy-infrastructurerelated staffing decisions, it is advantageous to establish, wherever practical, joint, single-point-of-contact 

offices that consolidate agency expertise. Co-location of energy infrastructure environmental review and 

permitting staff from multiple Federal agencies helps to ensure coordinated, efficient, and expeditious 

permitting (e.g., in the Departments of Agriculture and the Interior’s Service First authority73 and BLM’s Oil 

ax DRECP is a Natural Community Conservation Plan under California State law and will include one or more Habitat Conservation 

Plans under the Federal Endangered Species Act.

ay BLM, the Federal Highway Administration, the National Oceanic and Atmospheric Administration, the National Park Service, the 

Army Corps of Engineers, the Environmental Protection Agency, the Fish and Wildlife Service, and the Forest Service.

az Eco-Logical encourages Federal, state, tribal, and local partners involved in infrastructure planning, design, review, and construction 

to use flexibility in regulatory processes. Specifically, Eco-Logical puts forth the conceptual groundwork for integrating plans across 

agency boundaries and endorses ecosystem-based mitigation, an innovative method of mitigating infrastructure impacts that cannot 

be avoided. Eco-Logical can be accessed at www.environment.fhwa.dot.gov/ecological/eco_index.asp. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-17

and Gas Pilot Office Program74). For example, the regional response teams established by the Administration 

in 2013—including the Pacific Northwest Regional Infrastructure Team75 and the Renewable Energy Action 

Team, a partnership between the Department of the Interior and the State of California that helped permit 

thousands of megawatts of renewable energy generation projects and related transmission lines76—have 

facilitated state partnerships and collaboration across agencies with different missions.

Facilitating Non-Federal Activity in Support of Siting and Permitting 

Partnerships with state and tribal governments, regional planning authorities, and the private sector can 

improve infrastructure siting and permitting. For example, DOE and the Western Governors’ Association 

partnered in 2014 to launch an online toolkit—the Regulatory and Permitting Information Desktop 

Toolkit—that collects publicly available information about permits and regulations affecting energy and bulk 

transmission project development to facilitate communication among project developers; agency personnel 

at all jurisdictional levels; and project stakeholders, including the public.77 Elsewhere, the Council of State 

Governments developed an Interstate Transmission Line Siting Compact with model language for state 

legislatures to enact a compact for interstate cooperation on electric transmission siting.78 That compact 

includes a mechanism through which Federal agencies and tribal governments can participate as equals 

with states in evaluating proposed electric transmission routes and in the decision-making processes used to 

determine whether an application is approved, approved with changes, or rejected for cause. More informal 

than a legal regional compact, regional siting protocols for siting transmission lines were signed in 2002 among 

the Western Governors’ Association and five Federal agencies;79 protocols were signed again in 2011 among 

then-member governors of the Midwest Governors Association and Manitoba, Canada.80 Elsewhere, the New 

England States Committee on Electricity created in 2011 an Interstate Transmission Siting Collaborative.81

Fostering additional efforts of this sort may benefit all project proposals and help streamline the siting and 

permitting process. 

QER Recommendations

Siting, permitting, and review of energy-related TS&D infrastructures are critical elements for meeting 

energy, environmental, and competitiveness goals. Current Administration initiatives are designed to 

expedite siting; improve communication and engagement among tribal, state and local governments, 

and the public at large; and modernize tools and processes available to policymakers. To these ends, we 

recommend the following:

Allocate resources to key Federal agencies involved in the siting, permitting, and review 

of infrastructure projects: Federal agencies responsible for infrastructure siting, review, and 

permitting have experienced dramatic appropriations cuts and reductions in staff. Competing 

demands for agency resources and inadequate support for affected agency staff means that energy 

infrastructure projects could face delays. Many of the components of the overall effort to improve 

the Federal siting and permitting processes have been stymied in recent years by appropriations 

shortfalls. Congress should fully fund these priorities.

Prioritize meaningful public engagement through consultation with Indian Tribes, 

coordination with state and local governments, and facilitation of non-Federal partnerships:

While the Federal Government’s role in infrastructure siting and permitting is important, many large 

energy infrastructure projects depend on state and local siting decisions. The Federal Government 

also has a responsibility to consult with affected Indian Tribes on projects that cross tribal lands or 

impact traditional cultural properties and certain other historic and cultural resources. Early and 

meaningful public engagement with affected residential communities, nonprofit organizations, 
9-18 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

QER Recommendations (continued)

and other non-Federal stakeholders through the NEPA process and other forums can reduce siting 

conflicts. Federal agency coordination with state and local governments and government-togovernment consultation with affected Indian Tribes should remain a Federal Government priority. 

Establish regional and state partnerships and co-locate dedicated cross-disciplinary energy 

infrastructure teams: When possible, Federal agencies should co-locate energy infrastructure 

environmental review and permitting staff from multiple Federal agencies’ regional and field 

offices. An interagency effort should be made to facilitate interagency collaboration and engage the 

impacted communities.

Expand landscape- and watershed-level mitigation and conservation planning: Given their 

size and complexity, many major infrastructure projects have impacts on the Nation’s landscapes 

and natural and cultural resources. When adverse impacts cannot be avoided or minimized any 

further, Federal agencies should seek innovative approaches to compensate for adverse project 

impacts commensurate with the scope and scale of the project and effects to resources. In order to 

produce the greatest environmental benefits, mitigation efforts should be focused on activities where 

environmental needs and potential environmental contributions are the greatest and in accordance 

with statutory requirements. Through mitigation planning at a landscape, ecosystem, or watershed 

scale, agencies can locate mitigation activities in the most ecologically important areas.

Enact statutory authorities to ensure coordination across agencies: To implement its Federal 

permitting and review proposals, the Obama Administration proposed establishing an Interagency 

Infrastructure Permitting Improvement Center in the Office of the Secretary of Transportation. 

Congress should authorize and fund the center, as set forth in Section 1009 of the Administration’s 

draft legislation for the Generating Renewal, Opportunity, and Work with Accelerated Mobility, 

Efficiency, and Rebuilding of Infrastructure and Communities throughout America Act, or GROW 

AMERICA Act.

Adopt Administration proposals to authorize recovery of costs for review of project 

applications: While some agencies have legal authority to recover permitting costs from project 

applicants, others do not possess the authority to do so. In some circumstances, as proposed in the 

President’s Fiscal Year 2016 Budget, additional flexibility for certain agencies to accept funds from 

applicants would be appropriate and could expedite the Federal permitting and review process. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-19

RECOMMENDATIONS IN BRIEF:

Siting and Permitting of TS&D Infrastructure

Allocate resources to key Federal agencies involved in the siting, permitting, and review of infrastructure 

projects. Federal agencies responsible for infrastructure siting, review, and permitting have experienced dramatic 

appropriations cuts and reductions in staff. Many of the components of the overall effort to improve the Federal siting and 

permitting processes have been stymied in recent years by appropriations shortfalls. Congress should fully fund these priorities. 

Prioritize meaningful public engagement through consultation with Indian Tribes, coordination with state 

and local governments, and facilitation of non-Federal partnerships. Early and meaningful public engagement 

with affected residential communities, nonprofit organizations, and other non-Federal stakeholders through the National 

Environmental Policy Act process and other forums can reduce siting conflicts. Federal agency coordination with state and local 

governments and government-to-government consultation with affected Indian Tribes should remain a Federal Government 

priority. When possible, Federal agencies should co-locate energy infrastructure environmental review and permitting staff from 

multiple Federal agencies’ regional and field offices.

Expand landscape- and watershed-level mitigation and conservation planning. When adverse impacts to the 

Nation’s landscape cannot be avoided or minimized any further, Federal agencies should seek innovative approaches to 

compensate for adverse project impacts commensurate with the scope and scale of the project and effects to resources. 

Through mitigation planning at a landscape, ecosystem, or watershed scale, agencies can locate mitigation activities in the 

most ecologically important areas.

Enact statutory authorities to improve coordination across agencies. Congress should authorize and fund the 

Interagency Infrastructure Permitting Improvement Center in the Department of Transportation, as set forth in Section 1009 of 

the Administration’s draft legislation for the Generating Renewal, Opportunity, and Work with Accelerated Mobility, Efficiency, 

and Rebuilding of Infrastructure and Communities throughout America Act, or GROW AMERICA Act. 

Adopt Administration proposals to authorize recovery of costs for review of project applications. Consistent 

with the proposal in the President’s Fiscal Year 2016 Budget request, additional flexibility for certain agencies to accept funds 

from applicants would be appropriate and could expedite the Federal permitting and review process.
9-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

Endnotes

1. The White House. “Presidential Memorandum - Speeding Infrastructure Development through More Efficient 

and Effective Permitting and Environmental Review.” August 31, 2011. http://www.whitehouse.gov/the-pressoffice/2011/08/31/presidential-memorandum-speeding-infrastructure-development-through-more. Accessed March 19, 

2015.

2. Executive Order No. 13604. “Improving Performance of Federal Permitting and Review of Infrastructure Projects.” 

77 Fed. Reg. 18887. March 22, 2012. http://www.whitehouse.gov/the-press-office/2012/03/22/executive-order-improvingperformance-federal-permitting-and-review-infr. Accessed January 15, 2015.

3. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” February 15, 2013. http://www.gao.gov/assets/660/652225.

pdf. Accessed January 15, 2015. 

4. Vann, A. “The Federal Government’s Role in Electric Transmission Facility Siting.” Congressional Research Service. 

October 2010. http://fas.org/sgp/crs/misc/R40657.pdf. Accessed March 27, 2015.

5. IOGCC/NARUC Pipeline Siting Work Group. “Final Report: Recommendations of the naruc/iogcc Pipeline Work 

Group.” July 2001. http://www.naruc.org/Publications/pipelineworkgroup.pdf. Accessed March 27, 2015.

6. 25 C.F.R. § 169.

7. 15 U.S.C. § 717f(c). 

8. Executive Order No. 11423. “Providing for the Performance of Certain Functions Heretofore Performed by the 

President with Respect to Certain Facilities Constructed and Maintained on the Borders of the United States.” 

33 Fed. Reg. 11741. August 20, 1968. http://www.archives.gov/federal-register/codification/executive-order/11423.

html.; Executive Order No. 13337. “Issuance of Permits with Respect to Certain Energy-Related Facilities and Land 

Transportation Crossings on the International Boundaries of the United States.” 69 Fed. Reg. 25299. May 5, 2004. 

http://www.gpo.gov/fdsys/pkg/FR-2004-05-05/pdf/04-10378.pdf.; Executive Order No. 10485. “Providing for the 

Performance of Certain Functions Heretofore Performed by the President with Respect to Electric Power and Natural 

Gas Facilities Located on the Borders of the United States.” 18 Fed. Reg. 5397. September 9, 1953. http://www.archives.

gov/federal-register/codification/executive-order/10485.html. Accessed January 20, 2015.; Executive Order No. 12038. 

“Relating to Certain Functions Transferred to the Secretary of Energy by the Department of Energy Organization 

Act.” 43 Fed. Reg. 4957. February 3, 1978. http://www.archives.gov/federal-register/codification/executive-order/12038.

html. Accessed January 20, 2015. 

9. Natural Gas Act §§ 3 and 7, 15 U.S.C. § 717f, 42 U.S.C. § 7151(b). June 21, 1938.

10. Department Of Energy Organization Act. 15 U.S.C. § 717b(a). August 4, 1977.

11. Executive Order No. 10485. “Providing for the Performance of Certain Functions Heretofore Performed by the 

President with Respect to Electric Power and Natural Gas Facilities Located on the Borders of the United States.” 18 

Fed. Reg. 5397. September 3, 1953. http://www.archives.gov/federal-register/codification/executive-order/10485.html.

12. Executive Order No. 12038. “Relating to Certain Functions Transferred to the Secretary of Energy by the Department 

of Energy Organization Act.” 43 Fed. Reg. 4957. February 3, 1978. http://www.archives.gov/federal-register/codification/

executive-order/12038.html.

13. 16 U.S.C. § 824a(e).

14. Executive Order No. 10485. “Providing for the Performance of Certain Functions Heretofore Performed by the 

President with Respect to Electric Power and Natural Gas Facilities Located on the Borders of the United States.” 18 

Fed. Reg. 5397. September 3, 1953. http://www.archives.gov/federal-register/codification/executive-order/10485.html. 

Accessed January 20, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-21

15. Executive Order No. 12038. “Relating to Certain Functions Transferred to the Secretary of Energy by the Department 

of Energy Organization Act.” 43 Fed. Reg. 4957. February 3, 1978. http://www.archives.gov/federal-register/codification/

executive-order/12038.html. Accessed January 20, 2015.

16. 42 U.S.C. § 6212. 

17. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 7. May 2014. http://www.permits.

performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

18. Executive Order No. 13175. “Consultation and Coordination with Indian Tribal Governments.” 65 Fed. Reg. 67249. 

November 6, 2000.

19. Secretarial Order 3317. “Department of the Interior Policy on Consultation with Indian Tribes.” December 31, 2012. 

http://www.doi.gov/cobell/upload/FINAL-Departmental-tribal-consultation-policy.pdf.

20. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 12. May 2014. http://www.permits.

performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

21. 42 U.S.C. § 4321 et seq.

22. 40 C.F.R. §§ 1500–1508. 

23. 40 C.F.R. §§ 1508.14 and 1508.15. 

24. Government Accountability Office. “National Environmental Policy Act: Little Information Exists on NEPA Analyses.” 

April 15, 2014. http://www.gao.gov/assets/670/662546.pdf. Accessed January 30, 2015.

25. 40 C.F.R. § 1503 and §§ 1501.4(e) and 1506.6. 

26. Zichella, C. and J. Hladik. “America’s Power Plan – Siting: Finding a Home for Renewable Energy and Transmission.” 

September 19, 2013. http://americaspowerplan.com/wp-content/uploads/2013/09/APP-SITING-PAPER.pdf. Accessed 

February 10, 2015.

27. Center for Rural Affairs. “Landowner Compensation in Transmission Siting for Renewable Energy Facilities Siting.” 

May 2014. http://www.cfra.org/sites/www.cfra.org/files/publications/landowner-compensation-052014_0.pdf. Accessed 

February 25, 2015. 

28. Western Governors’ Association. “Siting and Permitting Transmission Reforms.” p. 4. May 2012. https://www.google.

com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QFjAA&url=http%3A%2F%2Fwww.

westgov.org%2Fcomponent%2Fdocman%2Fdoc_download%2F1605-siting-report-2012&ei=jG_vVJ5Xk4Y21Y-D6A8&us

g=AFQjCNF39jwmgo3JgEBc8DU1ocovv8jyqg&bvm=bv.86956481,d.eXY. Accessed February 26, 2015.

29. Government Accountability Office. “National Environmental Policy Act: Little Information Exists on NEPA Analyses.” 

p. 18. April 2014. http://www.gao.gov/assets/670/662546.pdf. Accessed January 30, 2015.

30. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” February 15, 2013. http://www.gao.gov/assets/660/652225.

pdf. Accessed January 15, 2015. 

31. Congressional Research Service. “Interstate Natural Gas Pipelines: Process & Timing of FERC Permit Application 

Review.” January 16, 2015. https://www.hsdl.org/?view&did=761686. Accessed February 10, 2015.

32. Luciani, R. and M. Shober. “Transmission Planning Whitepaper.” Eastern Interconnection States’ Planning Council. 

p. 19 and Appendix B. January 2014. http://communities.nrri.org/documents/68668/466bb83f-729e-4787-9c02-

ca140679e488.

33. Keyes & Fox LLP. “Report to Western Governors’ Association: State Transmission Siting Processes.” p. 11. April 30, 

2012. www.westgov.org/component/docman/doc_download/1593-state-siting.
9-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

34. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” February 15, 2013. http://www.gao.gov/assets/660/652225.

pdf. Accessed January 15, 2015.

35. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” February 15, 2013. http://www.gao.gov/assets/660/652225.

pdf. Accessed January 15, 2015. 

36. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” p. 30. February 15, 2013. http://www.gao.gov/

assets/660/652225.pdf. Accessed January 15, 2015.

37. Executive Order No. 13604. “Improving Performance of Federal Permitting and Review of Infrastructure Projects.” 

77 Fed. Reg. 18887. March 22, 2012. http://www.whitehouse.gov/the-press-office/2012/03/22/executive-order-improvingperformance-federal-permitting-and-review-infr. Accessed January 21, 2015.

38. Zichella, C. and J. Hladik. “America’s Power Plan—Transmission Policy: Planning for and Investing in Wires.” p. 14. 

September 19, 2013. http://americaspowerplan.com/wp-content/uploads/2013/09/APP-TRANSMISSION-PAPER.pdf.

39. National Electrical Manufacturers Association. “Siting Transmission Corridors – A Real Life Game of Chutes and 

Ladders.” 2011. http://www.nema.org/Policy/Documents/tc-gameboard-4web.pdf. Accessed January 21, 2015.

40. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 4–5. May 2014. http://www.permits.

performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

41. The White House. “Presidential Memorandum – Transforming our Nation’s Electric Grid Through Improved 

Siting, Permitting, and Review.” June 7, 2013. https://www.whitehouse.gov/the-press-office/2013/06/07/presidentialmemorandum-transforming-our-nations-electric-grid-through-i. Accessed January 15, 2015. 

42. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” p. 12–16. February 15, 2013. http://www.gao.gov/

assets/660/652225.pdf. Accessed January 15, 2015.

43. Government Accountability Office. “Renewable Energy – Agencies Have Taken Steps Aimed at Improving the 

Permitting Process for Development on Federal Lands.” p. 26. January 18, 2013. http://www.gao.gov/products/GAO-13-

189. Accessed February 10, 2015.

44. Department of Energy. “Improving Performance of Federal Permitting and Review of Infrastructure Projects.” 78 Fed. 

Reg. 53436. August 29, 2013. http://www.energy.gov/sites/prod/files/2013/08/f2/RFI-IIP-FRN082913.pdf. Accessed January 

20, 2015. 

45. Department of the Interior, Bureau of Land Management. “Competitive Processes, Terms, and Conditions for Leasing 

Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections.” Proposed Rule. 79 

Fed. Reg. 59022. September 30, 2014. http://www.gpo.gov/fdsys/pkg/FR-2014-09-30/pdf/2014-23089.pdf. Accessed 

February 26, 2015.

46. Government Accountability Office. “Renewable Energy – Agencies Have Taken Steps Aimed at Improving the 

Permitting Process for Development on Federal Lands.” p. 37. January 18, 2013. http://www.gao.gov/products/GAO-13-

189. Accessed February 10, 2015. 

47. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 44. May 2014. http://www.permits.

performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

48. Department of the Interior, Bureau of Land Management. “Competitive Processes, Terms, and Conditions for Leasing 

Public Lands for Solar and Wind Energy Development and Technical Changes and Corrections.” Proposed Rule. 79 

Fed. Reg. 59022. September 30, 2014. http://www.gpo.gov/fdsys/pkg/FR-2014-09-30/pdf/2014-23089.pdf. Accessed 

February 26, 2015.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-23

49. Executive Office of the President. “Report to the President – Rebuilding America’s Infrastructure: Cutting Timelines 

and Improving Outcomes for Federal Permitting and Review of Infrastructure Projects.” May 2013. http://www.

whitehouse.gov/sites/default/files/omb/reports/report-to-the-president-rebuilding-americas-infrastructure.pdf. Accessed 

January 15, 2015.

50. Cobert, B., M. Boots and V. Mendez. “Cross-Agency Priority Goal, Infrastructure Modernization, Quarterly 

Progress Update.” Fiscal Year 2014 Quarter 4. http://www.performance.gov/content/infrastructure-permittingmodernization#progress-update. Accessed February 11, 2015.

51. Government Accountability Office. “2013 Pipeline Permitting: Interstate and Intrastate Natural Gas Permitting 

Processes Include Multiple Steps, and Time Frames Vary.” p. 32. February 15, 2013. http://www.gao.gov/

assets/660/652225.pdf. Accessed January 15, 2015. 

52. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 23–24. May 2014. http://www.

permits.performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

53. Executive Order No. 13653. “Preparing the United States for the Impacts of Climate Change.” 78 Fed. Reg. 66819. 

November 6, 2013. https://www.whitehouse.gov/the-press-office/2013/11/01/executive-order-preparing-united-statesimpacts-climate-change. Accessed March 15, 2015. 

54. California Energy Commission. “Draft: Desert Renewable Energy Conservation Plan.” September23, 2014. http://

www.drecp.org/draftdrecp/. Accessed January 21, 2015.

55. The White House. “Presidential Memorandum – Transforming our Nation’s Electric Grid Through Improved 

Siting, Permitting, and Review.” June 7, 2013. https://www.whitehouse.gov/the-press-office/2013/06/07/presidentialmemorandum-transforming-our-nations-electric-grid-through-i. Accessed January 15, 2015. 

56. Department of the Interior, Bureau of Land Management. “Approved Resource Management Plan Amendments/

Record of Decision (ROD) for Designation of Energy Corridors on Bureau of Land Management-Administered 

Lands in the 11 Western States.” http://www.corridoreis.anl.gov/documents/docs/Energy_Corridors_final_signed_

ROD_1_14_2009.pdf. Accessed March 9, 2015.

57. Department of Agriculture, Forest Service. “Designation of Section 368 Energy Corridors on National Forest System 

Land in 10 Western States.” http://corridoreis.anl.gov/documents/docs/WWEC_FS_ROD.pdf. Accessed March 9, 2015.

58. Steering Committee on Federal Infrastructure Permitting and Review Process Improvement. “Implementation Plan 

for the Presidential Memorandum on Modernizing Infrastructure Permitting.” p. 36–42. May 2014. http://www.

permits.performance.gov/pm-implementation-plan-2014.pdf. Accessed January 15, 2015.

59. Environmental Law Institute & The Nature Conservancy. “Watershed Approach Handbook: Improving Outcomes and 

Increasing Benefits Associated with Wetland and Stream Restoration and Protection Projects.” September 2014. http://

www.eli.org/sites/default/files/eli-pubs/watershed-approach-handbook-improving-outcomes-and-increasing-benefitsassociated-wetland-and-stream_0.pdf. Accessed March 9, 2015.

60. Presentation of Nicole Korfanta, PhD., Quadrennial Energy Review Infrastructure Siting Meeting. Cheyenne, WY. 

August 8, 2014. http://www.energy.gov/sites/prod/files/2014/08/f18/l_korfanta_presentation_qer_cheyenne.pdf. Accessed 

February 28, 2015. 

61. Department of the Interior, Fish and Wildlife Service. “Permits – HCPs in Development: NiSource Multi-Species 

Habitat Conservation Plan.” June 2013. http://www.fws.gov/midwest/Endangered/permits/hcp/nisource/2013NOA/

NiSourceHCPfinalJune2013.html. Accessed February 26, 2015. 

62. Department of the Interior, Fish and Wildlife Service. “NiSource, Inc.; Record of Decision, Habitat Conservation Plan, 

Environmental Impact Statement, and Permit Issuance.” 78 Fed. Reg. 68465. November 14, 2013. http://www.gpo.gov/

fdsys/pkg/FR-2013-11-14/pdf/2013-27230.pdf. Accessed February 26, 2015.

63. Department of Transportation, Federal Highway Administration. “Eco-logical: An Ecosystem Approach to 

Developing Infrastructure Projects.” http://environment.fhwa.dot.gov/ecological/eco_4.asp. Accessed February 11, 2015. 
9-24 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter IX: Siting and Permitting of TS&D Infrastructure

64. Department of the Interior. “A Strategy for Improving the Mitigation Policies and Practices of the Department of 

the Interior.” April 2014. http://www.doi.gov/news/upload/Mitigation-Report-to-the-Secretary_FINAL_04_08_14.pdf. 

Accessed January 21, 2015. 

65. Department of the Interior, Bureau of Land Management. “The BLM’s Landscape Approach for Managing Public 

Lands.” January 31, 2014. http://www.blm.gov/wo/st/en/prog/more/Landscape_Approach.html. Accessed February 23, 

2015.

66. Department of the Interior, Bureau of Land Management. “Dry Lake Solar Energy Zone (SEZ) Solar Regional 

Mitigation Planning Project.” April 4, 2014. http://www.blm.gov/nv/st/en/fo/lvfo/blm_programs/energy/dry_lake_solar_

energy.html. Accessed January 21, 2015.

67. Department of the Interior, Bureau of Land Management. “Dry Lake Solar Energy Zone (SEZ) Solar Regional 

Mitigation Planning Project.” April 4, 2014. http://www.blm.gov/nv/st/en/fo/lvfo/blm_programs/energy/dry_lake_solar_

energy.html. Accessed January 21, 2015.

68. Department of Transportation, Federal Highway Administration. “Eco-Logical: An Ecosystem Approach to 

Developing Infrastructure Projects.” http://www.environment.fhwa.dot.gov/ecological/eco_index.asp. Accessed 

February 22, 2015.

69. Army Corps of Engineers and Environmental Protection Agency. “Compensatory Mitigation for Losses of Aquatic 

Resources.” 73 Fed. Reg. 19594. 40 C.F.R. § 230. April 10, 2008. http://www.gpo.gov/fdsys/pkg/FR-2008-04-10/pdf/E8-

6918.pdf#page=94. Accessed February 26, 2015.

70. Western Governors’ Association. “Regional Transmission Expansion Planning: Transmission Siting Task Force.” http://

www.westgov.org/index.php?option=com_content&view=article&id=311&Itemid=81. Accessed January 15, 2015.

71. Government Accountability Office. “Renewable Energy – Agencies Have Taken Steps Aimed at Improving the 

Permitting Process for Development on Federal Lands.” p. 29–30. January 18, 2013. http://www.gao.gov/products/GAO13-189. Accessed February 10, 2015.

72. Executive Office of the President. “Report to the President – Rebuilding America’s Infrastructure: Cutting Timelines 

and Improving Outcomes for Federal Permitting and Review of Infrastructure Projects.” p. 11. May 2013. http://www.

whitehouse.gov/sites/default/files/omb/reports/report-to-the-president-rebuilding-americas-infrastructure.pdf. Accessed 

January 15, 2015.

73. Government Printing Office. “Cooperative Action and Sharing of Resources by Secretaries of the Interior and 

Agriculture.” 43 U.S.C. § 1703. January 3, 2012. http://www.gpo.gov/fdsys/pkg/USCODE-2011-title43/pdf/USCODE-2011-

title43-chap35-subchapI-sec1703.pdf. Accessed February 26, 2015.

74. Department of the Interior, Bureau of Land Management. “Pilot Project to Improve Federal Permit Coordination.” 

October 20, 2009. http://www.blm.gov/wo/st/en/prog/energy/oil_and_gas/pilot_project.html. Accessed January 21, 2015. 

75. Department of the Interior, Bureau of Land Management. “Pacific Northwest Regional Infrastructure Team.” http://

www.blm.gov/or/energy/files/PNWRIT_Factsheet.PDF. Accessed February 26, 2015.

76. Department of the Interior. “Memorandum of Understanding Between the Department of the Interior and the State 

of California on Renewable Energy.” October 12, 2009. https://www.fws.gov/cno/pdf/Energy/Energy_2009-10-12_DOI_

CA_MOU.pdf. Accessed February 26, 2015.

77. Open Energy Information. “Bulk Transmission Regulations and Permitting.” http://en.openei.org/wiki/RAPID/

BulkTransmission. Accessed January 21, 2015.

78. National Center for Interstate Compacts. “Transmission Line Siting Compact.” 2011. http://www.csg.org/NCIC/

TransmissionLineSitingCompact.aspx. Accessed February 26, 2015. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 9-25

79. Department of Agriculture, Forest Service. “Protocol Among the Members of the Western Governors’ Association, 

the U.S. Department of the Interior, the U.S. Department of Agriculture, U.S. Department of Energy, and the 

Council on Environmental Quality and the Western Governors’ Association Governing the Siting and Permitting of 

Interstate Transmission Lines in the Western United States.” June 23, 2002. http://www.fs.fed.us/specialuses/documents/

interagency_wga_elec_trans_Protocol.pdf. Accessed January 21, 2015.

80. Organization of MISO States. “Protocol Among the Midwestern Governors Regarding the Permitting and Siting of 

Interstate Electric Transmission Lines In The Midwestern United States And Manitoba, Canada.” 2005. http://www.

misostates.org/files/MGATransProtocolFinalDraft7-8.pdf. Accessed January 21, 2015.

81. New England States Committee on Electricity. “New England States Form Interstate Transmission Siting 

Collaborative.” June 23, 2011. http://www.nescoe.com/uploads/Interstate_Siting_Collaborative.pdf. Accessed January 21, 

2015.
9-26 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-1

Chapter X

This chapter describes the analyses and stakeholder engagement that provided 

the substantive basis for the Quadrennial Energy Review (QER). The first section 

describes the analytical work carried out for the QER, including baselines, 

scenarios, and specific analyses underlying some of the key chapters in this 

report. The second section describes how the QER process engaged a broad 

range of stakeholders across the Nation in its development, including through 

technical workshops, 13 formal public stakeholder meetings, and a special 

series of roundtables on methane emissions from transmission, storage, and 

distribution (TS&D) infrastructure. This chapter is intended to document the 

process of developing the QER and contains no recommendations.

ANALYTICAL AND 

STAKEHOLDER PROCESS
10-2 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

QER Systems Analysis

The QER is a policy document based on robust systems/policy analysis and extensive stakeholder and 

interagency engagement (see Figure 10-1). These connected efforts support the findings and recommendations 

described in the main QER document, as well as the Natural Gas, Liquid Fuels, and Electricity appendices. 

Figure 10-1. Inputs to the QER1

This figure shows the analytical, stakeholder, and interagency efforts underpinning the QER.

In the Presidential Memorandum establishing the QER, President Obama directed the QER Task Force to 

conduct policy analysis and modeling to support QER recommendations and actions. The Department of 

Energy’s (DOE’s) Office of Energy Policy and Systems Analysis (EPSA)—serving as secretariat for the QER 

Task Force—undertook an extensive suite of analyses, focusing on energy TS&D infrastructures. This effort 

included the following: 

• Commissioned analyses from DOE national laboratories, including scenario modeling, synthesis, and 

white papers.

• Commissioned analyses from energy consulting and analytics firms, including modeling, baselines, and 

scenarios.

• Internal EPSA analysis—in collaboration with partners across DOE and other Federal agencies—to 

generate analysis, policy working papers, and public reports.

• Overlapping analysis with stakeholder engagement efforts and technical workshops with associated 

analytical products.

High Level Goals Energy Infrastructure Objectives Crosscutting Issues

JOBS

ENVIRONMENT

NATURAL GAS

LIQUID FUELS

ELECTRICITY

SITING

ENERGY

 INFRASTRUCTURE 

FOR THE 21ST 

CENTURY

Increasing the 

Resilience, Reliability, 

Safety, and Asset 

Security of TS&D 

Infrastructure

Modernizing 

the Electric Grid

Modernizing U.S. Energy 

Security Infrastructures in 

a Changing Global 

Marketplace

Improving 

Shared 

Transport 

Infrastructures 

Economic

Competitiveness 

ANALYSIS STAKEHOLDER

ENGAGEMENT

TS&D

Baselines

Scenarios

and

Modeling

Analysis of 

Disruptive 

Events

Synthesis

of Available

Work

Stakeholder

Meetings

Stakeholder

Comments

Technical 

Workshops

Interagency

Engagement

Environmental

Responsibility
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-3

This chapter lists commissioned analyses used to support QER findings and recommendations. Many of the 

QER analyses are crosscutting in nature and apply to more than one energy objective or sector. Analyses (some 

forthcoming) are posted at energy.gov/epsa/qer-document-library.

Crosscutting Scenario Analysis

The QER used scenario analyses to assess the impact of a range of factors on the need for liquid fuels, natural 

gas, and electricity transmission infrastructure between 2014 and 2030. These scenario analyses do not model 

any specific Administration policy or projection about energy technology or markets. Rather, the goal was to 

explore both infrastructure changes and investments that might be required under a range of possible future 

conditions (in particular, considering options different from those implied under the Energy Information 

Administration Annual Energy Outlook 2014 Reference case). Factors analyzed included, among others, 

an economy-wide cap on carbon dioxide emissions driving a 40-percent reduction in 2030, reductions in 

renewable generation costs, increased natural gas prices, and dramatic expansions of liquefied natural gas 

export capacity. The individual scenarios are described in Table 10-1 (note that some scenarios—such as the 

electricity scenarios—were run in combination).2

Table 10-1. Table of QER Modeling Scenarios3

Scenarios Model

Base Case: Annual Energy Outlook 2014 Reference Case

Natural Gas

• High domestic gas demand

• High world gas supply

• High U.S. exports

Deloitte (MarketPoint)

• Coupled gas infrastructure and electricity market models

• Outputs include major pipeline capacity expansions and 

new pipeline builds

Electricity

• Low wind cost

• Low solar cost

• Low-cost storage

• High/low electricity demand

• High natural gas prices

• 40-percent economy-wide greenhouse gas reduction by 2030

• High penetration of distributed generation (photovoltaic)

• High natural gas use

• No new transmission

National Renewable Energy Laboratory 

(Renewable Energy Deployment System, ReEDS)

• Electricity generation capacity expansion model

• Outputs include transmission capacity expansion, 

generation, electricity costs, etc.

Liquid Fuels

• Low/high oil resource

• Revisit oil export ban/keep intact

• Low oil demand

Energy Policy Research Foundation, Inc. 

(Ponderosa Crude Flow Model)

• Pipeline flow and refinery model allocates domestic and 

foreign crude oil based on refinery demand and margin 

optimization

Oak Ridge National Laboratory/Jacobs Model

• Detailed refinery modeling (Jacobs) informs simplified 

refinery, crude distribution model (Oak Ridge)

The QER explored a wide range of natural gas, electricity, and liquid fuels scenarios.
10-4 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Chapter-Specific Analyses 

The QER commissioned multiple studies across TS&D, including the following for specific chapters:

Increasing the Resilience, Reliability, Safety, and Asset Security of TS&D Infrastructure

• An INTEK study of U.S. regional fuel resiliency based on an extensive analysis of natural gas and liquid 

infrastructure systems, their specific vulnerabilities to natural threats, and options to increase overall system 

resiliency.4

• A national laboratory team synthesis—including the National Renewable Energy Laboratory, Argonne 

National Laboratory, Pacific Northwest National Laboratory, Sandia National Laboratories, and Los Alamos 

National Laboratory—of more than 150 papers on disruptions and resilience of electricity, natural gas, 

and liquid fuels TS&D infrastructures, identifying vulnerabilities of each to a range of natural threats and 

hostile actions.5

• A RAND Corporation synthesis of resilience metrics, summarizing, categorizing, and analyzing the 

utilization of 172 metrics related to liquid fuels, natural gas, and electricity infrastructure.6

• A Sandia National Laboratories design and initial demonstration of a resilience analysis framework for 

energy systems that explicitly quantifies uncertainty in threats and disruption outcomes.7

• A Sandia National Laboratories modeling of a Marcellus freeze-off scenario in 2015 and 2030 using the Gas 

Pipeline Competition Model to assess shifts in gas production, storage withdrawals, and flow.8

• A BENTEK forecast of natural gas supply, demand, and infrastructure developments through 2030 using an 

inventory and cell model.9

Promoting Reliability and Climate Mitigation through the Electric Grid of the Future

• A Brattle Group report that examined the U.S. baseline electric grid system.10

• A Pacific Northwest National Laboratory-led workshop and analytical effort that assessed the system 

architecture of the electricity grid and provided future views of the architecture in addressing emerging 

trends, systemic issues, and structural constraints. Throughout the course of the work, two review 

sessions were held with industry and DOE.11

• Multiple white papers on electricity TS&D issues from the national laboratories on renewable 

integration,12 efficiency of TS&D,13 electricity-information technology interdependency,14 and 

transmission planning with demand-side resources.15

• A DOE report that identified the potential infrastructure needs of the U.S. interstate natural gas pipeline 

transmission system across a range of future natural gas demand scenarios that drive increased electric 

power sector natural gas use.16

Modernizing U.S. Energy Security Infrastructures in a Changing Global Marketplace

• In conjunction with the Strategic Petroleum Reserve program office and analytical support, an 

Oak Ridge National Laboratory study of the needs associated with the Strategic Petroleum Reserve 

distribution capacity and life extension.17

• An examination of scenarios of liquefied natural gas exports and potential impacts and needs associated 

with natural gas midstream build-out by two different energy analytic firms—Deloitte and Jensen.18, 19

Improving Shared Transport Infrastructures

• An Argonne National Laboratory analysis of coal transport by rail, including a business-as-usual case 

through 2030, exports, potential congestion, and other issues.20
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-5

Developing and Managing Energy Infrastructures in an Environmentally Responsible Manner

• A Joint Institute for Strategic Energy Analysis review of Federal and state authorities that affect 

investment decisions regarding natural gas system modernization (safety, economic regulation, 

environment, and facility permitting), with a focus on policies that relate to methane emissions, energy 

efficiency, and safety.21

• A Joint Institute for Strategic Energy Analysis synthesis of marginal abatement cost-curve analysis 

for methane emissions, which involves examining the relative cost effectiveness of different methane 

abatement strategies throughout the natural gas supply chain.22

• A Lawrence Berkeley National Laboratory review of opportunities for efficiency improvements in the 

U.S. natural gas transmission and distribution system, including recommendations of the major areas for 

efficiency gains based on the published literature.23

Enhancing Employment and Workforce Training

• A National Renewable Energy Laboratory analysis of energy-related transmission and distribution jobs, 

including comparison of estimates and methodology to other studies.24

• A Joint Institute for Strategic Energy Analysis examination of the employment implications of public and private 

sector investments in safety and methane abatement within natural gas TS&D segments of the supply chain.25

No major externally commissioned analyses were conducted for Chapter VI (Integrating North American 

Energy Markets) or Chapter IX (Siting and Permitting of TS&D Infrastructure).

QER Stakeholder Engagement

In the Presidential Memorandum establishing the QER,26 President Obama directed the QER Task Force to 

“gather ideas and advice from state and local governments, tribes, large and small businesses, universities, 

national laboratories, nongovernmental and labor organizations, consumers, and other stakeholders and 

interested parties...” The President ordered the Task Force to “develop an integrated outreach strategy that relies 

on both traditional meetings and the use of information technology.” 

EPSA, which is serving as the secretariat for the QER Task Force, undertook an open, transparent process for 

informing stakeholders of the purposes and scope of the first installment of the QER. This stakeholder engagement 

was accomplished by multiple means throughout the QER development process, including the following activities: 

• Informal meetings at DOE headquarters involving hundreds of interested stakeholders.

• Briefings on the QER process at meetings with industry associations; groups of state, local, and tribal 

officials; the offices of environmental groups; and with Members of Congress, their staffs, and the staffs 

of multiple relevant congressional committees.

• Speeches and briefings by the Secretary of Energy, the Director of the President’s Office of Science and 

Technology Policy, other White House officials, and various members of DOE leadership to interested 

groups in Washington, D.C., and across the country. 

• A series of informal briefings at DOE headquarters for the Washington, D.C.-based government affairs 

personnel and consultants of companies across all energy sectors, industry associations, organizations 

involved in infrastructure development or made up of users of particular infrastructures, environmental 

groups, organized labor, think tanks, and multi-industry/multi-client consultants—representing the 

widest possible spectrum of stakeholder interests.

• The creation of a public comments portal (QERcomments@hq.doe.gov) to allow interested stakeholders and the 

general public to provide comments on individual stakeholder meetings, as well as to allow outside experts to 

send the QER Task Force studies, reports, and data sets related to topics within the scope of the first installment 

of the QER.
10-6 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

• Technical workshops on topics relating to the QER where secretariat staff could explore issues in greater 

depth with technical experts from both inside and outside the government.

• Five methane stakeholder roundtables—convened by Secretary Moniz and with the participation of 

senior White House staff—to hear from stakeholders in industry, environmental nongovernmental 

organizations, consumer groups, public utility commissions, labor, and academia about strategies to 

achieve significant methane reductions from various segments of the natural gas industry.

• A series of formal public stakeholder meetings,a beginning in Washington, D.C., in April 2014 and 

extending through early October 2014 at 13 additional venues around the Nation (see Table 10-2). 

Comments Portal and QER Library

From the beginning of the QER process, stakeholders and the general public were encouraged to offer 

suggestions, comments, insights, and criticisms on issues surrounding the planning, siting, engineering, 

financing, development, and utilization of infrastructure for TS&D of energy. The secretariat established a 

Web-based portal for stakeholders to share comments (QERcomments@hq.doe.gov), as well as studies, reports, 

data sets, and any additional materials stakeholder organizations wanted to get in front of QER Task Force 

analysts. All comments submitted to the portal are available on EPSA’s website at www.energy.gov/epsa/

quadrennial-energy-review-qer.

The QER Task Force received more than 300 written comments, many of which included detailed reports and 

studies on behalf of trade associations, utilities, and energy companies; state and local governments; nonprofit 

organizations; and other stakeholders (totaling thousands of pages). Each of the comments received was 

reviewed by secretariat staff and contractors, and insights and recommendations gleaned from these comments 

and materials have been included in the QER itself. Stakeholder comments fell into three broad categories 

of concerns and recommendations: how to operate the system safely, fairly, and efficiently; who should be 

responsible for reliability, security, safety, and flexibility (new investments, standards, enforcement, etc.); 

and how to allocate costs of resilience measures. Across sectors, stakeholders also expressed a need to better 

quantify, model, and predict the value of new technologies and services. 

Kicking Off the QER: Informal Meetings and Briefings 

Secretary of Energy Moniz, Secretartiat staff, and other high-ranking Administration officials met with 

energy industry representatives, other interested stakeholders, Members of Congress and their staffs, other 

public officials, and numerous other individuals and groups throughout the QER process to discuss the QER 

scope, the QER Task Force process, and how organizations and private citizens might involve themselves. 

The Secretary of Energy and senior DOE staff delivered numerous public presentations on the QER around 

the country to a variety of audiences, including industry groups, associations of state energy offices, public 

utility commissioners and other energy regulators, Federal advisory committee members, and various other 

interested stakeholder groups. 

To foster discussion among stakeholders and stimulate interest in the QER in the relatively short time 

between the publication of the Presidential Memorandum and the beginning of the formal stakeholder 

events, secretariat staff held a number of informal briefings at DOE headquarters for stakeholders based in 

Washington, D.C. In these meetings, a representative group of stakeholders—nongovernmental organizations, 

industry, think tanks, state/municipality organizations, and others—received in-person briefings on the QER 

process and learned about the multiple ways their organizations could participate. Integral to the process, these 

briefings allowed secretariat staff to hear (at a very early stage) from interested parties about suggested paths 

a There were two stakeholder meetings in Providence, Rhode Island, and Hartford, Connecticut, on infrastructure constraints in New 

England; because the overall topic was the same for both, these meetings are treated as a single meeting for purposes of summaries in 

this chapter and on the QER meeting website. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-7

of inquiry, to take and answer questions about the scope of the first installment of the QER, to describe the 

manner in which information would be sought and received, and to discuss substantive concepts and topics 

that might be considered. These meetings were very helpful to the QER Task Force in its inquiry. 

QER Technical Workshops

In developing its plan to engage stakeholders to obtain a comprehensive overview of the Nation’s energy 

TS&D infrastructure, the QER Task Force determined that some important topics were either unique or too 

technically complex to be given the requisite attention during the course of its formal public meetings. Those 

meetings were organized around regional or sector-specific themes and intended to tackle broad themes or 

regional circumstances. To ensure that stakeholders were heard on these important topics, the secretariat 

assembled subject matter experts from relevant fields for a number of technical workshops, or to participate in 

previously scheduled workshops organized by DOE programs, to provide the QER expert insights through the 

intensive analytical approach of these 1-day and 2-day symposia.

Three of the four technical workshops were held in Washington, D.C., to facilitate the participation of experts 

based at DOE headquarters. The remaining workshop—a follow up to the initial workshop in Washington, 

D.C.—was held at Long Island’s Brookhaven National Laboratory. Each workshop featured a roster of subject 

matter experts from industry, academia, national laboratories, and other relevant organizations. Participants 

were told their attendance would be a matter of public record, in accordance with the mandate and desire for 

transparency in the QER process, and that while notes would be taken and a summary would be published, the 

public document would not attribute comments to the speaker to allow for a more open discussion.b

Following are details about the topics, dates, and locations of the DOE technical workshops held to inform the QER: 

Resilience Metrics for Energy Transmission and Distribution Infrastructure, Session 1

April 29, 2014 – Washington, D.C. 

Measuring progress toward a more resilient energy system requires metrics that assess planning, operations, 

and policy changes. QER Task Force analysts found that differing definitions for “resilience” exist, depending 

on energy system attributes, outcomes, and time scale. Additionally, to date, resilience metrics for energy 

systems have been unable to quantify resilience benefits. Building on this theme and ongoing work by DOE’s 

Office of Electricity Delivery and Energy Reliability, the secretariat convened two workshops with more than 

140 authorities from academia, industry, and government to provide insight on resilience metrics and offer 

feedback on a framework to generate resilience metrics for infrastructures that transport, transmit, and deliver 

electric power, natural gas, and oil. 

During the initial workshop, participants explored technical research and modeling on resilience metrics, 

the applicability of existing metrics to energy infrastructure, and areas for further research. Subject matter 

experts from the American Gas Association, ConEdison, Dominion Electric, and Kinder Morgan presented 

sector-specific considerations and associated metrics. Workshop findings suggested that industry is currently 

addressing specific aspects of resilience; however, participants agreed that a comprehensive approach 

could help to drive policy and planning decisions (e.g., investment priorities) on a larger scale. Industry 

representatives asked that incorporating resilience metrics into a regulatory framework have minimal impact 

on reporting requirements.

b The names of each participant in the technical workshops, attendees at the agency’s methane roundtables, and panelists at the formal 

public stakeholder meetings can be accessed on EPSA’s website at www.energy.gov/epsa/quadrennial-energy-review-qer.
10-8 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Resilience Metrics for Energy Transmission and Distribution Infrastructure, Session 2

June 10, 2014 – Upton, New York (Brookhaven National Laboratory)

At a subsequent workshop at Brookhaven National Laboratory, Sandia National Laboratories researchers 

presented a prototype framework for developing resilience metrics for the electricity, oil, and gas sectors. 

Workshop participants expressed eagerness to put the resilience framework to use, while stressing significant 

research and development needs, such as improved quantification of human and societal consequences based 

on reduced system performance during a disruption. Feedback collected during this workshop helped to refine 

the resilience metrics framework, and it also informed the QER Task Force analysis and recommendations 

about the need for resilience metrics and tools. 

Collectively, the April 29 and June 10 workshops culminated in the development of a “Conceptual Framework 

for Developing Resilience Metrics for the Electricity, Oil, and Gas Sectors in the United States.” The framework 

provides a general resilience metric structure and procedures for analyzing, quantifying, and planning for 

resilience of energy infrastructure systems. The approach under this framework encourages a shift to energy 

resilience metrics that quantify expected consequences due to low-probability, high-consequence events; relies 

on the performance of the system rather than its attributes; and incorporates uncertainty. Suggested next 

steps include testing of the framework at utilities and developing a task force to address the refinement and 

standardization of energy resilience metrics.

Lessons Learned on Alternative Transportation Refueling Infrastructure: Implications for the QER

June 20, 2014 – Washington, D.C.

The secretariat worked with DOE’s Office of Energy Efficiency and Renewable Energy on a technical workshop 

that examined the trends and long-term policy needs relating to the alternative transportation refueling 

infrastructure program to produce inputs for the QER. The workshop was held in conjunction with an Office 

of Energy Efficiency and Renewable Energy merit review meeting to review research, development, and 

demonstration trends in the transportation sector and contributions made by program grantees. 

The goal of the meeting was to leverage the inherent synergies between DOE’s research and policy functions 

and to gather expert input. Specifically, this workshop focused on the current status of deploying alternative 

transportation refueling infrastructure, as well as on various business models for such infrastructure. The 

workshop informed analysis of alternative fuel vehicles for the first installment of the QER, and it will provide 

baseline context and data for the next installment of the QER. 

Grid Architecture

August 26 and September 23, 2014 – Washington, D.C.

The purpose of these workshops was to solicit the views of a wide variety of stakeholders to help inform the grid 

architecture work being performed by Pacific Northwest National Laboratory in support of the QER. This project 

developed a preliminary reference architecture for identifying and characterizing technical and policy issues that will 

affect the development of the future grid. The project was coordinated by EPSA with two other DOE offices: the Office 

of Energy Efficiency and Renewable Energy and the Office of Electricity Delivery and Energy Reliability.

Participants from industry, academia, national laboratories, and other interested stakeholder groups were asked 

to provide their organizations’ views of grid architecture as a system-level model, with analysis of electrical 

infrastructure, communications and control, industry and regulatory structure, energy sources and related 

sub-structures, and value accrual frameworks. The workshop informed analysis of alternative fuel TS&D 

infrastructure for the first installment of the QER, and it will provide baseline context and data for future 

installments.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-9

Estimating the Benefits and Costs of Distributed Energy Technologies

September 30 – October 1, 2014 – Washington, D.C.

As with the earlier alternative fuel infrastructure workshop, for this valuation workshop, EPSA worked with 

DOE colleagues to derive value for the QER from a previously planned technical symposium organized by 

DOE’s Grid Tech Team. The Grid Tech Team was initiated in the first term of the Obama Administration as a 

crosscutting, intraagency organization to better understand the challenges and critical issues arising from the 

complex, pervasive, and interdependent nature of the electric power system. The Grid Tech Team has worked 

to foster collaborative discussions with both public and private sector grid stakeholders, as well as to develop 

an effective network of public-private partnerships to ease the transition to a more modern grid.

The Grid Tech Team planned this workshop to be a technical discussion about distributed energy technologies, 

to support the development of grid planning tools and models, and to assist states with their regulatory 

responsibilities as they seek to integrate more distributed electricity assets. Grid Tech Team leaders emphasized 

that this was part of a multi-year discussion and—specifically—a reconnoitering of the key challenges 

regarding valuation, including what role DOE and other parts of the Federal Government should perform in 

the process going forward.

Formal Public Stakeholder Meetings

The QER Task Force’s most visible effort to engage stakeholders—and to highlight the various sectoral or 

regional differences that should be considered in a comprehensive overview of the Nation’s energy systems—

was the series of 13 public meetings held around the country from April 2014 to October 2014 (see energy.gov/

epsa/listings/past-quadrennial-energy-review-qer-meetings). The meetings provided opportunities for energy TS&D 

infrastructure stakeholders, as well as the general public, to speak directly to members of the QER Task Force 

and to have their statements and presentations become a permanent part of the QER Library for use by Task 

Force analysts and later, researchers.

Each meeting began with statements by the hosting administration representatives, along with local, state, 

and national political leaders who participated at events in their regions. The remainder of the meetings 

consisted of expert stakeholder panels; panelists made individual presentations and engaged in moderated 

group discussions on the themes of that day’s event. Each meeting concluded with an “open microphone” 

segment, during which members of the general public could make statements for the QER record and had the 

opportunity to offer prepared presentations, studies, reports, and more for review by Task Force analysts and 

inclusion in the QER Library.
10-10 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Table 10-2. List of QER Formal Public Stakeholder Meetings (with topic, location, and date)27

Topic Location Date Administration Chair(s)

Vulnerabilities (cyber, physical, 

climate, and interdependencies)

Washington, D.C. 4/11/14 Secretary of Energy Ernest Moniz

Director of the Office of Science and 

Technology Policy John Holdren

Infrastructure Constraints—

New England

Providence, RI

Hartford, CT

4/21/14 Secretary of Energy Ernest Moniz

Petroleum Product Transmission, 

Storage, and Distribution 

New Orleans, LA 5/27/14 Secretary of Energy Ernest Moniz

Deputy Secretary of Interior Michael Connor

Water-Energy Nexus San Francisco, CA 6/19/14 Director of the Office of Science and 

Technology Policy John Holdren

Deputy Secretary of Interior Michael Connor

Electricity Transmission, Storage, 

and Distribution—West

Portland, OR 7/11/14 Deputy Secretary of Energy Daniel Poneman

Natural Gas Transmission and 

Distribution 

Pittsburgh, PA 7/21/14 Secretary of Energy Ernest Moniz

Gas-Electricity Interdependence Denver, CO 7/28/14 Deputy Assistant to the President for Energy and 

Climate Change Dan Utech

Rail, Barge, and Truck 

Transportation 

Chicago, IL 8/8/14 Secretary of Energy Ernest Moniz

Secretary of Transportation Anthony Foxx

Director of the Office of Science and 

Technology Policy John Holdren

Assistant Secretary of the Army (Civil Works) Jo-Ellen 

Darcy

Infrastructure Constraints—

Bakken

Bismark, ND 8/8/14 Secretary of Energy Ernest Moniz

Secretary of Transportation Anthony Foxx

Director of the Office of Science and 

Technology Policy John Holdren

Assistant Secretary of Interior for Land and Minerals 

Management Janice Schneider

State, Local, and Tribal Issues Santa Fe, NM 8/11/14 Secretary of Energy Ernest Moniz

Secretary of Interior Sally Jewell

Infrastructure Siting Cheyenne, WY 8/21/14 Secretary of Energy Ernest Moniz

Assistant Secretary of Interior for Land and Minerals 

Management Janice Schneider

Electricity Transmission, Storage, 

and Distribution—East

Trenton, NJ 9/8/14 Secretary of Energy Ernest Moniz

Finance and Market Incentives New York, NY 10/6/14 Secretary of Energy Ernest Moniz
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-11

Federal Register notices announcing each formal public stakeholder meeting were published; these notices 

were also made available via the EPSA website at www.energy.gov/epsa/office-energy-policy-and-systems-analysis. 

DOE publicized the meetings by sending advisories to local media; using social media; and emailing state, 

local, and tribal governments, as well as representatives of energy stakeholders—both in the region of each 

meeting and in Washington, D.C. 

To allow people to participate in the meetings without traveling, all meetings (except for the April meetings in 

New England) were live streamed. However, the Hartford, Connecticut, meeting was broadcast by Connecticut 

Public TV. In the interests of transparency and open government, court reporters produced a transcript for 

each meeting, and the secretariat produced a summary of each meeting’s presentations and discussions. The 

transcripts and summaries, along with links to the live-streamed recordings and panelists’ prepared remarks 

and presentations, are available on the EPSA website at www.energy.gov/epsa/quadrennial-energy-review-qer.

Following are details about the dates, topics, locations, and foci of the formal public stakeholder meetings 

organized by the secretariat to inform the QER. 

Meeting #1: Enhancing Energy Infrastructure Resiliency and Addressing Vulnerabilities

April 11, 2014 – Congressional Visitors Center; Washington, D.C. 

Hosted by Secretary of Energy Ernest Moniz; Director of the President’s Office of Science and Technology 

Policy John Holdren; and Representative Henry Waxman (CA-33), Ranking Member on the House Energy and 

Commerce Committee. 

The QER Task Force convened its first public stakeholder meeting to examine the challenges and opportunities 

resulting from the evolving U.S. energy sector. New domestic sources of energy and the expanded use of 

renewables have improved America’s energy security and economic competitiveness and will help in achieving 

its environmental goals. However, not all of the changes across the energy marketplace are universally positive. 

As the energy sector expands and new market entrants emerge, the number and complexity of vulnerabilities 

threatening energy TS&D infrastructure increase. The QER Task Force asked stakeholder experts at this 

meeting to discuss the vulnerabilities identified by QER analysts, suggest additional topics for research and 

analysis, and offer policy prescriptions for consideration in preparation of this first QER installment. The 

vulnerabilities identified include, but are not limited to, the following: 

• Challenges to TS&D infrastructure caused by new markets, changes in energy user demographics, and 

energy usage patterns

• Aging infrastructure and workforces

• Current and anticipated capacity constraints

• Impacts of climate change

• Threat of cyber attacks and physical attacks on the infrastructures

• Potential for any vulnerability to be exacerbated by the increasing interdependencies of energy systems 

with water, telecommunications, transportation, and emergency response systems.

Additionally, stakeholder experts were asked to discuss the resilience of energy infrastructure; in particular, the 

ability to withstand the variable nature of vulnerabilities—like climate-change-driven extreme weather—and 

the concept of the changing universe of energy supply options as a vulnerability in and of itself. The QER Task 

Force sought insights about what relevant industries are doing to plan and execute strategies that address these 

vulnerabilities; how the public and private sectors could work together to responsibly develop necessary new 

infrastructure; and what will be the appropriate roles and responsibilities of Federal, state, local, and tribal 

governments in these endeavors out to 2030 and beyond.
10-12 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Meeting #2: New England Regional Infrastructure Constraints

April 21, 2014

Morning Session – Rhode Island Convention Center; Providence, Rhode Island 

Hosted by Secretary of Energy Ernest Moniz; Governor Lincoln Chafee; and U.S. Senator Jack Reed (RI).

Afternoon Session – Connecticut Department of Energy and Environmental Protection; Hartford, Connecticut 

Hosted by Secretary of Energy Ernest Moniz; Governor Dannel Malloy; Representative Elizabeth Esty (CT-5); 

Representative John Larson (CT-1); and Connecticut Department of Energy and Environmental Protection 

Commissioner Robert Klee.

The second formal public stakeholder meeting consisted of morning and afternoon sessions in separate cities 

to examine infrastructure constraints for energy TS&D in New England. New Englanders pay high prices 

for electricity, home heating oil, gasoline, and natural gas, and these prices can be volatile. For instance, the 

unusually severe winter of 2013-2014 saw extremely high natural gas prices (greater than $120 per million 

British thermal units compared to normal summer prices of around $5 per million British thermal units). 

These spikes can be attributed to strong demand, pipeline constraints, wellhead freeze-offs, limited regional 

liquefied natural gas deliveries, and a lack of storage. Similarly, the regional electricity market suffers from 

outdated regulatory constructs and business models that do not take full account of the importance of 

ensuring adequate natural gas and electric transmission.

New England governors, other political leaders, the business community, and residents in all six states are 

paying close attention to the region’s infrastructure. The QER Task Force convened this meeting to hear these 

stakeholders’ concerns, but also to hear about efforts underway to create regional solutions. In Providence, 

the Task Force heard presentations and panel discussions on two infrastructure topics: (1) needs for heat and 

power, and (2) how to ensure reliability and affordability of the region’s energy systems. In Hartford, the Task 

Force heard stakeholder experts address two infrastructure topics: (1) gas-electricity interdependence, and (2) 

current challenges and solutions. A fifth panel made up of representatives from the Governors of Connecticut, 

Maine, Massachusetts, New Hampshire, and Vermont (the State of Rhode Island had participated in the 

morning session) discussed regional approaches to infrastructure solutions.

Meeting #3: Petroleum Product Transmission and Distribution

May 27, 2014 – Louisiana State University Health Sciences Center; New Orleans, Louisiana 

Hosted by Secretary of Energy Ernest Moniz; Deputy Secretary of the Interior Mike Connor; and U.S. Senator 

Mary Landrieu (LA), Chair of the Senate Energy and Natural Resources Committee.

The third QER public meeting was convened to give the QER Task Force an appreciation for the regional and 

nationwide importance of petroleum TS&D infrastructure. Stakeholder experts were asked to discuss the 

implications of shifting energy flows from the standpoint of their particular organization or sector, as well as 

the U.S. petroleum industry, and to provide a particular focus on the onshore and offshore regions in the Gulf 

of Mexico. Additionally, panelists were asked to discuss the need for petroleum storage; interdependencies 

between various infrastructure energy systems (e.g., pipelines, rail, electricity, and telecommunications); 

workforce issues; and rapidly evolving challenges to petroleum infrastructure, particularly the degree to which 

it can be made more resilient in light of increasingly severe weather patterns.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-13

While petroleum TS&D infrastructure was the announced topic, panelists and U.S. Senator Landrieu (LA) also 

emphasized that the New Orleans area (including the region’s rail and marine infrastructure) was important 

for other industries (in particular, for the natural gas industry) and integral to the movement of other 

commodities (in particular, coal and agricultural products moving down the Mississippi to both foreign and 

domestic customers).

Meeting #4: The Water-Energy Nexus

June 19, 2014 – City Hall; San Francisco, California 

Hosted by Director of the Office of Science and Technology Policy John Holdren and Deputy Secretary of the 

Interior Mike Connor.

The fourth QER meeting examined the intrinsic linkages between water and energy. While the first installment 

of the QER focused on TS&D infrastructure, the San Francisco meeting addressed a broader set of issues that 

relate to both current and future QER topics, as well as DOE’s ongoing work on the water-energy nexus. Water 

is essential to energy production and electricity generation, and energy is required to extract, convey, and 

deliver water for these purposes, as well as to treat associated wastewater. Increasingly, the water-energy nexus 

is on the minds of policymakers and stakeholders: climate change has altered precipitation levels, temperature 

patterns, and the availability of water; population growth and migration to arid regions intensifies battles 

over water rights; and new technologies have been introduced and are shifting or increasing water and energy 

demand. Finally, governments and private sector stakeholders are trying to come to terms with the increasing 

interdependence in light of the fact that, though closely linked, energy and water systems historically have been 

developed, managed, and regulated independently at the local, state, national, and international levels. 

The QER Task Force heard from two expert panels on the increasing urgency to act on the water-energy 

nexus, as well as how state, local, tribal, and international governments can work together to integrate water 

and energy infrastructure development, management, and regulation, including identifying opportunities to 

improve efficiency, conservation, and infrastructure resilience.

In conjunction with the San Francisco meeting, DOE released an associated report, “The Water-Energy Nexus: 

Challenges and Opportunities.”28

Meeting #5: Electricity Transmission, Storage, and Distribution—West

July 11, 2014 – Lewis & Clark College; Portland, Oregon 

Hosted by Deputy Secretary of Energy Daniel Poneman.

The fifth QER public stakeholder meeting addressed electricity transmission and distribution issues from a 

Western U.S. perspective. Panelists were asked to respond to a set of framing questions. For the first panel on 

transmission, panelists delivered presentations and opined on the broad question, “Can we build and operate 

the appropriate amount of TS&D for future needs?” Panelists discussed how to maintain reliability with a 

changing generation and end-use resource mix; the planning, cost-allocation, and state and Federal siting 

processes needed to build new transmission; and when to build new versus upgrading existing transmission. 

For the second panel on electricity distribution, experts were asked to react to the question, “How do we cope 

with new distribution challenges and opportunities?” The second panel considered a broad array of emerging 

technologies on the distribution grid, as well as greater customer engagement and other factors providing both 

technical and policy challenges to the delivery of energy services to customers.

Portland’s final panel focused on whether electricity storage was finally coming of age. As part of this 

discussion, panelists were asked whether changing needs and improving technologies might finally make widescale storage a reality for the transmission and distribution grid.
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Chapter X: Analytical and Stakeholder Process

Meeting #6: Natural Gas: Transmission, Storage, and Distribution

July 21, 2014 – Carnegie Mellon University; Pittsburgh, Pennsylvania 

Hosted by Secretary of Energy Ernest Moniz and Representative Tim Murphy (PA-18), Chair of the Investigations 

and Oversight Subcommittee of the House Energy and Commerce Committee.

The sixth QER stakeholder meeting focused on natural gas infrastructure. While national in scope, the 

Pittsburgh meeting featured a number of expert speakers who addressed natural gas development in the 

Marcellus and nearby Utica shale formations. The shale gas boom has created questions about how our 

existing infrastructure is adapting to serve a newfound abundance in supply, as well as the need for additional 

infrastructure—both to maximize resource utilization and to create localized and sustainable economic 

development for newly producing regions.

While the American economy continues to adapt to the abundance of accessible shale and the resulting low 

natural gas prices, decreased carbon emissions, lower imports, and enhanced industrial competitiveness, the 

QER Task Force sought stakeholder insights on the effects of the shale revolution that are already being seen, 

what we as a Nation should focus on in terms of infrastructure and policy development to harness these 

resources for the regional and national economies, and how to balance the challenges and opportunities arising 

from the shale boom.

Meeting #7: Gas-Electricity Interdependencies

July 28, 2014 – University of Denver; Denver, Colorado 

Hosted by Deputy Assistant to the President for Energy and Climate Change Dan Utech and Colorado Public 

Utilities Commission Commissioner Pamela Patton.

The seventh formal QER public stakeholder meeting was convened to demonstrate how the increasing demand 

for natural gas (in the power sector and in the economy) and the increased share of the electricity generation 

mix represented by natural gas have heightened the interdependence between the electricity and natural gas 

transmission systems. The meeting also highlighted how the importance of careful and coordinated planning 

and development of infrastructure for both systems is increasingly imperative. While the electricity and natural 

gas pipeline industries have operated together for decades, the two systems’ growing interdependence has 

created more frequent reliability challenges in recent years. To help craft policy recommendations to avoid 

a future of uncertain and periodically curtailed electricity services—especially during periods of extreme 

temperatures—or other gas disruptions that could adversely affect human health or the economy, the QER 

Task Force asked stakeholder experts to address the following issues in their presentations and moderated 

group discussions: (1) industry and government efforts to improve coordination between the gas and 

electricity sectors, and (2) how the gas and electricity sectors can reconcile differing planning, financing, and 

construction processes to improve infrastructure development, operation, and end use, and generally reduce 

the risks of increased interdependence out to 2030 and beyond.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-15

Meeting #8: Rail, Barge, and Truck Transportation

August 8, 2014 – University of Illinois at Chicago; Chicago, Illinois 

Hosted by Secretary of Energy Ernest Moniz; Secretary of Transportation Anthony Foxx; Director of the Office of 

Science and Technology Policy John Holdren; Assistant Secretary of the Army (Civil Works) Jo-Ellen Darcy; and 

Mayor Rahm Emanuel.

The eighth public meeting considered the effects of the last decade’s energy boom on our Nation’s shared 

transportation infrastructure—how the Nation’s rail network, highways, and the various vessels and 

infrastructures that make up our inland waterway, Great Lakes, and coastal maritime trade have adapted 

to increased commerce in crude oil and refined petroleum products, coal, ethanol, and other biobased and 

alternative fuels and natural gas liquids. The Chicago meeting sought to shed light on how the transformation 

of our domestic energy sector has created new issues for the “rail,” “truck,” and “barge” infrastructures; how it 

has exacerbated old problems; and how moving new and more energy products in a safe and efficient manner 

on these shared infrastructures has challenged policymakers and infrastructure planners.

The QER Task Force sought to gain a better understanding of the complexities of the interrelated systems, 

as well as the opportunities and challenges inherent in changes—some planned, some not—coming to these 

infrastructures. Industries across multiple sectors are adjusting to new or vastly increased movements of 

energy products by multiple modes, and the goal of the Chicago meeting was to provide QER Task Force 

analysts and agency leadership with an opportunity to hear how things are functioning and how they might be 

improved.

Meeting #9: Infrastructure Constraints—Bakken

August 8, 2014 – Bismarck State College; Bismarck, North Dakota

Hosted by Secretary of Energy Ernest Moniz; Secretary of Transportation Anthony Foxx; Director of the Office 

of Science and Technology Policy John Holdren; Assistant Secretary of the Interior for Land and Minerals 

Management Janice Schneider; Governor Jack Dalrymple; U.S. Senator John Hoeven (ND); U.S. Senator Heidi 

Heitkamp (ND); and Representative Kevin Cramer (ND-AL). 

The ninth public meeting (and the second on August 8) examined the dramatic changes to the U.S. energy 

profile that resulted from the development of the fossil fuel resources of the Bakken formation, as well as the 

infrastructure constraints created or exacerbated by the Bakken boom. Due to Administration principals flying 

into North Dakota for this meeting from a morning QER meeting in Chicago, the format of the Bismarck 

meeting was slightly different than the rest in the series. The meeting opened with a panel on workforce 

development issues, which were introduced by U.S. Senator Heitkamp (ND). The QER Task Force heard from 

representatives of state and tribal colleges, state and local government officials, and other experts on how to 

address the shortage of workers and housing in the region.

After the workforce panel, state, Congressional, and Administration officials made remarks and took questions 

from the audience. The next two panels focused on Bakken infrastructure constraints and solutions and sought 

stakeholder input on changing infrastructure needs. During the meeting, panelists discussed shipping oil 

by rail, developing oil and gas pipelines, building electricity transmission for wind energy and conventional 

energy, reducing gas flaring, managing infrastructure siting and permitting issues, and extending the Highway 

Trust Fund.
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Chapter X: Analytical and Stakeholder Process

Meeting #10: State, Local, and Tribal Issues

August 11, 2014 – New Mexico State Personnel Office; Santa Fe, New Mexico 

Hosted by Secretary of Energy Ernest Moniz; Secretary of the Interior Sally Jewell; and U.S. Senator Martin 

Heinrich (NM).

The 10th formal QER public stakeholder meeting addressed the challenges of the changing energy marketplace 

for the state, local, and tribal authorities responsible for regulating energy infrastructure and maintaining 

the appropriate balance among pursuing economic goals; addressing system vulnerabilities; and maintaining 

a secure, affordable, reliable, and environmentally responsible energy system. The Santa Fe meeting sought 

insights from state, local, and tribal governments on a variety of topics, including the multi-jurisdictional 

nature of many of the regulatory and other responsibilities regarding energy TS&D infrastructure, particularly 

in the electricity and oil and gas sectors. 

During this meeting, state policymakers, public utility commissioners, agency heads, tribal leaders, and city 

and county officials described new jurisdictional, regulatory, and coordination models that could enhance the 

Nation’s energy infrastructure and allow them to adapt to changing needs. Importantly, they also explored 

the broader policy implications of this transition, including infrastructure’s ability to withstand increasing 

threats; developing the workforce and training needed to build, operate, and upgrade infrastructure; designing 

affordable rate structures to pay for infrastructure; and addressing environmental quality concerns.

Meeting #11: Infrastructure Siting

August 21, 2014 – Little America Hotel; Cheyenne, Wyoming 

Hosted by Secretary of Energy Ernest Moniz; Assistant Secretary of Interior for Land and Minerals Management 

Janice Schneider; and Governor Matt Mead (WY).

The 11th formal QER public stakeholder meeting focused on infrastructure siting. State government officials, 

infrastructure developers, representatives of utilities and the oil and gas industry, community leaders, 

environmentalists, and other stakeholders were given the opportunity to inform the QER Task Force on ways 

to improve the planning and siting processes for building new energy TS&D infrastructure. Three expert 

panels (on electricity transmission, oil and natural gas infrastructure, and data needs) highlighted key lessons 

learned in siting and planning new TS&D infrastructure that can be applied to national policy determinations, 

or exposed problems that might be mitigated by research and development initiatives.

As with each of the other public stakeholder meetings, the general public was provided with an opportunity to 

make comments at the conclusion of the expert panels. The Cheyenne meeting was the only one in the series 

during which no public comments were offered.

Meeting #12: Electricity Transmission and Distribution—East

September 8, 2014 – New Jersey Institute of Technology; Newark, New Jersey 

Hosted by Secretary of Energy Ernest Moniz.

The 12th public stakeholder meeting sought expert insights on the same two topics covered at the July 11 

Portland, Oregon, meeting (electricity transmission and electricity distribution), but from an eastern U.S. 

perspective. The Newark meeting also featured a panel on business models and regulation of regulated electric 

utilities. Stakeholder experts were asked to respond to the same questions asked in Portland: (1) Can we build 

and operate the appropriate amount for future needs?; and (2) How do we cope with new challenges and 

opportunities in distribution? The first panel emphasized reliability amid changing conditions, siting and other 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-17

planning challenges, cost allocation, changing load growth, resource diversity, and cost-benefit analyses of new 

construction versus existing asset optimization. The second panel focused on technical and policy options 

created by emerging technologies.

The last panel on business models and regulation for regulated electric utilities had, as its context, the following 

trends: declining sales or low load growth for many utilities; increasing self-generation by some customers; 

and, despite this phenomenon, increasing spending to maintain and continue updating electricity transmission 

and distribution. Taken together, these factors had some panelists calling into question whether current 

business models and regulation for regulated electric utilities are still appropriate or if they need to evolve.

Meeting #13: Energy Infrastructure Finance

October 6, 2014 – New York University; New York, New York 

Hosted by Secretary of Energy Ernest Moniz and Representative Carolyn Maloney (NY-12), Ranking House 

Member on the Joint Economic Committee and Ranking Member on the Subcommittee on Capital Markets and 

Government Sponsored Enterprises of the House Financial Services Committee.

The last public meeting for this installment of the QER focused broadly on the financing of energy TS&D 

infrastructure. The dramatic transformation of the U.S. energy sector has produced a variety of benefits, but 

also has resulted in a number of challenges and uncertainties. These uncertainties include how the financial 

industry should react when traditional signals from the energy sector—historical flow patterns, as well as 

assumptions of supply scarcity and demand growth—have been upended by an unprecedented period of 

technological advancement and adaptation. With the energy landscape seeming to change before the eyes 

of investors, and with the risk calculations traditionally used by the banking industry not necessarily being 

relevant any longer, the 13th QER public meeting examined how players in infrastructure finance were meeting 

the challenge of these new realities to support the development of new and expanded pipeline networks, 

transmission and distribution assets, storage facilities, and other infrastructure.

Financial experts in three sectors (capital acquisition, electricity, and oil and natural gas) explored the 

following: how to minimize the cost of capital/maximize the availability of capital in a new energy economy; 

the potential for stranded investments or underinvestment in assets in fast-moving market conditions; 

balancing regulatory costs with the need for regulation as an incentive for desired infrastructure development; 

how to improve cost-benefit analyses and broader dissemination of best practices; and how to evaluate the 

financial risk of new, unproven technologies and processes.

Methane Stakeholder Roundtables 

Secretary of Energy Ernest Moniz hosted five stakeholder roundtables with government, industry, 

environmental, labor, and academic leaders involved in the natural gas sector to identify and highlight best 

practices, technology solutions, and policies for securing reductions in methane emissions from its midstream 

and downstream segments. The roundtable sessions allowed experts to provide input into the Administration’s 

Strategy to Reduce Methane Emissions;c discussions and information shared by stakeholders also proved very 

informative for the QER. 

The primary goal of these roundtables was to catalyze action to reduce methane emissions from distribution, 

transmission, storage, and processing segments of natural gas systems. Roundtable participants were invited 

based on their expertise in methane emissions abatement.

c See: The White House Blog. “A Strategy to Cut Methane Emissions.” March 28, 2014. www.whitehouse.gov/blog/2014/03/28/

strategy-cut-methane-emissions. 
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Chapter X: Analytical and Stakeholder Process

Additional goals of the methane roundtables included the following: (1) promoting a common understanding 

of the scale of methane emissions from natural gas systems and related abatement opportunities, (2) catalyzing 

greater action and engagement by policymakers at all levels of government, and (3) encouraging visible 

leadership and demonstrated commitments to a common vision that embraces the need to reduce methane 

emissions from natural gas systems. After review and consideration of stakeholder input, Secretary Moniz 

joined stakeholder participants at the White House in announcing several new initiatives to help advance the 

goals of the Administration’s broader Strategy to Reduce Methane Emissions.

Following are details about the dates, topics, locations, and foci of the methane stakeholder roundtables held by 

DOE to inform the QER. 

Kickoff Roundtable 

March 19, 2014 – DOE Headquarters; Washington, D.C.

The initial meeting of the methane stakeholder roundtable series included participants from industry, state 

government, academia, nongovernmental organizations, and labor organizations. Participants expressed a 

common interest in repairing natural gas infrastructure to improve safety, create jobs, and reduce greenhouse 

gas emissions. There are significant remaining opportunities to reduce methane emissions from all segments 

of the natural gas supply chain; however, industry representatives noted that their companies have been 

focused on repairing leaks, replacing leak-prone pipelines, and conducting preventative maintenance for 

many years. The primary barrier to natural gas infrastructure modernization is getting cost recovery for the 

capital-intensive investments. While most states have trackers or surcharges on consumer bills to facilitate cost 

recovery for pipeline replacement efforts by local distribution companies, there is no equivalent mechanism 

for interstate pipeline networks that are regulated by the Federal Energy Regulatory Commission. Stakeholders 

suggested that there are still opportunities for DOE to help facilitate industry efforts (e.g., by supporting the 

development of new and lower-cost technologies to enable the broader use of leak detection and repair and by 

coordinating research efforts across government agencies and with stakeholders).

Participants shared many examples of successful infrastructure modernization programs and best practices. 

For example, Arkansas recently completed its statewide replacement of cast iron pipe. Arkansas policy has 

succeeded in part because companies can immediately recover costs with a line item on consumer bills, 

meaning that utilities do not have to wait for a new rate case. Georgia, Ohio, and Oklahoma are also making 

big strides, in part by enabling immediate cost recovery for infrastructure investments.

Labor Unions and the Manufacturing Sector

April 24, 2014 – DOE Headquarters; Washington, D.C.

Participants at the second methane stakeholder roundtable reiterated the shared interest in infrastructure 

modernization to increase the reliability of the natural gas system, create jobs for skilled workers, and reduce 

greenhouse gas emissions. Often, local distribution companies are willing to make upgrades if funding is 

available. Securing funding for infrastructure modernization can be challenging, but some state policies—such 

as the Strategic Infrastructure Development and Enhancement Program in Maryland—have made it easier for 

local distribution companies to acquire funding for infrastructure projects. However, even if funding is made 

available, a project-by-project approach to regulatory approval can still be a barrier to achieving widespread 

improvements and coordination in infrastructure repair and modernization.

A comprehensive strategy for infrastructure modernization can create jobs for skilled workers. Skilled union 

workers, in particular, could help companies repair pipelines to high-quality standards, avoiding repeated 

short-term repairs that result from poor construction. The current workforce with the skills to replace 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-19

pipelines is nearing retirement, and unions can help provide worker training programs to prepare younger 

workers for these jobs. Job creation and training should be considered part of the investment in the asset base 

of natural gas infrastructure.

Academia, Nongovernmental Organizations, and Environmental Groups

May 20, 2014 – DOE Headquarters; Washington, D.C.

During the third methane roundtable session, participants discussed the research needed to improve methane 

sensing, reform state and Federal policies, and remove barriers to investments in infrastructure that is safer and 

lower emitting. One of the resounding themes of the discussion was the need for a more comprehensive system 

for calculating emissions and transparently providing the necessary data in an improved inventory. Although 

data for specific systems and locations has been calculated, there is not a complete picture of emissions from 

TS&D of the supply chain. There is a shared belief that sensor technology should be improved to accurately 

collect emissions data and that it would potentially require more funding for such improvements.

In addition, participants deliberated over which incentives need to be implemented to reduce methane 

emissions. Environmental groups expressed strong support for the Environmental Protection Agency taking 

steps to propose and finalize methane emissions performance standards for new and existing facilities across 

the natural gas supply chain. It was suggested that the costs of investments in infrastructure modernization 

should be borne more by shareholders instead of having the consumer pay out-of-pocket for all of the 

necessary repairs. Another theme was to amend state and Federal economic regulatory frameworks to reduce 

the economic disincentives to become safer and possibly encourage more investment in infrastructure. Finally, 

participants explored various ways for Federal and state economic regulators to treat lost- and unaccountedfor gas, which is a catch-all accounting mechanism used to reflect meter errors, theft, leakage, and other factors. 

Others pointed out that lost- and unaccounted-for gas is a poor metric for leakage. Participants suggested 

research and development to lower the cost of more accurate meters and limit the amount of lost- and 

unaccounted-for gas that companies are allowed to recover through rates (as some states have adopted).

Natural Gas Companies 

June 11, 2014 – DOE Headquarters; Washington, D.C.

During the fourth methane roundtable session, participants discussed progress that the natural gas industry 

has made to reduce methane emissions and remaining barriers to emissions reductions. Companies have 

taken innovative approaches to reduce methane emissions and further their pipeline safety efforts, including 

the development of partnerships with government agencies, academic institutions, and industry to reduce 

emissions through programs such as the Environmental Protection Agency’s Natural Gas STAR program 

and private sector efforts like the Downstream Initiative and the OneFuture Coalition. Some companies have 

undertaken in-house initiatives to reduce emissions using self-assessment of performance metrics. However, 

participants emphasized several barriers to accelerating investment in infrastructure. More cooperation within 

the natural gas industry and stronger relationships between state regulators and operators could help speed 

infrastructure modernization. Greater coordination between government agencies could allow for natural gas 

infrastructure improvements in conjunction with other public works projects (i.e., in conjunction with water 

and telecommunications infrastructure upgrades). Participants suggested implementing public education 

programs and sharing best practices between companies and regulators. 

Participants also voiced concern over the lack of funding for researching and developing technologies that 

could facilitate infrastructure modernization. These technologies include less expensive and more accurate 

leak-detection equipment, innovative methods or materials that could reduce the cost of pipeline replacement, 

and data collection systems to monitor the entire natural gas supply chain.
10-20 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Capstone Roundtable 

July 29, 2014 – The White House; Washington, D.C. 

The capstone roundtable included industry, labor, state regulators, and environmental and consumer groups 

that have been actively engaged in a range of efforts to modernize natural gas infrastructure and reduce 

leakage from transmission and distribution segments of natural gas systems. The focus of the roundtables 

was on reducing emissions from natural gas transmission and distribution systems. This meeting was the 

culmination of in-depth discussions with industry, unions, consumer and environmental groups, state 

regulators, and academics at the four previous roundtables. This series provided the opportunity for experts 

to provide input into the Administration’s strategy. This complements efforts underway at the Environmental 

Protection Agency and served as one means to inform the interagency methane strategy and QER. 

At this meeting, Secretary Moniz announced a number of actions that DOE will take to address methane 

emissions from natural gas systems. Participating stakeholders also announced several new initiatives, 

including significant new investments in infrastructure. While natural gas companies have made significant 

progress in reducing methane emissions, many expressed strong commitments to play leadership roles and do 

more to modernize infrastructure to help realize the safety, economic, environmental, and health benefits that 

natural gas provides to customers. A group of five labor unions announced an expansion of apprenticeship 

and training programs, while the Interstate Natural Gas Association of America committed to developing 

guidelines for directed inspection and maintenance at natural gas transmission facilities. A more detailed 

description of actions can be found on DOE’s website at www.energy.gov/articles/factsheet-initiative-help-modernizenatural-gas-transmission-and-distribution. 

QER Interagency Engagement

In the QER Presidential Memorandum, the President established the QER Interagency Task Force, which is 

co-chaired by the Director of the Office of Science and Technology Policy and the Director of the Domestic 

Policy Council and more than 20 executive departments and agenciesd that play key roles in developing and 

implementing policies governing energy resources and consumption, as well as associated environmental 

impacts. The President directed the Task Force to develop a comprehensive and integrated review of 

energy policy resulting from interagency dialogue and active engagement of external stakeholders, as well 

as offer recommendations on what additional actions it believes would be appropriate. As set forth above, 

the final QER was developed by the Task Force in response to the President’s direction. The findings and 

recommendations are based on Task Force deliberations, meetings with staff-level agency representatives and 

experts, and information provided to the secretariat and Task Force members by external stakeholders. 

Since issuance of the Presidential Memorandum, the White House (supported by DOE, serving as executive 

secretariat of the Task Force) convened regular meetings of the Task Force and worked closely with the 

agencies’ leadership and staff on the QER. Member agencies have collaborated with the Task Force to develop 

the QER by providing information on topics within their statutory and regulatory jurisdiction, or areas of 

particular expertise related to energy infrastructure TS&D. Agencies have delivered studies, data, and other 

d The members of the Task Force include: (1) the Department of State; (2) the Department of the Treasury; (3) the Department 

of Defense; (4) the Department of the Interior; (5) the Department of Agriculture; (6) the Department of Commerce; (7) the 

Department of Labor; (8) the Department of Health and Human Services; (9) the Department of Housing and Urban Development; 

(10) the Department of Transportation; (11) the Department of Energy; (12) the Department of Veterans Affairs; (13) the 

Department of Homeland Security; (14) the Office of Management and Budget; (15) the National Economic Council; (16) the 

National Security Staff; (17) the Council on Environmental Quality; (18) the Council of Economic Advisers; (19) the Environmental 

Protection Agency; (20) the Small Business Administration; (21) the Army Corps of Engineers; (22) the National Science 

Foundation; and (23) such agencies and offices as the President may designate.
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-21

information to the Task Force for consideration in policy analysis and modeling; reviewed analysis and 

findings; leveraged the work of other relevant Administration initiatives;e and, led by the Office of Science and 

Technology Policy and Domestic Policy Council, collaboratively developed policy recommendations. 

Task Force members also partnered with the secretariat on a series of 13 formal public stakeholder meetings, 

scheduled at venues around the country from April 2014 to October 2014, with themes of a regional, sectorspecific, or stakeholder-group-specific nature. At each of the meetings, Administration representatives, 

including Cabinet secretaries, senior White House personnel, and other senior officials, often joined by 

Members of Congress, governors, or mayors, opened the events and set the focus for the expert panels that 

followed.

e The Task Force leveraged the work of related initiatives, including, among others, the Interagency Climate Change Adaptation Task 

Force, the Task Force on Climate Preparedness and Resilience, the Build America Infrastructure Initiative Working Group, the 

Interagency Methane Strategy, the Federal Interagency Floodplain Management Task Force, the Hurricane Sandy Building Task 

Force, the Arctic Council, the Mitigation Framework Leadership Group, the Committee on the Marine Transportation System, the 

Interagency Steering Committee on Federal Infrastructure Permitting and Review Process Improvement, the Rapid Response Team 

for Transmission, and the Unified Federal Environmental and Historic Preservation Review.
10-22 QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 

Chapter X: Analytical and Stakeholder Process

Endnotes

1. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.

2. Quadrennial Energy Review Analysis: RAND Corporation. “Scenario Development for the 2015 Quadrennial Energy 

Review.” 2015 (forthcoming at http://energy.gov/epsa/qer-document-library).

3. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.

4. Quadrennial Energy Review Analysis: INTEK Inc. “United States Fuel Resiliency: US Fuels Supply Infrastructure (Vol 

1–3).” September 2014. http://energy.gov/epsa/qer-document-library.

5. Quadrennial Energy Review Analysis: Los Alamos National Laboratory, Sandia National Laboratories, Argonne 

National Laboratory. “Synthesis of Impacts/Disruptive Events on TS&D Infrastructure (Vol 1–3: Electricity, Liquid 

Fuels, Natural Gas).” 2014 (forthcoming at http://energy.gov/epsa/qer-document-library).

6. Quadrennial Energy Review Analysis: Willis, H.H. and K. Loa. “Measuring the Resilience of Energy Distribution 

Systems.” RAND Corporation. PR-1293-DOE. July 2014. http://energy.gov/epsa/qer-document-library.

7. Quadrennial Energy Review Analysis: Watson, J.-P. et al. “Conceptual Framework for Developing Resilience Metrics 

for the Electricity, Oil, and Gas Sectors in the United States.” Sandia National Laboratory. 2014. http://energy.gov/epsa/

qer-document-library. 

8. Quadrennial Energy Review Analysis: Tenney, C. and L. Pierpoint. “Simulation and Analysis of North American 

Natural Gas Supply and Delivery During a Winter High-Demand Event with Loss of Marcellus Production.” Sandia 

National Laboratories and Department of Energy, Office of Energy Policy and Systems Analysis. 2015 (forthcoming at 

http://energy.gov/epsa/qer-document-library).

9. Quadrennial Energy Review Analysis: BENTEK Energy. “The Future of U.S. Natural Gas: Supply, Demand, and 

Infrastructure Developments.” 2014 (forthcoming at http://energy.gov/epsa/qer-document-library). 

10. Quadrennial Energy Review Analysis: The Brattle Group. “Electricity Baseline Report for the US Power System.” 

Prepared for the Pacific Northwest National Laboratory. 2015 (forthcoming at http://energy.gov/epsa/qer-documentlibrary).

11. Quadrennial Energy Review Analysis: Taft, J.D. and A. Becker-Dippman. “Grid Architecture.” Pacific Northwest 

National Laboratory. PNNL-24044. January 2015 http://energy.gov/epsa/qer-document-library. 

12. Quadrennial Energy Review Analysis: Cochran, J. et al. “Grid Integration and the Carrying Capacity of the U.S. Grid 

to Incorporate Variable Renewable Energy.” National Renewable Energy Laboratory. March 2015 (forthcoming at 

http://energy.gov/epsa/qer-document-library). 

13. Quadrennial Energy Review Analysis: Jackson, R. et. al. “Opportunities for Energy Efficiency Improvements in the 

U.S. Electricity Transmission and Distribution System.” Oak Ridge National Laboratory, Pacific Northwest National 

Laboratory, Savannah River National Laboratory, Lawrence Berkeley National Laboratory. March 2015 (forthcoming 

at http://energy.gov/epsa/qer-document-library).

14. Quadrennial Energy Review Analysis: Pacific Northwest National Laboratory. “The Emerging Interdependence of the 

Electric Power Grid & Information and Communication Technology.” 2015 (forthcoming at http://energy.gov/epsa/

qer-document-library).

15. Quadrennial Energy Review Analysis: Hadley, S.W. and A.H. Sanstad. “Impacts of Demand-Side Resources on 

Electric Transmission Planning.” Oak Ridge National Laboratory and Lawrence Berkeley National Laboratory. 

January 2015 http://energy.gov/epsa/qer-document-library. 

16. Quadrennial Energy Review Analysis: Department of Energy, Office of Energy Policy and Systems Analysis. “Natural 

Gas Infrastructure Implications of Increased Demand from the Electric Sector.” February 2015. http://energy.gov/epsa/

qer-document-library. 
QER Report: Energy Transmission, Storage, and Distribution Infrastructure | April 2015 10-23

17. Quadrennial Energy Review Analysis: Leiby, P. et al. “Results of Drawdown Capability Benefits, Study for DOE/EPSA.” 

Oak Ridge National Laboratory. 2015 (forthcoming at http://energy.gov/epsa/qer-document-library).

18. Quadrennial Energy Review Analysis: RAND Corporation. “Scenario Development for the 2015 Quadrennial Energy 

Review.” 2015 (forthcoming at http://energy.gov/epsa/qer-document-library).

19. Quadrennial Energy Review Analysis: Jensen, J. “LNG Analysis Summary: A Different Way of Looking at the Future 

of World LNG Trade.” Jensen Associates. 2014. http://energy.gov/epsa/qer-document-library.

20. Quadrennial Energy Review Analysis: Mintz, M., C. Saricks and A. Vyas. “Coal-by-Rail Business-as-Usual Reference 

Case.” Argonne National Laboratory. February 2015. http://energy.gov/epsa/qer-document-library.

21. Quadrennial Energy Review Analysis: Paranhos, E. et al. “Controlling Methane Emissions in the Natural Gas Sector 

– A Review of Federal & State Regulatory Frameworks Governing Production, Processing, Transportation, and 

Distribution.” Joint Institute for Strategic Energy Analysis. NREL/TP-6A50-63416. April 2015. http://energy.gov/epsa/

qer-document-library. 

22. Quadrennial Energy Review Analysis: Warner, E. et al. “Potential Cost-Effective Opportunities for Methane Emissions 

Abatement.” Joint Institute for Strategic Energy Analysis and Department of Energy, Office of Energy Policy and 

Systems Analysis. NREL/TP-6A50-62818. April 2015. http://energy.gov/epsa/qer-document-library.

23. Quadrennial Energy Review Analysis: Greenblatt, J. “Opportunities for Efficiency Improvements in the U.S. Natural 

Gas Transmission and Distribution System.” Lawrence Berkeley National Laboratory. 2015. http://energy.gov/epsa/qerdocument-library.

24. Quadrennial Energy Review: Keyser, D. “Energy-Related Employment in 2013: Methodology, Estimates, and 

Comparison to Other Recent Studies.” National Renewable Energy Laboratory. 2015 (forthcoming at http://energy.

gov/epsa/qer-document-library).

25. Quadrennial Energy Review Analysis: Keyser, D., E. Warner and C. Curley. “Quantification of the Potential Gross 

Economic Impacts of Five Methane Reduction Scenarios.” Joint Institute for Strategic Energy Analysis. NREL/TP6A50-63801. April 2015. http://energy.gov/epsa/qer-document-library.

26. The White House. “Presidential Memorandum – Establishing a Quadrennial Energy Review.” January 9, 2014. https://

www.whitehouse.gov/the-press-office/2014/01/09/presidential-memorandum-establishing-quadrennial-energy-review. 

Accessed January 16, 2015.

27. Department of Energy, Office of Energy Policy and Systems Analysis. 2015.

28. Department of Energy. “The Water-Energy Nexus: Challenges and Opportunities.” June 2014. http://www.energy.gov/

sites/prod/files/2014/06/f16/Water%20Energy%20Nexus%20Report%20June%202014.pdf. Accessed January 16, 2015.
LIST OF ACRONYMS AND UNITS

APE – Area of Potential Effect

ASSETS – Actions to Support Shared Energy 

Transport Systems

Bcf/d – billion cubic feet per day

BLM – Bureau of Land Management

BLS – Bureau of Labor Statistics

CCRIF – Caribbean Catastrophe Risk Insurance 

Facility

CEM – Clean Energy Ministerial

CESI – Caribbean Energy Security Initiative

CMAQ – Congestion Management and Air Quality

CO2 – carbon dioxide

CO2

-EOR – carbon dioxide enhanced oil recovery

DHS – Department of Homeland Security

DOE – Department of Energy

DOT – Department of Transportation

DRECP – Desert Renewable Energy Conservation 

Plan

EIA – Energy Information Administration

EPA – Environmental Protection Agency

EPCA – Energy Policy and Conservation Act 

EPSA – Office of Energy Policy and Systems Analysis

ERCOT – Electric Reliability Council of Texas

FERC – Federal Energy Regulatory Commission

FY – Fiscal Year

GHG – greenhouse gas

GHGI – Greenhouse Gas Inventory

GIS – geographic information system

GROW AMERICA Act – Generating Renewal, 

Opportunity, and Work with Accelerated Mobility, 

Efficiency, and Rebuilding of Infrastructure and 

Communities throughout America Act

GWP – Global Warming Potential

IEEE – Institute of Electrical and Electronics 

Engineers

kV - kilovolt

LNG – liquefied natural gas

LPTs – large power transformers

Million bbl/d – million barrels per day

Mm/yr – millimeters per year

MOU – memorandum of understanding

MTS – Marine Transportation System

MW – megawatt

NEHHOR – Northeast Home Heating Oil Reserve

NEPA – National Environmental Policy Act

NGL – natural gas liquids

NOAA – National Oceanic and Atmospheric 

Administration

PADD – Petroleum Administration for Defense 

District

PEV – plug-in electric vehicle

PHMSA – Pipeline and Hazardous Materials Safety 

Administration

PM2.5 – fine particulate matter

PV – photovoltaic

QER – Quadrennial Energy Review

QTR – Quadrennial Technology Review

R&D – research and development

RDD&D – research, development, demonstration, 

and deployment

RPPRs– regional petroleum product reserves

SPR – Strategic Petroleum Reserve

STB – Surface Transportation Board

TIGER – Transportation Investment Generating 

Economic Recovery

TS&D – transmission, storage, and distribution

USACE – Army Corps of Engineers

USFS – Forest Service

VOCs – volatile organic compounds