What is the key lesson from the US energy market?

The main lesson is that while policy is essential, frequent or abrupt policy changes create uncertainty that disrupts long‑term energy investment and system stability.

Why is durable energy policy important?

Energy infrastructure investments span decades, so durable, bipartisan policy frameworks help reduce risk and provide certainty for investors, operators and governments.

How does the US influence global energy security?

As a major producer and exporter of oil, gas and LNG, the US plays a central role in global energy supply, making its policy decisions consequential for international markets.

What can other countries learn about energy system complexity?

Countries should recognize complex jurisdictional structures, coordinate across regions and use digital tools to plan, simulate and manage energy systems more effectively.

The big lesson countries can take from the US energy market: policy is important, but volatile policy swings have a cost

Chad Klekar

Mar 25, 2026

The USA plays a key role in the global energy system. It produces more oil and gas than any other nation and is the second-largest producer of electricity in the world.

The country is also a major consumer of energy and, even with high domestic demand, has been a net exporter of energy since 2019. But in recent years, major policy shifts have brought abrupt changes to its energy infrastructure investments.

That’s why my colleague [Chad Klekar/Dieter Schulz] and I decided to write this blog on what other countries can learn from the US energy market. While the blog covers four areas, two key lessons run through them all:

Robust policy making relies on bipartisan efforts.
Energy security creates market and operational stability.

Both lessons mitigate the risk of administrations picking energy winners and losers.

Here’s our take on the four areas.

Durable policy puts long-term certainty before short-term agendas

Two major laws have recently reshaped the energy landscape in the USA: the 2022 Inflation Reduction Act (IRA) and the 2025 One Big Beautiful Bill (OBBB).

By challenging the tax incentives and funding programs created to accelerate the energy transition, the OBBB marked a significant shift in direction from the IRA. But in a sector that works to 30-50-year investment cycles, such a rapid change may change the economics of existing projects and disrupt long-term planning. It may even shift the balance between supply and demand.

In other words, policy is important, but volatile policy creates an uncertainty cost. And trying to minimize that volatility is as important as getting the fundamentals of the energy market right.

What other countries can do

Recognize the time horizons of energy investments by building a bipartisan policy framework that gives long-term certainty to governments, investors and developers. This should arise from effective civil debate, include appropriate checks and balances, and outlive the policy agendas of administrations.
Create or make use of organizations like the USA’s Bipartisan Policy Center (BPC) to help develop and sustain such a framework.
Evaluate project reliance on government incentives and plan for what happens if those incentives change. For example, if green subsidies shrink, it may be more cost-effective to extend the life of existing coal-fired plants than to build new infrastructure for renewables. (That’s only one of many potential trade-offs, or realities to consider, which extend far beyond financials.)

A resilient supply chain makes the global energy system more stable

The USA is the world’s largest producer of liquified natural gas (LNG) and a key exporter to Europe, Asia and Africa.

In 2024, the Biden administration paused approvals of new applications for LNG exports from countries without a free trade agreement – a decision the Trump administration reversed in 2025. This pause showed how sudden policy shifts can disrupt projects across all stages of planning and development. The project delays that ensue are consequential to operating companies, but they can also threaten the energy security of countries reliant on LNG imports from the USA.

Nonetheless, net exports grew by more than 20% between 2024 and 2025, and increased imports to Europe and Africa are making up for falls in parts of Asia. Infrastructure is also being built that will almost double LNG production between 2024 and 2028 – strengthening the USA’s position as the world’s main supplier of reliable, affordable energy.

Overall, long-term LNG demand appears strong, and US operators will keep focusing on production efficiency while commodity prices are low.

What other countries can do

The LNG pause reinforces the case for using durable policy frameworks to mitigate disruption.

On top of that, countries can:

Recognize that global energy security is highly dependent on global commodity trading.
Minimize disruption costs through a resilient supply chain – whether that disruption is from policy changes, geopolitical tensions or natural disasters.
Invest in trading intelligence systems that allow gas supply to be reallocated quickly when shocks happen – adding security to the whole value chain.

Coordinated thinking can combat a complex, jurisdictional energy system

The USA may be one country, but many authorities have a role within its energy system, including the Federal Energy Regulatory Commission (FERC). Beneath this oversight lies a complex network of regional, state, local and indigenous agencies, operators and regulators.

The US bulk electricity system consists of three electricity grids and nine independent operating systems (ISOs). These don’t align with state boundaries, so different planning requirements and regulation can apply within a single ISO. And with demand growth concentrating around data centers and cities, coordinating regional or local responses to demand surges will present system-wide and geographical challenges.

While there’s no like-for-like equivalent to the US situation, other energy markets have complex jurisdictional boundaries within a single, overarching structure. And whether that structure is federal (Australia, Germany) or regional (the European Union), stakeholders often underestimate the level of difficulty it brings.

What other countries can do

Acknowledge the complexity of the stakeholder landscape, rather than thinking in silos.
Coordinate across regions, and trade across ISOs, to make the system more reliable and boost the supply of non-local resources.
Use digital tools to better understand those complex boundaries and simulate system planning and responses to emergencies or outages.
Differentiate between physical constraints, like infrastructure, and man-made ones, like operational boundaries. The former can’t flex but the latter can.

One size doesn’t fit all

The Levelized Cost of Energy (LCOE) is a metric for comparing the average cost of producing energy from different sources, such as wind, solar, gas, or nuclear. It’s simple, standardized, and widely used in the US and globally. But it’s only part of the picture, and on its own, it can lead to “picking winners” policy-making that creates volatility – especially when subsidies are involved.

Oversimplifying the LCOE calculation can misrepresent the regional or system-specific conditions that greatly influence both operational costs and performance. For example, operating a geothermal plant in poor geological conditions won’t yield great results, even if the LCOE looks competitive across the industry at large.

Proximity to natural resources and local policy priorities can also influence project economics. Abundant supplies of natural gas and access to existing infrastructure make it cheap and easy to generate gas-fired electricity in Texas. But in California, where oil and gas investment has declined while solar investment has increased, the cost of electricity is more than twice as high.

Discrepancies like these may be due to hidden integration, regulatory or operational costs, including the size of the regional energy system. Or they may stem from higher wages, resilience risks, or inefficiencies.

Whatever the cause, it’s in everyone’s interests to see the full picture. That way, governments can justify public spending and policy outcomes. Industry players can see where to allocate capital. And investors can compare risks and returns across the many system trade-offs, including environmental ones.

What other countries can do

Avoid narrowly advocating for only one source of energy generation before evaluating total system costs, including integration, reliability and the full operational lifecycle.
Consider the limiting impact of restrictive policies over time: the decline of oil and gas in California will make future investment in the state much more expensive, for example.
Invest in technologies, such as battery storage or a Distributed Energy Resource Management System (DERMS), that make operations more efficient and enable better control of prices.

Final word

In any energy market, trade-offs always exist, and you’re never going to get competing groups to align across many different priorities. But if stakeholders can develop durable, bipartisan frameworks that account for investment timelines, supply chain resilience, and system complexity/costs, energy can stay reliable and affordable while becoming more secure. In doing so, it can bring energy access and security to billions more people around the world.

Authors

As the world’s population grows and global economies evolve, the need for energy is ever-increasing. Meeting that need in a sustainable and cost-effective way is the primary challenge of every energy company. This is where Capgemini shines — at the intersection of engineering, digital, and data, where we innovate with our clients and partners to transform the energy industry.