Energy and environmental rules make up a large share of the total cost of federal regulation. Because of this, government regulation of energy sources and the pollution they generate create powerful economic incentives--and disincentives--that drive business choices among competing fuels and power generation methods.
The Obama Administration has launched a major initiative intended to reshape the mix of fuels that power the American economy. It has chosen to follow an indirect approach of subsidies and regulations, rather than more visible and less popular direct energy or carbon taxes. However, implementation of this plan has been complicated by other government actions and external events.