EIA s Energy Outlook Through 235 ReThink Montgomery Speaker Series Energy March 23, 21 Silver Spring, Maryland A. Michael Schaal, Director, Oil and Gas Division Office of Integrated Analysis and Forecasting ReThink Montgomery Speaker Series Energy, March 23, 21 1
ReThink Montgomery Speaker Series Energy, March 23, 21 2 Overview Global energy outlook U.S. energy outlook EIA s analysis of HR 2454, the American Clean Energy and Security Act (ACESA) A quick overview of the Outer Continental Shelf oil and gas production.
The Global Energy Outlook ReThink Montgomery Speaker Series Energy, March 23, 21 3
The composition of global energy use, as well as its level, is expected to change over time World primary energy consumption quadrillion Btu 25 History Projections 3% 2 15 1 Liquids (including biofuels) 35% 27% 23% Coal Natural gas Renewables (excluding biofuels) 28% 22% Share of world total 14% 5 1% 6% 5% Nuclear 199 1995 2 25 21 215 22 225 23 235 Source: International Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 4
ReThink Montgomery Speaker Series Energy, March 23, 21 5 International Energy Outlook 21 Reference Case Shale, Tight Gas, and Coalbed Methane Outlook Although the extent of the world s tight gas, shale gas, and coalbed methane resource base has not yet been fully assessed, the IEO21 Reference case projects a substantial increase in those supplies especially from the United States, but also from Canada and China. Rising estimates for shale gas resources have helped to increase total U.S. natural gas reserves by almost 5 percent over the past decade, and shale gas rises from 6 percent of total U.S. natural gas production in 27 to 26 percent in 235 in the Reference case. Tight gas, shale gas, and coalbed methane resources are even more important for the future of domestic natural gas supplies in Canada and China, where they account for 63 percent and 56 percent of total domestic production, respectively in 235.
Production from low permeability reservoirs, shale, and coalbed drives supply growth in China, Canada, and the U.S natural gas production trillion cubic feet 2 16 12 Tight gas, shale gas, and coalbed methane 8 4 Other 27 235 27 235 27 235 China Canada United States* *U.S. tight gas reported as other. Source: EIA, International Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 6
Percent per Year ReThink Montgomery Speaker Series Energy, March 23, 21 7 Growth in worldwide economic activity, and population growth in some regions, drives increased energy use 6.5 5.5 4.5 Population GDP per Capita Energy Use per GDP 3.5 2.5 1.5.5 -.5-1.5-2.5-3.5 US OECD Europe Japan China India Middle East Russia Brazil Source: US: Published AEO29 (March 29); ROW: GDP Assumptions based on IHS Global Insight, Inc.; Population from UN World Population Prospects (26 Revision)
Billion Metric Tons ReThink Montgomery Speaker Series Energy, March 23, 21 8 Absent new policies, energy-related CO 2 emissions grow 39% between 26 and 23 in EIA s reference case 45 4 35 Non-OECD OECD 3 25 2 15.4 17.6 19.5 21.5 23.7 25.8 15 1 5 13.6 13.4 13.6 13.9 14.2 14.6 26 21 215 22 225 23 Source: EIA International Energy Outlook 29, Reference Case
The U.S. Energy Outlook ReThink Montgomery Speaker Series Energy, March 23, 21 9
Energy and CO 2 per dollar GDP continue to decline; per capita energy use also declines 1.75 index, 25=1 History Projections 1.5 1.25 1. Energy per capita.75 Energy per dollar GDP.5 CO 2 per dollar GDP.25. 198 1985 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 1
Non-fossil energy use grows rapidly, but fossil fuels still provide 78 percent of total energy use in 235 12 quadrillion Btu History Projections Renewables (excluding liquid biofuels) 1 8 Liquid biofuels Liquid fuels 6 4 Coal 2 Natural gas Nuclear 198 1985 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 11
U.S. reliance on imported liquid fuels is reduced by increased domestic production and greater fuel efficiency million barrels per day 25 History Projections 2 Consumption 15 1 Production 6% peak 57% Net imports 45% 5 197 1975 198 1985 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 12
New light duty vehicle efficiency reaches 4 mpg by 235 miles per gallon 45 4 35 3 25 2 15 1 5 History AEO21 Updated AEO29 reference case 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 13
Mild and full hybrid systems dominate new light-duty vehicle sales by 235 millions 1 9 8 7 6 5 4 3 2 1 History Projections Electric/fuel cell Plug-in hybrid electric Hybrid electric Mild hybrid electric Gaseous Flex fuel Diesel 2 28 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 14
Biofuels grow, but fall short of the 36 billion gallon RFS target in 222, exceed it in 235 billion gallon-equivalents 45 4 35 3 25 2 15 RFS with adjustments under CAA Sec.211(o)(7) Legislated RFS in 222 Other feedstocks Renewable diesel Biomass-toliquids Biodiesel Net ethanol imports Cellulosic ethanol 1 5 Corn ethanol 28 222 222 in AEO29 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 15
Biofuels meet most of the growth in liquid fuels supply 25 million barrels per day History Projections Biofuels including imports 2 15 Petroleum supply 1 Natural gas plant liquids 5 Net petroleum imports 197 1975 198 1985 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 16
Import share of natural gas supply declines as domestic supply grows 3 trillion cubic feet History Projections 25 Consumption 6% 2 15 Net imports Domestic supply 13% 1 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 17
Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs 25 trillion cubic feet History Projections Alaska 2 Shale gas 15 Coalbed methane 1 Non-associated onshore 5 Non-associated offshore Associated with oil Net imports 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 18
Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources trillion cubic feet 225 2 175 Unproved shale gas & coalbed methane 15 125 1 75 Unproved Carbonate and Sandstone gas (including Alaska*) 5 25 1999 2 21 22 23 24 25 26 27 28 29 21 AEO edition Proved reserves (all types & locations) * Alaska resource estimates prior to AEO29 reflect resources from the North Slope that were not included in previously published documentation. ReThink Montgomery Speaker Series Energy, March 23, 21 19 19
ReThink Montgomery Speaker Series Energy, March 23, 21 2 Growth in electricity use continues to slow 3-year rolling average percent growth 14 12 1 8 6 4 2 History Period Annual Growth 195s 9.8 196s 7.3 197s 4.7 198s 2.9 199s 2.4 2-28.9 28-235 1. Projections -2 195 196 197 198 199 2 21 22 23 Source: Annual Energy Outlook 21
Renewables gain electricity market share; coal share declines billion kilowatthours and percent shares 6, History Projections 5, 17. 4, 9.1 Renewable 2.8 3, 21.4 Natural gas 2, 48.5 Coal 43.8 1, 1.5 Oil and other 1.4 Nuclear 19.6 17.1 199 1995 2 25 21 215 22 225 23 235 Source: Annual Energy Outlook 21 ReThink Montgomery Speaker Series Energy, March 23, 21 21
Nonhydropower renewable sources meet 41% of total electricity generation growth from 28 to 235 6 billion kilowatthours History Projections 5 4 Biomass 3 2 Wind 1 Solar Geothermal Waste 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 22 21 ReThink Montgomery Speaker Series Energy, March 23, 21 22
Phyllis Martin, Climate and Energy Imperatives for Future Naval Forces Symposium, March 21 23 Assuming no new policies, growth in energy-related CO 2 is driven by electricity and transportation fuel use Electric Power 2,359 (41%) 28 Buildings and Industrial Electric Power 2,634 (42%) 235 Buildings and Industrial 1,571 (25%) 1,53 (26%) 5,814 million metric tons 6,32 million metric tons 8.7% growth.3% per year Transportation 1,925 (33%) Transportation 2,115 (33%) Source: Annual Energy Outlook 21
ReThink Montgomery Speaker Series Energy, March 23, 21 24 What if policies change? Greenhouse Gas Cap and Trade Program
ReThink Montgomery Speaker Series Energy, March 23, 21 25 EIA Analysis of HR 2454 The American Clean Energy and Security Act (ACESA)
ACESA requires 24.6- billion-metric-ton reduction in covered GHG emissions over 212-23; actual reductions could be smaller or larger depending on the use of offsets and banking behavior CO 2 -equivalent emissions, billion metric tons 9 8 7 Cumulative difference, 212-23 = 24.6 BMT 6 5 4 Use of Offsets = BMT 3 2 1 Total Greenhouse Gas Emissions, Reference Case Covered Emissions, Reference Case Cap on Covered Emissions 25 21 215 22 225 23 Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 26
Main cases in EIA s analysis Case Name Assumptions Basic Zero Bank High Offsets High Cost No International No International / Limited Integrated analysis of all of the modeled provisions of ACESA. Same as Basic but no carryover of allowances beyond 23. Proxy for major low- no-carbon energy technology breakthroughs with significant market impacts after 23 Same as Basic but assumes increased use of international offsets. Same as Basic but assumes that nuclear, fossil with CCS and biomass gasification costs are 5 % higher Same as Basic but assumes international offsets are too expensive or unable to meet the requirements for use Same as Basic but limits additions of nuclear, fossil with CCS and biomass to reference case levels. Also no international offsets. * Additional report cases examine impacts of high technology assumptions, limited supply technology availability, the recent proposal to modify CAFE standards, a lower banking discount rate, and more aggressive banking through 23. Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 27
Energy sector reductions (2 bottom sections) vary with availability of offsets and low-emitting generation options Cumulative compliance, 212-23 (billion metric tons) 4 35 3 25 2 15 1 5 Energy-Related CO2 Non-Energy-CO2 covered emissions Offsets, Noncovered emissions - - - - - Required Abatement - - - - - Carbon Capture and Storage Offsets, Biosequestration Offsets, International Basic Zero Bank High Offsets High Cost No International No Int'l/Limited Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 28
Projected allowance prices depend on the availability of offsets and low/no carbon electricity generation technologies (27 dollars per metric ton CO 2 -equivalent) 2 Basic Zero Bank High Offsets 18 High Cost No International No Int / Limited 16 14 12 1 8 6 4 2 212 215 22 225 23 Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 29
The electricity sector dominates projected reductions in energy-related CO 2 emissions (million metric tons CO2) 6, 5, 2433 2639 4, 3, 29 237 2, 23 Electric Pow er Transportation Industrial Buildings 1886 1831 174 1573 384 98 1952 1985 1986 1942 1915 1868 1, 987 955 855 879 88 847 815 779 561 576 534 543 543 527 519 494 27 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 3
Generation by 23 shifts from conventional coal to nuclear, renewables, and fossil+ccs, though natural gas use grows dramatically if other options are limited ReThink Montgomery Speaker Series Energy, March 23, 21 31 (billion kilowatthours) Coal Coal w /CCS Oil Natural Gas Natural Gas w /CCS Nuclear Renew able 5, 4, 3, 2, 1, 352 86 892 221 798 89 976 15 2296 121 1548 636 513 841 979 987 1147 1151 78 713 262 34 165 1593 27 Reference Basic Zero Bank High Offsets 974 923 88 293 1281 1399 1863 592 1315 89 1638 44 15 1 285 High Cost No Interational No Int / Limited Source: EIA Analysis of the American Clean Energy and Security Act of 29
Capacity Additions, 28 to 23 Generally dominated by mix of nuclear, renewables, and fossil with CCS, though natural gas options are more important if those options are limited (thousand megawatts) 6 Renewable Nuclear 5 Natural Gas with CCS Natural Gas 4 Coal with CCS 219 Coal 3 2 81 119 96 93 95 116 135 25 1 125 42 69 44 45 55 53 82 46 35 41 39 6 112 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited Source: EIA Analysis of the American Clean Energy and Security Act of 29 ReThink Montgomery Speaker Series Energy, March 23, 21 32
ReThink Montgomery Speaker Series Energy, March 23, 21 33 Efficiency programs and higher electricity prices reduce electricity demand growth Annual percent growth in electricity use 3.% 2.5% 2.% 2.39% 27 to 23 Growth 1.5% 1.% 1.15%.5%.9%.64%.72%.72%.57%.56%.% 199 to 2 2 to 27 Reference Basic Zero Bank High Offsets High Cost No International.21% No Int / Limited Source: EIA Analysis of the American Clean Energy and Security Act of 29
ReThink Montgomery Speaker Series Energy, March 23, 21 34 2 18 16 14 12 1 8 Electricity prices stay near baseline through 225 in all but one case, then rise to higher levels through 23 (27 cents per kilowatthour, all sectors average) 6 4 2 Reference Basic Zero Bank High Offsets High Cost No International No Int / Limited 25 21 215 22 225 23 Source: EIA Analysis of the American Clean Energy and Security Act of 29
Present-value GDP losses over 212-23 range from.2% to.4%; consumption losses range from.1% to.3% in 5 analysis cases. Impacts are much higher in the No International/Limited Alternatives case. -415-896 -323-736 -392-829 -6-1249 -496-1179 -1521-324 -273-566 -196-432 -252-523 -384-781 -323-717 -988-1897 15398 1817 15348 1796 1538 181 15373 186 15328 1787 15365 182 15286 1753 19875 1469 19714 146 19771 1433 19755 1419 19661 13972 19649 14 19422 13889 Cumulative Change in Real GDP Undiscounted Present Value @ 4% 25 Real GDP -5 2-1 -15 15-2 -25-3 -35 Basic Zero Bank High Offset High Cost No International No Int/Limited 1 5 Reference Basic Zero Bank High Offset High Cost No International No Int/Limited 22 23 Cumulative Change in Real Consumption Undiscounted Present Value @ 4% 2 Real Consumption -25 15-5 -75-1 -125-15 -175 Basic Zero Bank High Offset High Cost No International No Int/Limited ReThink Montgomery Speaker Series Energy, March 23, 21 35 1 5 Reference Basic Zero Bank High Offset High Cost No International No Int/Limited 22 23 Source: EIA Analysis of the American Clean Energy and Security Act of 29
Deepwater Horizon Site, U.S. Gulf of Mexico ReThink Montgomery Speaker Series Energy, March 23, 21 36 GOM Crude Oil Production (million barrels per day) 5.3 GOM 29 Natural Gas Production (trillion cubic feet) 2.7 Share of Total U.S. Liquid Fuels Consumed 28% Share of Total U.S. Natural Gas Consumed 12% GOM Crude Oil Resources (billion barrels)* 47.3 GOM Natural Gas Resources (trillion cubic feet)* 246.6 Share of Total U.S. Crude Oil Resources* 25% Share of Total U.S. Natural Gas Resources* 14% * Technically Recoverable Resources as of January 1, 27. Total includes Alaska.
ReThink Montgomery Speaker Series Energy, March 23, 21 37 For more information U.S. Energy Information Administration home page www.eia.gov Short-Term Energy Outlook Annual Energy Outlook International Energy Outlook Monthly Energy Review Gulf of Mexico Fact Sheet www.eia.gov/emeu/steo/pub/contents.html www.eia.gov/oiaf/aeo/index.html www.eia.gov/oiaf/ieo/index.html www.eia.gov/emeu/mer/contents.html www.eia.gov U.S. Energy Information Administration www.eia.gov A. Michael Schaal Michael.Schaal@eia.doe.gov 22-586-559