Annual Energy Outlook 21 Reference Case The Paul H. Nitze School of Advanced International Studies December 14, 29 Washington, DC Richard Newell, Administrator Richard Newell, SAIS, December 14, 29 1
How does the AEO21 reference case handle public policy and technology? Generally assumes current laws and regulations provisions sunset if specified (e.g., renewable tax credits expire) excludes potential future laws and regulations (e.g., proposed greenhouse gas legislation is not included) some grey areas adopts proposed regulations that are not yet final, in order to inform the likely implementation of a statute adds a premium to the capital cost of CO 2 -intensive technologies to reflect market behavior regarding possible CO 2 regulation assumes implementation of existing regulations that enable building new energy infrastructure and resource extraction Includes technologies that are commercial or reasonably expected to become commercial in the next decade or so includes cost and efficiency improvements from learning, but not revolutionary or breakthrough technologies Richard Newell, SAIS, December 14, 29 2
Key updates included in the AEO21 reference case Extended projection period to 235 Changes in Federal and State laws and regulations revised handling of fuel economy standards to reflect the proposal for light-duty vehicles in model years 212-216 assumes permission will be granted to extend nuclear power unit operating licenses beyond 6 years; no retirements through 235 Revised capital costs for capital-intensive projects overnight costs for nuclear and coal power up 1-2% Changes to assumptions about oil and gas resource base updated characterization of natural gas shales, reflecting evolution of shale gas resources and technology new lower-48 onshore oil and gas supply submodule Richard Newell, SAIS, December 14, 29 3
Oil prices in the reference case rise steadily; the full AEO21 will include a wide range of prices 28 dollars per barrel 225 2 High oil price 175 15 125 1 75 5 25 AEO29 reference AEO21 reference Low oil price 198 1985 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 4
Oil to natural gas price ratio remains high over the projection Ratio of oil price to natural gas price 5 4 3 Oil and natural gas prices 28 dollars per million Btu 25 2 15 1 5 Crude oil U.S. natural gas wellhead 199 1995 2 25 21 215 22 225 23 235 2 1 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 5
Non-fossil energy use grows rapidly, but fossil fuels still provide 78 percent of total energy use in 235 quadrillion Btu 12 1 8 6 4 Renewables (excluding liquid biofuels) Liquid biofuels Liquid fuels Coal 2 Natural gas Nuclear 198 1985 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 6
Energy and CO 2 per dollar GDP continue to decline; per capita energy use also declines index, 25=1 1.75 1.5 1.25 1..75.5.25 Energy per capita Energy per dollar GDP CO 2 per dollar GDP. 198 1985 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 7
Energy efficiency gains reduce consumption 15% from where it would otherwise be; structural change is even larger quadrillion Btu 2 Constant intensity 192 15 1 Constant efficiency AEO21 reference case 133 115 Structural change Efficiency change 5 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 8
U.S. reliance on imported liquid fuels is reduced by increased domestic production and greater fuel efficiency million barrels per day 25 2 Consumption 15 6% 57% Net imports 4% 45% 1 Production 5 AEO21 reference case Updated AEO29 reference case 197 1975 198 1985 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 9
Biofuels meet most of the growth in liquid fuels supply million barrels per day 25 2 Biofuels including imports 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 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 1
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 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 11
New light duty vehicle efficiency reaches 4 mpg by 235 miles per gallon 45 4 35 3 25 2 15 1 5 AEO21 Updated AEO29 reference case 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 12
Mild and full hybrid systems dominate new light-duty vehicle sales by 235 millions 1 9 8 7 6 5 4 3 2 1 Electric/fuel cell Plug-in hybrid electric Hybrid electric Mild hybrid electric Gaseous Flex fuel Diesel 2 28 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 13
Natural gas wellhead price is projected to rise from low levels experienced during 28-29 recession 28 dollars per thousand cubic feet 1 8 6 4 2 AEO21 reference case Updated AEO29 reference case 198 1985 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 14
Import share of natural gas supply declines as domestic supply grows trillion cubic feet 3 25 Consumption 2% 6% 2 Net imports Domestic supply 13% 15 AEO21 reference case Updated AEO29 reference case 1 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 15
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 & other unconventional 15 125 1 75 Unproved conventional (including Alaska*) 5 25 1999 2 21 22 23 24 25 26 27 28 29 21 AEO edition * Alaska resource estimates prior to AEO29 reflect resources from the North Slope that were not included in previously published documentation. Proved reserves (all types & locations) Source: U.S. Geological Service, Mineral Richard Newell, SAIS, December 14, 29 16 Management Service, private data, and EIA.
Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs trillion cubic feet 25 2 Alaska Shale gas 15 1 Coalbed methane Non-associated onshore 5 Non-associated offshore Associated with oil Net imports 199 1995 2 25 21 215 22 225 23 235 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 17
Growth in electricity use continues to slow 3-year rolling average percent growth 14 12 1 8 6 4 2 Period Annual Growth 195s 9.8 196s 7.3 197s 4.7 198s 2.9 199s 2.4 2-28.9 28-235 1. Structural Change in Economy - Higher prices - Standards - Improved efficiency -2 195 196 197 198 199 2 21 22 23 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 18
Nuclear 11 (1%) Other renewables 4 (4%) Natural gas and renewables account for the majority of capacity additions from 28 to 235 Hydropower* 99 (1%) 28 capacity Capacity additions 28 to 235 1,8 gigawatts Coal 312 (31%) Other renewables 92 (37%) Nuclear 8 (3%) Hydropower* 1 (.4%) 25 gigawatts Coal 31 (12%) Other 119 (12%) Other 2 (1%) Natural gas 116 (46%) Natural gas 338 (33%) * Includes pumped storage Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 19
Renewables gain electricity market share; coal share declines billion kilowatthours and percent shares 6, 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 Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 2
Nonhydropower renewable sources meet 41% of total electricity generation growth from 28 to 235 billion kilowatthours 6 5 4 3 Biomass 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 21 21
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 1,53 (26%) Electric Power 2,634 (42%) 235 Buildings and Industrial 1,571 (25%) 5,814 million metric tons 6,32 million metric tons 8.7% growth.3% per year Transportation 1,925 (33%) Transportation 2,115 (33%) Richard Newell, SAIS, December 14, 29 Source: Annual Energy Outlook 21 22
Key results from the AEO21 reference case Recent Federal and State policies, and rising energy prices, moderate growth in energy consumption and shift it to renewable fuels U.S. oil use remains near its present level through 235 growth in overall liquids demand is met by biofuels, and ethanol accounts for >17% of gasoline consumption by 235 U.S. reliance on imported oil as a share of U.S. liquids use, declines to 45% over the next 25 years Shale gas provides the majority of growth in gas supply Energy-related CO 2 emissions grow.3% per year, absent any new policies to limit emissions Richard Newell, SAIS, December 14, 29 23
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 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 U.S. Energy Information Administration www.eia.gov Richard Newell, SAIS, December 14, 29 24