Annual Energy Outlook 2013

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1 Annual Energy Outlook th Annual Energy and Climate Change Research Seminar Electric Power Research Institute May 21, 2013 Washington, D.C. by, Director, Office of Electricity, Coal, Nuclear, and Renewables Analysis, Energy Information Administration U.S. Energy Information Administration Independent Statistics & Analysis

2 EIA s Reference case Generally assumes current laws and regulations excludes potential future laws and regulations (e.g., proposed greenhouse gas legislation is not included) Sunset provisions as specified in law (e.g., renewable production tax credits expire at the end of 2012) Some grey regulatory areas adds a premium to the cost of financing CO 2 -intensive technologies to reflect current market behavior regarding possible future policies to mitigate greenhouse gas emissions assumes implementation of existing regulations that enable the building of new energy infrastructure and resource extraction Includes technologies that are commercial or reasonably expected to become commercial over next decade or so includes projected technology cost and efficiency improvements, as well as cost reductions linked to cumulative deployment levels does not assume revolutionary or breakthrough technologies 2

3 Key results from the AEO2013 Reference case: Growth in energy production outstrips consumption growth Crude oil production, particularly from tight oil plays, rises sharply over the next decade Natural gas production is higher throughout the Reference case projection than it was in AEO2012, serving the industrial and power sectors and an expanding export market Motor gasoline consumption reflects the introduction of more stringent fuel economy standards, while diesel fuel consumption is moderated by increased natural gas use in heavy-duty vehicles The U.S. becomes a larger exporter of natural gas and coal than was projected in the AEO2012 Reference case All renewable fuels grow, but biomass and biofuels growth is slower than in AEO2012 U.S. energy-related carbon dioxide emissions remain more than five percent below their 2005 level through 2040, reflecting increased efficiency and the shift to a less carbon-intensive fuel mix 3

4 Energy and CO 2 per dollar of GDP continue to decline; per-capita energy use also declines Energy and emission intensity index, 2005=1 History Projections Energy use per capita Energy use per 2005 dollar of GDP Carbon dioxide emissions per 2005 dollar of GDP

5 Growth in energy production outstrips growth in consumption leading to reduction in net imports U.S. energy production and consumption quadrillion Btu History 125 Projections Consumption 10% 9% 75 Net imports 19% Production

6 Domestic production grows rapidly over projection period, particularly natural gas and renewables, and liquids in the near term U.S. energy production quadrillion Btu 120 History 2011 Shares of total U.S. production Projections Natural gas 35% % 12% 19% Renewables Crude oil and natural gas plant liquids 14% 17% 20 28% Coal 24% 11% Nuclear 10%

7 U.S. energy use grows slowly over the projection reflecting improving energy efficiency and a slow and extended economic recovery U.S. primary energy consumption quadrillion Btu Shares of total U.S. energy 120 History Projections % 6% 8% 23% 26% 8% 8% 1% 20% Natural gas Renewables (excluding liquid biofuels) Nuclear Liquid biofuels Coal 28% 11% 9% 2% 19% 20 39% 36% Oil and other liquids 32%

8 In the AEO2013 Reference case, energy-related CO 2 emissions never get back to their 2005 level Carbon dioxide emissions billion metric tons History Projections 6 AEO (billion metric tons) % -5.1% (percent change from 2005)

9 Petroleum and other liquid supply 9

10 U.S. dependence on imported liquids declines U.S. liquid fuel supply million barrels per day History Projections Consumption 15 Net imports 60% 45% 37% 37% 10 Domestic supply

11 U.S. import share of liquid fuels declines due to increased production of tight oil and gas liquids, and greater fuel efficiency U.S. liquid fuels supply million barrels per day 25 History 2011 Projections % 12% 38% Biofuels excluding imports Natural gas plant liquids 17% 7% Liquids from natural gas and coal 1% 10 Petroleum production 38% 5 45% Net petroleum and biofuel imports 37%

12 U.S. tight oil production leads a growth in domestic production of 2.6 million barrels per day between 2008 and 2019 U.S. crude oil production million barrels per day 8 History 2011 Projections 6 Tight oil 4 Other lower 48 onshore 2 Lower 48 offshore Alaska

13 Natural gas 13

14 Domestic natural gas production grows faster than consumption and the U.S. becomes a net exporter of natural gas around 2020 U.S. dry gas trillion cubic feet History 2011 Projections Consumption Domestic supply Net imports

15 Shale gas production leads growth in production through 2040 U.S. dry natural gas production trillion cubic feet 35 History 2011 Projections Shale gas Non-associated offshore Tight gas Coalbed methane Associated with oil Alaska Non-associated onshore

16 Electricity 16

17 Growth in electricity use slows, but still increases by 28% from 2012 to 2040 U.S. electricity use percent growth (3-year rolling average) History 2011 Period Annual Growth 1950s s s s s Projections

18 U. S. electricity use and economic growth, Percent growth (3-year compounded annual growth rate) 14% History 12% 2011 Projections 10% 8% 6% 4% Electricity Use average 2% 0% GDP 2.4% 0.9% -2%

19 Over time the electricity mix gradually shifts to lower-carbon options, led by growth in natural gas and renewable generation U.S. electricity net generation trillion kilowatthours History 2011 Projections % 11% 19% 25% 13% 19% Natural gas Renewables Nuclear 30% 16% 17% 1 53% 42% 35% Coal Oil and other liquids 4% 1% 0 1%

20 Alternative cases explore key uncertainties 20

21 Why might could will we be wrong? Different relative fuel prices Faster / slower demand growth Changing policies and regulations Changing consumer preferences Faster / slower technological progress Technological breakthroughs May 21,

22 Some key alternative cases and how they impact energy related CO 2 emissions High and low economic growth cases High and low oil/gas resource cases High and low coal cost cases High and low nuclear cases High and low renewables cases No sunset and extended policies cases GHG fee cases High net imports and Low/no net imports cases 22

23 Annual average henry hub spot prices for natural gas in alternative cases 2011 dollars per million btu Low Oil and Gas Resource Reference High Oil and Gas Resource

24 Annual average coal prices to power plants in alternative cases 2011 dollars per million Btu History Projections High Coal Cost Reference Low Coal Cost

25 With lower natural gas prices in the High Oil and Gas resource case, coal is permanently displaced as the leading generation source in the near future Billion kilowatthours 2,500 2,000 Coal Reference 1,500 1, Natural Gas High Oil and Natural Gas Resource

26 Energy-Related CO 2 Emissions with Alternative Oil and Natural Gas Resource Estimates Million metric tons CO 2 equivalent 6,400 6,200 6,000 5,800 5,600 History Reference Projections High Resource 5,400 Low Resource 5,200 5,

27 Energy-Related CO 2 Emissions with Alternative Coal Prices Million metric tons CO 2 equivalent 6,400 6,200 6,000 5,800 5,600 5,400 5,200 History Projections Low Cost Coal Reference High Cost Coal 5,

28 Economic Growth Path and Energy-Related CO 2 Emissions Million metric tons CO 2 equivalent 6,400 6,200 6,000 5,800 5,600 5,400 History Projections High Macro Reference 5,200 5, Low Macro 28

29 Role of natural gas electricity generation in reducing energyrelated CO 2 emissions Billion kilowatthours History Projections High oil and gas resource $10 fee $15 fee $25 fee Reference $10 fee $15 fee $25 fee

30 Role of natural gas in reducing total energy-related CO 2 emissions Million metric tons CO 2 equivalent 6,500 6,000 5,500 5,000 4,500 History Projections Reference case resources High oil/gas resources 4,000 3,500 $10 fees $15 fees $25 fees 3,

31 120% 100% 80% 60% 40% 20% 0% Projected electricity generation shares of different fuels are sensitive to fuel prices and policy developments percent 19% 24% 42% 17% 18% 30% 31% Higher / Lower Electricity Demand 19% 27% 29% 35% 35% 34% 38% Higher / Lower Coal Prices 13% 16% 15% 19% 16% 18% 17% 17% 36% 16% 28% 27% Higher / Lower Natural Gas Prices 14% 20% 21% 43% 21% 15% 17% 30% 38% 37% GHG Cases 28% 31% 27% 31% 13% 37% 29% 2% Renewables Nuclear Natural Gas Coal Source: U.S. Energy Information Administration, Annual Energy Outlook 2013, National Energy Modeling System runs REF2013.D102312A, LOWMACRO.D110912A, HIGHMACRO.D110912A, LCCST13.D112112A HCCST13.D112112A, HIGHRESOURCE.D021413A, LOWRESOURCE.D012813A, NOGHGCONCERN.D110912A, CO2FEE15.D021413A, and CO2FEE25.D021413A. 31

32 Cumulative coal-fired capacity retirements, gigawatts Reference Low High Economic Economic Growth Growth Low Coal Cost High Coal Cost High Oil and Gas Resource Low Oil and Gas Resource No GHG Concern GHG 15 GHG 25 Source: U.S. Energy Information Administration, Annual Energy Outlook 2013, National Energy Modeling System runs REF2013.D102312A, LOWMACRO.D110912A, HIGHMACRO.D110912A, LCCST13.D112112A HCCST13.D112112A, HIGHRESOURCE.D021413A, LOWRESOURCE.D012813A, NOGHGCONCERN.D110912A, CO2FEE15.D021413A, and CO2FEE25.D021413A. 32

33 For more information U.S. Energy Information Administration home page Annual Energy Outlook Short-Term Energy Outlook International Energy Outlook Today In Energy Monthly Energy Review Annual Energy Review 33

34 Backup Slides 34

35 Key differences between alternate cases AEO2013 Reference Low Economic Growth High Economic Growth Low Coal Cost High Coal Cost High Oil and Gas Resource Low Oil and Gas Resource GHG15 (CO2 fee of $15 in 2014 increasing to $53 in 2040) GHG25 (CO2 fee of $25 in 2014 increasing to $89 in 2040) GDP growth (avg. annual change from 2011) Electricity demand (avg. annual change from 2011) Delivered natural gas price to the electricity sector, 2040 (2011 dollars per million Btu) Delivered coal price to the electricity sector, 2040 (2011 dollars per million Btu) Minemouth coal price, 2040 (2011 dollars per short ton) Western coal transportation rates (percent change from 2011, constant dollar basis) Coal mining productivity (avg. annual change from 2011) Coal with CCS in power sector, 2040 (gigawatts) NGCC with CCS in power sector, 2040 (gigawatts) 2.5% 1.9% 2.9% 0.9% 0.6% 1.2% $8.38 $5.13 $10.55 $11.01 $11.10 $3.20 $1.88 $5.68 $7.71 $9.45 $61.28 $33.90 $ % -24% 27% -1.4% 0.9% -4.3%

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