(Globe-Net) - Last month the U.S. Energy Department’s Energy Information Administration (EIA) published its early release version of the Annual Energy Outlook 2009 Report (AEO2009). It provides updated projections for U.S. energy consumption and production through 2030. A number of significant points were contained in the new draft, which will be of interest to business leaders in preparing mid to long term business strategies.

Oil Use and Import Dependence

For the first time in more than 20 years, the new AEO reference case projects virtually no growth in U.S. oil consumption, reflecting the combined effect of recently enacted CAFE standards, requirements for increased use of renewable fuels, and an assumed rebound in oil prices as the world economy recovers.

With overall liquid fuel demand in the AEO2009 reference case growing by only 1 million barrels per day between 2007 and 2030, increased use of domestically-produced biofuels, and rising domestic oil production spurred by higher prices, the net import share of total liquids supplied, including biofuels, declines from 58 percent in 2007 to less than 40 percent in 2025 before increasing to 41 percent in 2030.  

Natural Gas Use and Import Dependence 

The reference case raises EIA’s projection for U.S. production and consumption of natural gas, reflecting increased availability of resources and higher demand for electric power generation. With growing production of natural gas from unconventional onshore sources, the Outer Continental Shelf, and  Alaska, the net import share of total natural gas use also declines, from 16 percent in 2007 to less than 3 percent in 2030 (Figure 2).

Total Primary Energy Use and Energy-Related Carbon Dioxide Emissions 

Efficiency policies and higher energy prices in AEO2009 slow the rise in U.S. energy use, which is projected to grow from 101.9 quadrillion Btu in 2007 to 113.3 quadrillion Btu in 2030. When combined with the increased use of renewables and a reduction in projected additions of new coal-fired conventional power plants, this slows the growth in energy-related GHG emissions.

Energy-related CO2 emissions grow at 0.3 percent per year from 2007 to 2030 in the AEO2009 reference case, reaching a level of 6,410 million metric tons in 2030, as compared with 6,851 million metric tons in the AEO2008 reference case (Figure 3).

Oil Prices

The assumption of a higher world oil price path in the AEO2009 reference case reflects tighter constraints on access to low cost oil supplies in a setting where the forces driving growth in long-term demand in non-OECD countries remains as strong as previously expected. In 2007 dollars, the world crude oil price, averaging near $60 in 2009, rises as the global economy rebounds and global demand once again grows more rapidly than non-OPEC liquids supply. In 2030, the average real price of crude oil is $130 per barrel in 2007 dollars ($189 per barrel in nominal dollars) (Figure 4).

Renewable Energy Use

Total consumption of marketed renewable fuels - including wood, municipal waste, and biomass in the end use sectors; hydroelectricity, geothermal, municipal waste, biomass, solar, and wind for electric power generation; ethanol for gasoline blending; and biomass-based diesel - grows by 3.3 percent per year in the AEO2009 reference case.  This rapid growth reflects the EISA2007 renewable fuel standard and strong growth in the use of renewables for electricity generation that is spurred by renewable portfolio standards for electricity generators in many States.

Vehicle Characteristics

A sharp increase in the sale of unconventional vehicle technologies, such as flex-fuel, hybrid, and diesel vehicles, and a significant decline in the new light-truck share of total light-duty vehicle sales are projected. Hybrid vehicle sales (all varieties) increase from 2 percent of new light-duty vehicle sales in 2007 to 38 percent in 2030. Sales of plug-in hybrid electric vehicles (PHEVs) grow to 90,000 vehicles annually by 2014, supported by recently enacted tax credits. By 2030, PHEVs account for 2 percent of new light vehicle sales (Figure 5).

Modeling Methodology

The AEO2009 reference case assumes no changes in current laws and regulations. However, it reflects the behavior of investors and regulators who, in their investment evaluation process, are implicitly (or explicitly) adding a cost to many proposed power plants that employ GHG-intensive technologies. Additions of new coal-fired power plants are significantly reduced from earlier projections.   
Other highlights of the AEO2009 reference case projections include:

• Coal, oil, and natural gas meet 79 percent of total U.S. primary energy supply requirements in 2030, down from an 85-percent share in 2007.

• Total domestic production of natural gas reaches 23.7 trillion cubic feet by 2030. While exploration and production costs rise over time, higher natural gas prices support the projected level of production. Onshore production of unconventional natural gas, including shale gas, increases from 9.2 trillion cubic feet in 2007 to 13.2 trillion cubic feet in 2030.

• Ethanol use for gasoline blending grows to 12.2 billion gallons and E85 consumption to 17.3 billion gallons in 2030. The ethanol supply from cellulosic feedstocks reaches 12.6 billion gallons (including both domestic and imported production) in 2030. Biodiesel and biomass-to-liquid diesel fuel use both rise significantly, reaching nearly 2 billion gallons and 5 billion gallons, respectively, in 2030.

• Total electricity consumption, including both purchases from electric power producers and on-site generation, grows from 3,903 billion kilowatthours in 2007 to 4,902 billion kilowatthours in 2030.

• New natural gas and renewable plants account for the majority of generating capacity additions. The natural gas share of electricity generation remains between 19 percent and 22 percent through 2030. Coal’s generation share declines from 49 percent to 45 percent between 2007 and 2025, then rebounds slightly to 47 percent in 2030 as a small number of new coal plants are added.

The reference case projections from the Early Release Summary of AEO2009 are available at www.eia.doe.gov/oiaf/aeo/index.html. The full AEO2009 report, including projections with differing assumptions on the price of oil, the rate of economic growth, and the characteristics of new technologies, will be released later in 2009, along with regional projections. 

Portions of the early release report are available for download.

Projection Tables

AEO2009 Early Release Summary Presentation 

AEO2009 Press Release 

Summary Reference Case Tables 

Year-by-Year Reference Case Tables 

Regional and other detailed tables

For More Information: Energy Information Administration