www.eia.gov U.S. Energy Information Administration Independent Statistics & Analysis
AEO2012 Early Release Rollout Presentation Paul H. Nitze School of Advanced International Studies John Hopkins University January 23, 2012 | Washington, DC Howard Gruenspecht, Acting Administrator
Annual Energy Outlook 2012 Early Release Reference Case
Key results from the AEO2012 Reference case, which assumes current laws remain unchanged
2 Howard Gruenspecht AEO2012, January 23, 2012
• Projected growth of energy use slows over the projection period reflecting an extended economic recovery and increasing energy efficiency in end-use applications
• Domestic crude oil production increases, reaching levels not experienced since 1994 by 2020
• With modest economic growth, increased efficiency, growing domestic production, and continued adoption of nonpetroleum liquids, net petroleum imports make up a smaller share of total liquids consumption
• Natural gas production increases throughout the projection period and exceeds consumption early in the next decade
• Renewables and natural gas fuel a growing share of electric power generation
• Total U.S. energy-related carbon dioxide emissions remain below their 2005 level through 2035
What is included (and excluded) in developing EIA’s “Reference case” projections?
3 Howard Gruenspecht AEO2012, January 23, 2012
• Generally assumes current laws and regulations – excludes potential future laws and regulations (e.g., proposed greenhouse gas legislation
and proposed fuel economy standards are not included)
– provisions generally sunset as specified in law (e.g., renewable tax credits expire)
• Some grey areas – adds a premium to the capital cost of CO2-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
Overview of U.S. energy supply and demand
4 Howard Gruenspecht AEO2012, January 23, 2012
Current U.S. energy supply is 83% fossil fuels; demand is broadly distributed among the major sectors
5
2010 total U.S. energy use = 98.0 quadrillion Btu
Source: EIA, Annual Energy Outlook 2012 Early Release
Primary energy demand by fuel Primary energy demand by sector
Natural gas 25.2%
Coal 21.3%
Renewable 8.2%
Nuclear 8.6% Petroleum
36.7%
Electricity – Residential
15.6%
Residential and Commercial 11.2%
Electricity – Commercial
14.3%
Electricity – Industrial 10.4% Industrial
20.4%
Transportation 28.1%
Howard Gruenspecht AEO2012, January 23, 2012
Energy use grows slowly over the projection in response to a slow and extended economic recovery and improving energy efficiency
6
0
20
40
60
80
100
120
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
U.S. primary energy consumption quadrillion Btu per year
Source: EIA, Annual Energy Outlook 2012 Early Release
History Projections 2010
37%
25%
21%
9%
7%
1%
32%
25%
20%
11%
9%
4%
Shares of total U.S. energy
Nuclear
Oil and other liquids
Liquid biofuels Natural gas
Coal
Renewables (excluding liquid biofuels)
Howard Gruenspecht AEO2012, January 23, 2012
Energy and CO2 per dollar of GDP continue to decline; per-capita energy use also declines
7
index, 2005=1
Source: EIA, Annual Energy Outlook 2012 Early Release
0.00
0.25
0.50
0.75
1.00
1.25
1.50
1.75
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Per dollar Per capita CO2 per GDP
History Projections 2010
Howard Gruenspecht AEO2012, January 23, 2012
0
1
2
3
4
5
6
7
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Energy-related CO2 emissions
2005 2020 2035 Energy-related CO2 emissions
6.00 5.55 5.81
% change from 2005 - - -7.5% -3.2%
In the AEO2012 Reference case, energy-related CO2 emissions never get back to pre-recession levels by 2035
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billion metric tons carbon dioxide
Source: EIA, Annual Energy Outlook 2012 Early Release
Projections History 2010 2005
Howard Gruenspecht AEO2012, January 23, 2012
Natural Gas
9 Howard Gruenspecht AEO2012, January 23, 2012
10
0
500
1000
1500
2000
2500
3000
2000 2005 2006 2007 2008 2009 2010 2011 2012
U.S. dry gas resources trillion cubic feet
*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.
Source: EIA, Annual Energy Outlook
2,214
273
482
1,460
Unproved shale gas Unproved other gas (including Alaska* and offshore) Proved reserves (all types and locations)
Howard Gruenspecht AEO2012, January 23, 2012
AEO Edition
Technically recoverable natural gas resources reflect updated assessments
Domestic natural gas production grows faster than consumption
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-5
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
U.S. dry gas trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2012 Early Release
Projections History 2010
Consumption
Domestic supply
Howard Gruenspecht AEO2012, January 23, 2012
Net imports
0
5
10
15
20
25
30
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
2%
Shale gas offsets declines in other U.S. natural gas production sources
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U.S. dry gas production trillion cubic feet per year
Source: EIA, Annual Energy Outlook 2012 Early Release
Non-associated offshore
Projections History
Associated with oil Coalbed methane
Non-associated onshore
Shale gas
2010
10%
7%
9%
7%
21%
23%
9%
9%
7%
49%
Alaska 1%
Tight gas 26%
21%
Howard Gruenspecht AEO2012, January 23, 2012
Natural gas consumption is quite dispersed; electric power and industrial use drives much of the future demand growth
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0
5
10
15
20
25
30
2005 2010 2020 2030 2035
U.S. dry gas consumption trillion cubic feet per year
*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel. Source: EIA, Annual Energy Outlook 2012 Early Release
Projections History
Industrial*
Electric power
Commercial
Residential
Transportation**
34%
18%
13%
32%
3%
31%
21%
13%
33%
3%
Howard Gruenspecht AEO2012, January 23, 2012
Natural gas price projections are lower than in AEO2011, consistent with recent market developments
14
natural gas spot price (Henry Hub) 2010 dollars per million Btu
Sources: EIA, Annual Energy Outlook 2012 Early Release and EIA, Annual Energy Outlook 2011
0
1
2
3
4
5
6
7
8
9
10
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Projections History 2010
AEO2011
Howard Gruenspecht AEO2012, January 23, 2012
AEO2012
Petroleum and other liquid supply
15 Howard Gruenspecht AEO2012, January 23, 2012
0
25
50
75
100
125
150
175
200
225
1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Oil prices in the Reference case rise steadily; the full AEO2012 will include a wide range of oil prices
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annual average price of light low sulfur (LLS) crude oil real 2010 dollars per barrel
Source: EIA, Annual Energy Outlook 2012 Early Release
Projections History 2010
High Oil Price
Low Oil Price
AEO2012 Reference (LLS)
Howard Gruenspecht AEO2012, January 23, 2012
Global liquids supply increases 25% while market shares hold relatively stable
17
0
20
40
60
80
100
120
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
liquids supply million barrels per day
Source: EIA, Annual Energy Outlook 2012 Early Release
Projections History 2010
OPEC
Other non-OECD
OECD Americas
OECD other
42%
19%
35%
3%
40%
19%
35%
6%
Howard Gruenspecht AEO2012, January 23, 2012
U.S. imports of liquid fuels continue to decline due to increased production of gas liquids and biofuels and greater fuel efficiency
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U.S. liquid fuels supply million barrels per day
Source: EIA, Annual Energy Outlook 2012 Early Release
0
5
10
15
20
25
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Projections History
Natural gas plant liquids
Petroleum production
Biofuels including imports
Net petroleum imports
14%
12%
36%
36%
10%
49%
36%
5%
Liquids from coal 1%
Howard Gruenspecht AEO2012, January 23, 2012
2010
U.S. dependence on imported petroleum continues to decline
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0
5
10
15
20
25
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
U.S. liquid fuel supply million barrels per day
Projections History 2010
Consumption
Domestic supply
Net petroleum imports 49%
36%
Howard Gruenspecht AEO2012, January 23, 2012
60%
2005
Source: EIA, Annual Energy Outlook 2012 Early Release
0
5
10
15
20
25
30
35
40
45
2010 2022 2035
RFS with adjustments under CAA Sec.211(o)(7)
Other Advanced
Biofuels fall short of the RFS target in 2022, but exceed 36 billion gallons by the early 2030s
20 Howard Gruenspecht AEO2012, January 23, 2012
billions ethanol-equivalent gallons
Source: EIA, Annual Energy Outlook 2012 Early Release, Annual Energy Outlook 2011
Legislated RFS in 2022 Biodiesel Net imports
Cellulosic biofuels
Corn ethanol
AEO2011 AEO2012
0
5
10
15
20
25
30
35
40
45
2000 2005 2010 2015 2020 2025 2030 2035
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miles per gallon
Source: EIA, Annual Energy Outlook 2012 Early Release
2010 Projections History
Summary of standards
2012-2016: 34.1 mpg CAFE average (based on NHTSA vehicle footprint sales distribution)
2020: 35 mpg by statute 2017-2025: Reference case does not include proposed
rulemaking from December 2011
Howard Gruenspecht AEO2012, January 23, 2012
New light duty vehicle fuel economy reaches almost 38 mpg by 2035 in the Reference case, which does not include proposed standards for MY2017 to MY2025 vehicles
0
4
8
12
16
1995 2000 2005 2010 2015 2020 2025 2030 2035
Most transport fuel consumption is in light and heavy duty vehicles
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U.S. transportation energy consumption million barrels per day oil equivalent
Source: EIA, Annual Energy Outlook 2012 Early Release
Rail Air
Projections History
Heavy-duty vehicles
Light-duty vehicles
Marine
2010
5%
66%
2% 9%
18%
64%
20%
9%
5% 2%
Howard Gruenspecht AEO2012, January 23, 2012
Efficiency improvements mostly offset underlying drivers of growth in transportation services
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* Equal to a 27% reduction in fuel use per mile. ** Equal to an 19% reduction in fuel use per mile. Source: EIA, Annual Energy Outlook 2012 Early Release
2010
2035
Growth (2010-2035)
Light duty vehicles Fuel consumption (million barrels per day oil equivalent) 8.6 8.8 2%
Number of licensed drivers (millions) 209 265 27%
Miles per licensed driver 12,700 13,600 7%
Efficiency of vehicle stock (mpg) 20.4 27.8 36%*
Heavy duty vehicles Fuel consumption (million barrels per day oil equivalent) 2.4 2.8 18%
Manufacturing output (billion 2005 dollars) 4,260 6,270 47%
Number of freight trucks (millions) 9.3 13.4 44%
Miles per vehicle 25,300 25,700 1.3%
Efficiency of vehicle stock (mpg) 6.7 8.2 23%**
Howard Gruenspecht AEO2012, January 23, 2012
Electricity
24 Howard Gruenspecht AEO2012, January 23, 2012
While electricity consumption grows by 23% over the projection, the annual rate of growth slows
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percent growth (3-year rolling average)
0
2
4
6
8
10
12
14
1950 1960 1970 1980 1990 2000 2010 2020 2030
Projections
History Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2010 1.0 2010-2035 0.8
2010
Source: EIA, Annual Energy Outlook 2012 Early Release
Howard Gruenspecht AEO2012, January 23, 2012
In 2010, U.S. electricity generation was 70% fossil fuels, 20% nuclear, and 10% renewable
Nuclear 19.6%
Natural gas 23.8%
2010 Total net generation: 4,120 billion kWh
Coal 44.9%
2010 Non-hydro renewable net generation: 168 billion kWh
Geothermal: 0.4%
Other biomass: 0.5%
Wood and wood-derived fuels: 0.9%
Other renewable
4.1%
Conventional hydroelectric
6.2%
Other 0.3%
Wind: 2.3%
Solar thermal and PV: <0.1%
Petroleum 0.9%
Other gases 0.3%
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Source: EIA, Annual Energy Review, October 2011
Howard Gruenspecht AEO2012, January 23, 2012
0
1
2
3
4
5
6
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Projections History
18%
16%
Electricity mix gradually shifts to lower-carbon options, led by growth in renewables and natural gas
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electricity net generation trillion kilowatthours per year
Source: EIA, Annual Energy Outlook 2012 Early Release
2010
24%
20%
45%
10%
1%
39%
27%
1%
Nuclear Oil and other liquids
Natural gas
Coal
Renewables
Howard Gruenspecht AEO2012, January 23, 2012
0
100
200
300
400
500
1990 1995 2000 2005 2010 2015 2020 2025 2030 2035
Projections History
Non-hydro renewable sources more than double between 2010 and 2035
28
non-hydropower renewable generation billion kilowatthours per year
Source: EIA, Annual Energy Outlook 2012 Early Release
Wind
Solar
Biomass
Geothermal Waste
Industrial CHP Power sector
Advanced biofuels cogeneration
Howard Gruenspecht AEO2012, January 23, 2012
2010
Expected changes in the AEO2012 Reference case for the complete release
29 Howard Gruenspecht AEO2012, January 23, 2012
• Incorporation of Mercury and Air Toxics Standards (MATS) issued by EPA in December, 2011
• Updated historical data and equations in the transportation sector, based on revised data from the National Highway Traffic Safety Administration (NHTSA) and Federal Highway Administration
• Revised long-term macroeconomic projection based on an updated long term projection from IHS Global Insight, Inc.
• New model for cement production in the industrial sector
• Updated handling of biomass supply
For more information
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U.S. Energy Information Administration home page | www.eia.gov
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Short-Term Energy Outlook | www.eia.gov/forecasts/steo
International Energy Outlook | www.eia.gov/forecasts/ieo
Monthly Energy Review | www.eia.gov/totalenergy/data/monthly
Annual Energy Review | www.eia.gov/totalenergy/data/annual
Howard Gruenspecht AEO2012, January 23, 2012
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