annual energy outlook 2016 - eia.gov · june 28, 2016 source: eia, annual energy outlook 2016...

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

Annual Energy Outlook 2016

AEO2016 Rollout Presentation

Johns Hopkins School of Advanced International Studies

June 28, 2016 | Washington, D.C.

by

Adam Sieminski, Administrator

Key takeaways from AEO2016• Energy use per dollar of Gross Domestic Product declines through 2040 allowing for economic growth

without upward pressure on energy consumption and related emissions

• Electricity demand growth slows while non-power sector generation increases, dampening the need for central power station generation

• Market forces drive up oil prices throughout the projection and U.S. production increases in response

• Natural gas production increases despite relatively low and stable natural gas prices

• Technological improvements are key drivers of U.S. oil and gas production

• Net exports of liquefied natural gas range between 3.5 Tcf and 10.6 Tcf in 2040 depending on relative prices in foreign markets

• EPA’s proposed medium and heavy-duty vehicle Phase 2 standards would increase fuel economy, resulting in 18% lower diesel consumption in 2040 compared with the Reference case

Adam Sieminski, Johns Hopkins SAIS

June 28, 20162

Key takeaways from AEO2016 (continued)• EPA’s Clean Power Plan (CPP) requires states to reduce carbon dioxide emissions from existing

fossil generators:

– Details of the CPP implementation strategies selected by the states affect the overall generation

mix, as well as consumer prices

– CPP effects on coal production vary across regions

– CPP, along with renewable tax credit extension and lower natural gas prices, contributes to a shift in

the generation mix, with increases in generation from natural gas and renewables and reduced coal

generation

– Even if the CPP is not implemented, key factors combine to support a transition from coal to natural

gas as the predominant fuel for electric generation

• Extending or expanding existing laws and regulations, including efficiency policies for appliances

and vehicles, the CPP, and EPA’s proposed Phase 2 standards for medium- and heavy-duty trucks

results lower energy consumption and CO2 emissions than projected in the Reference case


June 28, 20163

Overview

4Adam Sieminski, Johns Hopkins SAIS

June 28, 2016

The AEO2016 includes a full range of CPP and other alternative cases,

including:


June 28, 20165

• Alternative CPP cases: Rate-based implementation (applying limits on CO2 emissions

per kilowatthour from covered sources), other mass-based implementation options

(wider trading, allowance allocation to generators), hybrid case (mass-based in

Northeast and California, rate-based elsewhere), extended case (further reductions

beyond 2030)

• High and low world oil price

• High and low macroeconomic growth

• High and low oil and natural gas resources/technology

• High and low technology efficiency innovation

• Phase 2 standards for medium- and heavy-duty trucks

• Extended policies: extends current tax credits, adds follow-on efficiency standards,

extends the end date of the CPP from 2030 to 2040, and adopts and extends the

proposed Phase 2 Standards for medium- and heavy-duty trucks

0

20

40

60

80

100

120

1980 1990 2000 2010 2020 2030 2040 2020 2030 2040

U.S. primary energy consumption

quadrillion Btu


June 28, 2016

Reductions in energy intensity largely offset impact of gross domestic

product (GDP) growth, leading to slow projected growth in energy use

Source: EIA, Annual Energy Outlook 2016

6

29%

9%

16

36%

8%

Coal

History

2015

1%Liquid biofuels

32% of

U.S. total

8%

14%

33%

12%

1%

2015 AEO2016 Reference No CPP

Natural gas

Renewables

Nuclear

Petroleum and other liquids

33%

8%

10%

34%

14%

1%

(excluding biofuels)

ProjectionsProjections

energy and emission intensity

index, 2005=1


June 28, 2016

Shift towards low- and no-carbon fuels causes CO2 intensity to fall faster

than energy intensity per dollar of GDP

Source: EIA, Annual Energy Outlook 2016 Reference case

7

0.0

0.5

1.0

1.5

2.0

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

History Projections2015

Carbon dioxide emissions

per 2009 dollar GDP

Energy use per 2009

dollar of GDP

Energy use per capita

2005

AEO2016 Reference

No CPP

4,000

4,500

5,000

5,500

6,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

energy-related carbon dioxide emissions

million metric tons


June 28, 2016

CO2 emissions are lower in AEO2016 Reference case than AEO2015

Reference Case, even without consideration of CPP


8

No CPP

AEO2015 Reference

AEO2016 Reference


energy-related carbon dioxide emissions

million metric tons


June 28, 2016

Energy-related carbon dioxide emissions across six cases, 2000 to 2040


9

4,000

4,500

5,000

5,500

6,000

2000 2005 2010 2015 2020 2025 2030 2035 2040

High Macro


Extended

Policies

No CPP Low Oil Price

High Oil Price

Low Macro

Reference

-10

0

10

20

30

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040


June 28, 2016

U.S. net energy imports trend downward, reflecting increased oil and natural gas

production coupled with slowly growing or falling demand


10


Coal

Natural gas

Liquids

U.S. net imports

quadrillion Btu

Electricity


June 28, 2016


June 28, 2016


Electricity use (including direct use) continues to grow, but the rate of

growth slows as it has almost continuously over the past 60 years

12

U.S. electricity use and GDP

percent growth (rolling average of 3-year periods)

0

2

4

6

8

10

12

14

1950 1960 1970 1980 1990 2000 2010 2020 2030 2040

Period Average Growth

Electricity use GDP

1950s 9.8 4.2

1960s 7.3 4.5

1970s 4.7 3.2

1980s 2.9 3.1

1990s 2.4 3.2

2000-2015 0.5 1.8

2015-2040 0.9 2.2

History

Electricity

GDP

2015 Projections

0

500

1,000

1,500

2,000

2,500

1990 2000 2010 2020 2030 2040 2020 2030 2040

net electricity generation

billion kilowatthours

2015


June 28, 2016

Both natural gas and renewable generation surpass coal by 2030 in the

Reference case, but only natural gas does so in the No CPP case


13

History

2015AEO2016 Reference No CPP

Nuclear

Petroleum

Natural gas

Coal

Renewables

Projections Projections

0

200

400

600

800

1,000

1,200

1,400

2000 2005 2010 2015 2020 2025 2030 2035 2040 2015 2020 2025 2030 2035 2040

renewable electricity generation by fuel type



June 28, 2016

Changing tax and cost assumptions contribute to stronger solar growth,

with the CPP providing a boost to renewables


14

Solar Geothermal

Biomass

Municipal waste/

landfill gas

Wind

2015

History

Conventional

hydroelectric power

AEO2016 Reference No CPP2015


CPP implementation options affect results


June 28, 2016


15

CaseTarget

TypeTrading

Credit

Allocation

CO2 Reduction

Below 2005Impact vs. Reference

Reference Mass Regional Load 35% by 2030 N/A

No CPP N/A N/A N/A 20% by 2030 Stable coal generation

CPP Rate Rate Regional N/A 36% by 2030More renewable

generation

CPP

Interregional

Trading

Mass Interconnect Load 34% by 2030More renewable

generation

CPP Allocation

to GeneratorsMass Regional Generators 35% by 2030 Higher electricity prices

CPP Extended Mass Regional Load 45% by 2040More coal retirements,

gas, renewables


June 28, 2016

Alternative CPP implementation decisions can lower power-sector CO2

emissions in 2040 and extending CPP targets past 2030 could reduce

emissions even further


16

1,000

1,250

1,500

1,750

2,000

2,250

2,500

2005 2010 2015 2020 2025 2030 2035 2040

-16%

-21%

-32%

No CPP

CPP Extended

CPP Rate

CPP Interregional Trading

Reference

2015History Projections

electric power sector carbon dioxide (CO2) emissions

million metric tons


June 28, 2016

Retail electricity prices in 2030 are 4%-7% higher than in No CPP case


17

8.0

8.5

9.0

9.5

10.0

10.5

11.0

11.5

2005 2010 2015 2020 2025 2030 2035 2040


average electricity price

2015 cents per kilowatthour

Reference

CPP RateCPP Allocation to Generators

No CPP

CPP Extended


June 28, 2016

CPP reduces coal generation and increases renewable and natural gas

generation; mass-based standards result in more natural gas and less

renewables than rate-based targets


18

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 Reference CPPInterregional

Trading

No CPP Reference CPPInterregional

Trading

No CPP

net electricity generation


20402030

Oil and otherCoal

Nuclear

Natural gas

Wind

Solar

Incremental energy efficiency

Other renewables

CPP

Rate

CPP

ExtendedInter-

regional

Trading

CPP

Rate

CPP

ExtendedInter-

regional

Trading

0

200

400

600

800

1,000

2015 2020 2025 2030 2035 2040

million short tons


June 28, 2016

All coal supply regions are challenged when the CPP is implemented

19

No CPP Case

Reference Case

West: 124 mm tons

Interior: 81 mm tons

Appalachia: 29 mm tons

CPP supply

impact, 2040

51% West

26% Interior

22% Appalachia

Reference case

supply mix, 2040

55%

19%

26%


2015

Petroleum and other liquids


June 28, 2016

Brent crude oil spot price

2015 dollars per barrel


June 28, 2016

Near-term crude oil price scenario is lower in AEO2016

Source: EIA, Annual Energy Outlook 2016 Reference case and Annual Energy Outlook 2015 Reference case

21

0

50

100

150

200

250

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040


AEO2015 Reference

AEO2016 Reference

Low Oil Price

High Oil Price

0

5

10

15

20

1990 2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040

Projections

U.S. crude oil production

million barrels per day


June 28, 2016

U.S. crude oil production rises above previous historical high before

2030; alternative price and resource/technology cases can differ


22

Tight oil

Alaska

Lower 48 offshore

History

2015 2015 2015

U.S. maximum production level of

9.6 million barrels per day in 1970

Other lower 48 onshore

Reference

Reference

Low Oil and Gas Resource

and Technology

Low Oil Price

High Oil and Gas

Resource and

Technology

High Oil Price

High Oil and Gas Resource

and Technology


0

5

10

15

20

25

1970 1980 1990 2000 2010 2020 2030 2040 2020 2030 2040

U.S. liquid fuels supply



June 28, 2016

Combination of increased tight oil production and higher fuel

efficiency drives projected decline in oil imports

Note: “Other” includes refinery gain, biofuels production, all stock withdrawals, and other domestic sources of liquid fuels


23

History

Natural gas

plant liquids

Other crude oil production

(excluding tight oil starting in 2000)

Net petroleum and other liquids

imports

23%

25%

24%

Other

17%

Tight oil

production

10%

25%

19%

23%

12%

21%

2015

+21%

23%

9%

24%

44%


and TechnologyReference

Net exportsPercent of

supply

U.S.

supply

100%

2015

0

1

2

3

4

5

6

7

8

9

1990 2000 2010 2020 2030 2040

0

5

10

15

20

25

30

1990 2000 2010 2020 2030 2040

energy spot prices under Reference case

2015 dollars per million Btu Oil-to-gas price ratio


June 28, 2016

The price relationship between crude oil and natural gas impacts

producer economics and production levels for both commodities


24

2015

Henry Hub spot price

Brent crude oil

spot price

High Oil Price

Low Oil Price

Reference



and Technology

Low Oil and Gas

Resource and Technology

History Projections


June 28, 2016

Light-duty vehicle share of energy consumption declines because of new

vehicle fuel economy standards and in case with proposed Phase 2 standards


25

0 5 10 15 20 25 30

Total

Other

Rail

Pipeline

Marine

Air

Heavy-duty vehicles

Light-duty vehicles

2015

2040, Reference

2040, Phase 2 standards

energy consumption

quadrillion Btu

medium- and heavy-duty vehicle fuel consumption by type

million barrels per day oil equivalent


June 28, 2016

Diesel consumption decreases by a cumulative 2.5 billion barrels from

2021 to 2040 with impact of proposed Phase 2 standards


26

Solar

Wind

Conventional

hydroelectric power

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2005 2010 2015 2020 2025 2030 2035 2040 2015 2020 2025 2030 2035 2040


Diesel

CNG & LNG

Gasoline

2015

History

Reference Phase 2 Standards2015

0

1

2

3

4

5

6

7

2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. total natural gas plant liquids production



June 28, 2016

Future domestic natural gas plant liquids production depends on both

domestic resource endowment and world crude oil prices


27


Reference

Low Oil and Gas Resource

and Technology

Low Oil Price

High Oil and Gas Resource and Technology

High Oil Price

Natural gas


June 28, 2016

0

20

40

60

80

100

120

140

160

0

10

20

30

40

50

60

1990 2000 2010 2020 2030 2040

0

10

20

30

40

50

60

2015 2020 2025 2030 2035 2040

U.S. dry natural gas production

trillion cubic feet

U.S. dry natural gas production

trillion cubic feet


June 28, 2016

U.S. natural gas production dominated by shale resources; alternative

price and resource /technology assumptions could be quite different


29

billion cubic feet per day

Low Oil and Gas Resource and Technology

Low Oil Price


and Technology

High Oil Price

2016 Reference

2015 Reference

Tight gas

Coalbed methane

Other lower 48

Shale gas and

tight oil plays

Alaska

Lower 48 offshore

History Projections Projections2015

Alaskaonshore

0

10

20

30

40

50

60

70

80

90

100

0

5

10

15

20

25

30

35

40

2005 2015 Reference No CPP Reference No CPP Reference No CPP

U.S. dry gas consumption

trillion cubic feet billion cubic feet per day


June 28, 2016

Natural gas consumption growth is led by electricity generation and

industrial uses; natural gas use rises in all sectors except residential


30

ProjectionsHistory

Electric powerIndustrial**Residential Transportation*

12.6

4.6

1.7

11.2

3.7

9.1

4.6

0.9

9.6

3.2

**Includes combined heat-and-power and lease, plant, and export liquefaction fuel

Commercial

12.5

4.6

1.7

12.0

3.7

20402020 2030

*Includes pipeline fuel

0

10

20

30

40

50

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040

U.S. energy production and consumption

quadrillion Btu


June 28, 2016

U.S. natural gas production will soon exceed consumption, making the

United States a net exporter


31

Projections2015

Net exports

Consumption

Domestic supply

Net imports: 3%

2020

2040History

-22%

-8

-4

0

4

8

12

16

2000 2010 2020 2030 2040 2020 2030 2040 2020 2030 2040

Projections Projections Projections

U.S. natural gas imports and exports

trillion cubic feet billion cubic feet per day


June 28, 2016

Projected U.S. natural gas exports reflect the spread between domestic

natural gas prices and world energy prices


32

LNG imports

History

2015 2015

40

2015 Low Oil Price

Pipeline exports to

Mexico

Pipeline exports to Canada Pipeline imports from Canada

Alaska LNG exports

30

20

10

0

-10

-20


and Technology

Lower 48 states LNG

exports

Reference

0

2

4

6

8

10

2000 2005 2010 2015 2020 2025 2030 2035 2040

average Henry Hub spot prices for natural gas

2015 dollars per million Btu


June 28, 2016

Future domestic natural gas prices depend on both domestic resource

availability and world energy prices


33


Reference

Low Oil and Gas

Resource/Technology

Low Oil Price

High Oil and Gas Resource/Technology

High Oil Price

Buildings, Efficiency, Industry


June 28, 2016


June 28, 2016

Energy efficiency policies and standards, and population shifts to

warmer climates, contribute to declining energy intensity in the

building sector


35

0 5 10 15 20 25 30 35

Other uses

Computers

Cooking

Lighting

Refrigeration and freezers

Water heating

Heating, cooling, and ventilation

2015

2040

energy intensity

thousand Btu per square foot per year

0

50

100

150

200

250

300

2015 Reference Extended Policies



June 28, 2016

Extended Policies case increases the rate at which the building sector

generates its own electricity

36


Residential

generation

for own use

Commercial

generation

for own use

0

5

10

15

20

25

30

35

40

2010 2015 2020 2025 2030 2035 2040

industrial delivered energy consumption

quadrillion Btu

industrial delivered energy consumption

quadrillion Btu


June 28, 2016

Industrial coal share falls, petroleum feedstock share rises; high price

and high macro cases have similar effects on consumption


37

0

5

10

15

20

25

30

35

40

2015 2020 2025 2030 2035 2040

ProjectionsProjectionsHistory

Petroleum heat and power

Petroleum feedstocks

Natural gas excluding feedstocks

Renewables

Purchased electricity

Reference

Low Macro

High PriceHigh Macro

Natural gas feedstocks

Coal

For more information

U.S. Energy Information Administration home page | www.eia.gov

Annual Energy Outlook | www.eia.gov/forecasts/aeo

Short-Term Energy Outlook | www.eia.gov/forecasts/steo

International Energy Outlook | www.eia.gov/forecasts/ieo

Today In Energy | www.eia.gov/todayinenergy

Monthly Energy Review | www.eia.gov/totalenergy/data/monthly

State Energy Portal | www.eia.gov/state


June 28, 2016

http://www.eia.gov/

http://www.eia.gov/forecasts/aeo

http://www.eia.gov/forecasts/steo

http://www.eia.gov/forecasts/ieo

http://www.eia.gov/todayinenergy

http://www.eia.gov/totalenergy/data/monthly

http://www.eia.gov/state

annual energy outlook 2016 - eia.gov · june 28, 2016 source: eia, annual energy outlook 2016...

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