Energy Consumption by Primary Fuel

Total consumption of liquid fuels, including both fos-sil liquids and biofuels, grows from 20.7 million bar-rels per day in 2006 to 22.8 million barrels per day in 2030 in the AEO2008 reference case (Figure 3), less than the AEO2007 reference case projection of 26.9 million barrels per day in 2030. Liquid fuels consump-tion is lower in all sectors in AEO2008 than in the AEO2007 reference case, as a result of incorporation of the new LDV CAFE standard specified in EISA2007, slower economic growth, and higher deliv-ered prices for liquid fuels. Much of the difference is in the transportation sector.

figure data

In AEO2008, natural gas consumption increases from 21.7 trillion cubic feet in 2006 to 23.8 trillion cubic feet in 2016, then declines to 22.7 trillion cubic in 2030 (Figure 3). The projection for natural gas consumption in the AEO2008 reference case is sharply lower than in AEO2007, where consumption grew to 26.1 trillion cubic feet in 2030. Consumption is lower in all sectors in AEO2008, and particularly in the industrial and electricity power sectors. Industrial natural gas use is 1.7 trillion cubic feet lower in 2030 in the AEO2008 reference case (8.1 trillion cubic feet, compared with 9.8 trillion cubic feet in AEO2007), as a result of higher delivered prices for natural gas, lower economic growth, and a reassessment of natural gas use in the energy-intensive industries. In AEO2008, electricity generation accounts for 5.0 trillion cubic feet of natural gas use in 2030, compared with the AEO2007 projection of 5.9 trillion cubic feet. The lower level of consumption in AEO2008 results from higher natural gas prices and slower growth in electricity demand.

Total coal consumption increases from 22.5 quadrillion Btu (1,114 million short tons) in 2006 to 29.9 quadrillion Btu (1,545 million short tons) in 2030 in the AEO2008 reference case. As in the AEO2007 reference case, coal consumption is projected to grow at a faster rate toward the end of the projection period, particularly after 2020, as coal use for new coal-fired generating capacity grows rapidly. In the AEO2008 reference case, coal consumption in the electric power sector increases from 23.7 quadrillion Btu in 2020 to 27.5 quadrillion Btu in 2030, and coal use at CTL plants increases from 0.6 quadrillion Btu in 2020 to 1.0 quadrillion Btu in 2030. The projected increase in coal use for CTL plants is lower than in previous AEOs as a result of EISA2007, because investment dollars that previously would have gone into CTL capacity now flow to biomass-to-liquids (BTL) capacity; however, there is a great deal of uncertainty around this projection.

The AEO2008 reference case projects substantially greater use of renewable energy than was projected in AEO2007. Total consumption of marketed renewable fuels—including ethanol for gasoline blending, biodiesel [5], and diesel from biomass [6], of which 2.8 quadrillion Btu in 2030 is included with liquids fuel consumption—grows by 3.0 percent per year in the reference case, from 6.8 quadrillion Btu in 2006 to 13.7 quadrillion Btu in 2030, compared with 9.9 quadrillion Btu in AEO2007. About 45 percent of the demand for renewables in 2030 is for grid-related electricity generation (including combined heat and power).

The rapid growth in the use of renewable fuels for transportation in AEO2008 reflects the EISA2007 RFS, which sets a requirement for 21 billion gallons of advanced biofuels and 36 billion gallons of total renewable fuels by 2022. Included are requirements for 1 billion gallons of biodiesel and 16 billion gallons of cellulosic biofuels, both of which count toward the advanced biofuels requirement. The remaining 4 billion gallons of advanced biofuels may come from any source. The difference between advanced biofuels and total renewable fuels may be met by corn ethanol. Diesel fuels derived from biomass feedstocks count for 1.5 times their physical volume in the calculation of credits toward the RFS requirements, because die-sel has a higher energy content per gallon than ethanol does.

Although the situation is very uncertain, the current state of the industry and EIA’s present view of projected rates of technology development and market penetration of cellulosic biofuel technologies suggest that available quantities of cellulosic biofuels before 2022 will be insufficient to meet the new RFS targets for cellulosic biofuels, triggering both waivers and a modification of applicable volumes, as provided for in Section 211(o) of the Clean Air Act as amended by EISA2007. The modification of volumes reduces the overall target in 2022 from 36 billion gallons to 32.5 billion gallons in the AEO2008 reference case.

Ethanol use in the AEO2008 reference case, grows from 5.6 billion gallons in 2006 to 23.9 billion gallons in 2030—about 16 percent of total gasoline consumption by volume and about 65 percent more than in AEO2007. Ethanol use for gasoline blending grows to 13.4 billion gallons and E85 consumption to 10.5 billion gallons in 2030. The ethanol supply is expected to be produced from both corn and cellulose feedstocks, with corn accounting for 15.0 billion gallons and cellulose 6.9 billion gallons of ethanol production in 2030. Biodiesel use increases to 1.2 billion gallons in 2030, or about 1.5 percent of total diesel consumption by volume. In addition, consumption of BTL diesel grows to 4.5 billion gallons in 2030, or 5.3 percent of total diesel consumption by volume.

Excluding hydroelectricity, renewable energy con-sumption for electric power generation grows from 0.9 quadrillion Btu in 2006 to 3.2 quadrillion Btu in 2030, as compared with 2.1 quadrillion Btu in AEO2007. The higher level of nonhydroelectric renewable energy consumption in the AEO2008 reference case reflects primarily a revised representation of State RPS programs, which require that specific and gener-ally increasing shares of electricity sales be supplied by renewable resources, such as wind, solar, geothermal, and sometimes biomass or hydropower. Previous AEOs placed more weight on the “escape clauses” incorporated in many State RPS programs, given that the consumer costs of the programs would increase significantly if the Federal production tax credit (PTC) for qualifying renewable energy expired as provided for under current law. The new representation, which assumes that the State RPS goals will be met absent a clear contrary indication, results in significant additional growth of renewable generation from wind, biomass, and geothermal resources.

Notes and Sources