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Annual Energy Outlook 2008 (Early Release) |
Energy Consumption Total primary energy consumption in the AEO2008 reference case increases at an average rate of 0.9 percent per year, from 100.0 quadrillion Btu in 2006 to 123.8 quadrillion Btu in 2030—7.4 quadrillion Btu less than in the AEO2007 reference case. In 2030, the levels of consumption projected for liquid fuels, natural gas, and coal are all lower in the AEO2008 reference case than in the AEO2007 reference case. Among the most important factors resulting in lower total energy demand in the AEO2008 reference case are lower economic growth, higher energy prices, greater use of more efficient appliances, and slower growth in energy-intensive industries. As a result of demographic trends and housing preferences, residential delivered energy consumption in the AEO2008 reference case grows from 11.0 quadrillion Btu in 2006 to 13.3 quadrillion Btu in 2030, or by 0.8 percent per year (Figure 2). Higher delivered energy prices, slower growth in the housing stock, increases in end-use efficiency for most services, and a revised accounting of heating and cooling degree-days to better reflect recent temperature trends contribute to the lower level of residential energy use in the AEO2008 projection, which is 0.5 quadrillion Btu lower than the AEO2007 projection. Higher delivered energy prices and slower growth in commercial square footage lead to slower growth in commercial energy consumption in the AEO2008 reference case than in the AEO2007 reference case. Delivered commercial energy consumption grows from 8.4 quadrillion Btu in 2006 to 11.5 quadrillion Btu in 2030, almost 1 quadrillion Btu less than in the AEO2007 reference case. Since 1997, delivered energy consumption in the U.S. industrial sector has trended downward, falling from about 27 quadrillion Btu in 1997 to 25 quadrillion Btu in 2006. A number of factors have worked to reduce industrial energy consumption since 1997: economic weakness between 2000 and 2003, the hurricanes of 2005 that reduced activity in some industrial subsectors, and rising energy prices. Delivered industrial energy consumption in the AEO2008 reference case reaches 28.3 quadrillion Btu in 2030. The AEO2008 reference case does not consider events such as hurricanes and includes steady economic growth and declining energy prices in the near term. Expected growth in the energy-intensive industries continues to be weak, however, as they face increased competition from foreign regions with lower relative energy prices. Growth in the energy-intensive manufacturing industries averages 0.8 percent per year from 2006 to 2030, slower than the 1.4-percent average growth in AEO2007. Total industrial energy consumption in AEO2008 includes strong growth in nontraditional fuels, such as CTL and biofuels. Approximately 1.3 quadrillion Btu of coal is used to produce liquids in 2030, a practice not yet commercialized in 2006. Energy for biofuels in the industrial sector grows from 0.3 quadrillion Btu in 2006 to 0.8 quadrillion Btu in 2030. Delivered energy consumption in 2030 for industrial uses other than refining of conventional and nontraditional liquid fuels is projected to grow by only 0.2 quadrillion Btu above 2006 levels (21.5 quadrillion Btu in 2030 compared with 21.3 quadrillion Btu in 2006), despite growth in industrial shipments (excluding refining) that averages 1.5 percent per year from 2006 to 2030. The stronger growth in refining energy consumption results from increased production of nontraditional fuels and from the effects on oil refiners’ energy use of both a heavier average crude oil slate and responses to emissions regulations. Delivered energy consumption in the transportation sector grows to 36.6 quadrillion Btu in 2030 in the AEO2008 reference case, 2.7 quadrillion Btu lower than in AEO2007. The lower projected level of consumption predominantly reflects the influence of slower economic growth, but it also reflects higher fuel prices. Travel demand for light-duty vehicles is a significant determinant of total transportation energy demand, and over the past 20 years it has grown at an average rate of 2.6 percent per year. In the AEO2008 reference case, travel demand is projected to grow by 1.6 percent per year through 2030. The slower rate of growth reflects both demographic factors (for example, a slowdown in growth in labor force participation by women) and higher energy prices. The projected average fuel economy of new light-duty vehicles in 2030 is 30.0 miles per gallon, or 4.7 miles per gallon higher than the current average. Projected increases in new vehicle fuel economy reflect the existing Federal corporate average fuel economy (CAFE) standards for light trucks as well as market-driven increases in the sale of unconventional vehicle technologies,5 such as flex-fuel, hybrid, and diesel vehicles, and a slowdown in the growth of new light truck sales. The substantial revisions to Federal CAFE standards that are under consideration in the 110th Congress are not reflected in the AEO2008 reference case. Total electricity consumption, including both purchases from electric power producers and on-site generation, grows from 3,821 billion kilowatthours in 2006 to 5,149 billion kilowatthours in 2030, increasing at an average annual rate of 1.3 percent in the AEO2008 reference case. In comparison, the AEO2007 reference case projected faster growth, averaging 1.5 percent per year, with total electricity consumption increasing to 5,478 billion kilowatthours in 2030. The reduced rate of growth in AEO2008 results from slower economic growth and higher electricity prices. The projection for natural gas consumption in the AEO2008 reference case is sharply lower than in AEO2007. In AEO2008, natural gas consumption increases from 21.8 trillion cubic feet in 2006 to 24.3 trillion cubic feet in 2016, then declines to 23.4 trillion cubic in 2030 (Figure 3). Consumption is lower in all sectors, and particularly in the industrial and electricity power sectors. Industrial natural gas use is 1.3 trillion cubic feet lower in 2030 in the AEO2008 reference case (8.5 trillion cubic feet compared with 9.8 trillion cubic feet in the AEO2007 reference case) as a result of higher delivered natural gas prices, lower economic growth, and a reassessment of natural gas use in the energy-intensive industries. In 2030, electricity generation accounts for 5.1 trillion cubic feet of natural gas use in AEO2008, compared with 5.9 trillion cubic feet in AEO2007. 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 31.7 quadrillion Btu (1,682 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 and for CTL production grows rapidly. In the AEO2008 reference case, coal consumption in the electric power sector increases from 24.0 quadrillion Btu in 2020 to 28.5 quadrillion Btu in 2030, and coal use at CTL plants increases from 0.4 quadrillion Btu in 2020 to 1.3 quadrillion Btu in 2030. Total consumption of liquid fuels grows from 20.7 million barrels per day in 2006 to 24.9 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 consumption is lower in all sectors in AEO2008 than in the AEO2007 reference case, as a result of higher delivered prices for liquids and slower economic growth. Much of the difference is in the transportation sector. The AEO2008 reference case projects substantially greater use of renewable energy than was projected in AEO2007. Total consumption of marketed renewable fuels in the AEO2008 reference case (including ethanol for gasoline blending, of which 1.4 quadrillion Btu is included with liquid fuels consumption in 2030) grows from 6.8 quadrillion Btu in 2006 to 12.2 quadrillion Btu in 2030. Excluding hydroelectric power, renewable energy consumption grows from 3.4 quadrillion Btu in 2006 to 6.7 quadrillion Btu in 2030, compared with 5.5 quadrillion Btu in 2030 in the AEO2007 reference case. The higher level of nonhydroelectric renewable energy consumption is partially a result of the higher energy prices in the AEO2008 reference case. It also reflects a revised representation of State renewable portfolio standard (RPS) programs, which require that specific and generally increasing shares of electricity sales be supplied by renewable resources, such as wind, solar, geothermal, and sometimes biomass or hydropower. In previous AEOs, greater weight was placed on the “escape clauses” incorporated in many State RPS programs and on the fact that the costs of the programs to consumers would increase significantly if the Federal production tax credit (PTC) for qualifying renewable energy expired as provided under current law. The updated representation of State RPS programs results in significant additional growth of renewable generation from wind, biomass, and geothermal resources. The AEO2008 reference case includes 17 billion gallons of ethanol consumption in 2030, 16 percent more than in the AEO2007 reference case. With corn and biofeedstock supplies increasing, and with price advantages over other motor gasoline blending components, ethanol consumption grows from 5.6 billion gallons in 2006 to 13.5 billion gallons in 2012 in the AEO2008 reference case—far exceeding the requirement for 7.5 billion gallons in 2012 in the Renewable Fuel Standard that was enacted as part of the Energy Policy Act of 2005 (EPACT2005). Gasoline blending accounts for nearly all the projected consumption of ethanol. Ethanol supply in AEO2008 is dominated by domestic corn-based production, particularly in the near term, as a result of its cost advantages and eligibility for tax credits. Domestic ethanol production slows in the mid- to long term with expiration of the ethanol tax credit in December 2010. The AEO2008 reference case also expects strong growth in ethanol imports after 2010, reflecting the pending expiration of the tariff on imported ethanol in January 2009.
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