The U.S. Energy Information Administration (EIA) has issued a pre-release version of the Annual Energy Outlook 2016 (AEO2016). The pre-release includes the Reference case and the No Clean Power Plan case. The Reference case includes existing legislation and regulation including the Clean Power Plan (CPP). The Clean Power Plan has been mandated, but its implementation is being held up because it is being challenged in court. The No Clean Power Plan case assumes that the Clean Power Plan is not implemented.
The AEO2016 projects that CO2 emissions from electric power generation, which have declined over the past decade, will continue to decline. In the Reference case, CO2 emissions in the power sector are projected to drop to 35% below 2005 levels in 2030 as a result of the implementation of the CPP. Increased generation from renewables and the replacement of coal-fired by gas-fired generation are the primary reasons for lower emissions. There are a number of drivers including continuing low natural gas prices, state-level renewable portfolio standards, federal tax credits for renewables, and tighter environmental regulations. If the CPP is not implemented, the EIA projects that emissions will rise slightly but remain 19% below 2005 levels through 2040.
The most important trend that the EIA sees is the decoupling of emissions and economic growth. The EIA foresees that economic growth and electricity demand remain linked, but the linkage is shifting toward less energy intensity ($ of GDP per unit of electric power). The drivers for this include population growth, saturation of electricity using appliances such as refrigerators, higher efficiency of newer appliances, and a shift in the economy toward less energy-intensive industries. The efficiency standards for lighting and other appliances help to reduce the growth in electricity demand.
It is very interesting that the EIA projects substantial growth in the renewable generation share of electricity generation with or without the CPP. It projects that renewable generation will more than double with or without the CPP. Low cost solar PV installations, tax credit extensions and state renewable mandates are the important drivers.
The CPP is projected to be a major driver for natural gas generation. The natural gas share is projected to grow by 44% by 2040 with the CPP, compared to 32% in the No CPP case.
Coal generation is projected to decline by 32% from 2015 to 2040 with the CPP. Without the CPP coal generation is projected to remain flat as fewer plants are retired and the remaining units are assumed to operate at higher levels. Overall the coal share of total generation is projected to decline since no significant new capacity is expected to be added.
Nuclear generation is projected to remain flat throughout the projection, with new nuclear power units being offset by retirements of existing capacity. The EIA projects that no new, unplanned, nuclear plants will be constructed even with the CPP in place. According to the projection the nuclear share of total generation declines from 2015 level with or without the CPP.