The U.S. Energy Information Adminstration's (EIA) AEO2014 Early Release Overview has been released and the Reference Case changes projections from last year's AEIO2013, some significantly. EIA Reference Case projections tend to be conservative. One reason is that EIA Reference Case projections assume no new legislation or regulations beyond what has currently been enacted.
Total primary energy consumption is projected to grow by 12% in the AEO2014 Reference case, from 95 quadrillion Btu in 2012 to 106 quadrillion Btu in 2040.
Fossil fuel generation
Total electricity consumption in the AEO2014 Reference case is projected to grow from 3,826 billion kWh in 2012 to 4,954 billion kWh in 2040, an average annual rate of 0.9%. The combination of slow growth in electricity demand, competitively priced natural gas, programs encouraging renewable fuel use, and the implementation of environmental rules slows future coal use. The AEO2014 Reference case assumes implementation of the Clean Air Interstate Rule (CAIR) and the implementation of Mercury and Air Toxics Standard (MATS) in 2016. MATS is projected to reduce sulfur dioxide levels. Mercury emissions are projected to drop to 6.1 tons in 2016 from 30.8 tons in 2011.
After 2020, coal generation remains lower than projected in AEO2013, because more coal-fired capacity is retired and fewer new coal plants are built. Coal-fired electricity generation has traditionally been the largest component of electricity generation, representing 37% of total generation in 2012. By 2035, however, natural gas generation is projected to surpass coal generation. By 2040 the coal share is projected to drop to 32%, and the natural gas share increases to 35%. As retirements far outpace new additions, total coal-fired generating capacity falls from 310 gigawatts (GW) in 2012 to 262 GW in 2040. EIA’s latest prediction that about 60 GW of coal will retire by 2016 is up significantly from about 40 GW in AEIO2013 and 27 GW it predicted in AEIO2012.
Domestic natural gas consumption in the AEO2014 Reference case rises from 25.6 trillion cubic feet (Tcf) in 2012 to 31.6 Tcf in 2040. The largest share of the growth is for electricity generation. By 2017 natural gas-fired generation is higher in AEO2014 than in the AEO2013 Reference case, and the difference continues to grow. Additional retirements of coal and nuclear plants result in the need for new capacity, and new natural gas-fired plants are much cheaper to build than coal, nuclear, or renewable plants. In 2020, natural gas-fired generation in AEO2014 is 7% higher than in AEO2013, and in 2040 it is 16% higher.
Increased generation with renewable energy, excluding hydropower, accounts for 28% of the overall growth in electricity generation from 2012 to 2040 in the AEO2014 Reference case. Generation from renewable resources grows in response to federal tax credits, state-level policies, and federal requirements to use more biomass-based transportation fuels. In the final decade of the projection, however, renewable generation growth is driven by increasing cost competiveness with other nonrenewable technologies. The share of U.S. electricity generation coming from renewable fuels (including conventional hydropower) grows from 12% in 2012 to 16% in 2040 in the AEO2014 Reference case, even with federal subsidies for renewable generation assumed to expire as enacted.
Generation of electricity from solar photovoltaic energy shows the fastest growth accounting for 7.5% of total electricity generation from all nonhydropower renewable energy sources in 2040. Excluding hydroelectricity, renewable energy consumption in the electric power sector grows from 1.9 quadrillion Btu in 2012 to 4.5 quadrillion Btu in 2040, with wind accounting for 39% of the growth.
Energy use per 2005 dollar of GDP declines by 43% from 2012 to 2040 in AEO2014 as the result of a continued shift from manufacturing to services (and, even within manufacturing, to less-energy-intensive manufacturing industries), rising energy prices, and the adoption of policies that promote energy efficiency.
U.S. energy use per capita was constant from 1990 to 2007 but began to fall after 2007. In the AEO2014 Reference case, energy use per capita continues to decline as a result of improvements in energy efficiency and changes in the ways energy is used in the U.S. economy. Total U.S. population is projected to increase by 21% from 2012 to 2040, but energy use grows by only 12%, with energy use per capita declining by 8% from 2012 to 2040.
CO2 emissions per 2005 dollar of GDP have historically tracked closely with energy use per dollar of GDP. In the AEO2014 Reference case with lower-carbon fuels accounting for a growing share of total energy use, CO2 emissions per dollar of GDP decline more rapidly than energy use per dollar of GDP, to 56% below their 2005 level in 2040 (or by 2.3% per year).
In the AEO2014 Reference case projected energy-related CO2 emissions in 2020 and 2040 are about 9% and 7%, respectively, below the 2005 level. Again the EIA Reference Case assumed no new legislation or regulations beyond what is currently enacted.