THE UNIVERSITY OF NEW ENGLAND

Richard Newell, Distributional Aspects of Energy and Climate Policy Symposium, January 2010 1

Distributional Aspects of Energy and Climate Policy Symposium

January 20, 2010, Washington, DC

Richard G. Newell, Administrator

The Energy Outlook and Climate Change


Overview

• Global energy outlook

• U.S. energy outlook

• EIA’s analysis of HR 2454, the American Clean

Energy and Security Act (ACESA)


The Global Energy Outlook


Non-OECD countries account for 82% of the increase in

global energy use to 2030

0

100

200

300

400

500

600

700

800

2006 2010 2015 2020 2025 2030

Qu

ad

rillio

n B

tu

OECD Non-OECD

472508

552596

637678

51%

49%

41%

59%

Source: EIA International Energy Outlook 2009, Reference Case


Renewables are the fastest growing energy source

(but from a relatively small base)

0

50

100

150

200

250

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Qu

ad

rillio

n B

tu

Liquids (including biofuels)

Natural Gas

Coal

Renewables

(excluding biofuels)

Nuclear

History Projections

36%

23%

27%

8%

6%

32%

28%

11%

23%

6%

Share of

World

Total



Growth in worldwide economic activity, and population

growth in some regions, drives increased energy use

-3.5

-2.5

-1.5

-0.5

0.5

1.5

2.5

3.5

4.5

5.5

6.5

US

OE

CD

Euro

pe

Japan

Chin

a

India

Mid

dle

East

Russia

Bra

zil

Perc

ent

per

Year

Population

GDP per Capita

Energy Use per GDP

Source: US: Published AEO2009 (March 2009); ROW: GDP Assumptions based on IHS Global Insight, Inc.;

Population from UN World Population Prospects (2006 Revision)


Absent new policies, energy-related CO2 emissions grow 39%

between 2006 and 2030 in EIA’s reference case

13.6 13.4 13.6 13.9 14.2 14.6

15.4 17.619.5

21.523.7

25.8

0

5

10

15

20

25

30

35

40

45

2006 2010 2015 2020 2025 2030

Bil

lio

n M

etr

ic T

on

s

Non-OECD

OECD



The U.S. Energy Outlook


0

20

40

60

80

100

120

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

Non-fossil energy grows rapidly, but fossil fuels still

provide 78% energy use in 2035 in EIA’s Reference Case

quadrillion Btu

Coal

Liquid fuels

Natural gas

ProjectionsHistory

Nuclear

Liquid biofuels

Renewables (excluding liquid biofuels)

Source: Annual Energy Outlook 2010


0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

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

Energy and CO2 per dollar GDP continue to decline;

per capita energy use also declines

index, 2005=1

Energy per capita

Energy per dollar GDP

ProjectionsHistory

CO2 per dollar GDP



-2

0

2

4

6

8

10

12

14

1950 1960 1970 1980 1990 2000 2010 2020 2030

Growth in electricity use continues to slow

3-year rolling average percent growth

Projections

History

Period Annual Growth

1950s 9.8

1960s 7.3

1970s 4.7

1980s 2.9

1990s 2.4

2000-2008 0.9

2008-2035 1.0



Renewables gain electricity market share;

coal share declines

0

1,000

2,000

3,000

4,000

5,000

6,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

billion kilowatthours and percent shares

Natural gas

Renewable

ProjectionsHistory

Nuclear

Oil and other

Coal48.543.8

21.4

20.8

19.6 17.1

9.1

17.0

1.41.5



0.3% per year

8.7% growth

Assuming no new policies, growth in energy-related CO2 is

driven by electricity and transportation fuel use

Transportation

1,925 (33%)

Buildings and

Industrial

1,530 (26%)

Electric Power

2,359 (41%)

2008

5,814million metric

tons

2035

6,320million metric

tons

Transportation

2,115 (33%)

Buildings and

Industrial

1,571 (25%)

Electric Power

2,634 (42%)



EIA Analysis of HR 2454

The American Clean Energy and

Security Act (ACESA)


0

1

2

3

4

5

6

7

8

9

2005 2010 2015 2020 2025 2030

Total Greenhouse Gas Emissions, Reference Case

Covered Emissions, Reference Case

Cap on Covered Emissions

Cumulative difference, 2012-2030 = 24.6 BMT

CO2-equivalent emissions, billion metric tons

Use of Offsets = ? BMT

ACESA requires 24.6- billion-metric-ton reduction in covered GHG

emissions over 2012-2030; actual reductions could be smaller or larger

depending on the use of offsets and banking behavior

Source: EIA Analysis of the American Clean Energy and Security Act of 2009


Main cases in EIA’s analysis

Case Name Assumptions

BasicIntegrated analysis of all of the modeled provisions of

ACESA.

Zero Bank

Same as Basic but no carryover of allowances beyond

2030. Proxy for major low- no-carbon energy technology

breakthroughs with significant market impacts after 2030

High OffsetsSame as Basic but assumes increased use of

international offsets.

High CostSame as Basic but assumes that nuclear, fossil with

CCS and biomass gasification costs are 50 % higher

No InternationalSame as Basic but assumes international offsets are too

expensive or unable to meet the requirements for use

No International / Limited

Same as Basic but limits additions of nuclear, fossil with

CCS and biomass to reference case levels. Also no

international offsets.



0

5

10

15

20

25

30

35

40

Basic Zero Bank High Offsets High Cost No

International

No

Int'l/Limited

Energy-Related CO2 Carbon Capture and Storage

Non-Energy-CO2 covered emissions Offsets, Biosequestration

Offsets, Noncovered emissions Offsets, International

- - - - - Required Abatement - - - - -

Energy sector reductions (2 bottom sections) vary with

availability of offsets and low-emitting generation options


Cumulative compliance, 2012-2030 (billion metric tons)


0

20

40

60

80

100

120

140

160

180

200

2012 2015 2020 2025 2030

Basic Zero Bank High Offsets

High Cost No International No Int / Limited

Projected allowance prices depend on the availability of

offsets and low/no carbon electricity generation technologies


(2007 dollars per metric ton CO2-equivalent)


561 576 534 543 543 527 519 494

987 955 855 879 880 847 815 779

2009 20371952 1985 1986 1942 1915 1868

2433 2639

1074

1886 18311573

384908

0

1,000

2,000

3,000

4,000

5,000

6,000

2007 Reference Basic Zero Bank High Offsets High Cost No

International

No Int /

Limited

Electric Pow er

Transportation

Industrial

Buildings

2030

The electricity sector dominates projected reductions

in energy-related CO2 emissions


(million metric tons CO2)


20212296

841

1650 15931281

100 285

015

513

262 304293

440 15

892976

636

708 713880

5921638

806

890

1548

1147 1151 923

1863890

352

798

1021979 987

9741399

1315

0

1,000

2,000

3,000

4,000

5,000

2007 Reference Basic Zero Bank High

Offsets

High Cost No

Interational

No Int /

Limited

Coal Coal w /CCS Oil Natural Gas Natural Gas w /CCS Nuclear Renew able

Generation by 2030 shifts from conventional coal to

nuclear, renewables, and fossil+CCS, though natural gas

use grows dramatically if other options are limited


(billion kilowatthours)


0.90%

0.64%0.72% 0.72%

0.57% 0.56%

0.21%

2.39%

1.15%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1990 to 2000 2000 to 2007 Reference Basic Zero Bank High Offsets High Cost No

International

No Int /

Limited

2007 to 2030 Growth

Efficiency programs and higher electricity prices

reduce electricity demand growth

Annual percent growth in electricity use



0

2

4

6

8

10

12

14

16

18

20

2005 2010 2015 2020 2025 2030

Reference Basic Zero Bank

High Offsets High Cost No International

No Int / Limited

Electricity prices stay near baseline through 2025 in all

but one case, then rise to higher levels through 2030


(2007 cents per kilowatthour, all sectors average)


-415

-273

-323

-196

-392

-252

-600

-384-4

96

-323

-1521

-988

-1750

-1500

-1250

-1000

-750

-500

-250

0

Undiscounted Present Value @ 4%

Basic

Zero Bank

High OffsetHigh Cost

No International

No Int/Limited

Cumulative Change in Real GDP Real GDP

15398

19875

15348

19714

15380

19771

15373

19755

15328

19661

15365

19649

15286

19422

0

5000

10000

15000

20000

25000

2020 2030

ReferenceBasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

Cumulative Change in Real Consumption Real Consumption

-896

-566-736

-432

-829

-523

-1249

-781

-1179

-717

-3024

-1897

-3500

-3000

-2500

-2000

-1500

-1000

-500

0

Undiscounted Present Value @ 4%

Basic

Zero Bank

High OffsetHigh Cost

No International

No Int/Limited

10817

14069

10796

14006

10810

14033

10806

14019

10787

13972

10802

14000

10753

13889

0

5000

10000

15000

20000

2020 2030

ReferenceBasicZero BankHigh OffsetHigh CostNo InternationalNo Int/Limited

Present-value GDP losses over 2012-2030 range from 0.2% to 0.4%;

consumption losses range from 0.1% to 0.3% in 5 analysis cases. Impacts are

much higher in the No International/Limited Alternatives case.


For more information

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

Short-Term Energy Outlook www.eia.gov/emeu/steo/pub/contents.html

Annual Energy Outlook www.eia.gov/oiaf/aeo/index.html

International Energy Outlook www.eia.gov/oiaf/ieo/index.html

Monthly Energy Review www.eia.gov/emeu/mer/contents.html

National Energy Information Center (202) 586-8800Live expert from 9:00 AM – 5:00 p.m. EST

Monday – Friday (excluding Federal holidays)

email: [email protected]

U.S. Energy Information Administration

www.eia.gov

Documents

THE UNIVERSITY OF NEW ENGLAND