The Energy Information Administration (EIA) released their Annual Energy Outlook (AEO2009) this week and their numbers are a lot better than last year when the climate is concerned. It's exciting to see the progress. But reference scenarios still have emissions growing throughout the period, so we have plenty of work to do. For now, let's look at the numbers they present...
Primary Energy Use
Primary energy consumption is forecast to rise .5% per year, slower than a .7% rate predicted last year (translating into a 5.4% lower level by 2030). Electricity demand is expected to increase 1% per year, slower than 2008's 1.1% prediction. Increased efficiency and a demand response to higher expected oil prices drive this lower energy use. Lower energy demand growth is good news for the climate in general, but now let's dig deeper into the carbon composition of the numbers.
Renewables Rise
Renewables currently (in 2008) provide ~7.5% of US primary energy (March EIA Monthly Energy Review, p. 136). Most renewable energy comes from hydropower and biomass, with growing shares from wind, geothermal, and solar. While hydropower is expected to grow at a slow rate so that its market share remains ~2.5% of total primary energy, the EIA projects non-hydro renewables to triple, increasing renewables' total share to almost 15%. The largest renewable growth comes from wind power and biofuels.
Shifts in US Electricity
As I wrote about last week, the share of electricity generated from coal continues to drop in the EIA projection. But it falls slower than the climate needs it to -- going from today's ~48.5% to 47% in 2030, still an increase in coal consumption of 19% (p. 71). The ~25% increase in electricity demand requires 259 GW of new electrical capacity (p. 45), which is provided for primarily by natural gas (~137 GW or 53%), then renewables at 22% (~57 GW), coal at 18% (~47 GW), and nuclear plants at 5% (~13 GW). Approximately 30 GW of capacity are retired by 2030 (p. 72), mostly older coal and nuclear plants.
Wind & Solar Remain Small
In the reference case, the EIA expect wind and solar to remain mice compared to the elephants of fossil fuels. Wind grows to 44 GW (p. 48) or 2.5% of US electricity, only 75% higher than the ~25 GW at the end of 2008. It would take only 2 1/2 years at 2008's 8+ GW growth rate for 44 GW to be reached. Seems to me they are short-changing wind power.
Solar is dismissed even further into the margins. Growth is expected to make solar less than half the size of wind today by 2030 (p. 140), rather than its potential greater than 100 GW in my opinion. Their models have probably not incorporated the 30+% solar modules price drop currently taking place since last summer. It's clear that the industry will have to prove themselves to EIA officials in coming months that they can emerge profitable in 2010 despite module prices below $2.50 per watt.
Flat Oil Consumption
In a big shift from previous projections, US oil demand is now predicted to stay flat through 2030. The 1 million barrels per day (Mbd) increase in liquid consumption is provided by biofuels and some Coal-To-Liquid (CTL). Demand stays flat amidst a growing economy because of a rising oil price that gets back into the triple digits by the early 2010s and arrives at a real price of $130 per barrel by 2030. Their high oil price scenario approaches $200 per barrel by 2030 and seems more reasonable to me.
They project that US oil production increases above today's higher levels through 2030 due to a higher price making previously uneconomic deep-water projects profitable. While the increase in production thus far in 2009 is impressive, I am skeptical such a production plateau can be maintained going forward. After all, 2009 (if indeed production continues above 2008 levels) will only be the third year out of the last 24 that US oil production increased.
Climate Implications
This rise of clean energy allows greenhouse gas emissions to grow at a slower rate than overall energy consumption, a mere .3% per year (p. 5) compared to .65% per year growth projected last year. By 2030, the carbon intensity of US GDP falls 39% and per capita emissions fall 14% (p. 84). While this is an improvement from last year's projection, it clearly shows that our country must enact a federal climate bill or emissions will continue to increase.
Climate Concern Scenario
The reference case does not include early 2009 Green Stimulus Bill implications, such as the Production Tax Credit (PTC) extension. So, renewable electricity is expected to grow faster than their reference case, but they predict increased growth from a PTC to be less than 20% by 2030 (p. 48).
And the reference case does not include the passage of a federal cap-and-trade climate bill. For those projections, the EIA generated the scenario LW110. In LW110, more new low-carbon electrical capacity is added to replace the retirement of ~100 GW of old coal plants. The low-carbon sources include 65 GW more renewables than in the reference scenario, 93 GW more Carbon Capture & Storage (CCS) coal, and 33 GW more nuclear power (p. 185). As a result, emissions from electricity generation fall more than 50% from today's level by 2030 (p. 53). Overall US carbon dioxide emissions from energy fall a more mild 23% by 2030 (p. 52).
By internalizing the cost of climate change, the price of electricity rises ~20% from an expected plateau ~10.5 cents to a 2030 price of ~12.5 cents per kWh (p. 52). But we as consumers can still have lower our electrical bills by increasing our efficiency more than ~20%.
Bottom Line:
EIA projections in AEO2009 are much more climate-friendly than last year. But the reference scenario leaves a great deal of work for us to do. Federal climate legislation in the near term is crucial if our country is to be a responsible member of the global community. While the wind industry will contribute significantly to the solution, solar has a long way to go to earn the respect of the EIA as a major player in the next two decades.
I hope you enjoyed these bits from their 230-page report. I'll be writing more using insight from this report in the weeks ahead as we all work hard to accelerate the Sustainable Energy Transition!