Annual Energy Outlook 2011 Reference Case

www.eia.govU.S. Energy Information Administration Independent Statistics & Analysis

U.S. Energy Information AdministrationSpring, 2011 | Washington, DC

Annual Energy Outlook 2011Reference Case

2AEO2011, April 2011

Key results from the AEO2011 Reference case,which assumes current laws remain unchanged• Increased estimates for U.S. shale gas resources drive increased

U.S. production, lower prices, and lower imports of natural gas

• Industrial natural gas demand recovers, reversing recent trend

• Non-hydro renewables and natural gas are the fastest growing electricity generation sources, but coal remains the dominant fuel because of the large amount of existing capacity

• Oil imports fall due to increased domestic production—including biofuels—and greater fuel efficiency

• U.S. carbon dioxide emissions rise slowly, but do not pass 2005 levels again until 2027

3

What is included (and excluded) in developing EIA’s “Reference case” projections?• Generally assumes current laws and regulations

– excludes potential future laws and regulations (e.g., proposed greenhouse gas legislation and proposed fuel economy standards are not included)

– provisions generally sunset as specified in law (e.g., renewable tax credits expire)

• Some grey areas– adds a premium to the capital cost of CO2-intensive technologies to reflect market

behavior regarding possible CO2 regulation– assumes implementation of existing regulations that enable the building of new energy

infrastructure and resource extraction

• Includes technologies that are commercial or reasonably expected to become commercial over next decade or so

– includes projected technology cost and efficiency improvements, as well as cost reductions linked to cumulative deployment levels

– does not assume revolutionary or breakthrough technologies

AEO2011, April 2011

4

Key updates included in the AEO2011 Reference case• Natural gas and oil supply

– more than doubled the technically recoverable U.S. shale gas resources assumed in AEO2010 and added new shale oil resources

– updated offshore data and assumptions, pushing out start dates for several projects as a result of the drilling moratoria and delaying offshore leasing beyond 2017

• Electricity– updated costs for new power plants– expanded number of electricity regions to 22 from 13, allowing better regional

representation of market structure and power flow

• Transport– increased limit for ethanol blending into gasoline from E10 to E15 for approved vehicles– includes California’s Low Carbon Fuel Standard, which reduces the carbon intensity of

gasoline and diesel fuels in that state by 10% from 2012 through 2020 – revised light duty vehicle miles travelled downward– updated electric and plug-in hybrid electric battery cost and size

AEO2011, April 2011

5

Global energy consumption

AEO2011, April 2011

6

Non-OECD countries account for vast majority of the nearly 50% projected increase in global energy use by 2035

2007 2015 2020 2025 2030 20350

100

200

300

400

500

600

700

800

495544

591639

687739

energy consumptionquadrillion Btu

Source: EIA, International Energy Outlook 2010

Non-OECD

OECD

USA

50%

50%

62%

38%

AEO2011, April 2011

7

Overview of U.S. energy supply and demand

AEO2011, April 2011

8

Current U.S. energy supply is 83% fossil fuels;demand is broadly distributed among the major sectors

Petro-leum

35.30%

Natural Gas23.40%

Coal19.70%

Re-new-able

7.70%

Nuclear8.30%

2009 total U.S. energy use = 94.6 quadrillion Btu

Source: EIA, Annual Energy Review 2009

Industrial18.80%

Trans-portation27.00%

Residential and Commercial

10.60%

Electric-ity - Res-idential14.60%

Electric-ity -

Com-mercial14.17%

Electricity - Indus-trial

9.45%

Energy supply Energy demand

AEO2011, April 2011

9

Renewables grow rapidly, but under current policies fossil fuels still provide 78% of U.S. energy use in 2035

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20

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NuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclearNuclear

Oil and other liquid fuels

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Renewables (excluding liquid

biofuels)Renewables

(excluding liquid biofuels)


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biofuels)Renewables

(excluding liquid biofuels)


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U.S. primary energy consumptionquadrillion Btu per year

Source: EIA, Annual Energy Outlook 2011

History Projections2009

37%

25%

21%

9%

7%

1%

33%

24%

21%

10%

8%

3%

Shares of total U.S. energy

AEO2011, April 2011

10

Energy efficiency gains reduce consumption 13% from where it would otherwise be; structural change is even larger

quadrillion Btu


2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

0

50

100

150

200

250Constant Intensity

Constant Ef-ficiency

Reference Case Consumption

Efficiency change

Structural change-33%

-13%

AEO2011, April 2011

11

Energy and CO2 per dollar of GDP continue to decline;per-capita energy use also declines

index, 2005=1


1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

2031

2034

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

Per dollarPer capitaCO2 per GDP

History Projections2009

AEO2011, April 2011

12

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

0

1

2

3

4

5

6

7

Energy-related CO2 emissions

2005 2020 2035

Energy-related CO2 emissions

6.00 5.78 6.31

% change from 2005 - - -3.7% 5.2%

In the AEO2011 Reference case, energy-related CO2 emissions grow 5% over 2005 levels by 2035

billion metric tons carbon dioxide


ProjectionsHistory 20092005

AEO2011, April 2011

13

Electricity

AEO2011, April 2011

In 2009, U.S. electricity generation was 70% fossil fuels, 20% nuclear, and 10% renewable

Nuclear20.2%

Natural gas23.3%

2009 Total net generation:3,953 billion kWh

Coal44.6%

2009 Non-hydro renewablenet generation:141 billion kWh

Geothermal: 0.4%

Other biomass: 0.5%

Wood and wood-derived fuels: 0.9%

Otherrenewable

3.6%

Conventionalhydroelectric

6.9%

Other0.3%

Wind: 1.8%

Solar thermal and PV: <0.1%

Petroleum1.0%

Other gases0.3%

14

Source: EIA, Electric Power Monthly, October 2010

AEO2011, April 2011

While projected electricity consumption grows by 30%, the rate of growth has slowed

15

percent growth (3-year rolling average)


1950

1960

1970

1980

1990

2000

2010

2020

2030

0

2

4

6

8

10

12

14

Projections

HistoryPeriod Annual Growth1950s 9.81960s 7.31970s 4.71980s 2.91990s 2.42000-2009 0.52009-2035 1.0

Structural Change in Economy - Higher prices - Standards - Improved efficiency

2009

AEO2011, April 2011

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

1

2

3

4

5

6

45%

23%

10%

20%

1%

Coal

Natural gas

Renewable

Nuclear

Oil and other


25%

1%

43%

14%

17%

The Reference case electricity mix in AEO2011 gradually shifts to lower-carbon options, with generation from natural gas rising 40% and renewables rising 75%

16

electricity net generationtrillion kilowatthours per year


AEO2011, April 2011

17

Updated electric power plant capital costs show increases for nuclear, coal, and wind, while solar costs declineovernight capital cost2009 dollars per kilowatt


Natural Gas CC

Pulverized Coal

IGCC CCS

Nuclear Wind Biomass Solar Thermal

Photovoltaic0

1000

2000

3000

4000

5000

6000

7000

AEO 2010 AEO 2011

+ 1%

+ 25%

+ 39% + 37%

+ 21%

- 2%

- 10%

- 25%

AEO2011, April 2011

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

50

100

150

200

250

300

350

400

450 ProjectionsHistory 2009

Non-hydro renewable sources grow nearly three-fold, meeting 22% of projected electricity generation growth

18

non-hydropower renewable generationbillion kilowatthours per year


Wind

Solar

Biomass

Geothermal

Waste

Industrial CHP

Power sector

Advanced biofuels cogeneration

AEO2011, April 2011

19

Natural gas, wind and other renewables account for the vast majority of capacity additions from 2009 to 2035


Coal313 (30%)

Natural gas351 (34%)

Hydropower*99 (10%)

Nuclear101 (10%)

Other renewables

15 (1%)

Other fossil118 (11%)

* Includes pumped storage

Coal14 (6%)

Natural gas135 (60%)

Hydropower*3 (1%)

Nuclear6 (3%)

Other renewables28 (12%)

Other fossil

1 (0.4%)

2009 capacity Capacity additions 2009 to 2035

1,033gigawatts

223gigawatts

Wind25 (11%)

Wind32 (3%)

End-use coal4 (0.3%)

End-use coal12 (5%)

AEO2011, April 2011

20

Natural Gas

AEO2011, April 2011

Over the last decade, U.S. shale gas production has increased 14-fold and now comprises about 22 percent of total U.S. production

21

annual shale gas production trillion cubic feet

Sources: EIA, Lippman Consulting2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

1

2

3

4

5

6

Eagle Ford (TX)Marcellus (PA and Other Eastern states)Haynesville (LA and TX)Woodford (OK)Fayetteville (AR)Barnett (TX)Antrim (MI, IN, and OH)

AEO2011, April 2011

22

Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources

2000 2005 2006 2007 2008 2009 2010 20110

500

1000

1500

2000

2500

3000

U.S. dry gas resourcestrillion cubic feet

*Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.Source: EIA, Annual Energy Outlook 2011

2543

245

827

1472

Unproved shale gas

Unproved other gas (including Alaska* and offshore)

Proved reserves (all types and locations)

AEO2011, April 2011

23

30% domestic gas production growth outpaces 16% consumption growth, leading to declining imports

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

0

5

10

15

20

25

30

U.S. dry gastrillion cubic feet per year



Consumption

Domestic supply

AEO2011 Reference caseAEO2010 Reference case

Net imports 11%

1%

6%

AEO2011, April 2011

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

5

10

15

20

25

30

2%

Shale gas offsets declines in other U.S. supply to meet consumption growth and lower import needs

24

U.S. dry gastrillion cubic feet per year


Non-associated offshore

ProjectionsHistory

Associated with oilCoalbed methane

Net imports

Non-associated onshore

Shale gas

2009

11%

1%

9% 7%

9%9%

20%

14%

8%

8%

6%

46%

Alaska 1%

Tight gas28%22%

AEO2011, April 2011

25

Natural gas consumption is quite dispersed; industrial and electric power use drives future demand growth

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

0

5

10

15

20

25

30

U.S. dry gas consumptiontrillion cubic feet per year

*Includes combined heat-and-power and lease and plant fuel. **Includes pipeline fuel.Source: EIA, Annual Energy Outlook 2011


Industrial*

Central electric power

Commercial

Residential Transportation**

35%

18%

14%

30%

3%

32%

21%

14%

30%

3%

AEO2011, April 2011

26

A number of key economic and market drivers underpin natural gas consumption growth

Sector TCF Gas Consumption

Growth (2009 – 2035)

Key Drivers

2009 2035

Industrial, including combined heat-and-power

7.4 9.3 25% +215% combined heat-and power generation; +30% output of gas intensive industry; lower natural gas prices

Central electric power

6.9 7.9 14% +30% electricity consumption; lower natural gas prices; offset by +75% renewable generation and +26% coal generation

Commercial 3.1 3.8 23% +37% commercial floorspace; -4% energy intensity

Residential 4.8 4.8 <1% +30% number of households; +19% total square footage;-17% energy intensity


AEO2011, April 2011

27

Natural gas price projections are significantly lower than past years due to an expanded shale gas resource basenatural gas spot price (Henry Hub)2009 dollars per million Btu

Sources: EIA, Annual Energy Outlook 2011; EIA, Annual Energy Outlook 2010; and EIA, An Updated Annual Energy Outlook 2009 Reference Case

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

0

1

2

3

4

5

6

7

8

9

10


Updated AEO2009

AEO2011

AEO2010

$9/MMBtu

$7/MMBtu

AEO2011, April 2011

28

Oil and other liquid supply

AEO2011, April 2011

29

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

25

50

75

100

125

150

175

200

225

Oil prices in the Reference case rise steadily;the full AEO2011 will include a wide range of oil pricesannual average price of low sulfur crude oilreal 2009 dollars per barrel



High Oil Price

Low Oil Price

AEO2011 Reference

AEO2011, April 2011

30

Unconventional sources more than triple globally, but conventional petroleum continues to comprise the vast majority of liquids supply

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

0

20

40

60

80

100

120

global liquids productionmillion barrels per day



OPEC conventional

Non-OPEC conventional

Unconventional12%

47%

40%

39%

5%

56%

AEO2011, April 2011

31

U.S. imports of liquid fuels fall due to increased domestic production – including biofuels – and greater fuel efficiencyU.S. liquid fuels consumptionmillion barrels per day


1970

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

5

10

15

20

25ProjectionsHistory

Natural gas plant liquids

Petroleum supply

Biofuels including imports

Net petroleum imports

2009

13%

11%

41%

32%

10%

52%

34%

4%

Liquids from coal3%

AEO2011, April 2011

32

Biofuels, natural gas liquids, and crude oil production are key sources of increased domestic liquids supplyU.S. liquid fuelsmillion barrels per day


0 2 4 6 8 10 12 14 16 18 20 22

Series4

Series3

Net product imports

Net crude oil imports

Natural gas plant liquids

Liquids from coalGulf of Mexico

Crude oil production

Biofuels (including net imports)

Refinery processing gain

Total consumption

AEO2011, April 2011

33

2009 2022 2035 0

5

10

15

20

25

30

35

40

45

Other Advanced

Biofuels fall short of the goal in 2022, but exceed the 36 billion gallon RFS target by 2031

billions ethanol-equivalent gallons


Legislated RFS in 2022

RFS with adjustments under CAA Sec.211(o)(7)

BiodieselNet imports

Cellulosic biofuels

Corn ethanol

AEO2011, April 2011

34

2000

2005

2010

2015

2020

2025

2030

2035

0

5

10

15

20

25

30

35

40

45

New light duty vehicle fuel economy achieves almost 38 mpg by 2035 in the Reference case

miles per gallon


2009 ProjectionsHistory

Summary of standards

2012-2016: 34.1 mpg CAFE average (based on NHTSA vehicle footprint sales distribution)

2020: 35 mpg by statute2017-2025: Reference case does not include proposal

planned for September 2011

AEO2011, April 2011

35

1995

2000

2005

2010

2015

2020

2025

2030

2035

0

4

8

12

16

Most transport fuel growth is in light and heavy duty vehiclesU.S. transportation energy consumptionmillion barrels per day oil equivalent


Rail

Air

ProjectionsHistory

Heavy-duty vehicles

Light-duty vehicles

Marine

2009

4%

67%

2%

10%

16%

64%

20%

9%4%2%

AEO2011, April 2011

36

Efficiency improvements partially offset underlying drivers of growth in transportation services

* Equal to a 25% reduction in fuel use per mile. ** Equal to an 8% reduction in fuel use per mile.


2009 2035Growth

(2009-2035)

Light duty vehiclesFuel consumption (million barrels per day oil equivalent) 8.9 10.2 14%

Number of licensed drivers (millions) 207 265 28%

Miles per licensed driver 13,100 15,300 17%

Efficiency of vehicle stock (mpg) 20.8 27.9 34%*

Heavy duty vehiclesFuel consumption (million barrels per day oil equivalent) 2.2 3.2 47%

Manufacturing output (billion 2005 dollars) 4,197 6,770 61%

Number of freight trucks (millions) 8.7 16.6 90%

Miles per vehicle 23,700 20,200 -15%

Efficiency of vehicle stock (mpg) 6.1 6.6 9%**

AEO2011, April 2011

37

Unconventional vehicles meet over 40% of U.S. light-duty vehicle sales in 2035U.S. light car and truck salesmillions


2000 2009 2015 2020 2025 2030 20350

5

10

15

20

Conventional gasolineDieselGaseous and fuel cellMild hybrid electricHybrid electricPlug-in hybrid and all-electricE85 flex fuel

AEO2011, April 2011

38

For more informationU.S. Energy Information Administration home page | www.eia.gov

Short-Term Energy Outlook | www.eia.gov/steo

Annual Energy Outlook | www.eia.gov/aeo

International Energy Outlook | www.eia.gov/ieo

Monthly Energy Review | www.eia.gov/mer

AEO2011, April 2011

http://www.eia.gov/

http://www.eia.gov/steo

http://www.eia.gov/aeo

http://www.eia.gov/ieo

http://www.eia.gov/mer

Annual Energy Outlook 2011 Reference Case

Documents

energy supply

international energy

dcannual energy outlook

global energy use

shale gas resources

current laws

dominant fuel

cost reductions