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June 2, 2010: EIA Examines Impacts of Alternate Future Scenarios on Energy Trends

June 2, 2010
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WASHINGTON - How will various scenarios for future economic growth and energy policies affect projected U.S. energy use in 2035? That’s a question that the U.S. Department of Energy’s (DOE’s) Energy Information Administration (EIA) addresses in the release of its full Annual Energy Outlook 2010. In December 2009, the EIA released its reference case projections for 2035, sometimes referred to as the “business-as-usual” case, but the new release includes 38 alternative cases that examine the sensitivity of those projections to various assumptions about future economic growth, oil prices, and policies. For instance, the reference case has U.S. energy use growing at 0.5 percent per year, but a slow-growing economy could hold that growth to only 0.1 percent per year, while an overheated economy could increase that to 0.9 percent per year.

The EIA reference scenario also assumes that various tax credits will expire without being renewed and that there are no new policies, such as updated efficiency standards and fuel economy standards. In contrast, the “No Sunset” case continues current tax credits for renewable power, building efficiency, industrial combined heat and power, and biofuels, and it anticipates further increases in the Renewable Fuel Standard (RFS) after 2022. In this scenario, the growth in energy use is nearly the same as in the reference case, but the shift to cleaner energy sources cuts energy-related carbon dioxide emissions by 2.3 percent. The “Extended Policies” case adds in updated appliance efficiency standards and newly proposed fuel economy standards, but drops biofuels tax credits, assuming the RFS is sufficient to stimulate biofuels demand. That case drops U.S. energy use in 2035 by 3 percent, while also cutting energy-related carbon dioxide emissions by 3.2 percent. And what if homeowners adopted the most energy-efficient technologies, regardless of cost? That would cut residential energy use by 27 percent in 2035, demonstrating a clear benefit to overcoming the barriers to greater energy efficiency.

Another major factor in near-term future U.S. energy use is the production of natural gas from shale and tight sands. These relatively new unconventional sources of natural gas are currently projected to cause domestic natural gas production to increase significantly, keeping imports of liquefied natural gas at low levels. Examining the case in which such unconventional drilling is halted, natural gas prices increase to $10.88 per million Btu in 2035, and U.S. natural gas production falls to 17.4 trillion cubic feet. On the other hand, if current drilling continues and new, unproven resources hit pay dirt, U.S. production grows to 25.9 trillion cubic feet in 2035, while natural gas prices drop to $7.62 per million Btu.

For a copy of the full report, go to www.eia.gov/oiaf/aeo/index.html.

Publication date: 05/31/2010

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