US energy outlook: The good, the bad, and the ugly

Climate Progress

New projections released by the Department of Energy show a mixed — but mostly scary — picture for America’s energy and environmental future.

This week, the Energy Information Administration released its “AEO 2013 Early Release Overview.” It is the preview version of its complete Annual Energy Outlook 2013 due next spring.  This updates AEO 2012 by factoring in newly adopted policies – such as the 2017-2025 fuel economy standards for light duty vehicles – for EIA’s projections of energy production, consumption, and carbon pollution between now and 2040.

AEO 2013’s “reference case,” which assumes no future policy changes, includes good, bad, and ugly predictions for our energy system. Efforts to limit carbon pollution responsible for climate change fall into the ugly category. EIA’s estimates make it shockingly clear that under existing energy policies there will only be a small decrease in carbon pollution from the energy sector between now and 2040, condemning us to increasingly deadly climate change.

Here are some of the highs – and lows – of the AEO 2013 Early Release.

First, the good news. EIA predicts a sizable drop in gasoline consumption due to more stringent corporate average fuel economy standards. The agency estimates that liquid fuel consumption (mostly gasoline) will be 7 percent lower in 2020 compared to 2011, or about 600,000 barrels per day less.  As you can see in the graph below, these reductions continue until the early 2030’s when nearly all of the cars on the road are built with an average fuel economy standard of 54.5 miles per gallon.

Along with a decrease in liquid fuel consumption, EIA also projects that “crude oil production, particularly from tight oil plays, rises sharply over the next decade.”  Growing development of shale oil fields in North Dakota and Texas will help increase domestic oil production under current energy policies by 2 million barrels per day between 2010 and 2020 – a 36 percent increase.

The improved fuel efficiency, combined with this growing domestic oil consumption, means that foreign oil imports will fall by one quarter between 2010 and 2020. From a narrow energy security perspective, this means less money sent overseas to buy foreign oil. However, from a climate perspective, this keeps us on a path toward disaster: according to the International Energy Agency, we need to keep 2/3rds of proven carbon reserves in the ground through 2050 in order to avoid catastrophic climate change.

While there are clear economic benefits to using less foreign oil, it is critical that the US reduce overall petroleum through conservation and efficiency in order to address climate.

Interestingly, the combination of lower oil consumption along with higher domestic production suggests that the proposed Keystone XL pipeline – projected to move 800,000 barrels per day of Canadian tar sands oil from Alberta to the Gulf Coast – will do little to add to our national energy security.  Building the pipeline would facilitate a significant increase in the energy-intensive production of this oil, which yields at least 17 percent more carbon pollution compared to the production of conventional domestic oil.

Some good news on the renewables front: Solar power will grow as a source of clean electricity.  EIA projects that electricity generation from solar photovoltaic systems hooked up to the grid will more than double between 2012 and 2020, and increase by another third by 2030.

But there is also a sobering solar prediction.  Electricity from solar thermal plants will double between now and 2014, but remain static after that all the way through 2040. EIA predicts that under current energy policies there won’t be many other solar thermal plants like the Ivanpah project in California, which will use the sun to provide power to 140,000 homes. Hopefully, this reference case understates the growth in solar thermal plants due to outdated information or overly cautious estimates.

AEO 2013 also forecasts only a slight increase in wind electricity generation between now and 2020, with only a total 6 percent increase between 2012 and 2030.  This low estimate is based on the assumption that the Production Tax Credit for wind electricity expires at the end of 2012, and is not renewed, even though there is a bipartisan Congressional effort to extend it through 2013.

The laissez faire, business-as-usual approach to wind that is reflected in the EIA projections ignores that more wind electricity generation would help lower carbon pollution. In addition, an analysis by CAP’s Richard Caperton determined that “wind power helps to lower electricity prices.” It is imperative that Congress extend the PTC for multiple years to fight climate change, while also helping the middle class with electricity costs. This essential measure, along with enhanced wind access to transmission, would expand our wind generation capacity substantially.

The ugly news begins with coal-fired electricity, which is the single largest source of climate change pollution in the United States. Coal combustion also annually emits millions of tons of other pollutants, including mercury, carcinogens, soot, and smog ingredients.

In the last several years the low price of natural gas has led many utilities to substitute it for coal. Consequently, EIA projects that utilities will retire many aging coal plants between now and 2020 – enough to remove 49 gigawatts of electricity (or nearly 100 average sized coal plants). However, EIA forecasts zero additional coal plant retirements between 2022 and 2040.

The news gets uglier. EIA estimates that carbon pollution from electricity generation will grow at an average rate of 0.2 percent annually between 2011 and 2040, with a total increase of 7 percent under status quo energy policies.

The ugliest, most hideous news of all is that EIA predicts 2040 emissions will only be 5 percent below the 2005 baseline under current energy policies.  This is critical because the energy sector is the dominant contributor to climate change pollution in the United States.  EIA determined that:

“Of the total amount of U.S. greenhouse gases emitted in 2010, about 87% were energy-related and 91% of those energy-related gases were carbon dioxide from the combustion of fossil fuels.”

EIA’s latest projection that there will be only a minor decrease in carbon pollution from the energy sector over the next 30 years would be an epic disaster for the United States and the rest of the planet.

Such an outcome would certainly condemn the United States and the world to the most devastating impacts from climate change, including more fatalities and damages from increasingly ferocious and frequent extreme weather, more deaths and illness from smog, tropical diseases infecting people in northern latitudes, and the disruption of the world’s food production system.

The most effective way to thwart the worst impacts from climate changes is to dramatically reduce the carbon pollution from existing power plants by using the executive authority under the Clean Air Act — a plan laid out in great detail by the Natural Resources Defense Council this week.

There is some hopeful news in all of this: these dire projections are based on no policy changes at all. Lawmakers and regulators still have an opportunity to put in place the signals that will put us on a lower-carbon path. We do have a choice.

Daniel J. Weiss is a Senior Fellow at the Center for American Progress

This article was originally published on Climate Progress. Reproduced with permission