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Annual Energy Outlook 2017 AEO2017 Rollout Presentation Johns Hopkins School of Advanced International Studies January 5, 2017 | Washington, D.C. By Adam Sieminski, Administrator U.S. Energy Information Administration Independent Statistics

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www.eia.gov

U.S. Energy Information Administration

Independent Statistics & Analysis

Annual Energy Outlook 2017

AEO2017 Rollout Presentation Johns Hopkins School of Advanced International Studies January 5, 2017 | Washington, D.C. By Adam Sieminski, Administrator

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Key takeaways from AEO2017

  • With strong domestic production and relatively flat demand, the United States becomes a net

energy exporter over the projection period in most cases

  • U.S. crude oil production rebounds from recent lows, driven by continued development of tight oil

resources; with consumption flat to down compared to recent history, net crude oil and petroleum product imports as a percentage of U.S. product supplied decline across most cases

  • Across most cases, natural gas production increases despite relatively low and stable natural gas

prices, supporting higher levels of domestic consumption and natural gas exports; projections are sensitive to resource and technology assumptions

  • With modest demand growth, the primary driver for new electricity generation capacity in the

Reference case is the retirement of older, less efficient fossil fuel units, largely spurred by the Clean Power Plan (CPP), and the near-term availability of renewable tax credits; even if the CPP is not implemented, low natural gas prices and the tax credits result in natural gas and renewables as the primary sources of new generation capacity; the future generation mix is sensitive to the price of natural gas and the growth in electricity demand

2 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Key takeaways from AEO2017 (continued)

  • Transportation energy consumption peaks in 2018 in the Reference case because rising fuel

efficiency outweighs increases in total travel and freight movements throughout the projection period

  • Despite growth in the number of households and the amount of commercial floorspace, improved

equipment and efficiency standards contribute to residential and commercial consumption remaining relatively flat or declining slightly from 2016 to 2040 in the Reference case

  • With economic growth and relatively low energy prices, energy consumption in EIA’s three

industrial sub-sectors (energy-intensive manufacturing, non-energy-intensive manufacturing, and nonmanufacturing) increases during the projection period across all cases; energy intensity declines in the Reference case and most side cases as a result of technological improvements

3 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Overview

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AEO2017 includes side cases with different assumptions of macroeconomic growth, world oil prices, technological progress, and energy policies

  • Oil prices are primarily driven by global market balances that are mainly influenced by factors external to the NEMS

model; in the High Oil Price case, the price of Brent crude in 2016 dollars reaches $226 per barrel (b) by 2040, compared to $109/b in the Reference case and $43/b in the Low Oil Price case

  • In the High Oil and Gas Resource and Technology case, lower costs and higher resource availability than in the

Reference case allow for higher production at lower prices; in the Low Oil and Gas Resource and Technology case, more pessimistic assumptions about resources and costs are applied

  • The effects of economic assumptions on energy consumption are addressed in the High and Low Economic

Growth cases, which assume compound annual growth rates for U.S. gross domestic product of 2.6% and 1.6%, respectively, from 2016–40, compared with 2.2% annual growth in the Reference case

  • A case assuming that the Clean Power Plan (CPP) is not implemented can be compared to the Reference case to

show how that policy could affect energy markets and emissions

  • Although the graphics in this presentation focus on projections through 2040, this AEO is the first projection to

include model results through 2050, which are available on the AEO page of the EIA website; EIA welcomes feedback on the assumptions and results from the period 2040–50

5 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Total energy consumption quadrillion British thermal units

Energy consumption varies minimally across all AEO cases, bounded by the High and Low Economic Growth cases

Source: EIA, Annual Energy Outlook 2017

20 40 60 80 100 120 140 1980 1990 2000 2010 2020 2030 2040 2016 history projections High Economic Growth Low Oil Price High Oil Price High Oil and Gas Resource and Technology Reference Low Oil and Gas Resource and Technology Low Economic Growth

6 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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5 10 15 20 25 30 35 40 45 1980 1990 2000 2010 2020 2030 2040 petroleum and other liquids natural gas

  • ther renewable

energy coal nuclear hydro liquid biofuels 2016 history projections Energy consumption (Reference case) quadrillion British thermal units

Domestic energy consumption remains relatively flat in the Reference case, but the fuel mix changes significantly

Source: EIA, Annual Energy Outlook 2017 7 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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20 40 60 80 100 120 140 1980 1990 2000 2010 2020 2030 2040 High Oil and Gas Resource and Technology High Oil Price High Economic Growth Reference Low Economic Growth Low Oil Price Low Oil and Gas Resource and Technology 2016 history projections Total energy production quadrillion British thermal units

Energy production ranges from nearly flat in the Low Oil and Gas Resource and Technology case, to continued growth in the High Resource and Technology case

Source: EIA, Annual Energy Outlook 2017 8 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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10 20 30 40 1980 1990 2000 2010 2020 2030 2040 dry natural gas crude oil and lease condensate coal

  • ther renewables

nuclear natural gas plant liquids hydro 2016 history projections Energy production (Reference case) quadrillion British thermal units

United States energy production continues to increase in the Reference case, led by growth in natural gas and renewables

Source: EIA, Annual Energy Outlook 2017 9 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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10 20 30 40 1980 1990 2000 2010 2020 2030 2040 Low Oil Price Low Oil and Gas Resource and Technology High Economic Growth Reference case Low Economic Growth High Oil Price High Oil and Gas Resource and Technology 2016 history projections net imports net exports Net energy trade quadrillion British thermal units

The United States becomes a net energy exporter in most cases as petroleum liquid imports fall and natural gas exports rise

Source: EIA, Annual Energy Outlook 2017 10 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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5 10 15 20 25 30 35 40 1980 1990 2000 2010 2020 2030 2040 Energy trade (Reference case) quadrillion British thermal units exports imports 2016 history projections

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5 10 15 20 25 30 1980 1990 2000 2010 2020 2030 2040 Net energy trade (Reference case) quadrillion British thermal units petroleum and other liquids electricity coal and coke natural gas 2016 history projections net imports net exports

The United States becomes a net energy exporter in the Reference case projections as natural gas exports increase and petroleum imports decrease

11 Adam Sieminski, Johns Hopkins SAIS January 5, 2017 Source: EIA, Annual Energy Outlook 2017

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1 2 3 4 5 6 7 1980 1990 2000 2010 2020 2030 2040 2016 history projections No Clean Power Plan High Economic Growth Low Oil Price High Oil and Gas Resource and Technology Reference case High Oil Price Low Oil and Gas Resource and Technology Low Economic Growth Energy-related carbon dioxide emissions billion metric tons of carbon dioxide

Energy related carbon dioxide emissions decline in most AEO cases, with the highest emissions projected in the No Clean Power Plan case

Source: EIA, Annual Energy Outlook 2017 12 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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0.0 0.5 1.0 1.5 2.0 2.5 3.0 1980 1990 2000 2010 2020 2030 2040 transportation electric power industrial residential commercial 2016 history projections 0.0 0.5 1.0 1.5 2.0 2.5 3.0 1980 1990 2000 2010 2020 2030 2040 petroleum natural gas coal 2016 history projections

Source: EIA, Annual Energy Outlook 2017

Reference case energy-related carbon dioxide emissions fall, but at a slower rate than in the recent past

U.S. energy-related carbon dioxide emissions (Reference case) billion metric tons of carbon dioxide billion metric tons of carbon dioxide

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Although population and economic output per capita are assumed to continue rising, energy intensity and carbon intensity are projected to continue falling in the Reference case

50 100 150 200 250 300 350 400 1980 2010 2040 U.S. population million people 2016 history 10 20 30 40 50 60 70 80 1980 2010 2040 Gross domestic product per capita thousand dollars/person 2016 history 2 4 6 8 10 12 14 1980 2010 2040 Energy intensity thousand British thermal units per dollar 2016 history 10 20 30 40 50 60 70 1980 2010 2040 Carbon intensity metric tons CO2 per billion British thermal units 2016 history Reference case

Source: EIA, Annual Energy Outlook 2017 14 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Petroleum and other liquids

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50 100 150 200 250 2000 2010 2020 2030 2040 North Sea Brent oil price 2016 dollars per barrel 2016 history projections

Source: EIA, Annual Energy Outlook 2017

Reference case oil prices and production rise from current levels, price paths and production levels in the side cases are very different from those in the Reference case

2 4 6 8 10 12 14 16 18 2000 2010 2020 2030 2040 2016 history projections Crude oil production million barrels per day High Oil and Gas Resource and Technology High Oil Price Reference case Low Oil Price Low Oil and Gas Resource and Technology

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Tight oil dominates U.S. production in the Reference case, but other types of oil production continue to yield significant volumes

Source: EIA, Annual Energy Outlook 2017

2 4 6 8 10 12 14 16 18 2000 2010 2020 2030 2040 Crude oil production million barrels per day U.S. total tight oil non-tight oil 2016 history projections 2020 2030 2040 2016 projections 2020 2030 2040 2016 projections Low Oil and Gas Resource and Technology Reference High Oil and Gas Resource and Technology

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20 40 60 80 2000 2005 2010 2015 2020 2025 2030 2035 2040 Low Oil Price Low Oil and Gas Resource and Technology Reference High Oil Price High Oil and Gas Resource and Technology net imports net exports 2016 history projections Petroleum net imports as a percentage of products supplied percent

In the High Oil Price and the High Oil and Gas Resource and Technology cases, the United States becomes a net petroleum exporter

Source: EIA, Annual Energy Outlook 2017 18 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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10 20 30 40 50 2000 2010 2020 2030 2040 Light-duty stock fleet fuel economy miles per gallon car fleet average truck 2016 history projections 20% 30% 40% 50% 60% 70% 2000 2010 2020 2030 2040 Light-duty vehicle sales shares percent truck car 0% 2016 history projections

Source: EIA, Annual Energy Outlook 2017

Average light-duty fuel economy improves in the Reference case, even as the share of light-duty trucks increases

19 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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With the second phase of fuel efficiency regulations, medium- and heavy-duty vehicle energy consumption declines over 2027-33 despite continued growth in miles traveled

Source: EIA, Annual Energy Outlook 2017

50 100 150 200 250 300 350 400 450 2000 2020 2040 2016 history projections travel indicator billion vehicle-miles traveled 2 4 6 8 10 12 2000 2020 2040

2016 history projections

stock fuel economy miles per gallon 1 2 3 4 5 6 7 2000 2020 2040

2016 history projections

energy consumption quadrillion British thermal units Medium- and heavy-duty vehicle metrics

20 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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5 10 15 20 25 30 35 2000 2010 2020 2030 2040 Transportation sector consumption quadrillion British thermal units 2016 history projections motor gasoline distillate fuel oil jet fuel electricity

  • ther

5 10 15 20 25 30 35 2000 2010 2020 2030 2040 Transportation sector consumption quadrillion British thermal units 2016 history projections light-duty vehicles medium-and heavy-duty vehicles air commercial light trucks rail marine

  • ther

Source: EIA, Annual Energy Outlook 2017

Transportation energy use declines between 2018 and 2034 in the Reference case, driven by improvements in fuel economy

21 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Natural gas

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10 20 30 40 50 60 2000 2010 2020 2030 2040 U.S. natural gas production by type trillion cubic feet shale gas and tight oil plays tight gas

  • ther Lower 48 onshore

Lower 48 offshore

  • ther

2016 history projections

Source: EIA, Annual Energy Outlook 2017

U.S. dry natural gas production is the result of continued development of shale gas and tight oil plays, alternative assumptions cause significant differences

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10 20 30 40 50 60 2000 2010 2020 2030 2040 Dry natural gas production trillion cubic feet 2016 history projections High Oil Price High Oil and Gas Resource and Technology Reference case Low Oil Price Low Oil and Gas Resource and Technology

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20 40 60 80 100 5 10 15 20 25 30 35 40 2010 2016 2020 2030 2040 electric power industrial transportation commercial residential 2016 history projections Natural gas consumption by sector trillion cubic feet billion cubic feet per day

Increasing demand from industrial and electric power markets drive rising domestic consumption of natural gas in the Reference case

Source: EIA, Annual Energy Outlook 2017 24 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Increased natural gas trade is dominated by liquefied natural gas exports in the Reference case

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2 4 6 8 1980 1990 2000 2010 2020 2030 2040 Natural gas trade trillion cubic feet 2016 history projections liquefied natural gas (LNG) exports pipeline exports to Canada Mexico pipeline imports from Canada LNG imports billion cubic feet per day 22 16 10 5

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5 10 15 20 25 2 4 6 8 10 2000 2010 2020 2030 2040 Liquefied natural gas exports trillion cubic feet billion cubic feet per day 2016 history projections 1 2 3 4 5 6 7 8 2000 2010 2020 2030 2040 Oil-to-natural gas price ratio energy-equivalent terms 2016 history projections

Source: EIA, Annual Energy Outlook 2017

U.S. LNG export levels vary across cases and reflect both the level of global demand, as well as by the difference between domestic and global natural gas prices

Reference High and Low Oil and Gas Resource and Technology High and Low Oil Price

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2 4 6 8 10 12 2000 2010 2020 2030 2040 2016 history projections Low Oil and Gas Resource and Technology High Oil Price Reference case Low Oil Price High Oil and Gas Resource and Technology Henry Hub natural gas price 2016 dollars per million Btu

Future domestic natural gas prices depend on both domestic resource availability and world energy prices

Source: EIA, Annual Energy Outlook 2017 27 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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Electricity

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200 400 600 800 1,000 1,200 1,400 1,600 1,800 Electricity use by sector billion kilowatthours direct use electricity sales residential I commercial I Industrial I transportation

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1 2 3 4 5 6 1980 2000 2020 2040 Electricity use growth rate percent growth (three-year rolling average) 2016 history projections

Source: EIA, Annual Energy Outlook 2017

Electricity use continues to increase, but the rate of growth remains lower than historic averages in the Reference case

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500 1,000 1,500 2,000 2,500 1980 1990 2000 2010 2020 2030 2040 U.S. net electricity generation from select fuels billion kilowatthours natural gas 2016 history projections petroleum coal renewable energy nuclear Reference 2020 2030 2040 2016 projections No Clean Power Plan

Source: EIA, Annual Energy Outlook 2017

Fuel prices and current laws and regulations drive growing shares of renewables and natural gas in the electricity generation mix as coal’s share declines over time in the Reference case

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Natural gas resource availability affects prices and plays a critical role in determining the mix of coal, natural gas, and renewable generation

Source: EIA, Annual Energy Outlook 2017 31 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

2015 2025 2035 2015 2025 2035 Low Oil and Gas Resource and Technology High Oil and Gas Resource and Technology 500 1,000 1,500 2,000 2,500 1980 1990 2000 2010 2020 2030 2040 U.S. net electricity generation from select fuels billion kilowatthours natural gas 2016 history projections coal renewable energy Reference

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10 20 30 40 2005 2010 2015 2020 2025 2030 2035 2040 2016 history projections solar wind

  • il and gas

nuclear

  • ther

coal additions retirements Annual electricity generating capacity additions and retirements (Reference case) gigawatts

Lower capital costs and the availability of tax credits boost near-term wind additions and sustain solar additions; whereas coal-fired unit retirements in the Reference case are driven by low natural gas prices and the Clean Power Plan

Source: EIA, Annual Energy Outlook 2017 32 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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20 40 60 80 100 120 2010 2020 2030 2040 Nuclear electricity generating capacity gigawatts 2016 history projections Reference

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1 2 3 2015 2020 2025 2030 2035 2040 Year-over-year nuclear capacity changes gigawatts additions retirements assumed uprates new reactors actual/announced retirements projected retirements Reference

Source: EIA, Annual Energy Outlook 2017

Assumptions about license renewals in AEO2017 increase nuclear retirements, leading to net nuclear capacity decreases

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200 400 600 800 1,000 1,200 1,400 2000 2010 2020 2030 2040 Coal production million short tons total West Appalachia Interior 2016 history projections No Clean Power Plan Reference 200 400 600 800 1,000 1,200 1,400 2000 2010 2020 2030 2040 Coal consumption in electric power sector million short tons 2016 history projections No Clean Power Plan Reference

Source: EIA, Annual Energy Outlook 2017

Coal production decreases, primarily in the Western region

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Buildings and industrial

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1 2 3 4 5 6 heating cooling water heating lighting refrigeration

  • ther

Residential sector delivered energy consumption quadrillion British thermal units 2016 2040 1 2 3 4 5 6 heating cooling water heating lighting refrigeration

  • ther

Commercial sector delivered energy consumption quadrillion British thermal units 2016 2040

Source: EIA, Annual Energy Outlook 2017

Energy consumption decreases for most major end uses in the residential and commercial sectors with improved equipment efficiency and standards in the Reference case

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1 2 3 4

  • ther uses

TVs and PCs cooking laundry and dishwashing refrigerators and freezers water heating heating lighting cooling 2016 2040 Residential electricity use per household thousand kilowatthours per household

Per-household electricity use continues to decline in the Reference case led by efficiency improvements in lighting, cooling, and refrigeration

Source: EIA, Annual Energy Outlook 2017 37 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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18 20 22 24 26 28 30 32 34 36 1980 1990 2000 2010 2020 2030 2040 2016 history projections

//

High Oil Price High Economic Growth High Oil and Gas Resource and Technology Reference Low Oil and Gas Resource and Technology Low Economic Growth Low Oil Price Industrial energy consumption quadrillion British thermal units

Industrial energy consumption grows in all cases, but is higher in the High Oil Price case and the High Economic Growth cases over most of the projection

Source: EIA, Annual Energy Outlook 2017 38 Adam Sieminski, Johns Hopkins SAIS January 5, 2017

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2010 2020 2030 2040 Industrial energy consumption quadrillion British thermal units 2016 history projections non- manufacturing

  • ther non-energy

intensive metal durables refining bulk chemical feedstock bulk chemical heat & power food iron & steel paper

  • ther energy

intensive

Source: EIA, Annual Energy Outlook 2017

Industrial sector energy consumption growth in the Reference case is led by increases in petroleum and natural gas consumption

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5 10 15 20 25 30 35 1980 2000 2020 2040 Industrial energy consumption quadrillion British thermal units 2016 history projections coal electricity renewables natural gas hydrocarbon gas liquids petroleum

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For more information

U.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 Today in Energy | www.eia.gov/todayinenergy

40 Adam Sieminski, Johns Hopkins SAIS January 5, 2017