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Agricultural Resource Economics by alicejenny

VIEWS: 5 PAGES: 35

									Projections for Energy Markets
      2008-18 and Beyond

      Rising Food and Energy Prices

               October 2nd, 2008
               Corvallis, Oregon



                  A. Michael Schaal
           Director, Oil and Gas Division
   Office of Integrated Analysis and Forecasting
        Energy Information Administration
                                Outline


   • EIA’s Annual Energy Outlook 2008 Reference Case

   • Impacts of Revised CAFE and Renewable Fuel
     Standard

   • Alternative Scenarios For AEO 2008




Rising Food and Energy Prices
                    Energy use per capita and
                        per dollar of GDP
      (index, 1970=1.0)
1.2

                                                       per capita
1.0


0.8


0.6
                                                    per dollar real GDP
0.4


0.2
                          History                      Projection
0.0
   1970            1980        1990   2000   2010         2020      2030



 Rising Food and Energy Prices
      U.S. Primary Energy Consumption by Fuel, 1960-2030
                        (quadrillion Btu)

120                     History                    Projections

100                                                                    Coal



80
                                                                 Natural Gas


60



40                                              Liquid Fuels & Other Petroleum



20
                                                                      Nuclear

                                                                 Renewables
 0
 1960        1970       1980      1990   2000     2010         2020            2030

 Rising Food and Energy Prices
       U.S. Primary Energy Consumption by Fuel, 1960-2030
quadrillion Btu
                         (quadrillion Btu)
50
                        History                  Projections


40                                                               Liquid Fuels




30                                                                      Coal



                                                                  Natural Gas
20


                                                                 Renewables
10
                                                                      Nuclear



 0
 1960       1970       1980       1990   2000   2010           2020            2030

 Rising Food and Energy Prices
        Natural Gas Consumption by End-Use Sector
trillion cubic feet
      10
                        History                             Projections


                                                         Industrial*
       8

                                                       Electric Power

       6


                                                         Residential
       4


                                                         Commercial
       2



                                                       Transportation**
       0
         1990                     2000   2005   2010                   2020   2030
* Includes lease and plant fuel
** Includes pipeline fuel

   Rising Food and Energy Prices
         U.S. Electricity Demand Growth Trends
12%                                                   Annual
                                History               Growth            Projections

                                           1950s        9.0%
10%                                        1960s        7.3%
                                           1970s        4.2%
                                           1980s        3.1%
8%
                                           1990s        2.4%
                                          2000-2005     1.2%

6%                                        2005-2030     1.1%



4%



2%



0%
  1950      1960     1970        1980        1990      2000 2005 2010        2020     2030

Rising Food and Energy Prices
      U.S. Electricity Consumption Growth by Sector
billion kilowatthours


  2,000                        History                        Projections
                                                                                   Commercial




  1,500                                                                            Residential



                                                                                    Industrial
  1,000




    500




      0
          1980          1990             2000   2005   2010                 2020                 2030

   Rising Food and Energy Prices
                  Electricity Generation by Fuel Type
billion kilowatthours
    3,000
                        History                          Projections




    2,000                                              Coal




    1,000                                              Natural Gas

                                                       Nuclear

                                                  Renewables
                                                   Petroleum
         0
          1980           1990     2000   2005   2010              2020   2030


  Rising Food and Energy Prices
      AEO 2008 Outlook Affected By The Energy
       Independence and Security Act of 2007


   • Increased Corporate Average Fuel Economy (CAFE).
        – Light Duty Vehicle fuel economy standard of 35 miles per gallon
          by 2020.


   • Increased and Diversified the Renewable Fuels
     Standard (RFS)

   • Other End-Use Efficiency Standards.




Rising Food and Energy Prices
         New Light-Duty Vehicle Fuel Efficiency
                   (miles per gallon)

   40


   30


                                                              AEO2008
   20
                                                              AEO2007


   10


    0
     1978 1983 1988 1993 1998 2003 2008 2013 2018 2023 2028


Rising Food and Energy Prices
            The Transportation Sector Dominates
                 Liquid Fuels Consumption.
     million barrels per day
18

                          History                   Projections
15
                                                    Transportation

12



 9



 6
                                                       Industrial


 3
                                              Residential and Commercial
                                                    Electric Power
 0
  1970           1980          1990   2000   2010        2020         2030


Rising Food and Energy Prices
U.S. Sales of Unconventional Light-Duty Vehicles,
     2015 and 2030 (thousand vehicles sold)

 3,500      Hybrids
               Flex Fuel
 3,000                 Turbo Direct Injection Diesel

 2,500                     Gaseous
                               Electric
 2,000                               Fuel Cell


 1,500

 1,000

  500

    0

                       2015                            2030
Rising Food and Energy Prices
                                 Motor Fuels Demand
                                (million barrels per day)
     12

     10

       8

       6

       4

       2

       0
           1995      2000         2005       2010     2015   2020     2025   2030

                                         Motor Gasoline*     Diesel
* Motor Gasoline includes E85

 Rising Food and Energy Prices
           Bringing Liquid Fuels to Market

                                         Tanker,
                        Bio-Refinery   Barge or Rail




Rising Food and Energy Prices
        EISA 2007 Expands the Renewable Fuel
                  Standard (RFS) Mandate
        (billion credits, ethanol equivalent gallons)
   40

                                           Total
   30
                                           Advanced Biofuels
   20
                                           Cellulosic Biofuels

   10                                      Biomass-Based
                                           Diesel

    0
     06

     08

     10

     12

     14

     16

     18

     20

     22
  20

  20

  20

  20

  20

  20

  20

  20

  20




Rising Food and Energy Prices
              Advanced Biofuels Mandate
     billion credits
40



30

                                                        Legislated RFS

20
                                   RFS with Paragraph 7 Adjustments

                  Liquids from Biomass (BTL)
                                                             Biodiesel
10
                                       Net Ethanol
                                                            Cellulosic
                                        Imports
                                                             Ethanol
 0
                                                               Ethanol
           2006                 2010                 2020               2030
                                                             from Other
                                                             Feedstocks
Rising Food and Energy Prices
     Meeting the Renewable Fuels Standard
     billion credits
40
                                                 Legislated RFS
                                RFS with Paragraph 7 Adjustments
30
              Liquids from Biomass (BTL)
                                  Biodiesel
                          Net Ethanol Imports
20
                       Cellulose Based Ethanol                   Ethanol
                                                               from Other
                                                      Corn     Feedstocks
10
                                                     Based
                                                     Ethanol


0
           2006                 2010                  2020                  2030

Rising Food and Energy Prices
  Distribution of Ethanol Volumes Requires
           E85 Sales (billion gallons)
   16


   12


    8                                                      Ethanol in E10
                                                           Ethanol in E85

    4


    0
           2006       Reference   High Price   Low Price
                                    2030

Rising Food and Energy Prices
                   Motor Fuels by Source
                                (billion gallons)

   250


   200                                              Biofuel Content of
                                                    Diesel
   150                                              Fossil Fuel Content
                                                    of Diesel
   100                                              Biofuel Content of
                                                    Gasoline
    50                                              Fossil Fuel Content
                                                    of Gasoline
     0
      1995 2000 2005 2010 2015 2020 2025 2030



Rising Food and Energy Prices
Gas-to-Liquids, Coal-to-Liquids, Biomass-to-Liquids, and Oil
      Shale Production in the Price Cases, 1990-2030
                  (million barrels per day)

     1.4
                History                   Projections
     1.2                                                            Coal to Liquids/
                                                                    High price
     1.0

     0.8

     0.6                                                            Biomass to Liquids/
                                                                    Reference
     0.4
                                                                     Coal to Liquids/
                                                                     Reference
     0.2
                                                                    Oil Shale/High price
                                                                     Gas to Liquids/
     0.0                                                             High price
       1990   1995   2000   2005   2010    2015   2020   2025   2030



Rising Food and Energy Prices
  Liquid Fuels Consumption and Domestic Supply
     million barrels per day
30
                               AEO2008
                               AEO2007

20
                    Consumption
                                                       Net Imports   61%   54%
                                                60%


10
                  Domestic supply



                         History                          Projection
 0
  1970           1980           1990     2000   2010          2020         2030
Rising Food and Energy Prices
                               Carbon Dioxide Emissions

     million metric tons
                  Total Carbon Dioxide Emissions
 3,500   8,000
                                                                      Electricity
         7,500                                                        Coal
                                                   AEO2007                             AEO2007
 3,000                                                                Natural Gas        2030
         7,000
                                                                      Petroleum
         6,500                                                                              AEO2008
                                                 AEO2008                                      2030
 2,500
         6,000                                                                      2006

 2,000   5,500
                 2006   2010    2015      2020   2025      2030


 1,500


 1,000


  500


    0
         Residential               Commercial                     Industrial        Transportation    Electric Power

                                       Delivered, including losses

Rising Food and Energy Prices
                        AEO 2008 Scenarios
•   Reference                                • Renewable Fuels: High Renewable Cost
•   Early Release Reference                  • Renewable Fuels: Low Renewable Cost
•   Low Economic Growth                      • Oil and Gas: Rapid Technology
•   High Economic Growth                     • Oil and Gas: Slow Technology
•   Low Price                                • Oil and Gas: High LNG Supply
•   High Price                               • Oil and Gas: Low LNG Supply
•   Residential: 2008 Technology             • Oil and Gas: ANWR
•   Residential: High Technology             • Coal: Low Coal Cost
•   Residential: Best Available Technology   • Coal: High Coal Cost
•   Commercial: 2008 Technology              • Integrated 2008 Technology
•   Commercial: High Technology              • Integrated High Technology
•   Commercial: Best Available Technology    • Integrated Alternative Weather Case
•   Industrial: 2008 Technology              • High Commodity Cost
•   Industrial: High Technology              • Low Commodity Cost
•   Transportation: High Technology          • Restricted Non-Natural Gas Electricity
•   Electricity: Low Nuclear Cost              Generation
•   Electricity: High Nuclear Cost           • Restricted Natural Gas Supply
•   Electricity: Low Fossil Cost             • Combined High Demand/Low Natural
•   Electricity: High Fossil Cost              Gas Supply Case

Rising Food and Energy Prices
               Policy Change Possibilities




                     Greenhouse Gas
                       Legislation



                                             25
Rising Food and Energy Prices
               Recent EIA Policy Analysis

  • Energy and Economic Analysis of S. 2191, America’s
    Climate Security Act of 2007 – April 2008

  • Energy and Economic Analysis of S. 1766, the Low
    Carbon Economy Act of 2007

  • Proposal requiring 25 percent renewable fuels in the
    motor vehicle transportation and electricity markets by
    2025



                                                              26
Rising Food and Energy Prices
      Recent EIA Policy Analysis (Continued)

  • Analysis of S. 280, the Climate Stewardship and
    Innovation Act of 2007

  • Impacts of a 15-Percent Renewable Portfolio Standard,
    June 2007

  • All available at:
     – http://www.eia.doe.gov/oiaf/service_rpts.htm
     – http://www.eia.doe.gov/oiaf/analysis.htm



                                                            27
Rising Food and Energy Prices
         Key GHG Policy Analysis Factors
  • Stringency of emission limits

  • Coverage
     – What gases? What sectors?

  • Timing / Banking

  • Treatment of offsets
     – Foreign and domestic -- Agricultural and forestry

  • Safety Valve / Technology Accelerator Payment

  • Allowance allocation methodology

  • Use of allowance revenue and other supporting programs

                                                             28
Rising Food and Energy Prices
      Climate Stewardship and Innovation Act of
                    2007 (S. 280)

  • Caps GHG emissions on covered entities in the electric
    generation, commercial, and industrial sectors, together
    with producers and importers of hydrofluorocarbons,
    perfluorocarbons, and sulfur hexafluoride, and petroleum
    refiners and product importers.

  • Covered entities include all entities in covered sectors
    that own or control a single facility with emissions of
    10,000 metric tons or more.
      – Emissions of covered entities accounted for an estimated 78
        percent of total U.S. GHG emissions in 2004.
      – As emissions by covered entities are subject to limits that tighten
        over time under S.280, their share in total U.S. GHG emissions
        falls.


                                                                         29
Rising Food and Energy Prices
      Climate Stewardship and Innovation Act of
                    2007 (S. 280)

  • Covered Entity Emission Limits
     Time Period                Limit Description
     2012 through 2019          2004 level
     2020 through 2029          1990 level
     2030 through 2049          18 percent below 1990 level
     2050 and beyond            60 percent below 1990 level




  • Offsets (domestic or international) can be used
    in an amount equivalent to up to 30 percent of
    the allowance obligation

                                                              30
Rising Food and Energy Prices
           Energy-Related CO2 Emissions: S.280
                           (million metric tons)

                  Electric Power           Transportation   Industrial
  10,000          Residential              Commercial
   9,000
               2005                      2020                      2030
   8,000
   7,000
   6,000
   5,000
   4,000
   3,000
   2,000
   1,000
       0    2005 Actual            Reference    S.280        Reference    S.280




                                                                              31
Rising Food and Energy Prices
               Electricity Generation by Fuel : S.280
                                      (billion kilowatthours)
               Reference Case                                        S. 280 Core Case
6000                                                       6000

5000                                                       5000

4000                                                       4000

3000                                                       3000

2000                                                       2000

1000                                                       1000

  0                                                           0
   2005         2010      2015      2020      2025     2030   2005     2010      2015      2020     2025      2030


                Coal w/o CCS          Nuclear        Renewables        Natural Gas        Oil/Other


       • Nuclear and renewable generation grows , displacing coal-fired generation. Nuclear and renewables
       are generally less expensive than coal with carbon capture and sequestration (CCS) without any
       special incentives.
       • S.280 is also projected to reduce electricity demand growth, reflecting both higher electricity prices
       and targeted support of high-efficiency equipment
                                                                                                         32
  Rising Food and Energy Prices
                                Summary
  •   In the AEO 2008 Reference Case traditional fossil fuels are
      expected to continue to meet the bulk of energy requirements
      over the projection period

  •   U.S. energy demand is projected to grow at an average annual
      rate of 0.7 percent

  •   The energy efficiency of the economy is projected to increase
      at an average annual rate of 1.7 percent

  • EISA 2007 will have a significant impact on liquid fuels
    production and use.
      – Lower petroleum imports
      – Lower CO2 Emissions
      – Shift towards diesel




Rising Food and Energy Prices
                         Summary                     (continued)

  •   The RFS, made up of four mandates, met by a combination of ethanol, diesel
      production and imports.
       –   Achieves 32 billion gallons by 2022
       –   RFS implementation is in its early phases and significant uncertainties remain.


  •   The impacts of GHG policies depend on the specifics of the proposal
      but the likely impacts include:
       –   Lower coal generation
       –   Greater nuclear, renewable, and natural gas (under some circumstances) generation
       –   Reduced energy demand
       –   Higher energy prices

  •   Key uncertainties include:
       –   Cost, performance and feasibility of rapidly commercializing and deploying key low-
           carbon generating technologies
       –   Cost and availability of domestic and foreign offsets
       –   If these technologies can not be deployed in a timeframe consistent with the emission
           reduction requirements, allowance prices, energy prices and the use of other low-
           carbon fuels, particularly natural gas, will be higher




Rising Food and Energy Prices
     Annual Energy Outlook 2008, June 2008


     Short Term Energy Outlook, Monthly


     AEO 2008 Assumptions, June 2008




  A. Michael Schaal
  Energy Information Administration
  Michael.Schaal@eia.doe.gov

                                       www.eia.doe.gov

Rising Food and Energy Prices

								
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