Impacts of Modeled Recommendations
of the National Commission on Energy Policy

             
 

In December 2004, Senator Jeff Bingaman asked the Energy Information Administration (EIA) to analyze the energy supply, demand, and fuel import impacts that would result from the recommendations proposed in Ending the Energy Stalemate: A Bipartisan Strategy to Meet America's Energy Challenges, a report by the National Commission on Energy Policy (NCEP), a privately-funded nongovernmental entity.

    
 

EIA analyzed those energy-related recommendations that could be modeled using its National Energy Modeling System (NEMS) and that were thought to have significant potential to affect energy consumption, supply, and prices. The recommendations analyzed included:

  • A program to reduce greenhouse gas (GHG) emissions intensity through an emissions cap-and-trade mechanism;

  • A 36-percent increase (10 miles per gallon for cars, 8 miles per gallon for light trucks) in the corporate average fuel economy (CAFE) standards for light-duty vehicles;

  • A $3-billion tax incentives program to promote the adoption of hybrid and advanced diesel vehicles;

  • A $3.25-per-million-Btu minimum price guarantee at the Alberta Hub for natural gas from Alaska's North Slope;

  • New building codes and appliance efficiency standards for residential and commercial buildings;

  • A $4-billion stimulus to the deployment of sequestration-ready coal-fired integrated gasification combined-cycle (IGCC) plants;

  • A $3-billion program to stimulate carbon capture and sequestration technologies;

  • A $2-billion program to promote the deployment of an advanced nuclear power plant;

  • A $4-billion tax credit program for non-GHG-emitting power generation capacity added between 2006 and 2009;

  • Increased research, development, and deployment incentives for renewable transportation fuels.
   
 

   
 

Light-Duty Vehicle Fuel Consumption, 2003-2025

Source: Energy Information Administration.
 


EIA used the forecast published in its Annual Energy Outlook 2005 (AEO2005) as a baseline to compare results from the modeled recommendations.

Overview of Results

The GHG emissions intensity reduction program, the 36-percent increase in CAFE standards for cars and light trucks, and the new building and appliance efficiency standards are projected to have the largest impacts on energy production, consumption, prices, and fuel imports.

The other recommendations generally affect specific fuels or technologies but do not have large overall energy market impacts.

Some of the significant impacts of the modeled NCEP recommendations on energy supply, demand, imports, prices, and GHG emissions, relative to the AEO2005 reference case, are as follows:

    • Primary energy consumption is 1.9 percent lower in 2015 and 5.1 percent lower in 2025 as efficiency programs and new CAFE standards reduce demand.

    • Fossil fuel energy consumption is 2.4 percent lower in 2015 and 6.9 percent lower in 2025.

    • The import share of petroleum product supplied declines from 62.4 percent to 61.3 percent in 2015 and from 68.4 percent to 66.8 percent in 2025.

    • The absolute level of covered GHG emissions is projected to grow at an annual average rate of 1.1 percent over the 2003-to-2025 period, compared with annual average growth of 1.5 percent in the reference case.

    • The average petroleum price to all users is 2.2 percent higher in 2015 and 1.4 percent higher in 2025 than in the reference case.

    • The average delivered electricity price is unchanged in 2015 but is 5.8 percent higher in 2025 because of the mandatory cap-and-trade program.

    • By 2025, potential and actual real gross domestic product (GDP) are, respectively, about 0.3 percent and 0.4 percent below their reference case levels. These changes do not materially affect average economic growth rates over the forecast period.
   
 
  The full EIA report contains additional findings.

“Impacts of Modeled Recommendations of the National Commission on Energy Policy” (SR/OIAF/2005-02) is available on the EIA Web site in pdf format and downloadable excel spreadsheets from http://eia.doe.gov/oiaf/service_rpts.htm.		    
 

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URL: http://www.eia.doe.gov/emeu/plugs/plmay05.html
File last modified: May 25, 2005