U.S. ENERGY INFORMATION ADMINISTRATION
WASHINGTON DC 20585

FOR IMMEDIATE RELEASE
November 28, 2000

Higher Economic Growth Boosts Forecasts of
Energy Demand and Carbon Dioxide Emissions

Long-term U.S. economic growth is expected to average 3.0 percent per year through 2020, increasing projected U.S. energy demand from 96 quadrillion Btu in 1999 to 127 quadrillion Btu in 2020, according to the Energy Information Administration (EIA) which today released the reference case forecasts of its Annual Energy Outlook 2001 (AEO2001).

In the forecast EIA released one year ago, long-term economic growth was estimated at 2.1 percent per year through 2020. Although part of the upward revision is due to definitional changes in the National Income and Product Accounts, this year's projections reflect a more optimistic view of long-run economic growth in the United States. Higher projected economic growth in AEO2001 leads to higher forecasts for industrial output, housing starts, commercial floorspace, and disposable income. The projected growth for residential and commercial equipment, including personal computers and office equipment, also is higher in AEO2001. Higher projected growth means that energy demand in 2020 is projected to be 6 quadrillion Btu higher than last year's forecast of 121 quadrillion Btu. (One quadrillion Btu is equivalent to the annual energy consumption of ten million U.S. households.)

World oil prices, which increased in both 1999 and 2000, are projected to begin falling in 2001. Natural gas prices also increased in 2000 and are expected to decline within two years. In the longer term, technology improvements in the exploration and production of oil and natural gas are expected to moderate price increases even as demand for these fuels grows. The projected world oil price reaches $22.41 per barrel (1999 dollars) in 2020, similar to last year's projection (Figure 1). The average wellhead price of natural gas is expected to reach $3.13 per thousand cubic feet in 2020, 10 percent higher than forecast last year due to higher expected demand for natural gas over the coming decades, primarily for electricity generation (Figure 1).

Growth in energy demand is expected to lead to rising carbon dioxide emissions from energy combustion. U.S. carbon dioxide emissions are projected to reach 1,809 and 2,041 million metric tons carbon equivalent in 2010 and 2020, respectively, 34 percent and 51 percent higher than the level of 1,349 million metric tons carbon equivalent in 1990 (Figure 2), based on current laws and regulations. However, carbon dioxide emissions per unit of gross domestic product are projected to continue to decline (Figure 3).

Carbon dioxide emissions in 2020 are projected to be 3 percent higher than the level of 1,979 million metric tons carbon equivalent in last year's forecast. Higher carbon dioxide emissions are partly offset by higher nuclear generation in AEO2001. In 2020, nuclear generation is projected to be 34 percent higher than forecast last year, due to lower estimated costs for extending the life of current nuclear plants and higher projected natural gas prices, although total nuclear generation still declines as some existing plants retire.

Other forecast highlights include:

• Electricity demand is projected to grow at an average annual rate of 1.8 percent between 1999 and 2020, compared to the annual 1.3-percent rate forecast last year for the same period. Higher projected economic growth and a reevaluation of the growth in demand for some residential and commercial equipment lead to the higher projection.

• Average electricity prices are projected to generally decline from 6.7 to 6.0 cents per kilowatthour between 1999 and 2020 because of increasing competition in the electricity industry and declining coal prices due to improved productivity in coal mining and growing production from lower-cost mines in the West. Projected electricity prices increase slightly at the end of the forecast period due to rising natural gas prices (Figure 1).

• Coal remains the primary fuel for electricity generation, although its share is projected to decline from 51 to 44 percent by 2020 because electricity industry restructuring favors the less capital- intensive, more efficient natural gas generation technologies. Generation from renewable sources is projected to increase slowly due to relatively low prices of fossil-fired generation.

• Total natural gas demand is projected to increase by 62 percent between 1999 and 2020, from 21.4 to 34.7 trillion cubic feet. Natural gas demand for electricity generation, excluding cogeneration, is projected to triple over that period, as 89 percent of the generation capacity built over the next two decades is expected to be gas-fired units.

• Net petroleum imports are projected to increase, providing 64 percent of U.S. demand in 2020, up from 51 percent in 1999. Growth in petroleum demand is led by transportation, where efficiency improvements are more than offset by growing travel demand.

Reference case projections from the Annual Energy Outlook 2001 and an overview of the results can be accessed on EIA's Internet site at: http://www.eia.doe.gov/oiaf/aeo/earlyrelease/. The full report, including projections with differing assumptions on the price of oil, the rate of economic growth, and the characteristics of new technologies, will be released on December 22, 2000, along with regional projections and a report on the major assumptions underlying the projections.

EIA Program Contact: Mary J. Hutzler, 202/586-2222, mhutzler@eia.doe.gov
EIA Press Contact: National Energy Information Center, 202/586-8800, infoctr@eia.doe.gov

EIA-2000-21

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