Annual
Energy Outlook 2004 with Projections to 2025
Overview
Index (click to jump links)
Key Energy Issues to 2025
Economic Growth
Energy Prices
Energy Consumption
Energy Intensity
Electricity Generation
Energy Production and Imports
Carbon Dioxide Emissions
Key Energy Issues to 2025
For almost 4 years, natural gas prices have remained at levels
substantially higher than those of the 1990s. This has led to a
reevaluation of expectations about future trends in natural gas
markets, the economics of exploration and production, and the size
of the natural gas resource. The Annual Energy Outlook 2004 (AEO2004)
forecast reflects such revised expectations, projecting greater
dependence on more costly alternative supplies of natural gas, such
as imports of liquefied natural gas (LNG), with expansion of existing
terminals and development of new facilities, and remote resources
from Alaska and from the Mackenzie Delta in Canada, with completion
of the Alaska Natural Gas Transportation System and the Mackenzie
Delta pipeline.
Crude oil prices rose from under $20 per barrel in the late 1990s
to about $35 per barrel in early 2003, driven in part by concerns
about the conflict in Iraq, the situation in Venezuela, greater
adherence to export quotas by members of the Organization of Petroleum
Exporting Countries (OPEC), and changing views regarding the economics
of oil production. AEO2004 reflects changes in expectations about
the relative roles of various basins in providing future crude oil
supplies.
Outside OPEC, the major sources of growth in crude oil production
in the AEO2004 forecast are Russia, the Caspian Basin, non-OPEC
Africa, and South and Central America. U.S. dependence on imported
oil has grown over the past decade, with declining domestic oil
production and growing demand. This trend is expected to continue.
Net imports, which accounted for 54 percent of total U.S. petroleum
demand in 2002—up from 37 percent in 1980 and 42 percent in
1990—are expected to account for 70 percent of total U.S.
petroleum demand in 2025 in the AEO2004 forecast, higher than the
Annual Energy Outlook 2003 (AEO2003) projection of 68 percent.
The change in expectations for future natural gas prices, in combination
with the substantial amount of new natural-gas-fired generating
capacity recently completed or in the construction pipeline, has
also led to a different view of future capacity additions. Although
only a few years ago, natural gas was viewed as the fuel of choice
for new generating plants, coal is now projected to play a more
important role, particularly in the later years of the forecast.
In the AEO2004 forecast, beyond the completion of plants currently
under construction, little new generating capacity is expected to
be added before 2010. With a higher long-term forecast for natural
gas prices, the competitive position of coal is expected to improve.
As a result, cumulative additions of natural-gas-fired generating
capacity between 2003 and 2025 are lower in the AEO2004 forecast
than they were in AEO2003, and more additions of coal and renewable
generating capacity are projected.
Economic Growth
In the AEO2004 reference case, the U.S. economy, as measured by
gross domestic product (GDP), grows at an average annual rate of
3.0 percent from 2002 to 2025, slightly lower than the growth rate
of 3.1 percent per year for the same period in AEO2003. Most of
the determinants of economic growth in AEO2004 are similar to those
in AEO2003, but there are some important differences. For example,
AEO2004 starts with lower nominal interest rates than AEO2003; the
rate of inflation is generally higher; and unemployment levels are
higher. Consequently, differences between AEO2004 and AEO2003 cannot
be explained simply by differences in GDP growth.
Energy Prices
In the AEO2004 reference case, the average world oil price increases
from $23.68 per barrel (2002 dollars) in 2002 to $27.25 per barrel
in 2003 and then declines to $23.30 per barrel in 2005. It then
rises slowly to $27.00 per barrel in 2025, about the same as the
AEO2003 projection of $26.94 per barrel in 2025 (Figure 1). Between
2002 and 2025, real world oil prices increase at an average rate
of 0.6 percent per year in the AEO2004 forecast. In nominal dollars,
the average world oil price is about $29 per barrel in 2010 and
about $52 per barrel in 2025.
World oil demand is projected to increase from 78 million barrels
per day in 2002 to 118 million barrels per day in 2025, less than
the AEO2003 projection of 123 million barrels per day in 2025. In
AEO2004, projected demand for petroleum in the United States and
Western Europe and, particularly, in China, India, and other developing
nations in the Middle East, Africa, and South and Central America
is lower than was projected in AEO2003. Growth in oil production
in both OPEC and non-OPEC nations leads to relatively slow growth
in prices through 2025. OPEC oil production is expected to reach
54 million barrels per day in 2025, almost 80 percent higher than
the 30 million barrels per day produced in 2002. The forecast assumes
that sufficient capital will be available to expand production capacity..
Non-OPEC oil production is expected to increase from 44.7 to 63.9
million barrels per day between 2002 and 2025. Production in the
industrialized nations (United States, Canada, Mexico, Western Europe,
and Australia) remains roughly constant at 24.2 million barrels
per day in 2025, compared with 23.4 million barrels per day in 2002.
In the forecast, increased nonconventional oil production, predominantly
from oil sands in Canada, more than offsets a decline in conventional
production in the industrialized nations.
The largest share of the projected increase in non-OPEC oil production
is expected in Russia, the Caspian Basin, Non-OPEC Africa, and South
and Central America (in particular, Brazil). Russian oil production
is expected to continue to recover from the lows of the 1990s and
to reach 10.9 million barrels per day in 2025, 43 percent above
2002 levels. Production from the Caspian Basin is expected to exceed
6.0 million barrels per day by 2025, compared with 1.7 million barrels
per day in 2002. In 2025, projected production from South and Central
America reaches 7.8 million barrels per day, up from 4.3 million
barrels per day in 2002. A large portion of the increase in South
and Central American production, 0.9 million barrels per day, is
expected to come from nonconventional oil production in Venezuela.
Non-OPEC African production is projected to grow from 3.1 million
barrels per day in 2002 to 6.7 million barrels per day in 2025.
Average wellhead prices for natural gas (including both spot purchases
and contracts) are projected to increase from $2.95 per thousand
cubic feet (2002 dollars) in 2002 to $4.90 per thousand cubic feet
in 2003, declining to $3.40 per thousand cubic feet in 2010 as the
initial availability of new import sources (such as LNG) and increased
drilling in response to the higher prices increase supplies. With
the exception of a temporary decline in natural gas wellhead prices
just before 2020, when an Alaska pipeline is expected to be completed,
wellhead prices are projected to increase gradually after 2010,
reaching $4.40 per thousand cubic feet in 2025 (equivalent to about
$8.50 per thousand cubic feet in nominal dollars). LNG imports,
Alaskan production, and lower 48 production from nonconventional
sources are not expected to increase sufficiently to offset the
impacts of resource depletion and increased demand. At $4.40 per
thousand cubic feet, the 2025 wellhead natural gas price in AEO2004
is 44 cents higher than the AEO2003 projection. The higher price
projection results from reduced expectations for onshore and offshore
production of nonassociated gas, based on recent data indicating
lower discoveries per well and higher costs for drilling in the
lower 48 States.
In AEO2004, the average minemouth price of coal is projected to
decline from $17.90 (2002 dollars) in 2002 to a low of $16.19 per
short ton in 2016. Prices decline in the forecast because of increased
mine productivity, a shift to western production, declines in rail
transportation costs, and competitive pressures on labor costs.
After 2016, however, average minemouth coal prices are projected
to rise as productivity improvements slow and the industry faces
increasing costs to open new mining areas to meet rising demand.
In 2025, the average minemouth price is projected to be $16.57 per
short ton, still lower than the real price in 2002 but considerably
higher than the AEO2003 projection of $14.56 per short ton. In nominal
dollars, projected minemouth coal prices in AEO2004 are equivalent
to $32 per short ton in 2025.
Average delivered electricity prices are projected to decline
from 7.2 cents per kilowatthour in 2002 to a low of 6.6 cents (2002
dollars) in 2007 as a result of cost reductions in an increasingly
competitive market—where excess generating capacity has resulted
from the recent boom in construction—and continued declines
in coal prices. In markets where electricity industry restructuring
is still ongoing, it contributes to the projected price decline
through reductions in operating and maintenance costs, administrative
costs, and other miscellaneous costs. After 2007, average real electricity
prices are projected to increase, reaching 6.9 cents per kilowatthour
in 2025 (equivalent to 13.2 cents per kilowatthour in nominal dollars).
In AEO2003, real electricity prices followed a similar pattern but
were projected to be slightly lower in 2025, at 6.8 cents per kilowatthour.
The higher price projection in AEO2004 results primarily from higher
expected costs for both generation and transmission of electricity.
Higher generation costs reflect the higher projections for natural
gas and coal prices in AEO2004, particularly in the later years
of the forecast.
Energy Consumption
Total primary energy consumption in AEO2004 is projected to increase
from 97.7 quadrillion British thermal units (Btu) in 2002 to 136.5
quadrillion Btu in 2025 (an average annual increase of 1.5 percent).
AEO2003 projected total primary energy consumption at 139.1 quadrillion
Btu in 2025. The AEO2004 projections for total petroleum and natural
gas consumption in 2025 are lower than those in AEO2003, and the
projections for coal, nuclear, and renewable energy consumption
are higher. Higher natural gas prices in the AEO2004 forecast, and
the effects of higher corporate average fuel economy (CAFE) standards
for light trucks in the transportation sector, are among the most
important factors accounting for the differences between the two
forecasts.
Delivered residential energy consumption, excluding losses attributable
to electricity generation, is projected to grow at an average rate
of 1.0 percent per year between 2002 and 2025 (1.4 percent per year
between 2002 and 2010, slowing to 0.8 percent per year between 2010
and 2025). The most rapid growth is expected in demand for electricity
used to power computers, electronic equipment, and appliances. AEO2004
projects residential energy demand totaling 14.2 quadrillion Btu
in 2025 (slightly higher than the 14.1 quadrillion Btu projected
in AEO2003). The AEO2004 forecast includes more rapid growth in
the total number of U.S. households than was projected in AEO2003;
however, fewer new single-family homes are projected to be built
than in the AEO2003 forecast, because the mix of single- and multi-family
units has been revised, based on preliminary data on housing characteristics
from the Energy Information Administration’s 2001 Residential
Energy Consumption Survey. Multi-family units tend to be smaller
and use less energy per household, offsetting some of the increase
in projected energy demand due to the increase in the number of
U.S. households.
Delivered commercial energy consumption is projected to grow at
an average annual rate of 1.7 percent between 2002 and 2025, reaching
12.2 quadrillion Btu in 2025 (slightly less than the 12.3 quadrillion
Btu projected in AEO2003). The most rapid increase in energy demand
is projected for electricity used for computers, office equipment,
telecommunications, and miscellaneous small appliances. Commercial
floorspace is projected to grow by an average of 1.5 percent per
year between 2002 and 2025, identical to the rate of growth in AEO2003
for the same period.
Delivered industrial energy consumption in AEO2004 is projected
to increase at an average rate of 1.3 percent per year between 2002
and 2025, reaching 33.4 quadrillion Btu in 2025 (lower than the
AEO2003 forecast of 34.8 quadrillion Btu). The AEO2004 forecast
includes slower projected growth in the dollar value of industrial
product shipments and higher energy prices (particularly natural
gas) than in AEO2003; however, those effects are offset in part
by more rapid projected growth in the energy-intensive industries.
Delivered energy consumption in the transportation sector is projected
to grow at an average annual rate of 1.9 percent between 2002 and
2025 in the AEO2004 forecast, reaching 41.2 quadrillion Btu in 2025
(2.5 quadrillion Btu lower than the AEO2003 projection). Two factors
account for the reduction in projected transportation energy use
from AEO2003 to AEO2004. First is the adoption of new Federal CAFE
standards for light trucks—including sport utility vehicles.
The new CAFE standards require that the light trucks sold by a manufacturer
have a minimum average fuel economy of 21.0 miles per gallon for
model year 2005, 21.6 miles per gallon for model year 2006, and
22.2 miles per gallon for model years 2007 and beyond. (The old
standard was 20.7 miles per gallon in all years.) As a result, the
average fuel economy for all new light-duty vehicles is projected
to increase to 26.9 miles per gallon in 2025 in AEO2004, as compared
with 26.1 miles per gallon in AEO2003. Second is the lower forecast
for industrial product shipments in AEO2004, leading to a projection
for freight truck travel in 2025 that is 7 percent lower than the
AEO2003 projection.
Total electricity consumption, including both purchases from electric
power producers and on-site generation, is projected to grow from
3,675 billion kilowatthours in 2002 to 5,485 billion kilowatthours
in 2025, increasing at an average rate of 1.8 percent per year (slightly
below the 1.9-percent average annual increase projected in AEO2003).
Rapid growth in electricity use for computers, office equipment,
and a variety of electrical appliances in the residential and commercial
sectors is partially offset in the AEO2004 forecast by improved
efficiency in these and other, more traditional electrical applications,
by the effects of demand-side management programs, and by slower
growth in electricity demand for some applications, such as air
conditioning, which have reached near-maximum penetration levels
in regional markets.
Total demand for natural gas is projected to increase at an average
annual rate of 1.4 percent from 2002 to 2025. From 22.8 trillion
cubic feet in 2002, natural gas consumption increases to 31.4 trillion
cubic feet in 2025 (Figure 2), primarily as a result of increasing
use for electricity generation and industrial applications, which
together account for almost 70 percent of the total projected growth
in natural gas demand from 2002 to 2025. However, the annual rate
of increase in natural gas demand varies over the projection period.
In particular, the growth in demand for natural gas slows in the
later years of the forecast (growing by 1.6 percent per year from
2002 to 2020, as compared with 0.6 percent per year from 2020 to
2025), as rising prices for natural gas make it less competitive
for electricity generation. The AEO2004 projection for total consumption
of natural gas in 2025 is 3.5 trillion cubic feet lower than in
AEO2003.
In AEO2004, total coal consumption is projected to increase from
1,066 million short tons (22.2 quadrillion Btu) in 2002 to 1,567
million short tons (31.7 quadrillion Btu) in 2025. From 2002 to
2025, coal use (based on tonnage) is projected to grow by 1.7 percent
per year on average, compared with the AEO2003 projection of 1.4
percent per year. From 2002 to 2025, on a Btu basis, coal use is
projected to grow by 1.6 percent per year. (Because of differences
in the Btu content of coal across the Nation and changes in the
regional mix of coal supply over time, the rate of growth varies,
depending on whether it is measured in short tons or Btu.) The primary
reason for the change in the rate of growth is higher natural gas
prices in the AEO2004 forecast. In AEO2004, total coal consumption
for electricity generation is projected to increase by an average
of 1.8 percent per year (1.7 percent per year on a Btu basis), from
976 million short tons in 2002 to 1,477 million short tons in 2025,
compared with the AEO2003 projection of 1,350 million short tons
in 2025.
Total petroleum demand is projected to grow at an average annual
rate of 1.6 percent in the AEO2004 forecast, from 19.6 million barrels
per day in 2002 to 28.3 million barrels per day in 2025 AEO2003
projected a 1.8-percent annual average growth rate over the same
period. The largest share of the difference between the two forecasts
is attributable to the transportation sector. In 2025, total petroleum
demand for transportation is 1.2 million barrels per day lower in
AEO2004 than it was in AEO2003.
Total renewable fuel consumption, including ethanol for gasoline
blending, is projected to grow at an average rate of 1.9 percent
per year, from 5.8 quadrillion Btu in 2002 to 9.0 quadrillion Btu
in 2025, primarily as a result of State mandates for renewable electricity
generation. About 60 percent of the projected demand for renewables
in 2025 is for grid-related electricity generation (including combined
heat and power), and the rest is for dispersed heating and cooling,
industrial uses, and fuel blending. Projected demand for renewables
in 2025 in AEO2004 is 0.2 quadrillion Btu higher than in AEO2003,
with more wind and geothermal energy consumption and less biomass
fuel consumption expected in the AEO2004 forecast.
Energy Intensity
Energy intensity, as measured by energy use per dollar of GDP,
is projected to decline at an average annual rate of 1.5 percent
in the AEO2004 forecast, with efficiency gains and structural shifts
in the economy offsetting growth in demand for energy services (Figure
3). This rate of improvement, the same as projected in AEO2003,
is generally consistent with recent historical experience. With
energy prices increasing between 1970 and 1986, energy intensity
declined at an average annual rate of 2.3 percent, as the economy
shifted to less energy-intensive industries, product mix changed,
and more efficient technologies were adopted. Between 1986 and 1992,
however, when energy prices were generally falling, energy intensity
declined at an average rate of only 0.7 percent a year. Since 1992,
it has declined on average by 1.9 percent a year.
Energy use per person generally declined from 1970 through the
mid-1980s but began to increase as energy prices declined in the
late 1980s and 1990s. Per capita energy use is projected to increase
in the forecast, with growth in demand for energy services only
partially offset by efficiency gains. Per capita energy use increases
by an average of 0.7 percent per year between 2002 and 2025 in AEO2004,
the same as in AEO2003.
The potential for more energy conservation has received increased
attention recently as a potential contributor to the balancing of
energy supply and demand as energy supplies become tighter and prices
rise. AEO2004 does not assume policy-induced conservation measures
beyond those in existing legislation and regulation or behavioral
changes that could result in greater energy conservation.
Electricity
Generation
In the AEO2004 forecast, the projected average price for natural
gas delivered to electricity generators is 25 cents per million
Btu higher in 2025 than was projected in AEO2003. As a result, cumulative
additions of natural-gas-fired generating capacity between 2003
and 2025 are lower than projected in AEO2003, generation from gas-fired
plants in 2025 is lower, and generation from coal, petroleum, nuclear,
and renewable fuels is higher. Cumulative natural gas capacity additions
between 2003 and 2025 are 219 gigawatts in AEO2004, compared with
292 gigawatts in AEO2003. The AEO2004 projection of 1,304 billion
kilowatthours of electricity generation from natural gas in 2025
is still nearly double the 2002 level of 682 billion kilowatthours
(Figure 4), reflecting utilization of the new capacity added over
the past few years and the construction of new natural-gas-fired
capacity later in the forecast period to meet increasing demand
and replace capacity that is expected to be retired. Less new gas-fired
capacity is added in the later years of the forecast because of
the projected rise in prices for natural gas and the current surplus
of capacity in many regions of the country. In AEO2003, 1,678 billion
kilowatthours of electricity was projected to be generated from
natural gas in 2025.
The natural gas share of electricity generation (including generation
in the end-use sectors) is projected to increase from 18 percent
in 2002 to 22 percent in 2025 (as compared with 29 percent in the
AEO2003 forecast). The share from coal is projected to increase
from 50 percent in 2002 to 52 percent in 2025 as rising natural
gas prices improve the cost competitiveness of coal-fired technologies.
AEO2004 projects that 112 gigawatts of new coal-fired generating
capacity will be constructed between 2003 and 2025 (compared with
74 gigawatts in AEO2003).
Nuclear generating capacity in the AEO2004 forecast is projected
to increase from 98.7 gigawatts in 2002 to 102.6 gigawatts in 2025,
including uprates of existing plants equivalent to 3.9 gigawatts
of new capacity between 2002 and 2025. In AEO2003, total nuclear
capacity reached a peak of 100.4 gigawatts in 2006 before declining
to 99.6 gigawatts in 2025. In a departure from AEO2003, no existing
U.S. nuclear units are retired in the AEO2004 reference case. Like
AEO2003, AEO2004 assumes that the Browns Ferry nuclear plant will
begin operation in 2007 but projects that no new nuclear facilities
will be built before 2025, based on the relative economics of competing
technologies.
Renewable technologies are projected to grow slowly because of
the relatively low costs of fossil-fired generation and because
competitive electricity markets favor less capital-intensive technologies
in the competition for new capacity. Where enacted, State renewable
portfolio standards, which specify a minimum share of generation
or sales from renewable sources, are included in the forecast. The
production tax credit for wind and biomass is assumed to end on
December 31, 2003, its statutory expiration date at the time AEO2004
was prepared.
Total renewable generation, including combined heat and power
generation, is projected to increase from 339 billion kilowatthours
in 2002 to 518 billion kilowatthours in 2025, at an average annual
growth rate of 1.9 percent. AEO2003 projected slower growth in renewable
generation, averaging 1.4 percent per year from 2002 to 2025.
Energy Production
and Imports
Total energy consumption is expected to increase more rapidly than
domestic energy supply through 2025. As a result, net imports of
energy are projected to meet a growing share of energy demand (Figure
5). Net imports are expected to constitute 36 percent of total U.S.
energy consumption in 2025, up from 26 percent in 2002.
Projected U.S. crude oil production increases from 5.6 million
barrels per day in 2002 to a peak of 6.1 million barrels per day
in 2008 as a result of increased production offshore, predominantly
from the deep waters of the Gulf of Mexico. Beginning in 2009, U.S.
crude oil production begins a gradual decline, falling to 4.6 million
barrels per day in 2025—an average annual decline of 0.9 percent
between 2002 and 2025. The AEO2004 projection for U.S. crude oil
production in 2025 is 0.7 million barrels per day lower than was
projected in AEO2003. The projections for Alaskan production and
offshore production in 2025 both are lower than in AEO2003 (by 660,000
and 120,000 barrels per day, respectively), based on revised expectations
about the discovery of new speculative fields in Alaska and on an
update of the cost of offshore production.
Total domestic petroleum supply (crude oil, natural gas plant
liquids, refinery processing gains, and other refinery inputs) follows
the same pattern as crude oil production in the AEO2004 forecast,
increasing from 9.2 million barrels per day in 2002 to a peak of
9.7 million barrels per day in 2008, then declining to 8.6 million
barrels per day in 2025 (Figure 6). The projected drop in total
domestic petroleum supply would be greater without a projected increase
of 590,000 barrels per day in the production of natural gas plant
liquids (a rate of increase that is consistent with the projected
growth in domestic natural gas production).
In 2025, net petroleum imports, including both crude oil and refined
products (on the basis of barrels per day), are expected to account
for 70 percent of demand, up from 54 percent in 2002. Despite an
expected increase in domestic refinery distillation capacity of
5 million barrels per day, net refined petroleum product imports
account for a growing portion of total net imports, increasing from
13 percent in 2002 to 20 percent in 2025 (as compared with 34 percent
in AEO2003).
The most significant change made in the AEO2004 energy supply
projections is in the outlook for natural gas. Total natural gas
supply is projected to increase at an average annual rate of 1.4
percent in AEO2004, from 22.6 trillion cubic feet in 2002 to 31.3
trillion cubic feet in 2025, which is 3.3 trillion cubic feet less
than the 2025 projection in AEO2003. Domestic natural gas production
increases from 19.1 trillion cubic feet in 2002 to 24.1 trillion
cubic feet in 2025 in the AEO2004 forecast, an average increase
of 1.0 percent per year. AEO2003 projected 26.8 trillion cubic feet
of domestic natural gas production in 2025.
The projection for conventional onshore production of natural
gas is lower in AEO2004 than it was in AEO2003, because slower reserve
growth, fewer new discoveries, and higher exploration and development
costs are expected. In particular, reserves added per well drilled
in the Midcontinent and Southwest regions are projected to be about
30 percent lower than projected in AEO2003. Offshore natural gas
production is also lower in AEO2004 than in AEO2003 because of the
tendency to find more oil than natural gas in the offshore and at
higher costs than previously anticipated. Recent data from the Minerals
Management Service show that about three-quarters of the hydrocarbons
discovered in deepwater fields are oil, compared with 50 percent
assumed in AEO2003. Conventional production of associated-dissolved
and nonassociated natural gas in the onshore and offshore remains
important, meeting 39 percent of total U.S. supply requirements
in 2025, down from 56 percent in 2002.
Canadian imports are also projected to be sharply lower in AEO2004
than in AEO2003. Net imports of natural gas from Canada are projected
to remain at about the 2002 level of 3.6 trillion cubic feet through
2010 and then decline to 2.6 trillion cubic feet in 2025 (compared
with the AEO2003 projection of 4.8 trillion cubic feet in 2025).
The lower forecast in AEO2004 reflects revised expectations about
Canadian natural gas production, particularly coalbed methane and
conventional production in Alberta, based on data and projections
from the Canadian National Energy Board and other sources.
Growth in U.S. natural gas supplies will be dependent on unconventional
domestic production, natural gas from Alaska, and imports of LNG.
Total nonassociated unconventional natural gas production is projected
to grow from 5.9 trillion cubic feet in 2002 to 9.2 trillion cubic
feet in 2025. With completion of an Alaskan natural gas pipeline
in 2018, total Alaskan production is projected to increase from
0.4 trillion cubic feet in 2002 to 2.7 trillion cubic feet in 2025.
The four existing U.S. LNG terminals (Everett, Massachusetts; Cove
Point, Maryland; Elba Island, Georgia; and Lake Charles, Louisiana)
all are expected to expand by 2007, and additional facilities are
expected to be built in the lower 48 States, serving the Gulf, Mid-Atlantic,
and South Atlantic States, with a new small facility in New England
and a new facility in the Bahamas serving Florida via a pipeline.
Another facility is projected to be built in Baja California, Mexico,
serving the California market. Total net LNG imports are projected
to increase from 0.2 trillion cubic feet in 2002 to 4.8 trillion
cubic feet in 2025, more than double the AEO2003 projection of 2.1
trillion cubic feet.
As domestic coal demand grows in AEO2004, U.S. coal production
is projected to increase at an average rate of 1.5 percent per year,
from 1,105 million short tons in 2002 to 1,543 million short tons
in 2025. Projected production in 2025 is 103 million short tons
higher than in AEO2003 because of a substantial increase in projected
coal demand for electricity generation resulting from higher natural
gas prices. Production from mines west of the Mississippi River
is expected to provide the largest share of the incremental production.
In 2025, nearly two-thirds of coal production is projected to originate
from the western States.
Renewable energy production is projected to increase from 5.8
quadrillion Btu in 2002 to 9.0 quadrillion Btu in 2025, with growth
in industrial biomass, ethanol for gasoline blending, and most sources
of renewable electricity generation (including conventional hydroelectric,
geothermal, biomass, and wind). The AEO2004 projection for renewable
energy production in 2025 is 0.2 quadrillion Btu higher than was
projected in AEO2003 as a result of higher projections for electricity
generation from geothermal and wind energy.
Carbon Dioxide Emissions
Carbon dioxide emissions from energy use are projected to increase
from 5,729 million metric tons in 2002 to 8,142 million metric tons
in 2025 in AEO2004, an average annual increase of 1.5 percent (Figure
7). This is slightly less than the projected rate of increase over
the same period in AEO2003, 1.6 percent per year.
By sector, projected carbon dioxide emissions from residential,
commercial, and electric power sector sources are higher in AEO2004
than they were in AEO2003 because of an updated estimate of 2002
emissions and higher projected energy consumption in each of the
three sectors—particularly, coal consumption for electricity
generation in the electric power sector. Projected carbon dioxide
emissions from the industrial and transportation sectors are lower
in the AEO2004 forecast, because of lower projections for industrial
natural gas consumption and the new CAFE standards for light trucks
as well as other changes in the transportation sector that lead
to lower petroleum consumption. The AEO projections do not include
future policy actions or agreements that might be taken to reduce
carbon dioxide emissions.
Table 1. Total energy supply and disposition
in the AEO2004 reference case: summary, 2001-2025
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Energy and economic factors
|
2001 |
2002 |
2010 |
2015 |
2020 |
2025 |
Average Annual
change, 2002-2025(%) |
Primary energy production
(quadrillion Btu) |
Petroleum
|
14.70 |
14.47 |
15.66 |
14.91 |
13.95 |
13.24 |
-0.4% |
Dry
natl gas |
20.23 |
19.56 |
21.05 |
22.20 |
24.43 |
24.64 |
1.0% |
Coal
|
23.97 |
22.70 |
25.25 |
26.14 |
27.92 |
31.10 |
1.4% |
Nuclear
|
8.03 |
8.15 |
8.29 |
8.48 |
8.53 |
8.53 |
0.2% |
Renewable
|
5.25 |
5.84 |
7.18 |
7.84 |
8.45 |
9.00 |
1.9% |
Other
|
0.53 |
1.13 |
0.88 |
0.79 |
0.81 |
0.84 |
-1.3% |
Total
|
72.72 |
71.85 |
78.30 |
80.36 |
84.09 |
87.33 |
0.9% |
Net imports (quadrillion
Btu) |
Petroleum
|
23.29 |
22.56 |
28.13 |
33.20 |
37.25 |
41.69 |
2.7% |
Natural
gas |
3.69 |
3.58 |
5.63 |
6.39 |
6.63 |
7.41 |
3.2% |
Coal/other
|
-0.67 |
-0.51 |
0.06 |
0.26 |
0.43 |
0.61 |
NA |
Total
|
26.31 |
25.63 |
33.82 |
39.84 |
44.31 |
49.71 |
2.9% |
Consumption (quadrillion
Btu) |
Pet
products |
38.49 |
38.11 |
44.15 |
48.26 |
51.35 |
54.99 |
1.6% |
Natural
gas |
23.05 |
23.37 |
26.82 |
28.74 |
31.21 |
32.21 |
1.4% |
Coal
|
22.04 |
22.18 |
25.23 |
26.32 |
28.30 |
31.73 |
1.6% |
Nuclear
|
8.03 |
8.15 |
8.29 |
8.48 |
8.53 |
8.53 |
0.2% |
Renewable
|
5.25 |
5.84 |
7.18 |
7.84 |
8.46 |
9.00 |
1.9% |
Other
|
0.08 |
0.07 |
0.11 |
0.11 |
0.07 |
0.03 |
-4.6% |
Total
|
96.94
|
97.72
|
111.77
|
119.75
|
127.92 |
136.48 |
1.5% |
Petroleum Production
(million barrels per day) |
Dom. crude |
5.74 |
5.62 |
5.93 |
5.53 |
4.95 |
4.61 |
-0.9% |
Othr domestic |
3.11 |
3.60 |
3.59 |
3.72 |
3.94 |
3.98 |
0.4% |
Net imports
|
10.90 |
10.54 |
13.17 |
15.52 |
17.48 |
19.67 |
2.7% |
Consumption
|
19.71 |
19.61 |
22.71 |
24.80 |
26.41 |
28.30 |
1.6% |
Natural gas (trillion
cubic feet) |
Production
|
19.79 |
19.13 |
20.59 |
21.72 |
23.89 |
24.08 |
1.0% |
Net imports
|
3.60 |
3.49 |
5.50 |
6.24 |
6.47 |
7.24 |
3.2% |
Consumption
|
22.48 |
22.78 |
26.15 |
28.03 |
30.44 |
31.41 |
1.4% |
Coal (million short tons)
|
Production
|
1,138 |
1,105 |
1,230 |
1,285 |
1,377 |
1,543 |
1.5% |
Net imports
|
-29 |
-23 |
-2 |
6 |
14 |
23 |
NA |
Consumption
|
1,060 |
1,066 |
1,229 |
1,291 |
1,391 |
1,567 |
1.7% |
Prices (2002 dollars)
|
World oil ($/barrel) |
22.25 |
23.68 |
24.17 |
25.07 |
26.02 |
27.00 |
0.6% |
US
natural gas wellhead ($/tcf) |
4.14 |
2.95 |
3.40 |
4.19 |
4.28 |
4.40 |
1.8% |
US
coal ($/short ton) |
17.79 |
17.90 |
16.88 |
16.47 |
16.32 |
16.57 |
-0.3% |
Avg electricity
price (cents/kwh) |
7.4 |
7.2 |
6.6 |
6.8 |
6.9 |
6.9 |
-0.2% |
Economic
indicators |
Real
GDP (billion 1996$) |
9,215 |
9,440 |
12,190 |
14,101 |
16,188 |
18,520 |
3.0% |
GDP chain-type
price index(1996=1.000) |
1.094 |
1.107 |
1.301 |
1.503 |
1.774 |
2.121 |
2.9% |
Real
disposable personal income (billion 1996$)
|
6,748 |
7,032 |
8,894 |
10,330 |
11,864 |
13,826 |
3.0% |
Value
of industrial.shipments (billion 1996$) |
5,368 |
5,285 |
6,439 |
7,345 |
8,344 |
9,491 |
2.6% |
Energy
intensity (thousandBtu/1996 $ of GDP) |
10.53
|
10.36
|
9.17
|
8.50 |
7.91
|
7.37
|
-1.5%
|
Carbon
dioxide emissions(MMtons) |
5,691.7
|
5,729.3
|
6,558.8
|
7,028.4 |
7,535.6
|
8,142.0
|
1.5%
|
|
Released: January 2004
|