Addendum: Projected Expenditure Impacts By Sector

In response to a request from Chairman Edward Markey, the Energy Information Administration (EIA) prepared a report addressing the projected impacts of a 25-percent renewable electricity standard (RES) as proposed in the American Clean Energy and Security Act (ACESA) discussion draft.  This addendum responds to a further request from Chairman Markey that EIA provide additional summary information regarding the projected impacts of the RES on expenditures for electricity and natural gas in the residential, commercial, and industrial sectors, spanning the period from 2020, when EIA’s analysis shows that the RES program first becomes binding on a national basis, to 2030, the end of the projection period for the Annual Energy Outlook 2009.

The projected impacts of the RES on energy expenditures vary across sectors, the type of fuel consumed, and the year considered.  Electricity expenditures generally rise, reflecting the effect of the RES in shifting to higher-cost renewable generation sources, while expenditures on natural gas generally fall, reflecting the reduction in the price of natural gas as electricity sector demand for that fuel is reduced by the RES.  The expenditure changes for electricity and natural gas also reflect some small impacts of the RES itself and the price changes it causes on projected levels electricity and natural gas consumption.  

Table A1 provides summary information on percentage changes in expenditures relative to the baseline for the two RES cases considered in EIA’s analysis of the RES. The RES with Full Efficiency Credits (RESFEC) case assumes that the maximum level of efficiency credits, up to one fifth of the credits in the target in any given year, are claimed. This is reflected as a 20-percent reduction in the applicable target for eligible renewable generation.  The RES with No Efficiency Credits (RESNEC) case assumes that States cannot qualify for, or elect not to use, efficiency credits.