Energy Consumption by Primary Fuel

Total primary energy consumption grows by 7 percent in the AEO2013 Reference case, from 98 quadrillion Btu in 2011 to 104 quadrillion Btu in 2035—2.5 quadrillion Btu less than in AEO2012—and continues to grow at a rate of 0.6 percent per year, reaching about 108 quadrillion Btu in 2040 (Figure 7). The fossil fuel share of energy consumption falls from 82 percent in 2011 to 78 percent in 2040, as consumption of petroleum-based liquid fuels falls, largely as a result of the incorporation of new fuel efficiency standards for LDVs.

figure dataWhile total liquid fuels consumption falls, consumption of domestically produced biofuels increases significantly, from 1.3 quadrillion Btu in 2011 to 2.1 quadrillion Btu in 2040, and its share of total U.S. liquid fuels consumption grows from 3.5 percent in 2011 to 5.8 percent in 2040. The increases are much smaller than those in AEO2012, however, as a result of diminished FFV penetration, a smaller motor gasoline pool for blending ethanol, and reduced production of cellulosic biofuels, which to date has been well under the targets set by the EISA. (EPA issued waivers that substantially reduced the cellulosic biofuels obligation under the RFS for 2010, 2011, and 2012.) In addition, the production tax credit for cellulosic biofuels is scheduled to expire at the end of 2012.

Total U.S. consumption of liquid fuels, including both petroleum-based fuels and biofuels, which was 37.0 quadrillion Btu (18.9 million bpd) in 2011, increases to 37.6 quadrillion Btu (19.8 million bpd) in 2019 in the AEO2013 Reference case, then declines to 35.8 quadrillion Btu (18.9 million bpd) in 2035 before rising to 36.1 quadrillion Btu (about 18.9 million bpd) in 2040. Biofuel consumption increases over most of the projection period. The transportation sector dominates demand for liquid fuels, although its share (as measured by energy content) declines modestly, from 71 percent of total liquids consumption in 2011 to 70 percent in 2040.

In the AEO2013 Reference case, natural gas consumption rises from 24.4 trillion cubic feet in 2011 to 28.7 trillion cubic feet in 2035 (about 2.1 trillion cubic feet higher than in the AEO2012 Reference case) and continues to grow to 29.5 trillion cubic feet in 2040. The largest share of the growth is for electricity generation. Demand for natural gas in the electric power sector increases from 7.6 trillion cubic feet in 2011 to approximately 9.5 trillion cubic feet in 2040, with a portion of the growth attributable to the retirement of 49 gigawatts of coal-fired capacity by 2022. Natural gas consumption in the industrial sector is also higher in AEO2013 than was projected in AEO2012, due to the rejuvenation of the industrial sector as it benefits from surging shale gas production that is accompanied by slow price growth, particularly from 2011 through 2019, when the price of natural gas remains below 2010 levels. Some industries, such as bulk chemicals, are more strongly affected than others. In the residential sector, natural gas consumption declines throughout the projection period. Because natural gas is used in the residential sector directly for heating but not for cooling, residential natural gas consumption is affected by the 6-percent reduction in heating degree days described above.

Total coal consumption—including the portion of coal-to-liquids (CTL) consumed as liquids—increases from 19.7 quadrillion Btu (999 million short tons) in 2011 to 20.5 quadrillion Btu (1,071 million short tons) in 2040 in the AEO2013 Reference case. Coal consumption, mostly for electric power generation, falls off through 2016. After 2016, coal-fired electricity generation increases slowly as the remaining coal-fired capacity is used more intensively, but little capacity is added. Coal consumption in the electric power sector in 2035 in the AEO2013 Reference case is about 0.6 quadrillion Btu (23 million short tons) lower than projected in the AEO2012 Reference case. The startup of the first CTL plants is delayed to 2023 in the AEO2013 Reference case, with penetration of the technology far more modest than in AEO2012.

Total consumption of marketed renewable fuels grows by 1.6 percent per year in the AEO2013 Reference case. Growth in consumption of renewable fuels results mainly from the implementation of the federal RFS for transportation fuels and state renewable portfolio standard (RPS) programs for electricity generation. Marketed renewable energy includes wood, municipal waste, biomass, and hydroelectricity in the end-use sectors; hydroelectricity, geothermal, municipal solid waste, biomass, solar, and wind for generation in the electric power sector; and ethanol for gasoline blending and biomass-based diesel in the transportation sector, of which 2.2 quadrillion Btu is included with liquid fuel consumption in 2040. Excluding hydroelectricity, renewable energy consumption in the electric power sector grows from 1.6 quadrillion Btu in 2011 to 4.5 quadrillion Btu in 2040, with biomass accounting for 24 percent of the growth and wind 44 percent. Generation of electricity from solar photovoltaic (PV) energy exhibits the fastest growth. Starting from a small base, PV accounts for 17 percent of total electricity generated from renewable energy sources, excluding hydropower, in 2040.