Impacts of Updating the AEO2008 Reference Case

EIA’s decision to update the AEO2008 early-release reference case was motivated by the enactment in December 2007 of EISA2007, which contains many provisions that will significantly influence future energy trends. The specific EISA2007 provisions modeled in AEO2008 include updates to the renewable fuel standard (RFS) and the corporate average fuel economy (CAFE) standard for new light-duty vehicles (LDVs); updated and new appliance energy efficiency standards for boilers, dehumidifiers, dish-washers, clothes washers, and commercial walk-in refrigerators and freezers; lighting energy efficiency standards; provisions to reduce energy consumption in Federal buildings; and efficiency standards for in-dustrial electric motors.

Consistent with the general approach used in past AEOs, the reference case does not consider those sections of EISA2007 that require appropriations for implementation or sections with highly uncertain impacts on energy markets. It also includes additional revisions that reflect historical data issued after the AEO2008 early-release reference case was completed, new data from EIA’s January 2008 Short-Term Energy Outlook, a more current economic outlook, and technical updates to the earlier version of the National Energy Modeling System (NEMS).

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Total energy consumption and greenhouse gas emissions

EISA2007 has a significant impact on both projected total energy consumption and greenhouse gas emis-sions. Total primary energy consumption in the AEO2008 reference case grows by 18.5 quadrillion Btu, from 99.5 quadrillion Btu in 2006 to 118.0 quadrillion Btu in 2030—5.3 quadrillion Btu less than in the early-release reference case. Although other changes were also made, the inclusion of EISA2007 is by far the most important. In 2030, the projected consumption levels for liquid fuels, natural gas, and coal all are lower in the AEO2008 reference case than they were in the early-release case.

Without the application of carbon control and sequestration (CCS) technology, carbon dioxide emissions from the combustion of fossil fuels are proportional to the consumption and carbon content of the fuels. Inclusion of EISA2007 provisions in the AEO2008 reference case both reduces total energy consumption and shifts consumption to fuels that are less carbon-intensive or are carbon-neutral. As a result, the projection for total energy-related carbon dioxide emissions in 2030 is 6,851 million metric tons in the AEO2008 reference case, as compared with 7,373 million metric tons in the early-release reference case—a difference of 7 percent or 522 mil-lion metric tons (see figure). The difference between the two cases grows over time, so that cu-mulative energy-related carbon dioxide emissions over the period from 2008 to 2030 are 5.3 billion metric tons lower in the AEO2008 reference case than in the early-release reference case.

Liquid fuels consumption and imports

The combination of a higher CAFE standard for new LDVs and an updated RFS has a substantial impact on the level and mix of liquids consumption. Total liquids consumptiona in 2030 in the AEO2008 refer-ence case, including the impact of EISA2007, is 22.8 million barrels per day—2.1 million barrels per day lower than in the early-release reference case.

Conventional petroleum consumption in 2030, ex-cluding biofuels but including coal-to-liquids (CTL) diesel (a nonrenewable fuel), is 2.9 million barrels per day less in the AEO2008 reference case. On an energy basis, total liquids consumption is 44.0 quadrillion Btu in 2030 in the AEO2008 reference case, about 9 percent lower than projected in the early-release case.

In the AEO2008 reference case, because a large share of the biofuels consumed is produced domestically, net imports of liquid fuels (including both crude oil and products) are reduced by more relative to the early-release case than is total liquids con-sumption. Total net imports of liquids in 2030 are 2.4 million barrels per day lower in the AEO2008 reference case than in the early-release case. As shown in the figure, U.S. dependence on net imports of liquid fuels (including crude oil and re-fined liquids) on a volumetric basis declines in the AEO2008 reference case from 60 percent in 2006 to 51 percent in 2022, followed by an increase to 54 per-cent in 2030—as compared with 59 percent in the early-release reference case. Even with the increase in biofuel use and the higher vehicle efficiency stan-dards, however, petroleum products still account for 88 percent of total transportation energy consump-tion in the AEO2008 reference case, compared with 96 percent in 2006.

The fuel mix for vehicles also changes between the two cases. The figure below shows the mix of vehicle fuels in 2030 on an energy basis in the two cases. Biofuel consumption, excluding CTL, reaches 2.8 quadrillion Btu in 2030 (29.6 billion gallons, or about 11 percent of total demand for motor vehicle fuel) in the AEO2008 reference case, an increase of 0.9 quadrillion Btu (9.2 billion gallons) from the early-release reference case and 2.3 quadrillion Btu (23.8 billion gallons) more than in 2006. The increase in the AEO2008 reference case includes more ethanol consumption—both ethanol blended with gasoline in E10 (gasoline containing up to 10 percent ethanol by volume) and as E85 (fuel containing a blend of 70 to 85 percent ethanol and 30 to 15 percent gasoline by volume)—and more biodiesel con-sumption than in the early-release projection.