Issues in Focus

Effects of the Clean Power Plan

Release Date: 6/20/2016

The Clean Power Plan (CPP) [1] rule, issued under Section 111(d) of the Clean Air Act, is the U.S. Environmental Protection Agency (EPA) program to regulate carbon dioxide (CO2) emissions at existing fossil-fired electric power plants. EPA estimates that the CPP will reduce CO2 emissions from the power sector by 32% from 2005 levels by 2030. As described in the Annual Energy Outlook 2016 (AEO2016) Legislation and Regulations section, the CPP rule allows states to choose either mass-based or rate-based emissions targets. A mass-based target simply specifies an annual limit on the amount of CO2 that can be emitted by states from the affected sources. A rate-based target requires states to meet an annual adjusted emission rate (lbs CO2/MWh) based on emissions from affected sources divided by generation from affected sources, which for this calculation includes new non-emitting sources, such as nuclear and renewable capacity, and incremental energy efficiency. The rule also provides flexibility in other areas, such as regional cooperation through trading.

Fuel Consumption and Greenhouse Gas Emissions Phase 2 Standards for Medium- and Heavy-Duty Vehicles

Release Date: 6/23/2016

The transportation sector is the second-largest consumer of energy in the United States, accounting for more than 70% of U.S. petroleum consumption and thus playing a significant role in projections of energy demand. The Annual Energy Outlook 2016 (AEO2016) Reference case reflects the effects of existing laws and regulations on the fuel consumption and greenhouse gas (GHG) emissions of medium- and heavy-duty vehicles, which in 2015 accounted for 20% of total energy consumption in the transportation sector and 60% of total delivered distillate fuel consumption.

Extended Policies Case

Release Date: 6/27/16

The Annual Energy Outlook 2016 (AEO2016) Extended Policies case includes selected policies that go beyond current laws and regulations. Existing tax credits that have scheduled reductions and sunset dates are assumed to remain unchanged through 2040. Other efficiency policies, including corporate average fuel economy standards, appliance standards, and building codes, are expanded beyond current provisions; and the U.S. Environmental Protection Agency (EPA) Clean Power Plan (CPP) [1] regulations that reduce carbon dioxide emissions from electric power generation are tightened after 2030.

Hydrocarbon Gas Liquids Production and Related Industrial Development

Release Date: 7/6/16

Hydrocarbon gas liquids (HGL) are produced at refineries from crude oil and at natural gas processing plants from unprocessed natural gas. From 2010 to 2015, total HGL production increased by 42%. Natural gas processing plants accounted for all the increase, with recovered natural gas plant liquids (NGPL)—light hydrocarbon gases such as propane—rising by 57%, from 2.07 million barrels per day (b/d) in 2010 to 3.27 million b/d in 2015, while refinery output of HGL declined by 7%. The rapid increase in NGPL output was the result of rapid growth in natural gas production, as production shifted to tight gas and shale gas resources, and as producers targeted formations likely to yield natural gas with high liquids content.

Steel Industry Energy Consumption: Sensitivity to Technology Choices, Fuels Prices, and Carbon Prices in the AEO2016 Industrial Demand Module

Release Date: 7/7/16

The manufacture of steel and related products is an energy-intensive process. According to the U.S. Energy Information Administration’s (EIA) Manufacturing Energy Consumption Survey (MECS), steel industry energy consumption in 2010 totaled 1,158 trillion British thermal units (Btu), representing 8% of total manufacturing energy consumption. Energy consumption in the steel industry is largely for crude steel production using basic oxygen furnace (BOF) and electric arc furnace (EAF) technologies. Overall energy intensity in EAF, used primarily to melt scrap steel, is significantly lower than in BOF, which is used to create virgin steel by reducing (i.e., removing oxygen from) iron ore. In 2014, BOF technology accounted for 37% of total U.S. steel production, and EAF accounted for 63% of the total. Over the past two decades, a shift from BOF to EAF has contributed to a substantial reduction in the energy intensity of the U.S. steel industry. From 1991 to 2010, the EAF share of total U.S. steel production in physical units increased from 38% to 61%, and the overall energy intensity of crude steel production in Btu per metric ton decreased by 37%.