Annual Energy Outlook, 2014, With Projections to 2040

Annual Energy Outlook, 2014, With Projections to 2040
Annual Energy Outlook, 2014, With Projections to 2040
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The projections in the U.S. Energy Information Administration's (EIA's) Annual Energy Outlook 2014 (AEO2014) focus on the factors that shape the U.S. energy system over the long term.  This Reference case provides the basis for examination and discussion of energy production, consumption, technology, and market trends and the direction they may take in the future. This case also serves as a starting point for analysis of potential changes in energy policies.

Changes from Annual Energy Outlook 2013
The AEO2014 Reference case included as part of this complete report, released in April 2014, was updated from the AEO2013 Reference case released in December 2012. The Reference case was updated to reflect new legislation or regulations enacted since that time or to incorporate modeling changes. Major changes made in the Reference case include:

Revised U.S. Census Bureau population projections [2]. The population projection for 2040 in the AEO2014 Reference case is almost 6% below the 2040 projection used for the AEO2013 Reference case. Most of the revision in overall population growth results from a lower projection for net international migration, with younger age groups showing the largest differences from the earlier projection. The slower rate of population growth leads to less labor force growth, which contributes to slower GDP growth.

Residential, commercial, and industrial
Revised base year residential equipment stocks and energy consumption for space heating, space cooling, and water heating, based on data from EIA's 2009 Residential Energy Consumption Survey (RECS), the most recent data available [3]. Estimates of appliance stocks and energy consumption for several miscellaneous electric loads also were updated, based on a report by Navigant Consulting Inc., to better reflect recent changes and trends in the residential sector [4].

Updated and expanded representation of miscellaneous electric loads in the commercial sector, as well as personal computers and data center servers, based on the Navigant report, reflecting recent and expected trends in electronics use [5]

Updated costs and improved representation of residential lighting applications, including wider representation of light emitting diode (LED) lighting and outdoor lighting, based on the 2009 RECS and two U.S. Department of Energy (DOE) reports [6, 7].

Revised handling of the regional efficiency standard for residential furnaces, based on an ongoing legal appeal of the standard. The regional standard scheduled to take effect in 2013 is not included in AEO2014 because of a court challenge and proposed settlement that would vacate the standard in question and require DOE to develop new standards for residential furnaces.

Revised commercial capacity factors governing annual usage of major end-use equipment, based on an EIA-contracted analysis.

Updated manufacturing sector data to reflect the 2010 Manufacturing Energy Consumption Survey (MECS) [8].

Revised outlook for industrial production to reflect the effects of increased shale gas production and lower natural gas prices, resulting in faster growth for industrial production and energy consumption. The industries primarily affected include energy-intensive bulk chemicals and primary metals, both of which provide products used by the mining and other downstream industries, such as fabricated metals and machinery. The bulk chemicals industry is also a major user of natural gas and, increasingly, hydrocarbon gas liquid (HGL) feedstocks [9].

Expanded process flow models for the cement and lime industry and the aluminum industry, allowing technologies based on energy efficiency to be incorporated, as well as enhancement of the cement model to include renewable fuels.

Implemented a new approach to vehicle miles traveled (VMT) projections for light-duty vehicles (LDVs), based on an analysis of VMT by age group and the aging of the driving population over the course of the projection, which resulted in a significantly lower level of VMT growth after 2018 compared with AEO2013. On balance, demographic trends (such as an aging population and decreasing rates of licensing and travel among younger age groups) combine with employment and income factors to produce a 30% increase in VMT from 2012 to 2040 in AEO2014, compared with 41% growth in AEO2013.

Added liquefied natural gas (LNG) as a potential fuel choice for freight rail locomotives and domestic marine vessels, resulting in significant penetration of natural gas as a fuel for freight rail (35% of freight rail energy consumption in 2040) but relatively minor penetration in domestic marine vessels (2% of domestic marine energy consumption in 2040).

Adopted a new approach for estimating freight travel demand by region and commodity for heavy-duty vehicles (HDVs), rail, and domestic marine vessels, as well as updated fuel efficiencies for freight rail and domestic marine vessels.

Updated handling of flex-fuel vehicle (FFV) fuel shares to better reflect consumer preferences and industry response. FFVs are necessary to meet the renewable fuels standard (RFS), but the phaseout of corporate average fuel economy (CAFE) credits for their sale, as well as limited demand from consumers, reduces their market penetration.

Revised attributes for battery electric vehicles, including: (1) product availability, (2) electric drive fuel efficiency, and (3) non-battery system costs by vehicle size class, battery size, and added battery cost per kilowatthour based on vehicle power-to-energy ratio for vehicle type—applied to hybrid electric, plug-in hybrid electric, and all-electric vehicles.

Oil and natural gas production and product markets.

Revised network pricing assumptions based on benchmarking of regional natural gas hub prices to historical spot natural gas prices, using flow decisions based on spot prices, setting variable tariffs based on historical spot natural gas price differentials, and estimating the price of natural gas to the electric power sector off a netback from the regional hub prices [10].

Allowed secondary flows of natural gas out of the Middle Atlantic region to change dynamically in the model based on relative prices, which enables a larger volume of natural gas from the Middle Atlantic’s Marcellus formation to supply neighboring regions.

Developed the estimated ultimate recovery of tight oil and shale gas on the basis of county-level data [11].

Updated oil and gas supply module that explicitly reports technically recoverable resources of liquids in natural gas, enabling estimation of dry and wet natural gas.

Improved representation of the dynamics of U.S. gasoline and diesel exports versus U.S. demand, through adoption of endogenous modeling [12].

Added representation of the U.S. crude oil distribution system (pipelines, marine, and rail), to allow crude oil imports to go to logical import regions for transport to refineries, which enables crude imports and domestic production to move among refining regions and keeps imports of Canadian crude oil from flowing directly to U.S. Gulf refiners [13].

Revised production outlook for nonpetroleum other liquids—gas-to-liquids, coal-to-liquids (CTL), biomass-to-liquids, and pyrolysis [14]—with lower production levels than in AEO2013, as more recent experience with these emerging technologies indicates higher costs than previously assumed [15].

Revised representation of CO2-enhanced oil recovery (EOR) that better integrates the electricity, oil and gas supply, and refining modules [16].

Electric power sector
Revised approach to reserve margins, which are set by region on the basis of North American Electric Reliability Corporation/Independent System Operator requirements [17], and to capacity payments, which are calculated as a combination of levelized costs for combustion turbines and the marginal value of capacity in the electricity model.

Revised handling of spinning reserves, with the required levels set explicitly, depending on the mix of generating technologies used to meet peak demand by region, to allow better representation of capacity requirements and costs in regions or cases with high penetration of intermittent loads.

Revised assumptions concerning the potential for unannounced retirements of nuclear capacity in several regions to better reflect the impacts of rising operating costs and low electricity prices. Announced nuclear retirements are already incorporated as planned.

Updated handling of Mercury and Air Toxics Standards (MATS) [18] covering the electric power sector, to reflect potential upgrades of electrostatic precipitators, requirements for plants with dry scrubbers to employ fabric filters, and revised costs for retrofits of dry sorbent injection and fabric filters.

Updated treatment of the production tax credit (PTC) for eligible renewable electricity generation technologies consistent with the American Taxpayer Relief Act of 2012 (ATRA) passed in January 2013 [19]—including revision of PTC expiration dates for each PTC-eligible technology, to reflect the concept of projects being declared “under construction” as opposed to being placed “in service,” and extension of the expiration date of the PTC for wind generation projects by one year.

Future analyses using the AEO2014 Reference case will start from the version of the Reference case released with this complete report.


Individuals, policy makers, energy and utility manufacturers, and specialty scientists within this field may be interested in these energy projections.  Statisticians as well, as students and reference collections in libraries, may be able to use this annual resource.

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