Energy Outlook 2001-2020
By Bill Moore
Every year, the U.S. Department of Energy's Information Agency issues its Annual Energy Outlook (http://www.eia.doe.gov/oiaf/aeo/overview.html). AEO2001 takes a long view of America's energy future and that of the rest of the world. It attempts to identify those key energy issues which will confront the world in 2020. To quote the report, it 'addresses the longer-term trends of electricity restructuring, fossil fuel supply and prices, and the impacts of economic growth on projected energy use and carbon dioxide emissions.'
Given the assumption that the development of cleaner, more energy-efficient forms of transportation is driven, at least in part, by the availability and consequent cost and of energy -- especially fossil fuels -- EV World thought its readers should be aware of what the future might hold for all us, assuming the Energy Information Agency's prognostications are on target and there are no major geopolitical or economic disruptions (See CIA's Global Trends 2015 ).
The question of energy availability has suddenly taken center stage in America as we enter the new millennium. Shortages of electricity in California and of natural gas nationwide in the US has finally caught the attention of the media, as well as state and federal governments and the general public. The issue has become so critical in California that one home developer in San Diego - Shea Homes - announced this week it would begin incorporating solar electric panels into its newest subdivision. It estimates the system will cut homeowner electric bills in half. The company has not said how much the system will add to the cost of the home.
So, what does the US Energy Information Agency foresee on our global energy horizon? Here is a run down of their key points. We encourage you to use the above link and read the report in its entirety for a more complete picture.
The World Will Still Be Running On Oil
Whether we like it or not, the world runs on oil and coal... and to an increasing extent, natural gas. Oil, in particular, moves our cars, trucks, trains, boats and planes. It heats millions of homes and spins millions of kilowatts of electricity. With few exceptions, if it moves, oil moves it. So, oil and natural gas availability over the next twenty years is perhaps the most important question the report addresses.
While a minority of prognosticators foresee a rapidly approaching decline in oil production over the next twenty years, EIA does not.
Using recently revised US Geological Survey estimates for global oil resources, EIA projects that not only is there 700 billion more barrels of oil that can be recovered over the USGS's 1994 estimate, but that because of improved production efficiencies, prices are likely to remain fairly stable. Oil is projected to cost only about $22.41 per barrel (in 1999 dollars) by 2020. Interestingly, 90% of the oil from the Middle East will be flowing to China and the Far East and not the US or Europe. Instead, the West will be getting most of its oil from the Atlantic basin.
As a result of available reserves, EIA foresees projected oil demand growing from 75.5 million barrels a day in 1999 to 117.4 million by 2020, a number that is 5 million more barrels a day than was forecast by the agency just one year ago.
The price of oil is not the only fossil fuel that is expected to rise only modestly over the next two decades. The cost of natural gas -- currently in short supply in North America because of reduced exploration and production in the late 1990s -- is projected to rise from the $2.08 per thousand cubic feet in 1999 to $3.30 by 2001 and begin to decline through 2004 as more wells begin producing. The price in 2020 is estimated to be $3.13 per thousand cubic feet.
But Can We Keep Up With Demand?
The current energy situation in California, where two of the state's largest investor-owned utilities are teetering on the brink of insolvency because of billion dollar wholesale electricity bills, is partly the result of ever-increasing demand for more and more energy by everyone. The growth of the Internet, the plugging in of more and more consumer electrical devices and appliances -- and yes, EVs (though the tiny number of EVs that charge during mostly off peak hours has little or not impact on the current crisis in California) -- is putting a strain on a system that has added virtually no new generation capacity in the last decade.
EIA projects that world demand for all forms of energy will increase from 98.1 quadrillion Btu's to 127 quadrillion by 2020. All forms of energy use are expected to increase by from 1.0 to 1.5 percent annual over the next twenty years, while in the US natural gas demand will grow by 2.3 % annually.
Energy use per person in the US declined from 1970 through the 1980s, but as energy costs declined, usage began to increase again. However, improvements in efficiency will help offset part of the gain in energy use by the individual over the next two decades.
Feeding part of this growth is the conversion of electric generation away from fuel oils to relatively cleaner natural gas, as well as the eventual closing of numerous nuclear plants in North America that will be retired by 2020, totaling some 26 gigawatts of power .
What About Renewables?
Forecast stable fossil fuel costs mean that the growth of renewable energy will remain low and slow, unfortunately. EIA states the "total renewable generation, including cogenerators, is projected to increase by 0.7 percent per year." Ironically, this is the same percentage at which US oil production is expected to decline during the same period, despite advances in drilling and recovery technology. The strongest growth in renewables is expected to be in geothermal, wind, biomass, landfill gas production, industrial biomass and ethanol. Total renewable energy Btu's are forecast to increase from the current 6.6 quadrillion Btu to 8.3 quadrillion by 2020.
And What About CO2 Emissions?
Tracking neatly right along with the growth of fossil fuel energy use are CO2 emissions that are expected to grow at a rate of 1.4% annually. On top of this, EIA reports that 2020 emissions will be 62 million tons higher than their previous forecast last year as a result of higher projected economic growth.
The only silver lining in these projections (unless you mine it or ship it) is that coals share of electricity generation, now approximately 51% expected to decline to 44% over the next twenty years as utilities and industry shift to more efficient, less capital intensive natural gas-fired turbines.
So, while the world appears to be gradually shifting its economy to less carbon-intensive forms of energy, it appears it will be a long time before mankind sees the emergence of the long-heralded "hydrogen economy" which does not even merit mention in AOE2001.
Meanwhile, this week, Norway's government announced it will build no more large scale hydroelectric projects in a land rich with hydro resources, but also with equally lucrative North Sea oil fields. It was not reported how the country plans to meet its future energy needs.
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