Projected emissions reductions result from decreased energy consumption as well as additional energy production from low-carbon resources. In 2040, the Extended Policies case projects four quadrillion Btu lower annual U.S. energy consumption than the Reference case. The cumulative amount of energy use is 55 quadrillion Btu lower between 2013 and 2040.
The Extended Policies case differs from the Reference case, which generally reflects policies as they exist in spring 2013, including the assumption that any sunset dates (for example, scheduled expirations for tax credits) or other scheduled milestones occur as specified in law. In the Extended Policies case, EIA explores the possible effects of the indefinite continuation of certain provisions that have expiration dates and the expansion of certain energy laws and regulations. The Extended Policies case includes key assumptions affecting: Electric power; Residential and commercial buildings; Transportation; and Industry. The continuation of the production tax credit for wind, biomass, geothermal, and other renewable resources, and the investment tax credit for solar generation technologies exemplify the policy extensions included in this case.
The Extended Policies case includes several add-on assumptions to the "No Sunset case," e.g. additional updates to Federal equipment efficiency standards; residential and commercial end-use technologies eligible for incentives would not be subject to new standards. The assumptions of the No Sunset case include:
- The PTC of 2.2 cents per kilowatthour and the 30-percent investment tax credit (ITC) available for wind, geothermal, biomass, hydroelectric, and landfill gas resources, assumed in the Reference case to expire at the end of 2012 for wind and 2013 for the other eligible resources, are extended indefinitely.
- For solar power investments, a 30-percent ITC that is scheduled to revert to a 10-percent credit in 2016 is, instead, assumed to be extended indefinitely at 30 percent.
- In the buildings sector, personal tax credits for the purchase of renewable equipment, including photovoltaics (PV), are assumed to be extended indefinitely, as opposed to ending in 2016 as prescribed by current law. The business ITCs for commercial-sector generation technologies and geothermal heat pumps are assumed to be extended indefinitely, as opposed to expiring in 2016; and the business ITC for solar systems is assumed to remain at 30 percent instead of reverting to 10 percent.
- In the industrial sector, the 10-percent ITC for combined heat and power (CHP) that ends in 2016 is assumed to be preserved through 2040.
- Federal equipment efficiency standards are assumed to be updated at periodic intervals, consistent with the provisions in existing law, at levels based on ENERGY STAR specifications or on the Federal Energy Management Program purchasing guidelines for federal agencies, as applicable. Standards are also introduced for products that currently are not subject to federal efficiency standards.
- Updated Federal energy codes for residential and commercial buildings increase by 30 percent in 2020.
- Modifies the assumption in the Reference and No Sunset cases and assumes continued increases in CAFE standards after MY 2025. CAFE standards for new LDVs are assumed to increase by an annual average rate of 1.4 percent.
- In the industrial sector, the ITC for CHP is extended to cover all properties with CHP, no matter what the system size (instead of being limited to properties with systems smaller than 50 megawatts. Also, the ITC is modified to increase the eligible CHP unit cap to 25 megawatts from 15 megawatts.