Wednesday, May 01, 2013

Extending Energy Policies Will Reduce Use & CO2

Apr 30: The U.S. Energy Information Administration (EIA) released, as part of EIA's Annual Energy Outlook 2013 (AEO2013), the so-called "Extended Policies case" which shows that extending certain Federal energy efficiency and renewable energy laws and regulations could reduce annual energy-related carbon dioxide (CO2) emissions in the United States in 2040 by roughly 6% relative to a "Reference case" projection that generally assumes current laws and policies. Between 2013 and 2040, this reduction adds up to a cumulative emission savings approaching five billion metric tons. A release of an additional "Impact of natural gas liquids growth" analysis is scheduled for May 2. The natural gas analysis release will complete the full AE02013 analysis which will also be available on May 2. The full analysis includes sections on: Oil price and production trends in AEO2013; U.S. reliance on imported liquid fuels in alternative scenarios; Competition between coal and natural gas in the electric power sector; Nuclear power in AEO2013; Updated no sunset and extended policy cases; and Impact of natural gas liquids growth. The AEO2013 also includes additional chapters on: Market Trends; Legislation & Regulations;and  Comparisons.

    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.
     In addition to the above, the Extended Policies case adds the following assumptions:
  • 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.
    EIA also analyzes other cases including: the "Reference" case; "Low Oil Price" case; and the "High Oil Price" case. Additionally, the "Low Oil and Gas Resource" case only reflects the uncertainty around tight oil and shale gas resources; while the "High Oil and Gas Resource" case reflects a broad-based increase in crude oil and natural gas resources.
Also a "Low Coal Cost" case, assumes higher mining productivity and lower costs for labor, mine equipment, and coal transportation, leading to lower coal prices for electric power plants. A "High Coal Cost" case assumes coal-fired plants are used less, and more coal-fired capacity is retired than in the Reference case.
    Nuclear power is also projected. In 2011, approximately 19 percent of the nation's electricity was generated by 104 operating commercial nuclear reactors, totaling 101 gigawatts of capacity. In the AEO2013 Reference case, annual generation from nuclear power grows by 14.3 percent from the 2011 total to 903 gigawatt hours in 2040. However, the nuclear share of the overall generation mix declines to 17 percent as growth in nuclear generation is outpaced by the increases in generation from natural gas and renewables. The Reference case projects the addition of 19 gigawatts of nuclear capacity from 2011 to 2040, in comparison with the addition of 215 gigawatts of natural gas capacity and 104 gigawatts of renewable capacity. There are also "Low Nuclear" and "High Nuclear" cases.
    EIA indicates, "A key contributing factor to the recent decline in net import dependence has been the rapid growth of U.S. oil production from tight onshore formations, which has followed closely after the rapid growth of natural gas production from similar types of resources. Projections of future production trends inevitably reflect many uncertainties regarding the actual level of resources available, the difficulty in extracting them, and the evolution of the technologies (and associated costs) used to recover them. To represent these uncertainties, the assumptions used in the High and Low Oil and Gas Resource cases represent significant deviations from the Reference case."
    Also, EIA notes that, "Liquid fuels play a vital role in the U.S. energy system and economy, and access to affordable liquid fuels has contributed to the nation's economic prosperity. However, the extent of U.S. reliance on imported oil has often been raised as a matter of concern over the past 40 years. U.S. net imports of petroleum and other liquid fuels as a share of consumption have been one of the most watched indicators in national and global energy analyses. After rising steadily from 1950 to 1977, when it reached 47 percent by the most comprehensive measure, U.S. net import dependence declined to 27 percent in 1985. Between 1985 and 2005, net imports of liquid fuels as a share of consumption again rose, reaching 60 percent in 2005. Since that time, however, the trend toward growing U.S. dependence on liquid fuels imports has again reversed, with the net import share falling to an estimated 41 percent in 2012, and with EIA projecting further significant declines in 2013 and 2014."
    Access an overview of the Extended Policies case (click here). Access the extensive EIA analysis with numerous links to referenced information, data, appendices, additional chapters and more (click here). [#Energy, #Energy/Renewable, #Climate]
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