EIA releases Annual Energy Outlook 2013 reference case

By Erin Voegele | December 05, 2012

The U.S. Energy Information Administration has published Annual Energy Outlook 2013 Early Release Overview. The document is an abridged version of the Annual Energy Outlook that highlights changes made to the Annual Energy Outlook reference case from the prior year. According to the EIA, the reference case includes projections for the U.S. energy market through 2040, and takes into account only policies that have been enacted through law and final regulations. The full AEO2013 is scheduled for release in the spring.

Overall, the reference case predicts that total primary energy consumption will grow by 7 percent, from 98 quadrillion Btu in 2011 to 104 quadrillion Btu in 2035. This is 2.5 quadrillion Btu less than the growth assumed in the 2012 Annual Energy Outlook. In addition, the fossil fuel share of energy consumption falls from 82 percent in 2011 to 78 percent in 2040, a drop primarily attributed to new fuel efficiency standards for light duty vehicles.

Regarding renewable fuels, the updated reference case predicts that renewable fuel use will grow at a much faster rate than fossil fuel use.

Overall growth in liquid fuels consumption is expected to fall, but consumption of biofuel is expected to increase from 1.3 quadrillion Btu in 2011 to 2.1 quadrillion Btu in 2040. The total share of biofuel in liquid fuel consumption is expected to increase from 3.5 percent in 2011 to 5.8 percent in 2040. The increase is much smaller than predicted in the 2012 Annual Energy Outlook. The EIA attributes the decrease to diminished flex fuel vehicle penetration, a smaller gasoline pool for ethanol blending, and reduced production of cellulosic biofuels.  

In response to the report, Growth Energy issued a statement noting that scaling the blend wall and increasing market access will be key in meeting the goals for renewable fuel consumption set by the renewable fuels standard (RFS). “Currently the blend wall is preventing additional use of biofuels. While grain-based biofuels, such as corn ethanol have not only met, but exceeded the goals, the blend wall has prevented full saturation into the commercial marketplace and has discouraged investments in next generation biofuels,” said Growth Energy CEO Tom Buis.

The Fuels America Coalition points out that the EIA and other agencies’ multi-year projections have historically lowballed alternative energy forecasts. “In 2001, EIA projected there would be 2.79 billion gallons of ethanol in 2011—the industry actually churned out 13.39 billion gallons by that time. Investors, businesses and community leaders have shown that they can meet and exceed expectations when it comes to energy alternatives and the renewable fuel story will be no different,” said the organization in a statement.

Novozymes also weighed in on the report, specifically EIA’s projections that crude oil prices will continue to increase. “As oil prices climb, Americans deserve affordable alternatives,” said Adam Monroe, president of Novozymes North America. “We agree it’s going to take a mix of solutions to meet our nation’s energy needs. Biofuels have proven they are one of those solutions, reducing prices at the pump, creating careers and economic growth, reducing carbon emissions, and putting steel in the ground in rural communities. If smart, market-based policies like the RFS are maintained, advanced biofuels will continue to succeed and grow.”

The American Coalition for Ethanol cautioned against those would use the reference case to undermine the RFS. “Doing so would only prove their lack of understanding of EIA’s report and, more importantly, show their ignorance of the purpose of the RFS,” said ACE Executive Vice President Brian Jennings. “Congress designed the RFS as a flexible and forward-looking policy to serve as a catalyst for biofuel use, and by design, the RFS is built to help break through the blend wall. EIA, on the other hand, makes its projections based on market conditions and known technology. Ten years ago, the EIA Outlook said we could only make 3.4 billion gallons of ethanol in the U.S. by 2020. Congress deemed that unacceptable, and passed the RFS to encourage alternatives to oil, and they were right. The RFS works. Our industry produced almost four times that much ethanol two years ago—10 years ahead of schedule.”

A full version of the AEO2013 reference case can be downloaded from the EIA website. The full Annual Energy Outlook 2013 report, scheduled for release in early 2013, will include expanded projections that take into account differing assumptions for the price of oil, the rate of economic growth, and the characteristics of new technologies. It will also include regional projections.