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Annual Energy Outlook 2017

Full Release Date: January 5, 2017  |  Next Release Date:  January 2018 |   correction   |  full report

Changes AEO 2011Changes from Annual Energy Outlook 2015

Key updates made for the AEO2016 Reference case include the following:

The Annual Energy Outlook 2016 (AEO2016) Reference case included as part of this complete report (released in July 2016) has been updated from the Annual Energy Outlook 2015 Reference case (released in April 2015). The updated Reference case reflects new legislation and regulations enacted since April 2015, model changes, and data updates. The key model and data updates include:

Macroeconomic

  • Updated historical data on industries and employment
  • Updated information on natural gas extraction from the National Energy Modeling System (NEMS)
  • Extended dynamic Input-Output framework from 2013 to 2040
  • Disaggregation of three pulp and paper subindustries included in the NEMS macroeconomic model: pulp and paper mills, paperboard and containers, and all other pulp and paper
  • Disaggregated ethanol, flat glass, and lime and gypsum subindustries in the Industrial Output and Employment Model
  • Incremental electricity investment required to meet the standards in the U.S. Environmental Protection Agency (EPA) Clean Power Plan (CPP) [7]
  • Re-estimated commercial floorspace model, using data from Dodge Data and Analytics, and transformation of floorspace estimates to projected growth rates rather than levels

Residential, commercial, and industrial

  • New buildings equipment standards promulgated since the AEO2015 Reference case was completed, including standards affecting commercial cooling equipment, commercial furnaces, residential boilers, commercial oil-fired water heaters, fluorescent lamps, commercial pumps, and commercial ice makers and beverage vending machines
  • Cost and energy impacts of energy efficiency activities in support of the CPP through rebates for energy-efficient buildings enduse equipment, based on EIA analysis and a report by Leidos [8]
  • Updated cost and performance assumptions for distributed generation and combined heat and power technologies in the buildings sector, based on a draft report by Leidos and a joint presentation by the National Renewable Energy Laboratory and Lawrence Berkeley National Laboratory, reflecting recent and expected technological progress [9, 10]
  • Extension and phaseout of the investment tax credit for residential and commercial solar energy systems, included as part of the December 2015 budget reconciliation bill [11]
  • Updated cost assumptions associated with switching of fuels and/or technologies for residential end-use services and updated estimates for efficiency of the installed stock of residential end-use equipment, based on reports by Navigant Consulting, Inc. and Leidos [12, 13]
  • A new NEMS submodule estimates energy use in the steel and pulp and paper industries and allows for detailed technology choice
  • Updated motors model in NEMS to reflect increased efficiency standards for motors [14]
  • Updated construction [15] and mining [16] input data to reflect the 2012 Economic Census
  • Benchmarks added to individual industry tables in the Industrial Demand Module to allow comparison with aggregate industrial figures and application of benchmark factors in the Reference case to alternative cases.

Transportation

  • Implementation of a new regional (Census Division) marine model that captures impacts of International Convention for the Prevention of Pollution from Ships (MARPOL) emissions regulations, including modeling of fuel consumption in U.S. Emission Control Areas (ECAs); and incorporation of compliance options addressing fuel switching and the adoption of emission controltechnologies [17]
  • New light-duty and heavy-duty vehicle regional (Census Division) sales and stock models, including updated data or revisions to scrappage rates, historical distributions of vehicles by car and light truck class, weight class categories for medium-duty and heavy-duty trucks, fleet use, fuel economy, and fuel type
  • Modified calculations for technology adoption and fuel economics for heavy-duty vehicles, and addition of technology availability
  • Updated historical data on light-duty and heavy-duty truck vehicle miles traveled through 2013 based on U.S. Department of Transportation (DOT), Federal Highway Administration (FHWA) data [18], extended through 2014 using the DOT/FHWA Traffic Volume Trends report [19]
  • Addition of most recent California Zero-Emission Vehicle Program, starting in model year 2018 and reaching complete implementation in model year 2025, which mandates the sale of zero-emission vehicles and transitional zero-emission vehicles [20].
  • Addition of historical data in freight rail ton-miles through 2013, using Class 1 Railroad data as reported through the DOT Surface Transportation Board [21]

Oil and natural gas production and product markets

  • Adoption of a simplified approach to modeling the impact of technology advancement on U.S. oil and natural gas production to better capture a continually changing technological landscape, incorporating assumptions for ongoing innovation in upstream technologies and reflecting average annual growth rates for natural gas and oil resources, and cumulative production from 1990 between the AEO2000 and AEO2015 Reference cases
  • Revision of resource assumptions for the offshore North Slope to reflect disappointing results in the Chukchi Sea, BOEM's cancellation of upcoming Arctic lease sales, and Repsol’s deferral of exploration in the Arctic
  • Updated natural gas plant liquids (NGPL) factors for tight oil and shale gas formations at the play and county levels
  • Updated estimated ultimate recovery of tight and shale formations at the county level
  • Updated list of offshore discovered and nonproducing fields in the Lower 48 states and their expected resource sizes and startup dates.

Natural gas transmission and distribution

  • Updated liquefaction capacity to represent the five liquefied natural gas (LNG) export facilities already under construction, updated data from the International Energy Outlook 2016 used in estimating representative world natural gas prices, and calibration of related equations to latest historical data
  • Change in accounting for fuel used at LNG export terminals to a separate category, moved from the general category of lease and plant fuel to pipeline and distribution fuel use
  • Inclusion of pipeline flow on bidirectional arcs in output report and addition of East North Central to South Atlantic as a bidirectional pipeline flow option
  • Basing of fuel prices for compressed natural gas vehicles on data from the Alternative Fuels Data Center of DOE’s Energy Efficiency and Renewable Energy Office [22] rather than on EIA data; updated federal and state motor fuels taxes for LNG vehicles
  • Updated equations in NEMS for projecting consumption in Alaska and production in Canada and Mexico

Oil product markets and biofuels

  • Allowing all crude types (not only processed condensate) to be exported from the United States
  • Limiting the amount of crude exports from the PADD2-lakes region into Sarnia
  • Explicit representation of crude oil withdrawals from the Strategic Petroleum Reserve (SPR), based on SPR plans dated December 2015 [23, 24]
  • Revised renewable fuel standard levels for historical and near-term years (through 2016), based on EPA decision [25]
  • Expanded NEMS price curves for selected product imports and exports
  • Revised Liquid Fuels Market Module in NEMS to reflect receipt of NGPL by state and paraffin type, as defined in the Oil and Gas Supply Module
  • hange in first build years in NEMS, to 2020 for biomass-based liquids production and gas-to-liquids units and to 2025 for coal-to-liquids units
  • Updated fuel use data for corn ethanol plants
  • Allowing unplanned builds of splitters and atmospheric cracking units (ACUs) in the Gulf Coast region
  • Inclusion of 0.4% capacity "creep" through 2020 for ACUs only
  • Revised methodology for pricing fuel oil to electric utilities in Census Division 9
  • Increased flexibility of the International Energy Model to choose between crude oil price quality differentials and product exports/imports for better representation of U.S. refinery processes and domestic and foreign oil markets

Electric power sector

  • Representation of 3 gigawatts (GW) of unannounced nuclear retirements in the Reference case in the ReliabilityFirst East and West regions [26] and announced retirement of the James A. Fitzpatrick (December 2016), Pilgrim (June 2019), and Oyster Creek (December 2019) plants.
  • Explicit representation of 8.8 GW of coal-fired units that are being converted to natural gas-fired steam units between 2016 and 2025
  • Review of model representation of state RPS policies and incorporation of changes in NEMS
  • Updated cost estimates for several electricity generation technologies, based on a draft report provided by external consultants [27]
  • Modified Electricity Market Module (EMM) to include representation of the CPP [28]
  • Added model structure to Electricity Fuel Dispatch linear programs to adjust model dispatch dynamically and align it with inputs based on EIA's Short-Term Energy Outlook results for specific model years; and made changes to allow benchmarking of coal and natural gas generation and consumption and of nuclear, hydroelectric, wind, solar, and geothermal generation at the national level

 


Endnotes

1. U.S. Environmental Protection Agency, "Standards of Performance for Greenhouse Gas Emissions From New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units" (Washington, DC: October 23, 2015), https://www.federalregister.gov/articles/2015/10/23/2015-22837/standards-of-performance-for-greenhouse-gas-emissionsfrom-new-modified-and-reconstructed-stationary; and U.S. Environmental Protection Agency, "Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units" (Washington, DC: October 23, 2015), https:// www.federalregister.gov/articles/2015/10/23/2015-22842/carbon-pollution-emission-guidelines-for-existing-stationarysources-electric-utility-generating.

2. California Environmental Protection Agency, Air Resources Board, "Zero-Emission Vehicle Standards for 2018 and Subsequent Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles" (Sacramento, CA: August 10, 2014), http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.2_Clean.pdf.

3. CONGRESS.GOV, "H.R.2029 - Consolidated Appropriations Act, 2016" (Washington, DC: December 18, 2015), https://www.congress.gov/bill/114th-congress/house-bill/2029/text.

4. U.S. Environmental Protection Agency, "MARPOL Annex VI" (Washington, DC: January 14, 2015), http://www2.epa.gov/enforcement/marpol-annex-vi.

5. Vermont General Assembly, "H.40 (Act 56), An act relating to establishing a renewable energy standard and energy transformation program" (Montpelier, VT: May 15, 2015), http://legislature.vermont.gov/bill/status/2016/h.40; California Legislative Information, "SB-350 Clean Energy and Pollution Reduction Act of 2015" (Sacramento, CA: October 7, 2015), https:// leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB350. LegiScan, "Hawaii House Bill 623" (Honolulu, HI: June 10, 2015), https://legiscan.com/HI/text/HB623/2015.

6. A complete list of the laws and regulations included in AEO2016 is provided in Assumptions to the Annual Energy Outlook 2016, Appendix A, http://www.eia.gov/forecasts/aeo/assumptions/pdf/0554(2016).pdf.

7. U.S. Environmental Protection Agency, "Standards of Performance for Greenhouse Gas Emissions From New, Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units" (Washington, DC: October 23, 2015), https://www.federalregister.gov/articles/2015/10/23/2015-22837/standards-of-performance-for-greenhouse-gas-emissionsfrom-new-modified-and-reconstructed-stationary; and U.S. Environmental Protection Agency, “Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units" (Washington, DC: October 23, 2015), https://www.federalregister.gov/articles/2015/10/23/2015-22842/carbon-pollution-emission-guidelines-for-existing-stationarysources-electric-utility-generating.

8. U.S. Energy Information Administration, Analysis of Energy Efficiency Program Impacts Based on Program Spending (Washington, DC: May 2015), https://www.eia.gov/analysis/studies/buildings/efficiencyimpacts/.

9. Leidos, Review of Distributed Generation and Combined Heat and Power Technology Performance and Cost Estimates and Analytic Assumptions for National Energy Modeling System, Draft 3 Report and supplemental draft on distributed photovoltaic technologies (Washington, DC: December 2014 and July 2015), prepared for the U.S. Department of Energy, U.S. Energy Information Administration.

10. D. Feldman, G. Barbose, R. Margolis, M. Bolinger, D. Chung, R. Fu, J. Seel, C. Davidson, and R. Wiser, "Photovoltaic System Pricing Trends 2015 Edition" (Washington, DC: August 25, 2015), https://emp.lbl.gov/sites/all/files/pv_system_pricing_trends_presentation.pdf.

11. CONGRESS.GOV, "H.R.2029 - Consolidated Appropriations Act, 2016" (Washington, DC: December 18, 2015), https://www.congress.gov/bill/114th-congress/house-bill/2029/text.

12. Navigant Consulting Inc. and Leidos, Residential End Uses: Area 2: Incremental Installed Costs for Efficiency Upgrades (Washington, DC: January 2015), prepared for the U.S. Department of Energy, U.S. Energy Information Administration.

13. Navigant Consulting Inc. and Leidos, Residential End Uses: Area 1: Historical Efficiency Data (Washington, DC: February 2015), prepared for the U.S. Department of Energy, U.S. Energy Information Administration

14. U.S. Department of Energy, "Energy Conservation Program: Energy Conservation Standards for Commercial and Industrial Electric Motors," Federal Register, Vol. 79, No. 103 (Washington, DC: May 29, 2014) pp.30934–31014; https://www.gpo.gov/fdsys/pkg/FR-2014-05-29/pdf/2014-11201.pdf.

15. U.S. Census Bureau, "2012 Economic Census of the United States, Construction: Industry Series: Detailed Statistics by Industry for the U.S.: 2012" (Washington, DC: 2014), http://www2.census.gov/econ2012/EC/sector23/EC1223I1.zip.

16. U.S. Census Bureau, "2012 Economic Census of the United States, Mining, Industry Series: Detailed Statistics by Industry for the U.S.: 2012" (Washington, DC: 2014), http://www2.census.gov/econ2012/EC/sector21/EC1221I1.zip.

17. Leidos, EIA - Marine Fuel Choice for Ocean Going Vessels within Emission Control Areas (Washington, DC: June 11, 2015), prepared for U.S. Department of Energy, U.S. Energy Information Administration, https://www.eia.gov/analysis/studies/transportation/marinefuel/.

18.U.S. Department of Transportation, Federal Highway Administration, "Highway Statistics 2014: Annual Vehicle Distance Traveled in Miles and Related Data - 2014 by Highway Category and Vehicle Type" (Washington, DC: December 2015), http://www.fhwa.dot.gov/policyinformation/statistics/2014/vm1.cfm.

19. U.S. Department of Transportation, Federal Highway Administration, 'Travel Monitoring, Traffic Volume Trends, January 2016" (Washington, DC: March 2016), http://www.fhwa.dot.gov/policyinformation/travel_monitoring/tvt.cfm.

20.California Environmental Protection Agency, Air Resources Board, "Zero-Emission Vehicle Standards for 2018 and Subsequent Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles" (Sacramento, CA: August 10, 2014), http://www.arb.ca.gov/msprog/zevprog/zevregs/1962.2_Clean.pdf.

21.U.S. Department of Defense, U.S. Army Corps of Engineers, Waterborne Commerce of the United States, Calendar Year 2013, Part 5—National Summaries, Table 1.4: Total Waterborne Commerce, 1994–2013 (Washington, DC: December 2014), http://www.navigationdatacenter.us/wcsc/pdf/wcusnatl13.pdf.

22.U.S. Department of Energy, Energy Efficiency & Renewable Energy, "Clean Cities Alternative Fuel Price Report," table with compressed natural gas retail prices by region (Washington, DC: all editions), http://www.afdc.energy.gov/publications/.

23.U.S. Congress, Bipartisan Budget Act of 2015, Public Law 114–74, Sec. 401-403, "Title IV—Strategic Petroleum Reserve" (Washington, DC: November 2, 2015), https://www.congress.gov/bill/114th-congress/house-bill/1314/text#toc-H2D8D609ED2A3417887CC3EAF49A81E15.

24.U.S. Congress, H.R. 22 – FAST Act, Sec. 32204, "Strategic Petroleum Reserve Drawdown and Sale" (Washington, DC: December 4, 2015), https://www.congress.gov/bill/114th-congress/house-bill/22/text.

25.U.S. Environmental Protection Agency, "Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass- Based Diesel Volume for 2017" (Washington, DC: December 14, 2015), https://www.gpo.gov/fdsys/pkg/FR-2015-12-14/pdf/2015-30893.pdf.

26.The unannounced nuclear retirements in the Reference case reflect market uncertainty.

27.This report will be available on the EIA website when finalized. Costs were updated for coal with carbon capture and storage (CCS), combined cycle (without CCS) technologies, combustion turbine technologies, advanced nuclear, and onshore wind and solar photovoltaic technologies. Costs for other technologies are consistent with AEO2015 assumptions.

28.Model constraints were added in both the Electricity Capacity Planning (ECP) and Electricity Fuel Dispatch (EFD) linear programs, to allow modeling of either carbon dioxide (CO2) emission caps or CO2 emission rate standards by EMM region. Model structure was also added to allow trading of allowances between regions, including pricing impacts. The model was updated so that CO2 allowances can be assumed to be allocated to generator or load entities, or auctioned, with appropriate feedback to electricity prices, under a mass-based standard.