Petroleum and other liquids remain the most-consumed fuel in the AEO2021 Reference case. The transportation sector is the largest consumer of petroleum and other liquids, particularly motor gasoline and distillate fuel oil. In the Reference Case, EIA assumes that current fuel economy standards stop requiring additional efficiency increases in 2026 for light-duty vehicles and in 2027 for heavy-duty vehicles. As travel continues to increase, consumption of petroleum and other liquids increases later in the projection period.
For industrial uses, petroleum remains the primary fuel for refining processes and for agriculture.
In all cases, consumption of non-hydroelectric renewable energy is projected to be the fastest growing energy source. Policies at the state and federal level have encouraged significant investment in renewable resources for electricity generation and transportation fuels. New technologies have driven down the cost to install wind and solar generation, further increasing their competitiveness in the electricity market even as policy effects moderate over time. Federal regulation continues to encourage the use of biofuels, primarily ethanol, in the projection period. However, relatively modest increases in overall electricity and liquid fuel demand slow the projected growth of renewable energy in the Reference case.
EIA projects that consumption of natural gas will keep growing as well, driven by expectations that natural gas prices will remain low compared with historical levels. In the Reference case, the industrial sector becomes the largest consumer of natural gas starting in the early 2020s. This sector will expand the use of natural gas as a feedstock in the chemical industries, as well as for industrial heat and power.
Coal use through 2050 generally declines with the retirement of coal-fired electricity generating units in the United States. In 2020, all power generation types, including coal, saw a decline in power demand because of COVID-19 response measures, but the decline in power demand affected coal to a greater extent because the annual average natural gas price fell to its lowest level in more than 20 years and as a result coal-fired generation was displaced by natural gas-fired generation.
Changes over time in carbon dioxide (CO2) emissions in the Reference case reflect the shift in fuel consumption: emissions decrease from 2023 to 2035 as a result of a transition away from more emission-intensive coal and a rise in the use of natural gas and renewable energy. After 2035, U.S. emissions begin to trend upward, reflecting the overall increase in the use of energy as a result of increasing population and economic growth. This trend holds true in all AEO2021 side cases. The High Economic Growth case has the largest increase in emissions, and the Low Economic Growth case has the lowest. Reductions in both energy intensity (energy consumption per gross domestic product) and carbon intensity (CO2 per energy consumption) both lessen the effects of economic growth. Even in the High Economic Growth case, energy-related CO2 emissions remain lower than the 2007 peak of 6 billion metric tons through 2050.
As petroleum maintains market share despite strong growth in renewable energy, EIA projects that the trend of decreasing U.S. energy-related CO2 emissions will reverse after 2035.