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May 3, 2011

Continuation and expansion of efficiency programs could mitigate carbon dioxide emissions

Sources: U.S. Energy Information Administration, Annual Energy Outlook 2011

Energy-related carbon dioxide (CO2) emissions could be held nearly constant over the next two decades, according to the Extended Policies case, one of the many alternate cases included in the Annual Energy Outlook 2011. This case assumes the extension and/or expansion of efficiency programs in the buildings, industry, transportation, and utility sectors and the continued use of incentives for biofuels. Another case that assumes current tax credits do not expire, the No Sunset case, has relatively less impact.

The Reference case, which generally reflects current policies and regulation, serves as a starting point for analysis of proposed legislative and regulatory changes. However, some current policies have had a history of changing over time, including those that have usually been extended beyond their legislated sunset dates, those that require periodic updates (such as appliance standards), and those that allow regulatory agencies to issue new or revised regulations. Further, some of these changes have significantly expanded the application of the original policy or regulation

Compared to the Reference case, the Extended Policies case results in about a 7% reduction in CO2 emissions by 2035. Cumulatively, about 5,200 million metric tons of energy-related CO2 emissions are saved, which is roughly equivalent to all the energy-related CO2 emitted in the year 1995.

The No Sunset case eliminates the planned expiration dates of several tax credits in the utility, buildings, and industrial sectors for certain renewable energy technologies and combined heat and power (CHP) applications. Tax credits for ethanol, biodiesel, and cellulosic biofuels, as well as some energy efficient buildings-sector equipment, are also extended indefinitely in this case. Together, these policies result in CO2 emissions 1% below the levels in the Reference case in 2035.

The Extended Policies case starts with the same assumptions as the No Sunset case, with the exception of the tax credits for the biofuels industry, and also assumes the application of residential and commercial appliances and equipment efficiency standards, building energy codes, and transportation fuel economy standards for light-duty vehicles contribute to decreased energy demand. Further, industrial-sector CHP tax credits are extended to equipment under 50 megawatts, and the maximum tax credit is increased.

Issues in Focus AEO 2011 Part of the Annual Energy Outlook Issues in Focus, exploring current and emerging issues in energy markets.