EIA boosts estimate of US energy demand in 2020

The US Energy Information Administration said Tuesday long-term US economic growth is expected to average 3%/year through 2020, increasing projected energy demand from 96 quadrillion btu in 1999 to 127 quadrillion btu in 2020. In its annual energy outlook a year ago, EIA estimated long-term economic growth at 2.1%/year through 2020.


The US Energy Information Administration said Tuesday long-term US economic growth is expected to average 3%/year through 2020, increasing projected energy demand from 96 quadrillion btu in 1999 to 127 quadrillion btu in 2020. In its annual energy outlook a year ago, EIA estimated long-term economic growth at 2.1%/year through 2020.

It said although part of the upward revision was due to definitional changes, the projections reflect a more optimistic view of long-run economic growth in the US.

"Higher projected growth means that energy demand in 2020 is projected to be 6 quadrillion btu higher than last year's forecast of 121 quadrillion btu," EIA said. It said 1 quadrillion btu is equivalent to the annual energy consumption of ten million US households.

The agency said world oil prices, which increased in both 1999 and 2000, are projected to begin falling in 2001. Natural gas prices also increased in 2000 and are expected to decline within 2 years.

"In the longer term, technology improvements in the exploration and production of oil and natural gas are expected to moderate price increases even as demand for these fuels grows."

It forecast a world oil price of $22.41/bbl (1999 dollars) in 2020, similar to last year's projection. The average wellhead price of gas is expected to reach $3.13/Mcf in 2020, 10% higher than forecast last year due to higher expected demand for gas, primarily for electricity generation.

EIA said growth in energy demand is expected to lead to rising CO2 emissions from energy combustion. US carbon dioxide emissions are projected to reach 1,809 and 2,041 million metric tons of carbon equivalent in 2010 and 2020, respectively, 34% and 51% higher than the level of 1,349 million metric tons carbon equivalent in 1990, based on current laws and regulations. However, CO2 emissions per unit of gross domestic product are projected to continue to decline.

It said CO2 emissions in 2020 are projected to be 3% higher than the level of 1,979 million metric tons carbon equivalent in last year's forecast. Higher carbon dioxide emissions are partly offset by higher nuclear generation in the forecast.

Total natural gas demand is projected to increase by 62% between 1999 and 2020, from 21.4 to 34.7 tcf. Natural gas demand for electricity generation, excluding cogeneration, is projected to triple over that period, as 89% of the generation capacity built over the next 2 decades is expected to be gas-fired units.

Net petroleum imports are projected to increase, providing 64% of US demand in 2020, up from 51% in 1999. Growth in petroleum demand is led by transportation, where efficiency improvements are more than offset by growing travel demand.

EIA said electricity demand is projected to grow at an average rate of 1.8%/year between 1999 and 2020, compared to the 1.3%/year rate forecast last year for the same period. Higher projected economic growth and a reevaluation of the growth in demand for some residential and commercial equipment lead to the higher projection.

Average electricity prices are projected to generally decline from 6.7 to 6.0�/kw-hr between 1999 and 2020 because of increasing competition in the electricity industry and declining coal prices due to improved productivity in coal mining and growing production from lower-cost mines in the West. Projected electricity prices increase slightly at the end of the forecast period due to rising gas prices.

Coal remains the primary fuel for electricity generation, although its share is projected to decline from 51 to 44% by 2020 because electricity industry restructuring favors the less capital-intensive, more efficient gas generation technologies. Generation from renewable sources is projected to increase slowly due to relatively low prices of fossil-fired generation.

In 2020, nuclear generation is projected to be 34% higher than forecast last year, due to lower estimated costs for extending the life of current nuclear plants and higher projected gas prices, although total nuclear generation still declines as some existing plants retire.

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