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A. Scenario Analysis
Richard SilberglittRAND
Anders HoveRAND
RAND undertook an analysis of future scenarios to help inform EERE’s planningprocess. Scenarios are used as descriptions of alternative futures, not as forecastsor predictions. They enable policymakers to systematically consider uncertaintiesinherent in energy planning and to select strategies that are robust. Robuststrategies perform adequately over a range of conditions, in contrast to those thatdo very well under some conditions, but fail under others.
This appendix describes the methodology and results of the scenario analysisundertaken as part of the E-Vision 2000 process. This analysis indicates the rangeof representative scenarios that are documented and familiar to energy experts,aggregates these scenarios into a smaller set that can be clearly distinguishedfrom one another, and illustrates some of the policy actions and strategiesimplied by these scenarios. It is important to note that this analysis did notextend into a full-fledged strategic planning process.
In the planning phase of the E-Vision 2000 process, the scenario analysis wasanticipated to provide conference participants with a common basis fordiscussion of widely available energy scenarios. In practice, the insights from thescenario analysis were not integrated into the panel discussions of the PolicyForum. By design, they were not used by participants in the Delphi processeither.
The analysis did highlight essential similarities and differences among the manyenergy scenarios that have been published in recent years, and served toillustrate how such scenarios and studies can provide policy insights despite theuncertainty associated with long-term projections. Additional work is needed totake these scenarios to the point where the implications for energy R&D can bemore clearly focused and useful to EERE.
An analysis of future scenarios was undertaken to inform EERE’s strategicplanning. Clearly, major uncertainties will influence the future evolution of U.S.
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energy supply and use. For example, future U.S. energy consumption and fuelmix will likely depend upon:
• Energy intensity of the economy (quadrillion BTU/$ GDP);
• Absolute value and amount of variation in oil prices, the possibility of oilprice shocks, and the stability (security) of oil supply;
• Availability of increased amounts of natural gas in North America, to meetincreased demand without the need for increased intercontinental (LNG)transport;
• Extent to which the current carbon-intensive fuel mix is accepted, or effortsto “decarbonize” are intensified;
• Rate of adoption of renewable technologies in all end use sectors;
• Fraction of electricity derived from nuclear power (i.e., rate ofdecommissioning of existing nuclear plants and whether new plants will bebuilt).
To address these uncertainties, scenarios are used as descriptions of alternativefutures, not as forecasts or predictions. By regarding a range of possible futures,not just the most likely future, we can cope with the uncertainty that is inherentin energy planning, and select strategies that are robust (perform adequately inall future situations), rather than fragile.
To do this, possible futures must be described in sufficient detail and within acommon framework so it is possible to distinguish them on importantparameters and ensure we are truly regarding a set that is broad enough to spanthe scenario space. We do this by defining the scenarios associated with thesefutures with a common set of metrics or parameters.
This allows us to develop signposts to alert us to the approach of undesirablefutures or gauge our progress toward desirable futures.
It also allows us to compare the paths associated with alternative futures withhistory to develop some sense of how “heroic” paths to desirable futures are. Wecan then develop hedging strategies to help ensure we can cope with undesirablefutures (or take advantage of desirable ones), and shaping strategies to help ensurewe can achieve desirable futures. These elements, signposts, hedging strategies,and shaping strategies are the building blocks of an adaptive approach tostrategic planning that can help the U.S. avoid undesirable outcomes and movetoward desired futures despite the uncertainty inherent in energy planning.
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Method of Scenario Analysis
RAND’s scenario analysis team defined a set of parameters that could provide acommon framework to compare and contrast the large number of commonlyused energy planning scenarios in ways that were meaningful for policydevelopment. This framework was then used to identify groupings of individualscenarios that comprised “meta-scenarios,” representing a plausible set ofalternative futures that met two criteria:
• They must be sufficiently parsimonious to be used for policy planing in apractical sense, and
• They must cover a sufficiently broad range of possible futures to provide arobust basis for informing policy decisions.
These meta-scenarios were then assessed to determine the signposts, hedgingstrategies, and shaping strategies needed for an adaptive approach to strategicenergy planning.
Scenario Parameters to Define a Common Frameworkfor Analysis
A sufficient set of metrics, or parameters, is required to provide a commonframework to compare and contrast scenarios. Without clearly definedparameters that can capture important distinguishing features of scenarios (e.g.economic growth and environmental and socio-political impact as well as energyuse), we run the risk of incorrectly assessing importantly different scenarios. Forexample, a scenario with current energy use in 2020, together with substantialeconomic growth (enabled by increased energy productivity), and a scenariowith current energy use in 2020, together with economic stagnation, representvery different futures. A sufficient set of scenario parameters will describe thesignificant social, political, and economic aspects of the envisioned future, as wellas the details of energy supply, demand, and use. Thus, we define threecategories of parameters: sociopolitical parameters, economic parameters, and energy
parameters.1
________________ 1 We use constant 1996 dollars for the economic measures in this report.
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Sociopolitical Parameters
From a sociopolitical viewpoint, energy is not an end, but rather a means or atool to achieving desired outcomes, e.g., food, shelter, comfort, transportation,products, trade. The types and quantities of energy needed and used dependboth on the structure and behavior of society and on the existing energy supplyand end-use infrastructure. If these are well-matched, then the energy sectorfunctions smoothly. However, if required quantities of fuel are unavailable whenneeded, or end-use patterns change rapidly, or in unanticipated ways, orinfrastructure breaks down, disruption occurs. Such disruption can haveeconomic impact (e.g., lost production), can cause personal inconvenience (e.g.,power outages, gas lines), and can affect political decisions (e.g., trading partners,military alliances). An estimate of the possible level of disruption is an importantsociopolitical metric that is difficult to quantify. Accordingly, we will recognizethe differences between scenarios by providing a qualitative estimate of thepotential for disruption as high, medium, or low.
That a scenario has low potential for disruption merely specifies that energydemand patterns, infrastructure, and supply are well-matched. It does not meanthat the scenario has no sociopolitical impacts. For example, high energy pricescan have significant and regressive societal impact. The use of energy causes avariety of environmental and health impacts. Regulations that limit these impactshave costs as well.
The following are the sociopolitical parameters used as scenario descriptors inthis study.
SP1: Potential for Disruption (high, medium, or low)
SP2: Energy Contribution to the Consumer Price Index (percent)
SP3: Cost of Health and Environmental Impacts and Regulatory Compliance
($/MBTU)
Most scenarios do not provide information on parameters SP2 and SP3.
Economic Parameters
The following parameters are used to describe the economic aspects of thescenarios. Monetary measures are in constant 1996 dollars.
EC1: GDP Growth (percent per year)
EC2: Inflation Rate (percent per year)
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EC3: Energy Price Inflation/Overall Price Inflation (ratio)
EC4: Fuel Taxes, Energy Subsidies, and R&D Expenditures ($/MBTU)
Most scenarios provide information on GDP growth, but few provideinformation on inflation. Many scenarios do not provide full information ontaxes, subsidies, and R&D expenditures. In some cases, policy surrogates areused that allow estimation of these parameters.
Energy Parameters
The following are the energy parameters used in this study. They characterizeenergy supply and demand, as well as the fuel mix and end use system.
EN1: Total Energy Consumption (Quadrillion BTUs per year)
EN2: Decarbonization2 (dimensionless, with unity corresponding to exclusive
coal use, and infinity corresponding to exclusive use of non-fossil fuels)
EN3: Energy Productivity of the economy ($ GDP/MBTU)3
We call scenarios “full” energy scenarios when they provide data on all of theseenergy parameters. Scenarios that provide data on some, but not all, of theparameters, or provide incomplete data, are called “partial” scenarios. Inaddition to full and partial scenarios, we also analyzed some technology studiesthat provide useful input data for energy scenarios. We note that parameters EN2
and EN3 provide alternative means to reduce environmental impacts of energy
use, the former through fuel mix changes and the latter through improvedsupply or use technologies or behavioral change. We also note that metric EN3 isnot independent of parameters EC1 and EN1. It is nonetheless important in its
own right as a measure of the amount of energy needed to sustain a unit of GDP.
________________ 2 This is measured by the weighted sum of energy consumption per fuel type, normalized to
total energy consumption, where the weights reflect the CO2 emissions of each fuel per MBTU ofenergy consumed.
3 We refer to this ratio as energy productivity to emphasize the fact that it includes more than thesimple efficiency of electrical devices. Importantly it also includes the effects of sophisticatedproduction and use choices that are increasingly available to us because of information technology –such as avoiding the production of excess inventory and using automated timers to control heatingand air conditioning in buildings.
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Analysis of Selected Individual Scnearios
Scenarios Investigated
Quantitative scenarios, i.e., those containing a complete quantitative descriptionof energy consumption and fuel mix versus time (which we term “full”scenarios) were obtained and reviewed by RAND from a wide range of differentsources, as summarized in Table 1.
• EIA Scenarios based upon econometric and technological (sectoralconsumption) models (EIA Annual Energy Outlook 2000)
• Scenarios based upon EIA’s analysis of compliance with the Kyoto Protocolon CO2 emissions reduction
• Econometric scenarios: IEA, GRI, AGA, IPAA, DRI, WEFA
• World energy scenarios (WEC/IIASA)
• Sustained growth and dematerialization (Royal Dutch Shell)
• Intergovernmental Panel on Climate Change (IPCC)
• America’s Energy Choices (ACEEE, ASE, NRDC, UCS, Tellus Institute)
• Bending the Curve Scenarios (SEI/GSG)
• Inter-laboratory Working Group: Scenarios of U.S. Carbon Reductions
The EIA Reference Case, with its 5 variants, and its 32 Side Cases (20 of whichwere fully quantified), as described in Annual Energy Outlook 2000, provided abaseline. These scenarios are extrapolations of current trends and policies, usinga combination of econometric and technological (sectoral consumption) models.
The EIA report, Impacts of the Kyoto Protocol on U.S. Energy Markets and Economic
Activity (October 1998), includes 6 scenario variants that use the DOE economicand technological models, with an added carbon price component included inthe price of each fuel, plus 5 sensitivity cases that vary economic growth, rate oftechnological improvement, and nuclear power use. EIA followed this reportwith Analysis of the Impacts of an Early Start for Compliance with the Kyoto Protocol
(July 1999), which revisited the same assumptions together with implementationbeginning in 2000. The carbon prices were reduced somewhat but theconclusions were unchanged.
Scenarios based upon econometric models developed by multi-national and non-governmental organizations were included in the study, e.g., InternationalEnergy Agency (IEA), Gas Research Institute (GRI), American Gas Association
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(AGA), Independent Petroleum Association of America (IPAA), Standard andPoors DRI Division, Wharton Econometric Forecasting Association (WEFA).
The World Energy Council (WEC), together with the International Institute forApplied Systems Analysis (IIASA), in the report, Global Energy Perspectives
(Cambridge University Press (1998), describe 6 world energy scenario variants thatspan a broad range of alternative futures.
Royal Dutch Shell Energy Group describes one scenario variant in which growthin energy consumption is sustained at a high rate, and one scenario variant inwhich “dematerialization” slows energy consumption.
The Intergovernmental Panel on Climate Change (IPCC) describes 6 scenariovariants with different assumptions about economic, population, andtechnological growth.
The American Council for an Energy Efficient Economy (ACEEE), Alliance toSave Energy, National Resource’s Defense Council, and the Union of ConcernedScientists, in consultation with the Tellus Institute, describe 3 scenario variantsbased upon high energy efficiency and investment in renewable energy, togetherwith substantial changes in the energy infrastructure.
In the report, Conventional Worlds: Technical Description of Bending the Curve
Scenarios, the Stockholm Environment Institute and Global Scenario Groupdescribe 2 scenario variants driven by intervention to reduce carbon emissionsand transition to renewable energy sources.
The Inter-Laboratory Working Group of five DOE national laboratories, in thereport, Scenarios of U.S. Carbon Reduction: Potential Impacts of Energy-Efficient and
Low-Carbon Technologies by 2010 and Beyond (1997), describes 2 scenario variants inwhich public policy actions and market intervention lead to reduced carbonemissions.
The Interlab Working Group's 2000 report, Scenarios for a Clean Energy Future,describes three additional scenarios involving policy interventions such asincreased Federal R&D and domestic carbon trading programs.
A number of scenarios that did not provide a fully quantitative picture of theenergy consumption and fuel mix were also reviewed. We termed these “partial”scenarios.
The President’s Council of Advisors on Science and Technology (PCAST), in thereport, Powerful Partnerships: The Federal Role in International Cooperation on Energy
Innovation (June 1999), makes quantitative estimates of reductions in fossil fuel
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use, U.S. oil imports, and CO2 and other emissions possible with increased
investment in energy RD&D.
Professor Jesse Ausubel of Rockefeller University, in the paper, Where is Energy
Going? (The Industrial Physicist, February 2000), describes the decarbonization ofthe fuel mix in “pulses” of rising energy consumption per capita, with naturalgas as the 21st century transition fuel to hydrogen.
Joseph Romm, Arthur Rosenfeld and Susan Herrman, in The Internet and Global
Warming, argue that e-commerce spurred recent improvements in U.S. energyefficiency, and posit future increases in efficiency beyond extrapolation of currenttrends, with concomitant reductions in energy consumption.
Amory Lovins and Brett Williams, in A Strategy for the Hydrogen Transition,envision stationary fuel cells powering buildings and providing distributedgeneration of electricity, resulting in the reduction of size and cost of fuel cellsand hydrogen infrastructure, and ultimately cost-effective fuel-cell-poweredultra-high efficiency “hypercars.”
Several technology-specific scenarios were also reviewed.
The California Air Resources Board (CARB) study, Status and Prospects of Fuel
Cells as Automobile Engines, examined the cost of hydrogen infrastructure forautomotive fuel cells, as well as methanol and gasoline as hydrogen sources.
Arthur D. Little, in the report, Distributed Generation: Understanding the Economics,provides a detailed market study of fuel cells, co-generation, small gas turbines,and microturbines for distributed electricity generation.
The U.S. Energy Information Administration, in chapter 3 (Future SupplyPotential of Natural Gas Hydrates) of Natural Gas 1998: Issues and Trends,describes the vast reserves of methane trapped in hydrated form in deepundersea and Arctic deposits, and discusses the technological prospects forrecovery.
The study, Solar Energy: From Perennial Promise to Competitive Alternative,performed by the Dutch Firm KPMG and sponsored by Greenpeace, proposesconstruction of large-scale (500 MW) photovoltaic power plants as a way ofdecreasing the cost of solar electricity.
The National Renewable Energy Laboratory published several reports detailingthe current state of federal renewables research. Photovoltaics: Energy for the New
Millenium, projects growth rates of photovoltaic systems and reductions insystem costs, including an industry-developed roadmap with photovoltaics
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providing 10% of electricity by 2030. The Federal Wind Energy Programenvisions prices of wind energy to fall to 2-4 cents by 2002. Further research anddevelopment could lower this price to 1-3 cents by 2015.
The DOE Biomass Power Program: Strategic Plan 1996-2015 aims at establishingpartnerships between the DOE and the private sector to revitalize ruraleconomies through the introduction of biomass fuels. This report describes thepotential of biomass power to grow to 30,000 megawatts of capacity, employing150,000 in predominantly rural areas, and producing 150-200 billion kilowatt-hours of electricity by 2020. Finally, the Strategic Plan for the Geothermal Energy
Program envisions that by 2010, geothermal energy will be the preferredalternative energy source around the globe. By 2010, this program intends tosupply electricity to 7 million U.S. homes (18 million people), and meet theessential energy needs of 100 million people in developing countries by installingU.S. technology for at least 10,000 megawatts of power.
Analysis of Each Scenario
This section details the RAND analysis of each of the planning scenarios assessedin this report.
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EIA forecasts:Reference, high/low GDP, and high/low oil price cases
Outputs (Energy Consumption &Fuel Mix)
Continued reliance on fossil fuels,dramatically higher oil imports,natural gas and coal consumption
Nuclear cut in half in line withprojected plant decommissioning
Renewables, fuel cells insignificant to2020
Issues and ImplicationsHigh reliance on oil imports,
vulnerability to economic, priceshocks
CO2 emissions unabated
Inputs (assumptions)No policy changeGDP, oil prices remain key drivers of
energy consumption, fuel mixEfficiencies increase graduallyNo lasting economic, geopolitical,
or oil price shocks
MethodIntegrated econometric and
technological modelsDetailed projections of fuel
consumption by sectors,appliances, vehicles, etc.
SOURCE: RAND analysis.
Figure A.1— EIA Reference Cases
EIA Reference Cases. The EIA Reference Case assumptions for GDP and oilprices and its variants represent a relatively narrow range of extrapolationsbased upon the recent past. Real GDP grows at 2.2 percent annually for theReference Case (1.7 and 2.6 percent in the low and high GDP variants). ReferenceCase oil price is $22/barrel in 1998 dollars ($15 to $28 per barrel in the low andhigh oil price variants). EIA acknowledges that its oil price forecasts show “farless volatility than has occurred historically.” (Oil price has ranged from$12.00/barrel to $57.00/barrel in 1996 dollars.) It is questionable if these 5 casesreflect a wide enough range for effective policy analysis.
In the EIA Reference Case, growth rates in energy demand in residential andcommercial sectors drop due to lower population and building additions.Additionally, industrial sector growth drops due to lower GDP growth andincreasing focus on growth in less energy-intensive products. Similarly,transportation sector growth declines somewhat due to slower growth in light-duty vehicle travel. In each sector, a variety of complex technological and policyassumptions are made, most of which hinge on maintaining existing policy levelsas a minimum, with additional technological improvements possible.
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EIA projects large growth in natural gas consumption, although its forecasts aresomewhat lower than, for example, those of the American Gas Association(AGA) and the Gas Research Institute (GRI). The EIA report acknowledges highuncertainties associated with the environmental acceptability of coal boilers andthe adoption of natural gas technology. The source of natural gas is clearly animportant policy issue.
In the EIA Reference Case, U.S. energy consumption in 2020 is 121 quadrillionBTUs. The high/low GDP and high/low oil price variants suggest this levelcould be as high as 130 or as low as 112 quadrillion BTUs.
The industrial and transportation sectors continue to dominate growth in energyconsumption, accounting for approximately 75 percent of the growth projected to2020. Although the residential and commercial sectors are projected to continuegrowing, their energy consumption gradually levels off toward 2020 in all five ofthe main EIA variants. The Side Cases discussed later, which assume increasedadoption of new technologies, lower the sectoral consumption curves somewhat,although these variants show a larger effect in the two smaller sectors (residentialand commercial) than in the industrial and transportation sectors.
In all five Reference Case variants, the fuel mix remains largely unchanged, withfossil fuels accounting for a larger fraction of energy supply than in 1997. Energyderived from natural gas rises almost 40% (an increase of 9 quads), while oil rises36% (an increase of 13 quads) and coal rises 29% (an increase of 6 quads). Nuclearenergy falls by almost 40% because of the assumption of decommissioning ofnuclear plants on schedule. Renewable energy from all sources continues toaccount for between 7 and 8 quadrillion BTUs. The continuation of the existingfuel mix, together with increased energy consumption, raises policy issuesassociated with both supply (oil and gas) and use (coal). The low rate of adoptionof renewables and the decommissioning of nuclear plants eliminate from the fuelmix potential low CO2 options.
In the EIA Reference Case, domestic oil supply continues to drop steadily, whileoil imports rise over 50%. Even the EIA high oil price variant shows steady andlarge increases in oil consumption, with imports continuing to supply a largershare. This suggests the need for energy policy to deal with security of supply orhedge strategies for replacement fuels.
Note that the rise in natural gas described in the previous slide will requiresubstantial increases in domestic production or a similar level of increased gasimports. Domestic production of natural gas peaked in the early 1970s at about22 trillion cubic feet (Tcf), declined until 1987, then increased to reach its currentlevel of about 19 Tcf a few years ago. Natural gas well productivity peaked in
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1971 at 435 thousand cubic feet per day per well, then declined to its current levelof about 180 thousand cubic feet per well per day by 1985. Substantial price andpolicy incentives may be required to achieve the projected increased domesticproduction of 27 Tcf per year. Moreover, the source of this increased domesticproduction is assumed to be from growth in the current proven reserves ofapproximately 164 Tcf.
Any shortfall in domestic production, resulting from either lack of availablereserves or too slow a rate of extraction, will necessitate increased natural gasimports. Will these gas imports be obtained via pipeline from Canada (currentlythe source of more than 90 percent of U.S. natural gas imports) or Mexico, or viaLNG shipments from South America, the Middle East, or Asia? With respect tothe North American sources, the relevant question is magnitude and rate ofadditions to reserves. For the other sources, it is the required cost andinfrastructure investment, and the safety ramifications.
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EIA Side Cases:Four key groups
• Slow change (9 variants):– 2000 technology variants– low oil and gas technology variant– electricity high nuclear variant– electricity low fossil and low demand variants
• Faster adoption of advanced technology (12 variants)– 10 high technology variants– 2 high building efficiency variants
• More change, same consumption (10 variants)– remaining electricity, oil, gas, and coal variants
• Electricity high demand variant (1 variant)
SOURCE: RAND analysis.
Figure A.2— EIA Side Cases
EIA Side Cases. The 32 EIA Side Cases fall into four key groups. The first groupcomprises variants resulting in slow change relative to the Reference Case. The“2000 technology” variants all suppose that technology available in 2000 will beused but no new technologies will be adopted. The “low oil and gas technology”and “electricity low fossil and low demand” variants also assume no or slowtechnology improvement, while the electricity high nuclear also results in onlyminor change. (In the high nuclear case, plants are decommissioned at a slowerrate.)
The advanced technology variants make more aggressive assumptions about theadoption of new technology. Several “best-available-technology” cases assumerapid building-shell efficiency growth as well as immediate adoption of bestavailable technology. Four “high technology” sector variants assume earlieravailability, lower costs, and higher efficiencies for advanced equipment. Finally,two building sector variants assume 25% and 50% increases in building efficiencyto 2020.
The remaining electricity, oil, gas, and coal variants examine the effects ofvarious policies such as electricity competition, mine-mouth prices, andrenewables pricing subsidies, all of which lead to energy consumption similar to
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that of the Reference Case. Finally, the electricity high demand variant (uppercenter) assumes demand growth of 2%, as opposed to 1.4% in the Reference Case,resulting in substantially higher energy consumption. This variant requires evenmore natural gas than the reference case, focusing even more sharply the issue ofnatural gas supply.
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EIA Special CasesImpacts of the Kyoto Protocol on U.S. Energy Markets and EconomicActivity (October 1998) and Analysis of the Impacts of an Early Startfor Compliance with the Kyoto Protocol (July 1999)
Inputs (Assumptions)The cost of compliance with the CO2
emissions targets of the KyotoProtocol will requireincorporation of carbon cost inenergy prices
MethodInclusion of a carbon cost in fuel
prices, based upon the carboncontent of fuels at the point ofconsumption
Use of DOE model to determine thecarbon cost to achieve specificlevels of CO2 emissions
Outputs (Energy Consumption &Fuel Mix)
Dramatic reduction of coal use andsubstantial increases in naturalgas, renewables and nuclearenergy, with respect to the DOEReference Case.
Issues and ImplicationsPolitical and economic impact of
higher energy pricesRequirements for technology and
infrastructure development forfuel mix changes
Level of electricity consumptionand amount from nuclear
SOURCE: RAND analysis.
Figure A.3— EIA Special Cases
EIA Special Cases. In the EIA report, Impacts of the Kyoto Protocol on U.S.Energy Markets and Economic Activity (October 1998), six different carbonreduction cases, characterized by total U.S. CO2 emissions in 2020, are compared
with the 1998 EIA Reference Case. These cases are: the 1990 level (1340 millionmetric tons, hereafter referred to as “1990”) + 24%; 1990 + 14%; 1990 + 9%; 1990;1990 – 3%; 1990 – 7%. (The Reference Case corresponds to 1990 + 33%.) For eachcase, the reduction in CO2 emissions is achieved by applying a carbon price to
each of the energy fuels relative to its carbon content at its point of consumption.The EIA model is then used to calculate the carbon price necessary to achieve thestated level of CO2 emissions. These carbon prices range (in 2010) from $67 per
metric ton (1996 dollars) in the 1990 + 24% case to $348 per metric ton in the 1990– 7% case.
In the October 1998 report, it was assumed that the carbon prices wereimplemented in 2005. The July 1999 report examined the impact ofimplementation in 2000. This reduced carbon prices in 2010 from $60 per metricton (1990 + 24% case) to $310 per metric ton (1990 - 7% case). While the detailedimpact on the economy is somewhat different, the energy policy implicationsremain unchanged.
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The total energy consumption and fuel mix for each carbon reduction case aredetermined from the EIA technological and economic models, with theadditional carbon price component included in the price of each fuel. Because ofthe increase in energy prices, 2020 total energy consumption is always lower thanthe EIA Reference Case, ranging from 98.8 quads (1990 – 7%) to 108.6 quads (1990+ 24%). All cases show a dramatic reduction in coal use, as compared to a slightincrease in the EIA Reference Case, with the 1990, 1990 – 3%, and 1990 – 7% casesreduced to about 3 quads, compared to the current level of 22 quads.
Oil consumption in 2020 is higher than the current level, but less than that of theEIA Reference Case, while natural gas consumption is higher than that of the EIAReference Case. The contributions of renewable and nuclear energy to the fuelmix in 2020 are significantly higher than the EIA Reference Case, reflecting fastertechnological development and adoption for renewables and extension of the lifeof existing nuclear power plants. In the 1990 – 7% case, 13 quads of renewableenergy and almost 8 quads of nuclear are used in 2020, as compared to 7 quadsand 4 quads, respectively in the DOE Reference Case.
In addition to the 6 carbon reduction cases, EIA analyzed 5 sensitivity cases, asfollows: high and low economic growth (2 cases); faster and slower availabilityand rates of improvement in technology (2 cases); and construction of newnuclear power plants (1 case). Each sensitivity case was constrained to the samelevel of carbon emissions as the case to which it was compared, so that theprincipal difference was in the carbon cost required to achieve the stated level ofemissions. The high technology and low economic growth cases lead to lowercarbon prices, with concomitant higher energy consumption, while the lowtechnology and high economic growth cases lead to higher carbon prices, withlower energy consumption. The overall fuel mix observations described in theprevious paragraph are still valid.
The nuclear sensitivity case introduces the possibility of growth in nuclear powerby allowing the construction of new nuclear power plants, and also by relaxingassumptions in the reference case of higher costs associated with the first fewadvanced nuclear plants. Under these assumptions, in the 1990 – 3% case, it wasfound that 41 gigawatts, representing about 68 new plants of 600 megawattseach, were added. The total energy consumption in this case is about 1.8 quadshigher than the 1990 – 3% case, or 101.7 quads, still about 15% less than the EIAReference Case. Carbon price is $199 per metric ton, as compared to $240 permetric ton for the 1990 – 3% case. Because of the lower energy prices, energyconsumption is higher, but the presence of increased nuclear power allows thecarbon emissions target to be met with a higher level of energy consumption.
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These reports explicitly identify the costs associated with reducing CO2
emissions, and tracks the fuel mix changes that are necessary within a plausibleset of scenario variants to achieve those reductions. Price increases are projectedfor all fuels, with the greatest impact on coal and natural gas. (Despite the highercarbon content of oil, the impact of carbon price on natural gas is greater becauseof differences in tax and pricing structures for these fuels, especially the hightaxes on oil.) The increases required in natural gas, renewables, and nuclearpower, relative to the EIA Reference Case, underscore further the policy issuesraised in earlier slides with respect to oil imports, sources of natural gas,development and adoption of renewable technologies, and decommissioning ofnuclear power plants. The nuclear sensitivity case provides one explicit exampleof an alternative electricity scenario that can be used as a basis for policy analysis.
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Other Econometric Scenarios:IEA, GRI, AGA, IPAA, DRI, WEFA
Inputs (Assumptions)Economic growth, oil prices
remain key drivers of worldenergy picture
Few dramatic efficiency gains ornew fuel alternatives—nosubstantial change in energypicture to 2020
No sustained economic orgeopolitical disruptions
MethodIntegrated economic models
assuming conservativeeconomic growth and oil pricechanges
Outputs (Energy Consumption &Fuel Mix)
Substantially similar to presentfuel mix
GRI suggests much higher naturalgas usage, lower gas prices,extensive distributedgeneration
Issues and ImplicationsHigh reliance on oil imports,
vulnerability to economic,price shocks
CO2 emissions unabated“Portfolio” of energy sources less
diverse
SOURCE: RAND analysis.
Figure A.4— Econometric Scenarios
Econometric Scenarios. Other econometric scenarios share many of thecharacteristics of the EIA projections, and their results are also similar. The mostdramatic differences appear in the fuel mix. The Gas Research Institute (GRI)projects a dramatic drop in U.S. coal supply as environmental impacts of coalboilers become unacceptable, whereas Standard and Poors’ data researchdivision (DRI) and Wharton Econometric Forecasting Associates (WEFA) bothsuggest much higher domestic coal consumption, with still higher coal exports.(EIA projects that coal exports would fall off due to declining OECD reliance oncoal for electricity generation.) The GRI and the American Gas Association(AGA) scenarios both include dramatic increases in natural gas consumption inresidential, commercial, and industrial sectors, whereas gas consumption inresidential and commercial sectors is assumed to level off by DRI and WEFA. Allof these scenarios call for increased natural gas consumption, although in theWEFA and DRI scenarios these gains come about primarily as a result ofindustrial sector fuel mix changes.
Like the EIA Reference Case, the econometric scenarios tend to rely onassumptions about economic growth and oil price stability that resemble theexperiences of the past decade. Oil prices fall in the $15-$25/barrel range for
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most of the econometric scenarios, with the exception of IEA, which considers arange from $20/barrel to $30/barrel between 2010 and 2015.
In the transportation sector, the econometric scenarios are broadly similar in theirassumptions; most project slower growth in number of vehicles driven than inthe past few years. The GRI scenarios are more aggressive, suggesting relativelyrapid gains in vehicle efficiency.
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World Energy Council (WEC) /International Institute for AppliedSystems Analysis (IIASA)Inputs (Assumptions)1992 World Bank population estimatesBy 2100, all countries and regions
successfully industrialize andaccelerate economic growth
Patterns of energy usage convergeExisting high-efficiency technologies
become economicalFossil fuels sufficient for 100 years
MethodEconomic model; incorporates
technological, environmental,agricultural changes
Outputs 2100 (Energy Consumption& Fuel Mix)
All cases characterized byreduction of dependence onfossil fuel, increased relianceon electricity, and increaseduse of renewables.
Cases differ by magnitude ofenergy use.
Issues and ImplicationsResource availability not a major
global constraint?Technological change will be
critical for future energysystems
Decarbonization will improve theenvironment at local, regional,and global levels
SOURCE: RAND analysis.
Figure A.5— WEC and IIAS
WEC and IIASA. The World Energy Council and the International Institute forApplied Systems Analysis analyzed six possible futures that fall within threebroad categories. Each scenario spans the globe until 2100 and demonstrates thedependence of energy futures on geopolitics, policy intervention, and the worldeconomy.
Case A assumes a world of free trade and favorable geopolitics; by 2050 there is afive-fold increase in World GDP, and by 2100 a fifteen-fold increase. Thisincrease in wealth leads to an increase in consumption; between 2030 and 2100,U.S. and Canadian total energy use increases to over 160 Quads/year. Electricitydominates the scene, responsible for 3/4 of all fossil energy consumed.
Case B takes a more cautious approach to geopolitical and international trendswhile allowing for a conservative increase in economic expansion. Between theU.S. and Canada, total energy usage peaks in 2030 at 120 Quads before levelingoff. Here too, electricity is dominant.
Case C is characterized by strong policy elements that determine the distributionand use of particular fuels. Scenarios phasing out nuclear power entirely as wellas developing small-scale, safe, and publicly accepted nuclear plants are
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investigated. Between the U.S. and Canada, total energy usage drops to just over35 Quads/year by 2100. While use of alternative fuels such as hydrogen andsolar power increase, less energy is used overall. Both energy consumption andeconomic growth in the case C variants are substantially lower than in cases Aand B.
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Royal Dutch Shell:Sustained Growth and Dematerialization
Inputs (Assumptions)Follows World Bank population
estimatesTwo scenarios: “Sustained Growth”
continues the 20th century’s patternof energy per capita increases,providing energy at competitiveprices on the open market
“Dematerialization” posits advances inmaterials and design capabilitiesincreasing efficiency and demandinga lesser energy input
MethodModel developed by Shell analysts;
details not provided
Outputs (Energy Consumption &Fuel Mix)
Sustained Growth: world consumption140 million Btu/capita by 2060 (c.f.73 million Btu/capita today). Fossilincreases until a plateau 2020-2030,when renewables increase
Dematerialization: world consumptionreaches 84 million Btu/capita by2060. Increase in gas; delayedintroduction of photovoltaics
Issues and ImplicationsNeed for hydrocarbonsAlternative fuel use selected by market
forces
SOURCE: RAND analysis.
Figure A.6— Royal Dutch Shell
Royal Dutch Shell. Recognized since the 1970s as a pioneer of scenario analysis,Royal Dutch Shell continues to make available to the public some details of itsworld energy scenarios. Two of these scenarios displayed on Shell’s web site are“sustained growth,” and “dematerialization.”
Shell’s “sustained growth” scenario is essentially a business-as-usual scenario forthe world economy, positing little fuel mix change by 2020, followed by increasesin the share of renewable energy, although fossil fuels continue to grow inabsolute terms.
Shell’s “dematerialization” scenario, on the other hand, posits rapid change inconsumer lifestyles, as well as increased technological growth enablingminiaturization of many resource-intensive activities. In some respects,dematerialization is a more radical version of the changes brought about recentlyby the Internet, a technology that has enabled some substitution of virtualactivity for physical services and products. In dematerialization, however,economic activity is curtailed to some extent following 2020. Technologicalchange takes place mainly in the area of dramatically increased efficiency,leading to reduced demand. In this scenario, the consequent drop in the absoluteworld demand for energy ultimately stifles development of clean energytechnologies.
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Intergovernmental Panel onClimate Change (IPCC)
Inputs (Assumptions)Assumptions about economic, population,
and technological growthA1 - economic convergence, good world
economy, gains in efficiency, clean fuelA2 - “regionalism,” high population
growth, lower economic activity andtrade
B1 - economic convergence, absolutefocus on environment over economy
B2 - “regionalism,” with emphasis on localenvironment, not global climate
MethodWorld econometric model driven by social
factors leading to differing levels ofregional economic growth, trade, andpopulation
Outputs (Energy Consumption & Fuel Mix)Dramatic changes in fuel mix, energy
efficiency—depending on cultural andsocietal commitment to reducedemissions, acceptance of internationalcooperation on environmental andeconomic matters
Issues and ImplicationsCultural change is a central driver of world
environmental policyAttitudes toward economic and political
regionalism can result in differingcommitment to emissions reduction
SOURCE: RAND analysis.
Figure A.7— IPCC
IPCC. The Intergovernmental Panel on Climate Change (IPCC) has developed anumber of scenarios to examine the effect of world social developments on globalemissions of CO2. These scenarios vary mainly by their assumptions of regional
levels of economic growth, population growth, and trade. The scenarios alsoinclude descriptions of cultural factors driving macroeconomic change, such asregionalism, traditionalism, or global cultural convergence.
IPCC describes its four scenarios in the following general terms: Scenario A1 is arapid economic growth, low population growth model involving rapidtechnological change and profound increases in efficiency and clean fueladoption worldwide. Regions converge culturally and economically. Scenario A2involves high population growth, lower economic growth, and “strengtheningregional cultural identities” centering around traditional values and lifestyles.Scenario B1, like A1, involves rapid advancement of clean fuels, and energyefficient technologies, with the emphasis on environmental improvement ratherthan on economic growth. Finally, Scenario B2 envisions a world driven byregionalism regarding cultural, environmental, and economic systems. In B2,technological change and clean fuels play a smaller role than in A1 and B1.
The IPCC reports are unique in acknowledging the central role of cultural andpolitical trends in driving policy regarding energy efficiency and clean energy.
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ACEEE, ASE, NRDC, UCS, Tellus Institute: America’s Energy Choices
Inputs (Assumptions)Reference based on DOE caseThree alternative scenarios reflect the
same level and quality of energyservices, but with a lesser cost andsmaller environmental impact—aresult of higher energy efficiency,efficient power supplies,infrastructure changes, andrenewable energy investments
MethodAdopt least expensive efficiency and
renewable resources, proceeding tomore expensive ones as needed;economic and technological factorsincorporated
Outputs (Energy Consumption & FuelMix)
Alternative scenarios project primaryenergy needs from 82–62 Quads in2030, compared to the reference of120 Quads the same year.
Reference projects a 15% increase in oilconsumption; alternative scenariosproject a 40–54% decrease.Renewables constitute 36–53% offuel mix by 2030.
Issues and ImplicationsStrong policy elements required at all
levels of government
SOURCE: RAND analysis.
Figure A.8— ACEEE, A8E, NRDC, UCS, Tellus Institute
ACEEE, A8E, NRDC, UCS, Tellus Institute. America’s Energy Choices is a seriesof energy scenarios published by the American Council for an Energy-EfficientEconomy, the Alliance to Save Energy, the Natural Resources Defense Council,and the Union of Concerned Scientists, in consultation with the Tellus Institute.These scenarios are based on economic assumptions found in the DOE ReferenceCase; however, additional scenarios variants are developed in which individualsand companies pursue a higher rate of investment in cleaner fuels and greaterenergy efficiency than would occur under DOE assumptions.
In the most aggressive scenario, “climate stabilization,” energy consumption iscut in half versus the DOE Reference Case in 2030, with half this energy derivedfrom renewable sources. The report also states that the improvements in energyefficiency and clean fuel adoption would result in $5 trillion in consumer savings,with only a $2.7 trillion increase in additional investment required to bring aboutthese changes.
Less aggressive are the “market” and “environmental” scenarios. The “market”scenario focuses on increased substitution of renewable energy “at marketpenetration rates,” without additional policy changes to support efficiency orclean fuel technology. The “environmental” scenario assumes more rapid
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penetration rates, as well as some increased policy focus on efficiency and cleanfuels. All three scenarios, according to the report, result in trillions of dollars innet cost savings over the DOE Reference Case. Notably, most of the efficiencygains portrayed in these scenarios comes about in the residential, commercial,and transportation sectors, with less relative change in industrial energydemand. The report describes a broad range of policies but does not explicitlyrelate specific policy actions to specific scenario characteristics.
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Stockholm Environment InstituteGlobal Scenario Group:Conventional Worlds, from Bending the Curve
Inputs (Assumptions)Both developing and developed
world undertake dramaticenergy policy intervention tocombat CO2
Developing world poses largestpotential CO2 problem
MethodForecasts driven by targets
(efficiency and renewable use),with macro-economic andenergy use trends adjusted tomeet those targets
Outputs (Energy Consumption &Fuel Mix)
Eventual transition to allrenewable energy, particularlybiomass and wind in the nearterm, followed by solar andhydrogen fuel cells in the farfuture
Issues and ImplicationsHigh political and economic costs
to adoption of aggressivepolicies
Possibility technologies will notturn out as hoped, or thatexisting technologies or fuelswill remain competitive,keeping renewables out at themargin
SOURCE: RAND analysis.
Figure A.9— Stockholm Environment Institute
Stockholm Environment Institute. “Bending the Curve Scenarios,” from theStockholm Environment Institute Global Scenario Group, examines the changesnecessary to reduce and nearly eliminate CO2 emissions worldwide by 2075, with
much of the out-year emissions coming from developing countries. The reportshows that a variety of changes would be needed to meet such a target, fromdramatically increased public transportation, efficiency mandates, convergencebetween developing and developed worlds in energy-use patterns, and anassumed dramatic increase in biomass, solar, wind, solid waste, geothermal,wave, and tidal power. Non-hydropower sources of electricity grow to 35% ofworld electricity generation by 2050 in the most aggressive scenario, comparedwith 16% in the study’s reference scenario.
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Inter-Laboratory Working GroupScenarios of U.S. Carbon Reductions andScenarios for a Clean Energy Future
Inputs (Assumptions)Modified EIA reference case from
Annual Energy Outlook (AEO) 1997Existing information on performance
and costs of technologies toincrease energy efficiency anddecarbonization
Projections of certain specifictechnological improvements
MethodEach report creates three quantitative
(implying six total) models: one“efficiency” case, utilizing publicand private-sector efforts, andtwo scenarios with carbon permits
Earlier report taken to 2010, laterreport to 2020
Outputs (Energy Consumption & Fuel Mix)Compared with EIA, the first ORNL report
As “efficiency” scenario reducesenergy growth from 22 quads to 15quads, and high-efficiency/low-carbon case reduces further to only a9 quad increase; the second ORNLreport shows energy grow6h to 2010of between 5 and 12 quads
$50/ton permit case reduces carbonemissions in 2010 to 1990 levels(achieved by 2010 in earlier report, by2020 in later report)
Issues and ImplicationsCombined efforts of government policy,
industry incentives, and privateinvestments required to achievethese results
SOURCE: RAND analysis.
Figure A10— Inter-Laboratory Working Group
Inter-Laboratory Working Group. In two reports -- Scenarios of U.S. CarbonReductions (1997) and Scenarios for a Clean Energy Future (2000) -- the Inter-Laboratory Working Group proposes scenarios that address the role of energy-efficient technologies and carbon trading in reducing U.S. carbon emissions. Twostrategies are considered: (1) an “efficiency” case in which both the public andprivate sectors engage in an accelerated R&D program and active marketalteration activities, and (2) two variants on a “high-efficiency/low-carbon” casein which federal policies and tradable emissions permits (at either $25 or $50 perton of carbon) are used to respond to an international emissions treaty.
These reports consciously avoid predicting what policies will have what effect,simply assuming that policy intervention of some form could achieve theseeffects. Potential sources of improvements come from renewables research(biomass, wind, renewables in buildings) and several opportunities forbreakthroughs in technology (building technology advances, light-duty vehicleadvances).
The 1997 report's efficiency case suggests an approximate cost of 25-50 billion1995$ and energy savings of 40-50 billion 1995$ by 2010, with carbon savings of
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100-125 MtC. The 1997 report's high-efficiency/low carbon case suggests costs of50-90 billion 1995$, projected savings of 70-90 billion 1995$, and carbon savingsof 310-390 MtC.
The 2000 report's projections extend to 2020. In its moderate scenario, the reportsuggests energy savings of 10 quadrillion Btus and carbon emissions reductionsof 86 MtC. In its advanced scenario, energy savings are 22 quadrillion Btus, andcarbon emissions reductions are 382 MtC.
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President’s Commission of Advisors onScience and Technology (PCAST):Powerful Partnerships
Outputs (Energy Consumption &Fuel Mix)
Reduced coal, reduced oil imports,increased natural gas, biomass,renewables, and nuclear fission(as compared to all DOEvariants)
Issues and ImplicationsLarge funding increases proposed,
but a small fraction of U.S.energy expenditures. Potentialreturns include lower energycosts, less imported oil, cleanerair, and increased flexibility forachieving CO2 reduction
Inputs (Assumptions)Business-as-Usual energy
consumption entailssubstantial economic,environmental and societalcosts and risks
Increased energy RD&D canprovide technologicaladvances to help mitigatethese costs and risks
MethodBottom-up technological and
sectoral analysis to evaluatepotential reductions in, e.g.,energy demand, oil imports,and CO2 emissions
SOURCE: RAND analysis.
Figure A.11— PCAST
PCAST. The EIA Reference Scenario and other Business-As-Usual forecastsassume continued reliance on fossil fuels, including increased U.S. oil importsand continued use of coal, leading to growth in energy consumption and CO2
emissions in the developing world that exceed current world totals.
The President’s Commission of Advisors on Science and Technology (PCAST), abroadly-based group of distinguished academic and industrial experts, arguesthat the costs and risks inherent in this situation justify increased investment inenergy RD&D that will allow the development and implementation of advancedenergy supply and use technologies that can more rapidly reduce reliance onfossil fuels, U.S. oil imports, and CO2 and other emissions. This includes: 25%
more energy-efficient buildings, 50% efficient microturbines, 100 mpg passengercars, doubling-tripling of truck fuel efficiency, advanced fuel cells, CO2
sequestration, extended operation of existing nuclear reactors and developmentof new reactors with improved safety and mitigated fuel cycle risks and impacts,increased cost-effective wind, photovoltaic, solar thermal and biopower systems,and a more rapid transition to biofuels and hydrogen. PCAST estimates that U.S.oil imports could be reduced to about 15 quads in 2030, approximately the 1990level, with continuing reduction in later years.
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The proposed increase of one billion dollars in 2003, compared with the 1997level of energy RD&D funding, represents less than a fifth of a percent of thecombined 1996 energy expenditures of U.S. firms and consumers, and as such,could yield a very high return on investment.
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Romm, Rosenfeld, and Herrman:The Internet and Global Warming
Inputs (Assumptions)Technological change fastest in
Internet sectorAdoption of the Internet, and use
for conducting business, resultsin lifestyle changes withimpacts on overall energypicture
MethodDescription of recent energy
consumption, GDP trendsemploying macroeconomicdata
Outputs (Energy Consumption &Fuel Mix)
Lower consumption, increasedefficiency, with reduction inlifestyle
Little change in fuel mix - lowertransportation may reduce oilconsumption
Issues and ImplicationsTechnological solutions need not
rely on new fuel sources -efficiency remains an option,albeit under uncertainties
Efficient technologies (e-commerce) may not even beenergy-related
SOURCE: RAND analysis.
Figure A.12— Romm, Rosenfeld, and Herrman
Romm, Rosenfeld, and Herrman. In “The Internet and Global Warming,” byJoseph Romm, Arthur Rosenfeld, and Susan Herrman, the authors note that in1997 and 1998 U.S. energy intensity (energy per dollar GDP) improved by 3%,compared with 1% in previous years. The authors believe that this improvementcan be attributed to the rise of the Internet, with attendant increases intelecommuting, reduced retail and office space, and fewer trips for errands.Although the authors note that data on these changes are still preliminary, theyalso note that the potential changes in commuting, shopping, and provision ofservices could still be large. Finally, the authors state that economic growth in thetechnology sector tends to be much more energy efficient than growth in otherindustrial and commercial sectors.
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Jesse Ausubel:Where Is Energy Going?
Inputs (Assumptions)“Decarbonization” of the energy
system (wood - coal - oil - gas- hydrogen)
Driven by demographics,transportability, electrification,environmental impact
MethodAnalysis of world energy fuel mix
and efficiency trendsLogarithmic plots of world fuel
market share data“Pulses” with increasing energy
consumption per capita
Outputs (Energy Consumption &Fuel Mix)
1st pulse coal - 90% share by 19252nd pulse oil - 85% share by 19803rd pulse gas - projected transition
fuel - 60% by 20304th pulse hydrogen - projected 60%
share in 2100
Issues and ImplicationsSources of natural gas and
infrastructureDevelopment of fuel cell
technologyProduction of hydrogen -
electrolysis with nuclearelectricity?
SOURCE: RAND analysis.
Figure A.13— Ausubel
Ausubel. The paper by Ausubel argues that the emergence of cities increasedenergy consumption per capita and ease of transportation and storage made coalthe fuel of choice. The higher energy density, pipeline transportation and easierstorage drove the transition to oil. End use cleanliness and the transmission/distribution grid drove electrification. It is argued that the lower emissions andflexibility to use in all sectors (direct combustion or in fuel cells) will makenatural gas the transition fuel to hydrogen, the ultimate clean fuel.
Based upon data from the late 19th Century to the present, Ausubel identifiestwo “pulses” with rising world energy consumption per capita. The 1st pulse, thecoal era, used 0.3-1.0 tons of coal equivalent (tce) per capita. The 2nd pulse, theoil era, which is argued to be currently waning, uses 0.8-2.3 tce per capita.Predicted are a 3rd pulse, the natural gas era (2000-2075), using 2.0-6.0 tce percapita, and a 4th pulse, the hydrogen era, beginning in the 2075-2100 time frame,using 6.0-15.0 tce per capita.
Estimates of the gas resource base have more than doubled over the past 20years, and it is argued that development of the necessary transportation,distribution, and utilization infrastructure, including fuel cells, will be driven by
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economic and environmental forces. Production of hydrogen from electrolysis isprojected. Nuclear fission is proposed as the most efficient means to accomplishthis at the scale needed to fuel a world hydrogen economy.
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Amory Lovins and Brett Williams:A Strategy for the Hydrogen Transition
Inputs (Assumptions)Hydrogen represents clean source
of energy for fuel cellsFuel cell advancement will make
hydrogen cells competitive inefficiency, price
Hydrogen transportation andstorage problems will beaddressed by technology
MethodTechnological assessment of
stationary fuel cell marketleading to fuel cell adoption incars, hydrogen transition
Focus on attaining competitiveprice, power, efficiency
Outputs (Energy Consumption &Fuel Mix)
Hydrogen grows rapidly as sourceof fuel in transportation, aswell as buildings, possibly usingPV as hybrid
Issues and ImplicationsNear-term focus on fossil fuel-
powered fuel cells, particularlyfor stationary power, couldprovide long-range pathwayfor otherwise problematichydrogen transition
SOURCE: RAND analysis.
Figure A.14— Lovins and William
Lovins and Williams. A report by Amory Lovins and Brett Williams asserts thathydrogen power for stationary fuel cells (e.g., for buildings) under a distributedgeneration scenario would reduce the size and cost of fuel cells, as well ashydrogen infrastructure, to the point where they would be cost-effective inautomobiles, particularly in super-efficient “hypercars” of low weight and highmileage. Of course there remains the problem of hydrogen refinement andinfrastructure construction. Even under the most optimistic scenarios theseactivities may not be competitive at the margin without aggressive policyintervention.
At the same time, the fact that fuel cell technology can continue to advancewithout relying on hydrogen in the near term makes it possible that thetechnology could be widely adopted, with methanol or natural gas as a transitionfuel, before the political or economic antecedents of a hydrogen economy areworked out. Lovins and Williams assert that the development of a stable marketfor stationary, distributed power generation can provide a pathway for fuel celltechnological improvement eventually enabling their use in mass-producedautomobiles. Once fuel cell infrastructure has been established, a hydrogentransition would face fewer obstacles.
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California Air Resources Board:Status and Prospects of Fuel Cells as Automobile Engines
Inputs (Assumptions)Fuel cell potential efficiencies
higher than potential ofexisting fuels
Fuel cells cleaner in terms of SO2,NO x, and CO2
MethodTechnological assessmentFocus on attaining competitive
price, power, efficiencySurvey of current research trends,
best available projections ofcosts
Outputs (Energy Consumption &Fuel Mix)
Some increase in amount ofnatural gas used in near term
Possible eventual transition tohydrogen, but not by 2020
Issues and ImplicationsIncreased dependence on natural
gasNeed for additional sources of
natural gasVolatility of natural gas prices
becomes economically moreimportant
SOURCE: RAND analysis.
Figure A.16— CARB – Fuel Cells
CARB – Fuel Cells. The California Air Resources Board (CARB) study ofautomotive fuel cells examined the cost of building a hydrogen infrastructure inthe United States, concluding that at present it was too high to make hydrogen afeasible fuel. CARB cited research conducted by Argonne National Laboratoryshowing that for a hydrogen economy equivalent to 1.6 million barrels of gas perday in 2030, capital costs were projected at $230-400 billion and distributionfacilities at $175 billion. With optimistic fuel efficiency assumptions, this worksout to $3500-5000 per vehicle, equivalent to $3.00 - $4.30 per gallon of gasoline(without the material and operational expenses). This cost is combined with thedifficulty of storing hydrogen onboard, effectively ruling out hydrogen as a fuelsource for automotive fuel cells in the near future. However, public sectortransportation may be a viable near-term option, as there are several hydrogen-powered bus demonstration projects in the works worldwide.
CARB examined methanol and gasoline as a source for hydrogen. The studynoted the need to chemically process gasoline (probably at refineries) beforeusage in fuel cells. At present methanol is a more likely candidate; a methanolinfrastructure would be substantially less expensive than a hydrogeninfrastructure, and could be in place in a matter of years if demand materialized.
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A.D. Little:Distributed Generation: Understanding the Economics
Inputs (Assumptions)Utility deregulation and system
capacity limits makedistributed generation moreattractive
Fuel cells, cogeneration, small gasturbines, microturbines, andenabling technologies (netmetering) are makingdistributed generation (DG)more efficient, less costly
MethodMarket study using data on fuel
prices, cost of substitutingvarious technologies, and ROIcalculations
Outputs (Energy Consumption &Fuel Mix)
Little change in consumption overbase cases
Increase in natural gas use(depending on technologychoice)
Issues and ImplicationsPossible reliance on natural gas,
increased importance of gasprice volatility
Implications for industry standards,consumer protections for newdistributed generation market
Potential for R&D allocations tosupport imminentcommercialization of DG
SOURCE: RAND analysis.
Figure A.17— A.D. Little – Distributed Generation
A.D. Little – Distributed Generation. A business analysis conducted by ArthurD. Little demonstrates the potential benefits of distributed generation to powerpurchasers across the country. The ADL report provides a blueprint foranalyzing the specific price factors that would lead to the adoption of distributedgeneration. These factors include local prices for natural gas and electricity,transmission and distribution costs, energy price volatility factors, investmenthorizons, and capital costs for distributed generation. The report demonstratesthe need for examination of local business conditions when considering theviability of distributed generation.
Distributed generation is an issue for energy scenarios because of its potentialimpact on efficiency and fuel mix. Several firms are offering or preparing to offerstationary fuel cells. United Technologies has commercialized a 200 kW cellpriced at over $1 million. Other firms are planning commercialization in the nextfew years, some for residential applications. The stationary cells now underdevelopment typically use natural gas for fuel. CO2 emissions are reportedly less
than half that of typical fossil fuel plants, and efficiencies could be in the over-40% range, particularly if distributed generation makes cogeneration morewidespread. Higher efficiencies may be attained by the emerging solid oxide and
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molten carbonate cells, which operate at higher temperatures than current protonexchange membrane (PEM) cells. Several firms are now working on grid-connected cells that, with deregulation, could make fuel cells more attractive.Early targets for stationary fuel cells will be businesses where high reliability anduninterrupted power are priorities, and where cogeneration is both feasible andattractive.
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Energy Information Administration:Future Supply Potential of Natural Gas Hydrates
Inputs (Assumptions)Methane gas trapped inside cage
of water moleculesEnormous resource on sea floor
and in Alaskan permafrostWorld resource several orders of
magnitude larger thanconventional natural gas
MethodTechnology development for cost-
effective extraction2000 Methane Hydrate Research
and Development Act
Outputs (Energy Consumption &Fuel Mix)
Source of natural gas for 21st
century transition fuel
Issues and ImplicationsPossible release during extraction
(methane 20X greenhouseeffect as compared to CO2)
Experience in Arctic oil explorationallows hazard evaluation
Availability of natural gas cangreatly reduce CO2 and otheremissions
SOURCE: RAND analysis.
Figure A.18— EIA – Gas Hydrates
EIA – Gas Hydrates. If even a small fraction of methane hydrates can beextracted economically, natural gas would be a viable 21st century transition fuel.The 1995 USGS estimate is 200,000 Tcf of U.S. reserves, as compared with 1400Tcf of conventional natural gas reserves. World figures are 400 million Tcf, ascompared with 5000 Tcf of conventional reserves. Current world energy demandis equivalent to approximately 300 Tcf annually.
Extraction of the gas from hydrates requires development of technology to drillthrough the sea bed safely and cost-effectively. Experience with deep oceancommercial and research wells and in the Arctic provides a base of knowledge,and Japan, India and the U.S. are moving forward with R&D.
Hydrates are a two-edged sword. Warming climate could release limitedamounts of potent greenhouse gas, and inadvertent or accidental releases couldoccur during exploration and extraction. However, hydrates could provide anenormous supply of methane which, when used as a combustion fuel or in fuelcells, could vastly reduce CO2 emissions as compared to use of coal or oil.
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KPMG:Solar Energy: From Perennial Promise to Competitive Alternative
Inputs (Assumptions)PV represents clean source of
powerPrice, technology are major
barriers to widespreadadoption
MethodTechnological assessmentFocus on attaining competitive
price, power, efficiencySurvey of current research trends,
best available projections ofcosts
Outputs (Energy Consumption &Fuel Mix)
PV a major source of electricity forresidential, commercial sectorsby 2050, but not by 2020
Issues and ImplicationsAdditional sources of cheap silicon
may be requiredPV may be best as hybrid for fuel
cells (hydrogen refining) - orin certain regions
Question of whether visual profile,physical siting pose additionalbarriers to adoption
SOURCE: RAND analysis.
Figure A.19— KPMG - Solar
KPMG - Solar. The environmental organization Greenpeace has long been aproponent of large-scale investments in solar manufacturing. In support of thisgoal, in 1999 Greenpeace commissioned an objective economic analysis fromKPMG’s Economic Research and Policy Consulting bureau in the Netherlands onthe economic feasibility of constructing a 500 MW power plant. (Presently, theNetherlands is projected to have an installed PV capacity accounting for 1.5% ofelectricity demand by 2020.)
The KPMG study examined four issues: the total area for siting of PV panels inthe Netherlands, the total electricity possible by siting existing PV technologieson such surfaces, the present cost of PV (4 to 5 times market price in theNetherlands), size of subsidies likely to be offered for renewable electricityinvestment (18% of investment costs), potential energy savings of PV investment(21% of investment costs), and projected cost reductions obtainable from large-scale production.
The KPMG study found that manufacturing capacity of PV would have toincrease 25-fold to bring the price of existing technology down to market levels.Furthermore, the KPMG study cast some doubt on the supply of silicon, which is
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used in conventional PV. (Silicon prices have been volatile, and world supply issufficiently limited to make large-scale PV manufacturing essentially reliant onsilicon availability.) Finally, the KPMG study found that 18% of the Netherlands’electricity generation could be provided by solar were all of its residential roofarea converted to PV, with commercial buildings offering less potential area.However, the KPMG study also found that the construction of a 500 MW solarpower plant would be feasible, and that such a plant would bring solar energyprices to Euro .16 per kWh, close to the market rate of Euro .13 per kWh.
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National Renewable Energy Laboratory:Photovoltaics: Energy for the New Millennium; The Federal WindEnergy Program; DOE Biomass Power Program: Strategic Plan 1996-2015; Strategic Plan for the Geothermal Energy Program
Inputs (Assumptions)PV, wind, biomass, and geothermal
energy represent cleansources of power
Price, technology are majorbarriers to widespreadadoption
MethodQualitative examination of myriad
of roadblocks andtechnological hurdles facingrenewables industry
Focus on bringing technology tocost-effectiveness, market
Outputs (Energy Consumption &Fuel Mix)
Modest change in fuel mix,consumption by 2020 - largepotential change in later years
Potential for larger change in fuelmix if technologicalbreakthroughs come to pass
Issues and ImplicationsPossibility that increased R&D could
bring about breakthrough,dramatic change in energypicture
Possibility of increased distributedgeneration, with implicationsfor transmission anddistribution system
SOURCE: RAND analysis.
Figure A.20— NREL – Photovoltaics, Wind, Biomass, and Geothermal
NREL – Photovoltaics, Wind, Biomass, and Geothermal. The NationalPhotovoltaics Program plan suggests that continued growth rates of PVshipments imply an installed capacity in 2020 of 3-7 GW. In the last 5 years,growth rates have been on the order of 20%, and 25% may be feasible. Theprogram also expects manufacturing capacity to grow seven fold andmanufacturing costs to fall by 50%. However, system costs are projected todecline more slowly, to $4-8/W in 2005 and $1-1.5/W in 2020-2030. All of theseprojections are subject to wide uncertainties.
The PV Technology Roadmap Workshop identified a multitude of barriers toadoption of PV technology. These included high cost, low efficiencies, unfocusedresearch and investment decisions (e.g. “lack of conviction to a technologychoice”), weak infrastructure, cost of raw material, lack of cheap and reliablepower inverters, low public exposure to and interest in PV, and unattractiveappearance of PV. The Industry-Developed PV Roadmap projects PV capacity torise to 10% of U.S. generating capacity in 2030, assuming an optimistic 25%industry growth per year. Under this scenario, 15 GW of installed peak capacitypower would be provided by PV in 2020, with costs falling to $3.00/W in 2010 to$1.50/W in 2020.
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The Federal Wind Energy Program, in collaboration with industry, utilities,universities, and other interest groups, seeks to develop the technologies to leadthe world in cost effective and reliable wind power. By 2002, they aim to developadvanced wind turbine technologies capable of reducing the cost of energy fromwind to $0.025 per kilowatt-hour (kWh) in 15-mile-per-hour (6.7-meters-per-second) winds. By 2005, they hope to establish the U.S. wind industry as aninternational technology leader, capturing 25% of world markets. And By 2010,the goal is to achieve 10,000 megawatts of installed wind-powered generatingcapacity in the United States.
The DOE Biomass Power program estimates that the potential exists for biomasspower to grow by 2020 into an industry of 30,000 megawatts of capacity andproducing 150-200 billion kilowatt-hours in the next twenty years. The programconsiders social, political, and environmental factors that would increase theadoption of biomass power, including the enforcement of landfill diversion rules,which would ensure clean materials are either recycled or reused as fuel; theemployment of agricultural field residues as fuel; and finally the increase inefficiency of the biomass-to-energy process. An early strategy is the increase inbiomass fuels in cofiring with coal plants, offsetting greenhouse gas emissionsand producing electricity at a relatively high efficiency (>35%).
The DOE’s Office of Geothermal Technologies (OGT) has five strategic goals thatdefine the role geothermal energy has the potential to play this coming decade.OGT discusses the ability of geothermal energy to supply electrical power to 7million homes (18 million people) in the U.S. by 2010, and to supply the basicenergy needs of 100 million people in the developing world with U.S. technologythrough the installation of at least 10,000 megawatts of generating capacity by2010. Another OGT strategic goal is the development of new technology by 2010do meet 10 percent of U.S. non-transportation energy needs in subsequent years.Over the next decade, potential benefits of increased geothermal use include areduction of U.S. carbon emissions by 80-100 million metric tons of carbon(MMTC) and global emissions by 190-230 MMTC, stimulation of investment ingeothermal facilities both at home and abroad, and 1.6 million person-years ofnew employment opportunities.
Analysis Across the Scenarios
The level of detail with which the various scenarios treat the major uncertaintiesdescribed previously is indicated in the figure below. A full quantitativetreatment is indicated by a filled circle, a partial or semi-quantitative treatmentby a half-filled circle, and lack of treatment by an unfilled circle.
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All of the full scenarios treat energy intensity in a quantitative manner, and mosttreat the acceptance of a carbon-intensive fuel mix quantitatively with some sortof CO2 reduction strategy. The EIA Reference and Side Cases and theeconometric scenarios are exceptions; CO2 emissions levels simply follow fromthe calculated energy consumption and fuel mix for these scenarios. All of thequantitative scenarios treat the rate of adoption of renewable technologies andnuclear power quantitatively, however the EIA and econometric scenarios use anarrower set of assumptions leading to little increase in renewable energy by2020 and close out the nuclear option via on-schedule decommissioning (partialtreatment). All quantitative scenarios treat oil and natural gas supply partially inthat none consider oil supply security or natural gas availability.
The PCAST scenario provides estimates of fossil fuel reductions arising frommore rapid adoption of renewable technologies, and also considers thepossibility of continued and expanded use of nuclear power, thus treating all ofthe uncertainties semi-quantitatively.
EIA ref erence & side casesEIA Kyoto P rotocolEconomet ric scenariosWECRoyal Du tch Shel lIPCCAmericaAs En ergy Fu tu reBending the Cu rveInte rlab Work ing G roupPCASTAusubelRomm et al.Lov ins and Will iamsCARBADLEIA Natu ral Gas Hy dratesKPMGEERE Program Plans
Ene
rgy
Inte
nsi
ty
Oil
pric
es&
sec
urity
Nat
. Gas
Ava
ilabi
lity
Car
bon
fuel
acce
ptan
ce
Ren
ewab
leA
do
ptio
n
Fra
ctio
nN
ucle
arFull treatmen t
Part ial or semi-quan titat ivet rea tment
Not t rea ted
SOURCE: RAND analysis.
Figure A.21—How Uncertainty Was Addressed in Each Scenario
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0
20
40
60
80
100
120
140
1.00 1.50 2.00 2.50 3.00
Decarbonization (1/c)
EIA ReferenceEIA Side CasesEIA Kyoto CasesWEC ScenariosRoyal Dutch-ShellBending the CurveACEEEInterlab Working Group 1Interlab Working Group 2
History (1949-1970)History (1971-1985)History (1986-1999)
E xclusive gas use(1.78)
Exclusiveoil use(1.47)
Exclusive coal use(1)
SOURCE: RAND analysis.
Figure A22—Energy Consumption vs. Decarbonization (quadrillions of BTUs)
Both Romm et al and Ausubel provide quantitative estimates of energyefficiency. The EIA report on methane hydrates addresses natural gas availabilitysemi-quantitatively. Lovins and Williams address energy efficiency andrenewable adoption quantitatively, but within a partial scenario. The technology-specific scenarios address the rate of renewable adoption semi-quantitatively, orquantitatively within a partial scenario.
To assess the policy implications of the various scenarios, in particular withrespect to EERE’s mission areas of clean energy and energy efficiency, it is usefulto visualize the results of the analysis on three graphs: (1) U.S. energyconsumption in 2020 vs. the inverse of the carbon content of the fuel mix in 2020;(2) U.S. energy consumption in 2020 vs. $ GDP/MBTU in 2020; and (3) theinverse of the carbon content of the fuel mix vs. $GDP/MBTU.
The graph above is a plot of U.S. energy consuption in 2020 in quadrillion BTUvs. the inverse of the carbon content of the fuel mix (1/C) for nine of the 14quantitative scenarios. (The IPCC scenario did not have detailed fuel mix dataneeded for this plot, and the fuel mix details for the econometric scenarios ofIEA, GRI, AGA, and IPAA were unavailable.) The decarbonization parameter
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(1/C) was computed for each scenario.4 The weight factors reflect the CO2
emissions per quad of each fuel when burned, as reported by the EIA.
The vertical lines on the graph indicate the position on the horizontal axis of eachfuel, if it were used exclusively. Thus, motion to the right represents thetransition to a cleaner fuel mix, e.g., from coal to oil to natural gas to renewableand nuclear energy. The scenarios fall into two groups with respect to thistransition:
The EIA Reference and Side cases, the DRI and WEFA econometric scenarios,Bending the Curve, the WEC High Growth (2 of 3) and Medium Growth variantsall show little or no fuel mix change from 1998-2020.
The EIA Kyoto, WEC High Growth (1 of 3) and Low Growth variants, RoyalDutch-Shell, Interlab Working Group, and ACEEE scenarios all show substantialmovement toward a cleaner fuel mix by 2020.
0
20
40
60
80
100
120
140
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0
E nergy Productivity ($GDP/btu) normalized to 1971 value (defined as 1)
E IA Reference
E IA Side Cases
E IA Kyoto Cases
WEC Scenarios
Royal Dutch-Shell
B ending the Curve
A CEEE
Interlab WorkingGroup 1Interlab WorkingGroup 2History (1949-1970)
History (1971-1985)
History (1986-1999)
SOURCE: RAND analysis.
Figure A.23—Energy Consumption vs. Energy Productivity (quadrillions of BTUs)
________________ 4 The decarbonization parameter was computed as the inverse of: C = [1/T] * [ C*WC + O*WO +
G*WG ], where T is Total Consumption, C, O, and G are Coal, Oil, and Gas Consumption,respectively, and WX the weights for carbon emissions; WC = 1.00, WO = 0.68, and WG = 0.56.
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The graph above is a plot of U.S. energy consumption in 2020 in quadrillion BTUvs energy productivity, as estimated by constant dollars of GDP per millionBTU5, for 8 of the 14 quantitative scenarios. (The data on energy productivitywere unavailable for the 6 econometric scenarios.)
The scenarios portray a range of energy productivity; however, most scenariosfall into the range of 20-60% increase from 1998-2020. This group of scenarios alsoshows a wide range of energy consumption in 2020, from slightly less than 1998to a 40% increase.
A few scenarios, in particular, the WEC Low Growth variant, and the ACEEEand Bending the Curve scenarios, show much larger increases in energyefficiency. For WEC and ACEEE, this is accompanied by greatly reduced energyconsumption, while for Bending the Curve, energy consumption is slightly largerthan that of the DOE Reference Case.
Analysis of Scenario Clusters
These scenarios reflect the underlying tension between the efficient use of energyto drive our economy and enhance our quality of life, and the detrimental impactthat energy generation has on the local and global environment. Total energyconsumption was a basic descriptor for all the complete scenarios we haveassessed, but there were no common metrics for the impact on the environment.To provide such a common measure that could be used to compare scenariosRAND developed an index of emissions and applied to carbon emissions as asurrogate for overall impact on the environment. In this metric the inversecarbon content of the fuel mix and $ GDP/MBtu were used in combination toprovide an overall measure of environmental effect due to energy use. Thederivation of this metric is shown in the highlight box, which also explains whythis combination of parameters provides a surprisingly complete single metricfor environmental impact.
________________ 5 Constant 1996 dollars have been used throughout this report.
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The energy productivity parameter, P, is defined as:
P = $GDP / E (1)
Where E is defined as total energy consumption.
The carbon emissions parameter, C, is defined as:
C =to Eo + tg Eg + tcEc
tcE(2)
where
to = tons carbon/MBtu oil; Eo = total oil consumption
tg = tons carbon/MBtu gas; Eg = total gas consumption
tc = tons carbon/MBtu coaoil; Ec = total coal consumption
In terms of these parameters, the total carbon emissions, T, can be computed as:
T = CtcE (3)
Using the definition of P, we can rewrite (3) as:
T = Ctc$GDP
P(4)
which is equivalent to:
P1c
∝
= tc
$GDP
T
∝
(5)
Thus, the product of the decarbonization and energy productivity parameters isproportional to the quantity $GDP/T, which is the carbon CO2 emission analog
of the energy productivity parameter and may thus be defined as carbonproductivity. The constant of proportionality is the tons of carbon per MBtu ofcoal burned. This quantity has been roughly constant at slightly more than .025metric tons per MBtu of coal burned since 1951.6
SOURCE: RAND analysis.
________________ 6 Marland, G., Andres, R. J., and Boden, T. A., Global, Regional, and National CO2 Emissions
Estimates from Fossil Fuel Burning, Cement Production, and Gas Flaring: 1950-1994 (revised February 1997),ORNL/CDIAC NDP-030/R7, electronic data base.
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Energy consumption versus GDP/T relative to EIA Reference Case
0
20
40
60
80
100
120
140
-100% 0% 100% 200% 300% 400% 500%
GDP/T (percent difference from EIA Reference Case)
En
erg
y C
on
sum
pti
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(q
uad
rilli
on
Btu
s)
EIA ReferenceCaseEIA Side Cases
EIA Kyoto Cases
WEC Scenarios
Royal Dutch-Shell
Bending the Curve
ACEEE
Interlab WorkingGroup 1Interlab WorkingGroup 2History (1949-1970)History (1971-1985)History (1986-1999)
SOURCE: RAND analysis.
Figure A.24—Energy Consumption vs. Carbon Productivity (quadrillions of BTUs)
Using this metric (i.e., carbon productivity) and total energy consumption we areable to compare and contrast the individual scenarios in terms of energy use andenvironmental impact. In the above graph, energy consumption is plottedagainst carbon productivity. This graph illustrates that the scenarios can begrouped into four clusters for the purposes of our analysis.
Several of the scenarios cluster around the EIA Reference Case, demonstratingthat their range of assumptions do not vary sufficiently from linearextrapolations of current trends and policies to inform policy. These form thefirst grouping.
The higher growth Royal Dutch Shell Scenario and one of the Bending the Curveand WEC/IIASA high growth variants from a second cluster with similar energyconsumption and somewhat lower carbon emissions per unit of GDP.
The EIA Kyoto and Interlab Working Group scenarios represent similarreductions in carbon emissions per unit of GDP, together with reduced energyconsumption (relative to the EIA Reference Case), achieved via a combination ofcarbon tax or trading incentives, and clean/efficient technology adoption. Thelow growth versions of Bending the Curve and WEC/IIASA also fall near theboundary of this cluster of scenarios.
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The WEC/IIASA low growth scenarios and the scenarios from the report,America’s Energy Choices (ACEEE et al) fall in regions of the graph relatively farremoved from the other three clusters, with substantial reductions in carbonemissions per unit of GDP and energy consumption, again relative to the EIAReference Case. These form the fourth grouping.
The two sets of scenarios from the Inter-Laboratory Working Group both showconsiderable variation in energy consumption and GDP per unit carbonemissions. The Interlab Working Group's more advanced scenarios involveenergy consumption at levels near that experienced today, with substantiallylower carbon emissions per unit of GDP than experienced at present.
Of particular note is information that was not included in the scenarios weassessed. Our energy history has been characterized by unanticipated economicor political disruption resulting from exogenous events. Events such as a MiddleEast war, environmental catastrophe (tied by either perception or reality toincreased carbon emissions), or a worldwide economic recession all providesufficient potential for such disruption. Since our intent is to cover the range ofpossible scenarios, not predict the most likely scenario, it is important to includescenarios that consider situations in which the U.S. is once again forced into anenergy crisis. Adequate consideration of scenarios that include disruption canmotivate explicit policy regard for unanticipated events.
Improvements in the technology associated with energy use can increase theefficiency with which we use energy and enhance its productivity. In this study,we use the ratio of GDP produced to BTUs used by the U.S. as the surrogate forthis measure. We refer to this as energy productivity to emphasize the fact that itincludes more than the simple efficiency of electrical devices. Importantly thisincludes the sophisticated production and use choices that are increasinglyavailable to us because of information technology – such as avoiding theproduction (and energy waste) of excess inventory or using automated control ofheating and air conditioning in the home. Technology improvements can alsoallow us to find and use less carbon intensive sources for our energy (estimatedhere, resulting in lower environmental impact). In the figure below we plotenergy productivity vs. decarbonization to provide some sense of which of theseuses of technology is reflected in each of the scenario clusters.
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0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
1.00 1.50 2.00 2.50 3.00
Decarbonization (1/c)
EIA ReferenceEIA Side Cases
EIA Kyoto CasesWEC Scenarios
Royal Dutch-Shell
Bending the CurveACEEEInterlab Work ing Group 1
Interlab Work ing Group 2
His tory (1949-1970)His tory (1971-1985)
His tory (1986-1999)
SOURCE: RAND analysis.
Figure A.25—Energy Productivity vs. Decarbonization (GDP $/MBTU)
The EIA Reference cases (and related scenarios) rely importantly onimprovements in energy efficiency and productivity, the EIA Kyoto scenariosrely on a mixed use of technology reflecting both productivity enhancements anddecarbonization, and the Royal Dutch-Shell scenarios reflect a substantial movetoward low-carbon energy sources. All of these scenarios reflect substantialimprovements that are roughly similar to the improvements we have observedhistorically, especially in energy productivity. The fourth group, typified by theWEC/IIASA low growth scenarios and ACEEE report, stand in marked contrastto these in that they require combinations of improvements in energyproductivity and low carbon energy sources that are substantially beyond recenthistorical experience.
Analysis of Meta-Scenarios
Meta-Scenarios as Alternative Futures for Policy Planning
Using a common framework to analyze the individual scenarios revealed thatthey fell into distinct clusters that were sufficiently different from one another toreflect importantly different policy challenges and implications. In essence, theindividual scenarios represented variants of a few meta-scenarios that could serveusefully as the alternative futures necessary for robust policy assessments and
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planning. The existing individual scenarios commonly used for planning in theenergy community can be summarized as variants on four meta-scenarios. Whilethe four do cover a broad range of alternative futures, we argue that this range isnot broad enough for robust policy planing. A meta-scenario characterized byslow economic growth and relatively low energy consumption (compared to theEIA Reference Case) was added to complete the set. It is of note that this scenario(which we term Hard Times in the section to follow) is not well-represented byany of the planning scenarios we reviewed.
Five Meta-Scenarios
The five meta-scenarios that resulted from our analysis are detailed below andsummarized in Table 2. (Parameters in Table 2 are increases and decreases withrespect to Business-as-Usual.)They are specified by the sociopolitical, economic,and energy parameters we have developed to define a common framework tocompare and contrast scenarios. They are arrayed according to a roughcharacterization as to their economic growth rate and their impact on theenvironment.
Hard Times (Low Growth – Moderate Environmental Impact). Either economicdownturn or supply constraint or environmental catastrophe or combinationleads to low to zero energy growth and no new technology, which also meansvery slow productivity growth and same fuel mix. None of the full energyscenarios fall in this category, because they do not consider surprises ordiscontinuities.
Business-as-Usual (Moderate Growth – High Environmental Impact).
Extrapolation of current trends, i.e., energy growth with continued improvementin energy productivity, but fuel mix actually becomes slightly more carbonizedbecause nuclear is decreasing and all the fossil fuels are increasing. This is a set ofscenarios clustered around the EIA Annual Energy Outlook 2000 results.
Technological Improvement (Moderate Growth – Low Environmental Impact).
Improvements in productivity and/or decarbonization resulting from use ofimproved technology lead to moderate economic growth with much smallergrowth in energy consumption. The EIA Kyoto and both InterlaboratoryWorking Group full scenarios fall in this category.
High Tech Future (High Growth – Moderate Environmental Impact). Economicand energy growth similar to Business-As-Usual, but with technological advancesthat provide for productivity or decarbonization improvements like Technological
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Improvement. The Royal Dutch Shell Sustained Growth scenario, and one of theWorld Energy Council High Growth scenarios.
New Society (Low Growth – Benign Environmental Impact). Environmentallyconscious and energy efficient choices in technology and life style lead to muchhigher productivity, much higher decarbonization, and decreased energyconsumption (e.g., total energy consumption in 2020 like that of 1960). TheACEEE and WEC Low Growth full energy scenarios fall in this category.
Pathway Analysis
Each meta-scenario is described in terms of the sociopolitical, economic, andenergy parameters that dominate possible pathways from the present to thefuture envisioned by these scenarios. Where appropriate, the historical pathexperienced by the U.S. is compared to the path that we would need to follow tofind ourselves in the future corresponding to each meta-scenario. Signposts (e.g.,in 2010) indicating that we are on this path are identified, and shaping strategies
(i.e., positive actions to increase the likelihood of this path) and hedging strategies
(i.e., positive actions to mitigate impacts of this path) are discussed.
U.S. Energy History. The Energy Information Administration (EIA) publishes ayearly Annual Energy Outlook, as well as an Annual Energy Review. The latterincludes the document, Energy in the United States: A Brief History and Current
Trends.7 This serves as the basis for the analysis in this section.
As shown in Figure A.26, U.S. energy consumption has grown substantially overthe past forty years, but not monotonically. Rapid growth between 1960 and 1972ended during the oil crisis of 1973, and energy consumption fluctuated between72 and 80 quads during the period 1972-1985 (which included times of high oilprices and economic recession). Energy consumption has increased since 1985,but again not monotonically, and at a slower rate than in the 60s and early 70s.
As shown in Figure A.27, the U.S. fuel mix is dominated by fossil fuels, with oilcomprising about 37% since 1960. The natural gas component peaked in 1971 andhas stabilized at 24%, coal reached a minimum in the 70s, then rebounded to itscurrent level of 23% around 1985. Renewable energy has remained constant atabout 7% since 1960, and the nuclear contribution has been 8% since the mid-1980s. There has been little change in the fuel mix for the past 15 to 20 years.
________________ 7 This is available at http://www.eia.doe.gov/emeu/aer/eh1999/eh1999.html
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40
50
60
70
80
90
100
1960 1965 1970 1975 1980 1985 1990 1995 2000
SOURCE: EIA.
Figure A.26—U.S. Energy Consumption (quadrillion BTUs)
Oil
Natural gas
Coal
NuclearR enewable
0%
20%
40%
60%
80%
100%
1960 1965 1970 1975 1980 1985 1990 1995 2000
SOURCE: EIA.
Figure A.27—U.S. Fuel Mix (percent)
As illustrated in Figure A.28, energy productivity, approximated by the ratio ofdollars of gross domestic product (GDP) to BTU of energy consumed, has beenmonotonically increasing since the 1970s. In 1980 the U.S. had $54 in GDP permillion BTUs; the value in 1998 was $74.50. The average yearly increase has been1.8% over the past 18 years.
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Figure A.29, which graphs historical data (WWII to the present) for U.S. energyparameters, suggests that there are several periods during which our energy usechanged in ways that will be instructive for our scenario analysis. These periodsare:
• 1949-1960: rapid growth with periods of substantial decarbonization;
• 1960-1973: rapid growth without energy productivity improvement;
• 1974-1984: energy productivity improvement without growth;
• 1985-2000: growth with energy productivity improvement anddecarbonization.
0.00005
0.00006
0.00007
0.00008
1980 1985 1990 1995
SOURCE: EIA.
Figure A.28—U.S. Energy Productivity ($ GDP per BTU)
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0
5,000
10,000
15,000
20,000
25,000
0.5 20.5 40.5 60.5 80.5 100.5 120.5 140.5
E nergy Consumption (quadrillion Btus)
EIA Reference
EIA Side Cases
EIA Kyoto Cases
WEC Scenarios
Royal Dutch-S hell
Bending the Curve
ACEEE
Interlab WorkingGroup 1Interlab WorkingGroup 2History (1949-1970)
History (1971-1985)
History (1986-1999)
SOURCE: RAND analysis.
Figure A.29—GDP vs. Energy Consumption ($ billion)
Figure A.29 illustrates that although GDP growth is generally linked to energyconsumption, it is not immutably so. There have been limited periods (typicallyproceeded by strong exogenous pressures) during which the economy grewwithout similar growth in consumption and the long term trend seems to betoward greater economic growth coupled with lesser associated energyconsumption.
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0
5,000
10,000
15,000
20,000
25,000
1.00 1.50 2.00 2.50 3.00
Decarbonization (1/c)
E IA ReferenceE IA Side CasesE IA Kyoto CasesWEC Scenarios
Royal Dutch-ShellB ending the CurveA CEEEInterlab Working Group 1Interlab Working Group 2History (1949-1970)History (1971-1985)History (1986-1999)
Exclusive gas use(1.78)
Exclusiveoil use(1.47)
Exclusive coal use(1)
SOURCE: RAND analysis.
Figure A.30—GDP vs. Decarbonization
Figure A.30 shows a long-term trend that illustrates that substantial change in thenation’s fuel mix will be a challenge. It does illustrate that there have been timesin the past where substantial movement in this arena has taken place.
The period from 1949 to 1973 was a period of monotonic increases in U.S. energyconsumption as the economy grew. The history reflects a large change indecarbonization before 1970 (due to the switch from coal to oil and gas), andalmost the entire energy productivity improvement occurring since 1970. Becausesuch shifts are dependent on the rate of change of the underlying infrastructureas well as the carbon characteristics of the fuels used, the change during thisperiod is surprising as to its rapidity and provides some insights as to howquickly such shifts can take place if the proper economic incentives are in play.
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0.0
5,000.0
10,000.0
15,000.0
20,000.0
25,000.0
0.00000 0.00005 0.00010 0.00015 0.00020 0.00025
E nergy Productivity
E IA ReferenceE IA Side CasesE IA Kyoto CasesWEC ScenariosRoyal Dutch-ShellB ending the CurveA CEEEInterlab Working Group 1Interlab Working Group 2
History (1949-1970)History (1971-1985)History (1986-1999)
SOURCE: RAND analysis.
Figure A.31—GDP vs. Energy Productivity ($ billion)
Energy consumption versus GDP/T relative to EIA Reference Case
0
2 0
4 0
6 0
8 0
1 0 0
1 2 0
1 4 0
- 1 0 0 % - 5 0 % 0 % 5 0 % 1 0 0 % 1 5 0 % 2 0 0 % 2 5 0 %
GDP/T (percent difference from EIA Reference Case)
En
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Co
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um
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(q
ua
dri
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n
Btu
s)
EIA ReferenceCaseEIA Side Cases
EIA Kyoto Cases
WEC Scenarios
Royal Dutch-ShellBending the Curve
ACEEE
Interlab WorkingGroup 1Interlab WorkingGroup 2History (1949-1 9 7 0 )History (1971-1 9 8 5 )History (1986-1 9 9 9 )
The graph of GDP vs. Energy Productivity provides insights into how quicklyenergy productivity (or energy efficiency) can increase in times of economicstress due to energy prices. Although the long-term trend has been very much
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the same over the half-century covered by the chart, there have been periods inwhich dramatic movement (both positive and negative) has taken place.
In the late 1960s, low energy costs motivated in a decrease in the productivity ofenergy use. Shortly thereafter, the energy crisis of 1973 caused a dramaticdecrease in fuel supply, with accompanying economic disruption. The nextseveral years were a period of adjustment during which curtailment or “belt-tightening” was followed by price- and policy-driven improvements in theenergy efficiency of infrastructure and changes in consumption patterns (e.g.,abundance of smaller automobiles).
By 1984, energy consumption was similar to that of a decade earlier, but energyproductivity had increased substantially. Growth in energy consumptionresumed in 1984. This growth continues to the present day, albeit together withgrowth in energy productivity and decarbonization. As oil prices decreased, theeconomy flourished and the U.S. abandoned its efforts toward energyindependence or lowering its reliance on oil.
In summary, the period prior to 1960 was characterized by a change in thecarbon content of the fuels used to generate the nation’s energy and so isinstructive in considering future efforts to decarbonize. The period 1960-1973 hadsubstantial growth in energy consumption without any improvement in energyproductivity, primarily because energy was cheap. The period 1974-1984,following the Arab Oil Embargo, was a time of little to no growth in energyconsumption and substantial increase in energy productivity, because of acombination of energy shortages, energy price increases, energy conservationpolicies, and slow economic growth. The period from 1985 to the present hadgrowth in both energy consumption and energy productivity, driven by acombination of a strong economy, technological improvements, andenvironmental and consumer activism.
Thus, U.S. energy history is one of growth, crisis, adjustment, and more growth,this time together with movement toward clean energy and energy efficiency.This suggests that energy scenarios need to consider both the effects of potentialcrises and the possibility that growth in energy consumption continue.
Note that there is historical precedent for decarbonizing and improving energyproductivity at the same time, as might be envisioned in the future, e.g., withtechnologies such as hybrid electric vehicles and (hydrogen) fuel cells.
Hard Times. Hard Times (100 quads in 2020) is similar to what happened to usbefore (1973-1984), and there are many possible events that could trigger this sortof slowdown in energy use without much improvement in energy productivity
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either (90 $/MBTU), e.g., Middle East war, environmental catastrophe(s) tiedeither by perception or reality to increased carbon emissions, worldwideeconomic recession.
Signposts: No energy growth, little productivity growth, stagnant economy.
Shaping Strategies: We don't want to go to this future, but inadvertent shapingstrategies might include: heavily increased regulatory constraints on energydevelopment; removal of incentives for increased energy productivity; flawedpolicies leading to economic recession.
Hedging Strategies: Increased R&D of energy productivity and renewable energytechnologies; incentives for energy productivity and decarbonization; incentivesfor oil and gas exploration; relicensing of nuclear power plants.
Business-as-Usual. Note that there are many obstacles to reaching the Business-
As-Usual future. This meta-scenario, with total energy consumption of 112-129quads and decarbonization of 1.5-1.6 in 2020, assumes that we will continue,simultaneously, to increase our oil imports, increase our use of natural gas (e.g.,for essentially all new electric capacity additions), while using more coal,decommissioning nuclear plants on schedule, and making little progress onrenewable adoption. Price and security of oil supply, price and adequacy of gassupply, and acceptability of higher levels of carbon emissions are alluncertainties that could derail this extrapolation, especially with respect to theeconomic and sociopolitical parameters, e.g., through disruption, or bydecreasing GDP growth, increasing the energy contribution to CPI, andincreasing the cost of health and environmental impacts and regulatorycompliance. It is important to note that from 1973-1984, a combination of supplyconstraints and economic downturn kept energy growth constrained. Moreover,since 1985, we have been increasing our energy productivity, and this trend willlikely continue, to the extent that we continue to employ new technology, at leastat the replacement rate.
Signposts: Continued growth in energy demand with productivity increasing atcurrent rate, and decarbonization remaining constant or decreasing by 2010.
Shaping Strategies: Incentives for increased oil and gas exploration, support foremissions trading strategies.
Hedging Strategies: Increased R&D of energy productivity and renewable energytechnologies; incentives for energy productivity and decarbonization; relicensingof nuclear power plants.
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Technological Improvements. Technological Improvements has several differentpossible pathways. Because the energy growth is modest (97-110 quads), pathsinclude going through a period of Hard Times, which is similar to the historicalpath to 2000. It also requires changes in productivity (105–133 $/MBTU) anddecarbonization (e.g., 1.6-1.8 for the 2000 Interlaboratory Working Group) thatare not too different from what we have seen in our history. For example, wemight imagine that environmental impact takes a more central stage, via eventsjust short of what would put us into Hard Times, or that would only put us therebriefly, but with sufficient economic growth (i.e., 2.2%/year) that we have thewherewithal to do something about it (via technology and/or economicintervention, e.g., via emissions trading). The main point when comparingTechnological Improvements to New Society, is that the rate of turnover may besufficient here if we have economic growth and a mandate for improvedproductivity and clean fuels. Or, we might find that supply constraints haveforced us to move in this direction, e.g., incentives for gas production insufficientto supply the demand for new electric plants, industry, and buildings, or oilimports not anywhere near the level projected by EIA, together withenvironmental constraints on new exploration in the U.S. Then we might becomeeven more efficient in our use of energy, like we did in the 1970s and continuingto the present.
One possible business-as-usual pathway from the present might pass through aperiod in which there is little or no growth in energy consumption, butsubstantial energy productivity increase (e.g., 2000-2010). This might happen, forexample, because of supply constraints or an environmental problem short ofwhat it would take to put us into the Hard Times scenario. Within a business-as-usual set of assumptions, productivity would continue to improve at about thecurrent rate, or perhaps somewhat faster to maintain some level of economicgrowth. Under this scenario, recovery of fuel supplies or solution of theenvironmental problem, e.g., with new technology, might enable continuedgrowth in both energy consumption and energy productivity (e.g., 2010-2020),much as has happened since 1985. The sociopolitical and economic parameters ofsuch a scenario would depend strongly on the details of the pathway.
Signposts: Signposts would include near-term fuel shortages or greatlyunderestimated environmental impacts. A “glitch” in energy growth lastingmore than a year or two, together with increased implementation of new energytechnologies (e.g., hybrid vehicles, microturbines).
Shaping Strategies: Incentives for energy productivity and decarbonization.Inadvertent shaping strategies might include rapidly escalating fuel prices orinfrastructure failures.
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Hedging Strategies: Hedging strategies include incentives for oil and gasexploration, relicensing of nuclear power plants, increased R&D of energyproductivity and renewable energy technologies, and incentives for energyproductivity and decarbonization.
High Tech Future. The High Tech Future has a combination of challenges, in thesense that it requires energy growth like Business-As-Usual, (120-127 quads) alongwith improvements in the fuel mix and energy productivity approaching thosethat we will describe in the New Society scenario below (decarbonization of 1.6–1.9 and energy productivity of 112–144 $/MBTU). So, to get there, one mustpostulate overcoming many of the obstacles to energy supply described underBusiness-As-Usual, while also accomplishing some change in the way we useenergy. However, because there is higher economic growth (3.2%/year), perhapsone can envision economic growth spawning large and rapid technical changeand equipment turnover.
Signposts: Continued economic prosperity leading to higher economic growth,increasing rate of adoption of new technology (e.g., hybrid vehicles), abundanceof cheap oil and gas.
Shaping Strategies: Incentives for oil and gas exploration; R&D incentives andsubsidies for energy productivity and renewable energy technologies; relicensingof nuclear power plants.
Hedging Strategies: Increased R&D of energy productivity and renewable energytechnologies; incentives for energy productivity and decarbonization.
New Society. Note that in order to reach the New Society we have to dosomething we never have done before, i.e., reduce energy consumption (fromapproximately 100 quads to 675-83), and also that the scale of the productivityand decarbonization improvements are daunting compared to those of the past,even with the downturn in economic growth embodied in this scenario. (Energyproductivity has increased from 54 $/MBTU to 92 in the past 40 years, anaverage of 1.8%/year. New Society requires an increase from 92 to 150–192 in thenext 20 years, an average of 3.1-5.6% per year. Decarbonization has increasedfrom 1.49 to 1.62 over the past 40 years, an average of 0.2% per year. New Societyrequires an increase from 1.62 to 1.8-2.6 in the next 20 years, an average of 0.5-2.3% per year.) In order to achieve reduced energy consumption and a lesscarbon-intensive fuel mix at the same time, we will need to change the manner inwhich we use energy in a revolutionary way. Technologies such as fuel cells,photovoltaics, electric and hybrid vehicles are presently much more expensivethan our currently used alternatives. We would need to allocate very largeresources to pay these costs, e.g., in the form of increased fuel taxes, increased
364
R&D costs, and increased subsidies for energy productivity and renewableenergy technologies. If successful, we would obtain health and environmentalbenefits from decreased energy use and use of cleaner energy technologies. Amore complete analysis of this meta-scenario should evaluate the rate of turnoverof energy conversion and utilization equipment, infrastructure improvementsand modifications (e.g., electricity storage) and the possible time to implementany necessary lifestyle changes (e.g., land use, public transportation, workpatterns) to see how difficult it might be to actually get there in 20 years.
Signposts: Revolutionary increases in energy productivity and decarbonization;accelerated use of renewable energy technologies; lifestyle changes involvinggreater use of mass transit, less driving, load-leveling electricity use.
Shaping Strategies: Major emphasis and resources devoted to energy productivityimprovement and accelerated adoption of renewable energy technologies,including incentives, subsidies, and public education.
Hedging Strategies: Incentives for oil and gas exploration, R&D on clean coaltechnologies, relicensing of nuclear power plants.
Issues and Policy Implications
Issues
There are 7 major issues identified by this scenario analysis:
• Need to explore pathways to implementation of scenarios, especially thosethat lead to a cleaner fuel mix and more efficient energy consumption.
• Need to explore the effect of “surprises” leading to either economic or energysupply disruptions, such as have occurred in the past (e.g., the period 1974-1984). This should include a new source of surprises, technology.
• Implications of no significant change in the U.S. fuel mix to 2020, inparticular, increased use of coal.
• Oil price and supply security, and alternative oil and liquid fuel supplyoptions.
• Natural gas price and availability, especially within North America, andrequired level of LNG imports.
• Need to explore the policy actions needed to increase the rate of adoption ofrenewable energy technologies.
• The future role of nuclear power in the electricity fuel mix.
365
The policy implications and insights for EERE planning derive directly fromthese issues.
Policy Implications
Many of these issues directly relate to DOE/EERE’s strategic planning andinvolve the policy instruments inherent in its programs and initiatives (see Boxon following page). The specific insights of importance to these efforts arediscussed below.
RAND’s scenario analysis examined a range of full scenario outputs whichincluded total energy consumption, energy efficiency, and decarbonization. Withrespect to decarbonization, the scenarios fell into two groups: one that showedminimal change from the EIA Reference Case, and one that showed gains indecarbonization resulting from a variety of technical, policy, and socialassumptions. Regarding energy efficiency and total energy consumption, thescenarios examined display a relatively wider variety of possible outcomes,resulting from policy change as well as economic change and dramatic gains inenergy efficiency.
Although planning scenarios were classified as “full” if they providedquantitative estimates of total energy, decarbonization, and efficiency to 2020,these variables alone are not sufficient to illuminate the range of optionsavailable to policy makers, or the range of uncertainties facing America’s energypicture. Indeed, many of these scenarios did not address specific policies neededto obtain the world picture they portrayed, while others examined only policytargets rather than providing pathways to achieve those targets. Similarly, therange of uncertainties regarding oil security, gas supply, rate of adoption ofrenewable technologies, and nuclear power is not well-covered by the scenariosexamined in this study.
If the drawback of the planning scenarios is a lack of policy specificity, thisproblem is addressed to some extent by narrower studies of technologies, as wellas partial scenarios examining effects of specific policies. Our analysis of thesestudies resulted in four policy implications that illustrate how such scenarios andstudies can provide policy insights despite the uncertainty associated with theseissues:
• First, research and development serves as a hedging strategy. Becausetechnological improvement and market penetration are all subject to
366
DOE/EERE Policy Instruments
The document Clean Energy for the 21st Century, Office of Energy Efficiency andRenewable Energy, Budget-in-Brief Fiscal Year 2001, DOE/EE-0212 describes theEERE program activities and their FY 1999, FY 2000, and FY 2001 (requested)budgets.
The EERE programs are: Industrial Technologies (OIT); TransportationTechnologies (OTT); Building Technologies, State and Community Programs(BTS); Power Technologies (OPT); and the Federal Energy Management Program(FEMP). The policy instruments used by these programs to achieve EERE goals arealso described in the aforementioned document.
The policy instruments available to EERE grow from its programs and activities.They fall in seven major areas:
• Funding of cost-shared research, development and demonstration (RD&D)programs
• Technical assistance• Information resources and outreach• Standards, codes, guidelines development• Energy efficiency improvement projects• Education, training, financing mechanisms to reduce market barriers• Creation of long-term U.S.-developing and transition country EERE
relationships
OIT, OTT, BTS, and OPT all devote a substantial portion of their budgets to cost-shared research, development, and demonstration (RD&D) programs withnational laboratory, private industry, and academic participants. They alsoprovide technical assistance, information resources, and outreach efforts toenhance development and deployment of clean and efficient energy technologies.OPT also sponsors field validations of a dvanced power technologies. BTS fundsprojects to weatherize homes and state grants to increase energy efficiency in all ofthe end-use sectors . BTS is also active in the development of building codes,appliance standards and guidelines to increase energy efficiency and accelerate theadoption of clean technologies. FEMP assists Federal Agencies in identifying,financing and implementing energy efficiency and renewable projects in Federalfacilities and operations.
EERE has several cross-cutting initiatives aimed at reducing market barriers toaccelerate deployment of clean and efficient energy technologies, as wellinternational programs that encourage greater use of U.S. energy efficiency andrenewable technologies by developed, developing and transition countries to helpmeet energy needs worldwide, reduce the rate of consumption of fossil energyresources, and address environmental issues.
SOURCE: DOE.8
Figure A.32—Policy Instruments Available to DOE/EERE
________________ 8 Clean Energy for the 21st Century is available on-line at http://www.doe.gov.
367
uncertainty, PCAST recommends maintaining a diverse portfolio of researchand development efforts. Findings such as these help illuminate how policycan take account of technological uncertainties.
• Second, if decarbonization policies are pursued, many of the scenariosexamined here suggest natural gas as a transition fuel, whether the gas isused by fuel cells or advanced combined-cycle turbines. Jesse Ausubel’s longrange study of historical energy trends and their implications for the futuresuggests that natural gas could be on the brink of a take-off, mirroring earlierexperiences with coal and oil. Decisionmakers will need to ensure that policychoices fully reflect such a change from the current situation.
• Third, Romm, Rosenfeld, and Herrman argue that changes need not bedriven by canonical factors. The world is accustomed to thinking of changein the energy field in terms of change being driven by geopolitics, publicpolicy choices, and consumer preferences. But the Internet and informationtechnology may be changing the way we use energy, resulting in some of themost fundamental change we have witnessed in history.
• Fourth, the partial scenario provided by Lovins and Williams, in the contextof other technology studies of distributed generation (ADL) and fuel cells(CARB) argue that technologies with a wide potential application may enablechanges in the generation system that can change the basic nature of thesystem. Because fuel cells have such a range of potential applications(remote, reliable, uninterrupted stationary power today, distributedgeneration tomorrow, then automotive use), they may ultimately enabletransition to a hydrogen economy.
None of the planning scenarios explored the effect of “surprises,” e.g., oil price“shocks” such as occurred in 1973 and 1979. Whatever the future holds in store, itis likely to include a lot less continuity than that depicted in these scenarios oreven the Hard Times meta-scenario we developed to explore these possibilities.The historical record of U.S. energy consumption shows periods of rapid growth,crisis and adjustment, and then continued growth, albeit at a slower rate, andaccompanied by increased energy efficiency. Even in the relatively recent past,the U.S. followed a reduced demand, reduced liquid fuel scenario from about1977-1986, then turned about and has followed an increased liquid fuel scenariosince. Business-As-Usual scenarios such as the EIA Reference Case and theeconometric scenarios, as well as the Royal Dutch Shell and WEC/IIASAscenarios, assume that ample fossil fuels will be available to fuel energy growth.A significant group of scenarios also assume that the U.S. will not significantlychange its fuel mix to 2020, implying increased use of coal. Unanticipated events,e.g., Middle East war, (real or perceived) global climate catastrophe, failure to
368
obtain approvals for new coal-fired power plants, failure to add to gas reserves atanticipated rates, LNG or oil tanker accidents, could lead to future energy supplyconstrictions. Aggressive policy actions to increase the fraction of clean energy inour fuel mix and to increase energy efficiency are the best hedge possible againstsuch futures.
There were some scenario variants with reduced energy consumption, in somecases associated with a transition to an environmentally conscious fuel mix.Many of these scenarios assume rapid adoption of improved technology,sometimes coupled with changes in patterns of energy consumption. Thesefutures are unlikely to come about without aggressive policy action, for example,the type of broad energy RD&D program envisioned by PCAST, or the carbonemissions price used by EIA in its analysis of the costs of compliance with theKyoto Protocol.
In particular, transition to a future of high energy efficiency and judicious fuelmix choices, as envisioned by ACEEE at al. and WEC/IIASA, will requirepositive policy actions, e.g., RD&D support such as proposed by PCAST, carbonreduction strategies and other policies, to promote a sustainable fuel mix. It is notby any means clear that such a future is obtainable through pursuit of existingpolicies. In fact, such policies, plus new fuel discoveries (e.g., methane hydrates)and a sustained economic boom, could well be driving forces toward increasedenergy growth.
Because most scenarios, especially EIA’s, show increased use of oil and naturalgas, the source and security of oil and gas supply, including imports, is a keypolicy issue. Increased oil imports are assumed to come primarily from thePersian Gulf. Increases in domestic supply of natural gas are assumed to comefrom additions to proven reserves. Alternative oil or liquid fuel supply optionsand necessary price and policy incentives for natural gas production are criticalissues that require analysis.
Most scenarios wrote off the nuclear option by assuming that nuclear powerplants will be decommissioned on schedule and that no nuclear power plantswill be built. While this is consistent with current trends in the U.S. and Europe,it is too narrow an assumption to inform policy. As demonstrated in the EIAKyoto Protocol scenario variants, extending the lifetime of existing plants can bean essential and cost-effective component of a carbon reduction strategy.Especially in light of the current level of international concern about greenhousegases, nuclear power, as a carbon-free source of electricity, needs to be analyzedand considered within an objective framework that compares the costs, risks, andimpacts of alternative energy sources.
369
Tab
le 1
Mod
els
and
Sce
nar
ios
RA
ND
Com
pil
ed a
nd
Eva
luat
ed
Mod
el/
Scen
ario
Sour
ceN
otes
EIA
Ann
ual E
nerg
y O
utlo
ok 2
000
(EIA
, 200
0)T
he E
nerg
y In
form
atio
n A
dm
inis
trat
ion
(EIA
) Ref
eren
ce C
ase
has
five
var
iant
s, a
nd 3
2 si
de
case
s (2
0 of
whi
ch w
ere
fully
quan
tifi
ed).
The
se s
cena
rios
are
ext
rapo
lati
ons
of c
urre
nt tr
end
san
d p
olic
ies,
usi
ng a
com
bina
tion
of e
cono
met
ric
and
tech
nolo
gica
l mod
els.
EIA
Kyo
to P
roto
col 1
Impa
cts
of th
e K
yoto
Pro
toco
l on
U.S
. Ene
rgy
Mar
kets
and
Eco
nom
ic A
ctiv
ity
(EIA
, Oct
ober
199
8)T
his
incl
udes
six
sce
nari
o va
rian
ts th
at u
se th
e E
IA e
cono
mic
and
tech
nolo
gica
l mod
els,
wit
h an
ad
ded
car
bon
pric
e co
mpo
nent
incl
uded
in th
e pr
ice
of e
ach
fuel
. The
rep
ort a
lso
des
crib
es fi
vese
nsit
ivit
y ca
ses
that
var
y ec
onom
ic g
row
th, r
ate
ofte
chno
logi
cal i
mpr
ovem
ent,
and
nuc
lear
pow
er u
se.
EIA
Kyo
to P
roto
col 2
Ana
lysi
s of
the
Impa
cts
of a
n E
arly
Sta
rt fo
r C
ompl
ianc
e w
ith
the
Kyo
to P
roto
col (
July
199
9)T
he s
econ
d o
f EIA
’s tw
o an
alys
es o
f the
impa
cts
of K
yoto
,re
visi
ted
the
sam
e as
sum
ptio
ns to
geth
er w
ith
impl
emen
tati
onbe
ginn
ing
in 2
000.
The
car
bon
pric
es w
ere
red
uced
som
ewha
tbu
t the
con
clus
ions
wer
e un
chan
ged
.
Eco
nom
etri
c Sc
enar
ios
Inte
rnat
iona
l Ene
rgy
Age
ncy
(IE
A);
Gas
Res
earc
hIn
stit
ute
(GR
I); A
mer
ican
Gas
Ass
ocia
tion
(AG
A);
Ind
epen
den
t Pet
role
um A
ssoc
iati
on o
f Am
eric
a(I
PAA
); S
tand
ard
and
Poo
rs’ D
RI D
ivis
ion;
Wha
rton
Eco
nom
etri
c Fo
reca
stin
g A
ssoc
iati
on (W
EFA
); So
urce
:E
IA, A
nnua
l Ene
rgy
Out
look
200
0 (E
IA, 2
000)
Scen
ario
s ba
sed
upo
n ec
onom
etri
c m
odel
s d
evel
oped
by
mul
ti-
nati
onal
and
non
gove
rnm
enta
l org
aniz
atio
ns w
ere
incl
uded
inth
e st
udy.
WE
CG
loba
l Ene
rgy
Per
spec
tive
s (C
ambr
idge
Uni
vers
ity
Pres
s,19
98)
The
Wor
ld E
nerg
y C
ounc
il (W
EC
) and
the
Inte
rnat
iona
l Ins
titu
tefo
r A
pplie
d S
yste
ms
Ana
lysi
s (I
IASA
) des
crib
e 6
wor
ld e
nerg
ysc
enar
io v
aria
nts
that
spa
n a
broa
d r
ange
of a
lter
nati
ve fu
ture
s.
370
Tab
le 1
—C
onti
nu
ed
Mod
el/
Scen
ario
Sour
ceN
otes
Roy
al D
utch
She
llR
oyal
Dut
ch S
hell
Ene
rgy
Gro
up, a
vaila
ble
onlin
e at
ww
w.s
hell.
com
, acc
esse
d Ju
ly, 2
000.
Roy
al D
utch
She
ll d
evel
oped
one
sce
nari
o va
rian
t in
whi
chgr
owth
in e
nerg
y co
nsum
ptio
n is
sus
tain
ed a
t a h
igh
rate
, and
anot
her
vari
ant i
n w
hich
“d
emat
eria
lizat
ion”
slo
ws
ener
gyco
nsum
ptio
n.
IPC
CT
he In
terg
over
nmen
tal P
anel
on
Clim
ate
Cha
nge
(IPC
C) ,
The
Pre
limin
ary
SRE
S E
mis
sion
s Sc
enar
ios
(Jan
uary
199
9)IP
CC
des
crib
ed s
ix s
cena
rio
vari
ants
wit
h d
iffe
rent
ass
umpt
ions
abou
t eco
nom
ic, p
opul
atio
n, a
nd te
chno
logi
cal g
row
th.
Am
eric
a’s
Ene
rgy
Futu
reT
he A
mer
ican
Cou
ncil
for
an E
nerg
y E
ffic
ient
Eco
nom
y(A
CE
EE
), A
llian
ce to
Sav
e E
nerg
y, N
atio
nal R
esou
rce’
sD
efen
se C
ounc
il, a
nd th
e U
nion
of C
once
rned
Scie
ntis
ts, i
n co
nsul
tati
on w
ith
the
Tel
lus
Inst
itut
e,A
mer
ica’
s E
nerg
y Fu
ture
, (19
97)
AC
EE
E d
escr
ibed
thre
e sc
enar
io v
aria
nts
base
d u
pon
high
ene
rgy
effi
cien
cy a
nd in
vest
men
t in
rene
wab
le e
nerg
y, to
geth
er w
ith
subs
tant
ial c
hang
es in
the
ener
gy in
fras
truc
ture
.
Ben
din
g th
e C
urve
Stoc
khol
m E
nvir
onm
ent I
nsti
tute
and
Glo
bal S
cena
rio
Gro
up, C
onve
ntio
nal W
orld
s: T
echn
ical
Des
crip
tion
of
Ben
ding
the
Cur
ve S
cena
rios
(199
8)
The
Sto
ckho
lm E
nvir
onm
ent I
nsti
tute
and
Glo
bal S
cena
rio
Gro
upd
escr
ibe
two
scen
ario
var
iant
s d
rive
n by
inte
rven
tion
to r
educ
eca
rbon
em
issi
ons
and
tran
siti
on to
ren
ewab
le e
nerg
y so
urce
s.
Inte
rlab
Wor
king
Gro
up 1
Inte
r-L
abor
ator
y W
orki
ng G
roup
, Sce
nari
os o
f U.S
. Car
bon
Red
ucti
on: P
oten
tial
Impa
cts
of E
nerg
y-E
ffici
ent a
nd L
ow-
Car
bon
Tec
hnol
ogie
s by
201
0 an
d B
eyon
d (1
997)
Firs
t of t
wo
repo
rts
by th
e fi
ve D
OE
nat
iona
l lab
orat
orie
sd
escr
ibes
two
scen
ario
var
iant
s in
whi
ch p
ublic
pol
icy
acti
ons
and
mar
ket i
nter
vent
ion
lead
to r
educ
ed c
arbo
n em
issi
ons.
Inte
rlab
Wor
king
Gro
up 2
Inte
r-L
abor
ator
y W
orki
ng G
roup
, Sce
nari
os fo
r a
Cle
anE
nerg
y Fu
ture
(200
0)Se
cond
of t
wo
repo
rts
by th
e fi
ve D
OE
nat
iona
l lab
orat
orie
s;d
escr
ibes
thre
e sc
enar
io v
aria
nts
invo
lvin
g pu
blic
pol
icy
acti
ons
and
mar
ket i
nter
vent
ions
des
igne
d to
bri
ng a
bout
red
uced
carb
on e
mis
sion
s.
PCA
STPr
esid
ent’s
Cou
ncil
of A
dvi
sors
on
Scie
nce
and
Tec
hnol
ogy
(PC
AST
), P
ower
ful P
artn
ersh
ips:
The
Fed
eral
Rol
e in
Inte
rnat
iona
l Coo
pera
tion
on
Ene
rgy
Inno
vati
on(J
une
1999
)
PCA
ST m
akes
qua
ntit
ativ
e es
tim
ates
of r
educ
tion
s in
foss
il fu
elus
e, U
.S. o
il im
port
s, a
nd C
O2 a
nd o
ther
em
issi
ons
poss
ible
wit
hin
crea
sed
inve
stm
ent i
n en
ergy
RD
&D
.
371
Tab
le 1
—C
onti
nu
ed
Mod
el/
Scen
ario
Sour
ceN
otes
Aus
ubel
Jess
e A
usub
el, “
Whe
re is
Ene
rgy
Goi
ng?”
(T
he In
dust
rial
Phy
sici
st, F
ebru
ary
2000
)A
usub
el o
f Roc
kefe
ller
Uni
vers
ity
des
crib
es th
e d
ecar
boni
zati
onof
the
fuel
mix
in “
puls
es”
of r
isin
g en
ergy
con
sum
ptio
n pe
rca
pita
, wit
h na
tura
l gas
as
the
21st
cen
tury
tran
siti
on fu
el to
hyd
roge
n.
Rom
m e
t al.
Jose
ph R
omm
, Art
hur
Ros
enfe
ld, a
nd S
usan
Her
rman
,T
he In
tern
et a
nd G
loba
l War
min
g (1
999)
Rom
m e
t al.
argu
e th
at e
-com
mer
ce s
purr
ed r
ecen
t im
prov
emen
tsin
U.S
. ene
rgy
effi
cien
cy, a
nd p
osit
futu
re in
crea
ses
in e
ffic
ienc
ybe
yond
ext
rapo
lati
on o
f cur
rent
tren
ds,
wit
h co
ncom
itan
tre
duc
tion
s in
ene
rgy
cons
umpt
ion.
Lov
ins
and
Will
iam
sA
mor
y L
ovin
s an
d B
rett
Will
iam
s, A
Str
ateg
y fo
r th
eH
ydro
gen
Tra
nsit
ion
(Apr
il 19
99)
Lov
ins
and
Will
iam
s en
visi
on s
tati
onar
y fu
el c
ells
pow
erin
gbu
ildin
gs a
nd p
rovi
din
g d
istr
ibut
ed g
ener
atio
n of
ele
ctri
city
,re
sult
ing
in th
e re
duc
tion
of s
ize
and
cos
t of f
uel c
ells
and
hyd
roge
n in
fras
truc
ture
, and
ult
imat
ely
cost
-eff
ecti
ve fu
el-c
ell-
pow
ered
ult
ra-h
igh
effi
cien
cy “
hype
rcar
s.”
CA
RB
Cal
ifor
nia
Air
Res
ourc
es B
oard
(CA
RB
), St
atus
and
Pro
spec
ts o
f Fue
l Cel
ls a
s A
utom
obile
Eng
ines
(Jul
y 19
98)
CA
RB
exa
min
ed th
e co
st o
f hyd
roge
n in
fras
truc
ture
for
auto
mot
ive
fuel
cel
ls, a
s w
ell a
s m
etha
nol a
nd g
asol
ine
ashy
dro
gen
sour
ces.
AD
LA
rthu
r D
. Lit
tle
(AD
L),
Dis
trib
uted
Gen
erat
ion:
Und
erst
andi
ng th
e E
cono
mic
s (1
999)
AD
L p
rovi
des
a d
etai
led
mar
ket s
tud
y of
fuel
cel
ls, c
o-ge
nera
tion
,sm
all g
as tu
rbin
es, a
nd m
icro
turb
ines
for
dis
trib
uted
ele
ctri
city
gene
rati
on.
EIA
Nat
ural
Gas
Hyd
rate
sU
.S. E
nerg
y In
form
atio
n A
dm
inis
trat
ion
(EIA
), ch
apte
r 3
“Fut
ure
Supp
ly P
oten
tial
of N
atur
al G
as H
ydra
tes”
inE
nerg
y In
form
atio
n A
ssoc
iati
on, N
atur
al G
as 1
998:
Issu
es a
nd T
rend
s (A
pril
1998
)
EIA
des
crib
es th
e va
st r
eser
ves
of m
etha
ne tr
appe
d in
hyd
rate
dfo
rm in
dee
p un
der
sea
and
Arc
tic
dep
osit
s, a
nd d
iscu
sses
the
tech
nolo
gica
l pro
spec
ts fo
r re
cove
ry.
KPM
GK
PMG
, Sol
ar E
nerg
y: F
rom
Per
enni
al P
rom
ise
to C
ompe
titi
veA
lter
nati
ve (A
ugus
t 199
9)A
Dut
ch fi
rm, K
PMG
, wit
h th
e sp
onso
rshi
p of
Gre
enpe
ace,
prop
oses
con
stru
ctio
n of
larg
e-sc
ale
(500
MW
) pho
tovo
ltai
cpo
wer
pla
nts
as a
way
of d
ecre
asin
g th
e co
st o
f sol
ar e
lect
rici
ty.
372
Tab
le 1
—C
onti
nu
ed
Mod
el/
Scen
ario
Sour
ceN
otes
EE
RE
Pro
gram
Pla
nsN
atio
nal R
enew
able
Ene
rgy
Lab
orat
ory
(NR
EL
),P
hoto
volt
aics
: Ene
rgy
for
the
New
Mill
eniu
m (J
anua
ry20
00)
NR
EL
pub
lishe
d s
ever
al r
epor
ts d
etai
ling
the
curr
ent s
tate
of
fed
eral
ren
ewab
les
rese
arch
. In
the
repo
rt o
n ph
otov
olta
ics,
NR
EL
pro
ject
s gr
owth
rat
es o
f pho
tovo
ltai
c sy
stem
s an
dre
duc
tion
s in
sys
tem
cos
ts, i
nclu
din
g an
ind
ustr
y-d
evel
oped
road
map
wit
h ph
otov
olta
ics
prov
idin
g 10
% o
f ele
ctri
city
by
2030
. The
Fed
eral
Win
d E
nerg
y Pr
ogra
m e
nvis
ions
pri
ces
ofw
ind
ene
rgy
to fa
ll to
2-4
cen
ts b
y 20
02. F
urth
er r
esea
rch
and
dev
elop
men
t cou
ld lo
wer
this
pri
ce to
1-3
cen
ts b
y 20
15.
NO
TE
: T
hese
mod
els
and
sce
nari
os a
re w
idel
y us
ed fo
r en
ergy
pol
icy
plan
ning
pur
pose
s. E
ach
mod
el o
r sc
enar
io in
corp
orat
es d
iffe
rent
ass
umpt
ions
abo
ut v
aria
bles
like
fuel
mix
, pol
itic
al c
limat
e an
d e
cono
mic
cha
nge.
The
follo
win
g ta
ble
sum
mar
izes
the
sour
ces
and
gen
eral
cha
ract
eriz
atio
n of
the
mod
els
and
sce
nari
os e
xam
ined
.
373
Tab
le 2
Su
mm
ary
of F
ive
Met
a-S
cen
ario
s
Para
met
ers
Har
d T
imes
Bus
ines
s-as
-Usu
alT
echn
olog
ical
Impr
ovem
ent
Hig
h-T
ech
Futu
reN
ew S
ocie
ty
Def
ined
as:
Low
gro
wth
/m
oder
ate
envi
ronm
enta
l im
pact
Mod
erat
e gr
owth
/hi
ghen
viro
nmen
tal i
mpa
ctM
oder
ate
grow
th/
low
envi
ronm
enta
l im
pact
Mod
erat
e gr
owth
/m
oder
ate
envi
ron-
men
tal i
mpa
ct
Low
gro
wth
/lo
w e
nvi-
ronm
enta
l im
pact
Pote
ntia
l for
Dis
-ru
ptio
n (S
P1)
Hig
hM
ediu
m, b
ecau
se o
f the
high
leve
l of o
ilim
port
s an
d h
igh
relia
nce
on n
atur
alga
s, b
oth
of w
hich
pose
pot
enti
al p
rob-
lem
s of
pri
ce in
crea
ses
and
sup
ply
secu
rity
or
avai
labi
lity.
Med
ium
, bec
ause
of t
hene
ed to
sub
stan
tial
lyin
crea
se e
ithe
r en
ergy
prod
ucti
vity
or
dec
ar-
boni
zati
on o
r co
mbi
-na
tion
of t
he tw
o.
Med
ium
, bec
ause
of t
hehi
gh le
vel o
f oil
impo
rts
and
hig
hre
lianc
e on
nat
ural
gas,
bot
h of
whi
chpo
se p
oten
tial
pro
b-le
ms
of p
rice
incr
ease
san
d s
uppl
y se
curi
ty o
rav
aila
bilit
y.
Hig
h, b
ecau
se o
f the
high
leve
l of p
olic
yin
terv
enti
on r
equi
red
to r
each
this
futu
re.
Ene
rgy
Con
trib
u-
tion
to th
e C
on-
sum
er P
rice
Ind
ex(S
P2)
Prob
ably
incr
ease
dbe
caus
e of
sca
rce
ener
gy a
nd lo
w e
co-
nom
ic g
row
th.
Not
ad
dre
ssed
.O
bjec
tive
wou
ld b
e to
keep
it th
e sa
me
asto
day
Obj
ecti
ve w
ould
be
toke
ep it
the
sam
e as
tod
ay
Low
374
Tab
le 2
—C
onti
nu
ed
Para
met
ers
Har
d T
imes
Bus
ines
s-as
-Usu
alT
echn
olog
ical
Impr
ovem
ent
Hig
h-T
ech
Futu
reN
ew S
ocie
ty
Cos
t of H
ealt
h an
dE
nvir
onm
enta
lIm
pact
s an
d R
egu-
lato
ry C
ompl
ianc
e(S
P3)
Red
uced
bec
ause
of
low
er e
nerg
y co
n-su
mpt
ion
and
low
erec
onom
ic g
row
th,
unle
ss th
e pa
thw
ay to
this
sce
nari
o w
as a
nen
viro
nmen
tal c
atas
-tr
ophe
, in
whi
ch c
ase
thes
e co
sts
wou
ld b
eve
ry la
rge.
EPA
has
rec
entl
y es
ti-
mat
ed th
e co
st o
fre
gula
tion
at $
150-
200
billi
on/
year
.
Shou
ld b
e re
duc
edbe
caus
e of
low
eren
ergy
con
sum
ptio
nan
d u
se o
f cle
aner
tech
nolo
gy, a
s ev
i-d
ence
d b
y in
crea
sed
dec
arbo
niza
tion
and
ener
gy p
rod
ucti
vity
.
Hig
her
ener
gy c
on-
sum
ptio
n ba
lanc
ed b
yus
e of
cle
aner
tech
nol-
ogy,
as
evid
ence
d b
yin
crea
sed
dec
ar-
boni
zati
on a
nd e
nerg
ypr
oduc
tivi
ty, c
ould
leav
e th
is th
e sa
me
asto
day
.
Shou
ld b
e gr
eatl
yre
duc
ed b
ecau
se o
flo
wer
ene
rgy
con-
sum
ptio
n an
d u
se o
fcl
eane
r te
chno
logy
, as
evid
ence
d b
y in
crea
sed
ecar
boni
zati
on a
nden
ergy
pro
duc
tivi
ty.
GD
P G
row
th (E
C1)
Clo
se to
zer
o1.
7-2.
6%/
year
, wit
h th
eE
IA b
ase
case
at
2.2.
%/
year
.
2.2%
/ye
ar (E
IA B
ase
Cas
e)3.
2%/
year
(.5
high
erth
an E
IA h
igh
GD
Pva
rian
t).
1.7%
/ye
ar
Infl
atio
n R
ate
(EC
2)A
few
per
cent
or
less
2.7%
/ye
ar.
2.7%
/ye
ar (E
IA B
ase
Cas
e)N
ot A
dd
ress
edN
ot A
dd
ress
ed
Ene
rgy
Pric
e In
fla-
tion
/O
vera
ll Pr
ice
Infl
atio
n (E
C3)
Cou
ld b
e in
crea
sed
beca
use
of e
nerg
ysh
orta
ges.
Oil
pric
es a
ssum
ed to
be
in th
e ra
nge
of $
15-
28/
barr
el in
202
0.
Cou
ld in
crea
se d
ue to
high
er fu
el ta
xes.
Not
Ad
dre
ssed
Not
Ad
dre
ssed
Fuel
Tax
es, E
nerg
ySu
bsid
ies,
and
R&
D E
xpen
dit
ures
(EC
4)
No
maj
or c
hang
es in
taxe
s, b
ut s
ubsi
die
san
d R
&D
exp
end
i-tu
res
are
red
uced
Ord
er o
f mag
nitu
de
esti
mat
e is
tens
of b
il-lio
ns o
f dol
lars
per
year
, bas
ed u
pon
avai
labl
e d
ata
and
stud
ies.
May
req
uire
incr
ease
dfu
el ta
xes;
will
def
i-ni
tely
req
uire
incr
ease
d R
&D
expe
ndit
ures
.
May
req
uire
incr
ease
den
ergy
sub
sid
ies;
will
prob
ably
req
uire
incr
ease
d R
&D
expe
ndit
ures
.
Will
req
uire
incr
ease
dfu
el ta
xes,
rem
oval
of
ener
gy s
ubsi
die
s, a
ndin
crea
sed
R&
Dex
pend
itur
es.
375
Tab
le 2
—C
onti
nu
ed
Para
met
ers
Har
d T
imes
Bus
ines
s-as
-Usu
alT
echn
olog
ical
Impr
ovem
ent
Hig
h-T
ech
Futu
reN
ew S
ocie
ty
Tot
al E
nerg
y C
on-
sum
ptio
n (E
N1)
100
quad
s11
2-12
9 qu
ads
97-1
10 q
uad
s12
0-12
7 qu
ads
65-8
3 qu
ads
Dec
arbo
niza
tion
(EN
2)1.
61.
5-1.
6 (1
.61
in 1
997)
1.5-
2.0
1.6-
1.9
1.8-
2.6
Ene
rgy
Prod
ucti
vity
of th
e E
cono
my
(EN
3)
$90/
MB
TU
$104
-118
/M
BT
U$1
05-1
33/
MB
TU
$112
-144
/M
BT
U$1
50-1
92/
MB
TU