The DOE/EIA recently completed their latest International Energy Outlook (IEO 2013) forecast.  This analysis indicates that total world energy consumption is projected to increase by 50% 2012-2040.  While renewables supplies are projected to almost double by 2040, the majority of added energy supplies are determined to come from increased fossil fuels.  In light of growing support for replacing fossil fuels with renewables and alternative technologies, is the EIA IEO 2013 report reasonably accurate or overly conservative?

Brief IEO 2013 Background – The EIA routinely develops IEO reports from their National Energy Modeling System (NEMS)/International Energy Module (IEM) program.  This very sophisticated statistical model is used to develop detailed international energy balances-projections and associated carbon emissions.  The NEMS/IEM programs are based on international countries’ historic supply-demand statistics, related energy markets data and trends, economic conditions and forecasted growth, populations growth estimates, and other critical factors that can affect energy supply, consumption, mix and cost.  One of the key factors that affect IEO projections are existing energy related regulations and proven technologies.

Since developed countries such as the U.S. have not formally approved any international agreements to control future carbon emissions or participated in carbon allowance or trading schemes, only Federal and State renewable standards are generally included in the IEO analyses.  New regulations such as the EPA’s proposed controls over coal power plant emissions will be roughly estimated, but since the full requirements and associated impacts of these developing regulations are yet-to-be developed only partial or relatively conservative impacts are included in the most recent IEO projections.  The same principle applies to nearly all developing countries such as China that has not formally approved any significant domestic or international agreements to restrict future fossil fuels consumption.

For further detail and information on how IEO analyses are carried and assumptions used refer to EIA briefing documents.

IEO 2013 Total Energy Balances – The EIA normally breaks down international data between Organization for Economic Co-operation Development (OECD) countries, which includes most major developed countries (U.S., Japan, Germany, UK, etc.), and non-OECD countries or primarily developing countries (China, India, etc.).

The IEO 2013 was published July 25, 2013, which updated energy projection data from the previous IEO 2011 report.  Total international energy consumption is projected to increase very significantly 2012-2040.  Refer to the following graph.

IEO 2013 Total World and Energy Mix Consumption Forecast

Data Source – EIA IEO interactive table browser for total and individual energy mix (Reference case).  Note – natural gas and (petroleum) liquids are converted from cubic feet and barrels per day to Btu’s and nuclear was converted from KWH to Btu’s based on IEO volume/electric power heat content data.

Between 2012-2040, nuclear and hydropower + (other) renewables energy supply-consumption is projected to increase by 125% and almost 100% respectively.  Most of this increase in both nuclear and hydropower + renewables are projected to take place in non-OECD (developing) countries.  Somewhat disappointing, the largest increase of energy consumption results from fossil fuels supplies.  During the period, increased coal and natural gas account for most of increased fossil fuels, followed by a somewhat smaller increase in (petroleum) liquids fuels.  Non-OECD countries account for the vast majority of increased fossil fuels consumed 2012-2040.

Why are Non-OECD Countries’ Total Energy and Fossil Fuels Consumption Projected to Exceed OECD Countries? – The IEO 2013 documentation indicates a number factors are expected to contribute to increased total energy consumption of non-OECD countries.  One of the largest factors appears to be economic growth.  Unlike many OECD countries that are experiencing renewed economic recessions or very slow growth and recovery from the last economic recession, larger non-OECD countries’ economies (China and India) are growing at very healthy rates.  Refer to the following graph.

IEO 2013 World GDP Growth by Region 

Data source – IEO 2013 interactive table browser for GDP expressed in purchasing power parity (Reference case).

Between 2012-2040 the EIA projected that total non-OECD economies’ GDP will soon exceed total OECD economies and effectively grow by 360% or double the forecasted growth in OECD countries.  In addition, total non-OECD populations are projected to increase by 1.6 billion or 10-times the population increase projected for total OECD countries.

To fuel this growth in non-OECD economies, populations and likely increased average living standards requires substantial fuels and power consumption, which includes all forms of energy from generally more economical fossil fuels to hydropower + renewables and nuclear as previously described.  If one estimates that average living standards are proportional to GDP per capita, non-OECD living standards are projected to improve 2-3 fold from 2012 levels.

IEO 2013 Carbon Emissions – The EIA has routinely tracked International Energy Statistics (IES) data since 1980.  These data cover a broad range of energy balances, market and economic factors.  Historic data helps provide a reasonably sound basis to model and forecast future energy balances.  The IES past and IEO 2013 projected carbon emissions from the consumption of fossil fuels are shown in the following graph.

IES and IEO 2013 Carbon Emissions

Data source – IES 1990-2004 data and IEO 2013 interactive table browser for world carbon emissions by region (Reference case).  Note: China/U.S. total carbon emissions are shown separately and are also included in the non-OECD/OECD totals.

Between 2012-2040 the IEO 2013 projects that total world carbon emissions will increase from 32 billion metric tons per year (MT/yr.) up to 45 billion MT/yr. in 2040.  Assuming that atmospheric carbon dioxide (CO₂) concentration increases are proportional to annual carbon emission increases, projected IEO carbon emissions could lead to an atmospheric CO₂ concentration of 450 ppm!  (This projection-estimate is based on EIA IES/IEO carbon emission data trends and Scripps atmospheric CO₂ data).  Why is the 450 ppm level important?  Limiting atmospheric CO₂ concentrations to 450 ppm has been estimated to be the threshold level to keep global average temperatures from increasing above the 2^o C goal set by the UN IPCC.

This projected carbon emission data may be somewhat disappointing, but is reasonably probable based on EIA NEMS/IEM modeling-analysis, including projected populations and economy’s growth trends, available energy supplies/technologies, and market forecast data.  The above graph shows that OECD countries’ carbon emissions are projected to remain relatively constant over the next several decades.  This does not mean that no improvements are made in replacing fossil fuels with renewables.  What the IEO 2013 data projection indicates is that probable improvements in energy efficiency, energy technologies and increased renewable energy supplies will be unfortunately offset by growth in populations and overall economies.

The carbon emissions performance of non-OECD countries is significantly different than OECD countries.  Growth in non-OECD populations, economies, living standards, and associated increased fossil fuel energy intensities are not offset by efficiency-technologies improvements or expanded renewables.  The above graph clearly shows that total non-OECD (developing) countries’ carbon emission exceeded OECD (developed) countries’ carbon emissions in 2005, and are project to grow continuously at greater rates through 2040.  China’s carbon emissions make up almost half of total non-OECD countries and are projected to exceed total OECD (developed) countries’ carbon emissions between 2025-2030.

Are the IEO 2013 Projections Overly Conservative? – Some individuals and organizations find that the IEO 2013 projections of energy consumption, renewables supplies and carbon emissions are possibly too conservative.  Or, underestimate probable renewables growth and increases in energy efficiency, and over estimate fossil fuels consumption and associated carbon emissions.  After all, many organizations and government agencies have significantly under estimated the recent and current growth in renewables such as wind and solar PV.  This is true, particularly for projections that did not anticipate very generous governments’ renewable power subsidies or renewable energy production-consumption mandates implemented briefly after past forecasts were published.

In the case of the EIA IEO analyses and reports, their projections are directionally conservative since they normally do not speculate as to what future government actions will be to support renewables, restrict or tax fossil fuels, or what innovative technology breakthroughs could be possibly developed someday.  The EIA’s analyses and projections are normally based on existing government policies and regulations that have been formally approved and implemented, real-world markets and economics modeling, and proven technologies.  They do, however, complete sensitivity analyses during the development of the IEO reports.  The sensitivity analyses not only help tune and calibrate their NEMS/IEM models to historic data, but is also used to carry out special studies for the Administration and different Federal Agencies.  The EIA routinely publishes some basic sensitivity analyses of key variables including high/low oil prices and high/low macroeconomics to compare these impacts to the most probable estimate, the ‘Reference case’.

Could the World Substantially Reduce Carbon Emission Below IEO 2013 Estimates? – Many individuals and organizations are very concerned with the impacts of atmospheric CO₂ concentrations approaching 450 ppm and associated global average temperatures possibly exceeding 2^o C.  To avoid this outcome the UN IPCC has tried to develop carbon reduction agreements to ultimately reduce most (developed) countries’ carbon emissions to 80% of 1990 levels.  Assuming all OECD countries were to achieve this target carbon reduction, what would future world carbon emissions possibly be?  To answer this question a forecast was developed based on the IEO 2013 report.  Refer to the following graph.

Carbon Emissions Based on Reducing OECD Emissions by 80% of 1990 Levels

Data source – Projection developed from IEO 2013 Reference case data.  Note: carbon emissions data 2040-2050 are estimated based on further projecting IEO 2010-2040 statistical trends.

This carbon balance (graph) assumes that all OECD countries reduced their carbon emissions linearly beginning 2014 to 80% of total 1990 levels in 2050.  No change to the original IEO 2013 non-OECD emissions is assumed since developing countries are least capable (and possibly unwilling) to reduce the consumption of likely more economical fossil fuels (compared to renewables).  Based on this analysis the world’s total carbon emissions should possibly peak at just under 37 billion MT/yr. in 2038 and begin to decline thereafter.  This analysis also indicates that non-OECD carbon emissions could also begin to flatten by 2050 and possibly peak shortly thereafter.

At a 37 billion MT/yr. total world carbon emission level, atmospheric CO₂ concentration could possibly peak well under 450 ppm; or roughly in the 425 ppm range.  If the current estimates of atmospheric CO₂ vs. increased average temperatures are reasonably accurate, then the global temperature could possibly stabilize within the UN IPCC’s 2^o C goal.

The next obvious question is: ‘How feasible is it for OECD countries to achieve an 80% reduction in 1990 carbon emissions levels?’  This question does not have an obvious answer.  The EIA clearly does not currently believe this outcome is reasonably feasible based on current markets, government regulations or available technologies.  My past analysis has shown that the U.S. could feasible reduce its 2005 carbon emissions by about 62% in 2050 (equivalent to about a 50% 1990 basis reduction).  The cost will, however, be quite substantial and the impact on the economy highly uncertain and potentially risky.  Other OECD countries may be better positioned to reduce their carbon emissions to greater levels than the U.S., but in all cases the price of motor and heating fuels, and electric power will very likely increase to levels many-fold current U.S. energy costs.  Overall impacts on other OECD economies is also uncertain and not without significant risk.

To further reduce future world total carbon emissions most likely will require the participation of non-OECD (developing) countries to levels greater than projected in the IEO 2013 report.  Unfortunately, a classic ‘catch-22’ could possibly develop due to OECD countries substantially reducing their consumption of fossil fuels as required to achieve the 80% 1990 reduction targets.  Substantial reductions of fossil fuels consumption by OECD countries will likely cause world market prices to crash.  Cheaper fossil fuels may further encourage non-OECD countries to consume increased amounts of these high carbon intensity fuels, once again possibly offsetting most of the extremely expensive OECD countries’ best efforts to reduce total world carbon emissions.

In Conclusion – The EIA has determined world total carbon emissions could begin exceeding 45 billion MT/yr. by 2040, which could exceed the UN IPCC’s 2^o C goal.  While some analyses and individuals’ opinions predict renewable energy supplies will grow to levels many times the EIA’s most recent IEO 2013 projection, these less conservative estimates generally discount many of the factors that are currently significant barriers to more substantial renewable energy and efficiency upgrades growth.  These much less rigorous analyses or rough estimates generally do not include important factors such the true cost effectiveness or technical feasibility of alternatives to fossil fuels/technologies, or the impacts of non-OECD (developing) countries’ economies and populations.

Developing new, expanded renewable energy supplies, technologies, and efficiency upgrades are definitely feasible in the future, but these innovations must truly be cost effective.  Cost effectiveness does not mean substantially and artificially increasing the cost of fossil fuels, which could result in very significant and chronic future worldwide economic recessions if not properly managed.  Cost effectiveness means developing renewable energy and technologies that economically competes and displaces substantial fossil fuels without substantially-negatively impacting the world’s regional or overall economic health, and, are truly sustainable without perpetual-costly government subsidies.

 

energy collective

2 Comments on "Are the Government’s International Energy Outlook Projections Too Conservative?"

BillT on Wed, 7th Aug 2013 1:04 am 



All they (IEA/EIA) can do is guess. But, any government agency is lying today.

The Energy Collective is not reliable either. It’s a collection of financial salesmen and corporate shills, all pushing their products in the guise of information and sponsored by Shell and other corporate interests.

Luke on Thu, 8th Aug 2013 8:04 am 



EIA=Big Oil=fossil lobby.