The Strong Impact of EPACT2005 is Seen in EIA Analysis of U.S. Energy Supply and Price
Energy bill spurs growth in nuke power, biofuels, flex-fuel cars and use of renewable energy
December 6, 2006
11:53 AM
Washington, D.C. – The Energy Information Administration (EIA) has released a midterm forecast and analysis of the U.S. energy supply, demand and prices through 2030. The report cited the impact of the Energy Policy Act of 2005 regarding the increased production and consumption of alternative fuels such as ethanol, biodiesel and coal-to-liquids and the increased production of nuclear power and renewable energy.
An overview of the report can be found at: http://www.eia.doe.gov/oiaf/aeo/index.html
Many of the positive trends released in this report are the result of the Energy Policy Act of 2005 (EPACT2005). Those trends include:
* Ethanol use is projected to grow from 4 billion gallons in 2005 to 11.2 billion gallons in 2012 and 14.6 billion gallons in 2030. This standard far exceeds the Renewable Fuel Standard enacted as a part of the energy bill. Ethanol related provisions and requirements in the bill help spur investment in ethanol production and the creation of American jobs.
* Alternative sources of distillate fuel are projected to grow to over 7 percent of the total distillate pool by 2030 when consumption of biodiesel reaches 0.4 billion gallons and distillate produced from coal-to-liquids reaches 5.7 gallons. The consumption of biodiesel is supported by tax credits in EPACT2005. The production of coal to liquid fuels is encouraged by the loan guarantees in the energy bill for clean technologies.
* Sales of flex-fuel vehicles, which are capable of using gasoline and E85, are projected to reach 2 million per year in 2030. Unconventional vehicle technologies, including cars powered by electricity, fuel cells or hydrogen, are projected to account for almost 28 percent of projected total new light-duty vehicles sales in 2030, up from just over 8 percent in 2005. In January 2006, EPACT2005 replaced the tax deduction for buying hybrid cars with a much more generous tax credit, giving consumers a greater incentive to buy fuel-efficient cars.
* Total operable nuclear generating capacity is projected to grow to 112.6 gigawatts in 2030, including 3 gigawatts of expansion at existing plants and 12.5 gigawatts of new capacity. Total nuclear generation is projected to grow from 780 billion kilowatthours in 2005 to 896 billion kilowatthours in 2030. Much of this new capacity is stimulated by provisions in EPACT2005, including the loan guarantee authority, the production tax credits, and the insurance protection against licensing delays and litigation.
* Real world crude oil prices (2005 dollars), are projected to decline gradually from their 2006 average level through 2015 as new supplies come online in response to higher crude prices and expanded exploration and development. The report anticipates increased production from unconventional sources such as oil sands, ultra-heavy oils and gas-to-liquids. Lower-48 crude oil production is projected to increase from 4.3 million barrels per day in 2005 to a peak of 5.3 million barrels per day in 2017 as a result of increased production offshore predominantly from the deep waters of the Gulf of Mexico. The energy bill includes incentives to encourage expanded exploration in the ultra deep waters of the Gulf of Mexico as well as incentives for developing technologies that extract oil from unconventional sources.
* The report projects that natural gas consumption will grow to only 26.1 trillion cubic feet by 2030, a significant drop from last year’s projection of 30 trillion cubic feet by 2030. While the report does not refer to EPACT2005 on this issue, one of the primary goals of the legislation was to discourage the U.S. over-reliance on natural gas as a source of electricity by providing incentives for the production of electricity from clean coal, wind, solar, geothermal and nuclear power.
* Average real natural gas wellhead prices are projected to fall from today’s high levels to just under $5 per thousand cubic feet (mcf) (2005 dollars) by 2013 as increased exploration brings on new supplies and new import sources become available. The energy bill brings clarity to the siting process for new LNG ports in an effort to facilitate construction of these ports where appropriate. The bill also provides incentives for the production of natural gas from deep wells in the Gulf.
* Consumption of renewable energy is projected to grow from 6.5 quads in 2005 to 10.2 quads in 2030. This forecast includes certain EPACT2005 provisions, including the extension and expansion of the production tax credit. The bill’s tax credits encourage the production of electricity from wind, solar, geothermal and biomass.
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