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EIA Energy Outlook 2007 Sees Shift Towards Biofuels, Coal-to-Liquids, and Accelerated Efficiency Improvements

The transportation sector will continue to be the largest and most rapidly growing consumer of energy. Click to enlarge.

The reference case in the Energy Information Administration’s (EIA) early release edition of Annual Energy Outlook 2007 (AEO2007) projects more biofuels (both ethanol and biodiesel) consumption, growth in coal-to-liquids (CTL) capacity and production, growing demand for unconventional transportation technologies, growth in nuclear capacity and generation, an expansion in coal-fired power generation and accelerated improvements in energy efficiency throughout the economy.

AEO2007 projects ethanol use increasing from 4 billion gallons in 2005 to 14.6 billion gallons (about 8% of gasoline consumption by volume) by 2030. Only 300 million gallons of that are projected to come from cellulosic biomass sources; the rest will come from corn. Biodiesel use will also grow rapidly to 400 million gallons in 2030, up from 25 million gallons in 2005. The EIA expects 5.7 billion gallons of CTL fuels by 2030.

As a result, petroleum consumption is projected to only increase 20% by 2030, while the total energy consumption for transportation increases by nearly 40%.

Projected ethanol consumption in 2012 far exceeds the 7.5 billion gallon requirement of the Renewable Fuel Standard enacted as part of the Energy Policy Act of 2005 (EPACT 2005).

The AEO2007 reference case also reflects growing penetration by non-gasoline technologies. Sales of flex-fuel vehicles, which are capable of using gasoline and E85, are projected to reach 2 million per year in 2030. Sales of hybrids, including both full and mild hybrids, are also projected to reach roughly 2 million per year in 2030, while diesel vehicles sales reach 1.2 million. Including other unconventional vehicle technologies (e.g., gaseous, electricity, fuel cells), in total they account for almost 28% of projected total new light-duty vehicles sales in 2030, up from just over 8% in 2005.

The EIA sees only marginal gains in fuel efficiency in the new light-duty fleet, however, with an increase to an average 29.2 mpg US by 2030 (33.7 mpg for cars, 26.5 mpg for light trucks).

Despite the projected rapid growth of biofuels and other non-hydroelectric renewable energies and the expectation of the first new orders for nuclear power plants in more than 25 years, oil, coal, and natural gas are nonetheless projected to provide roughly the same 86% share of the total US primary energy supply in 2030 as they did in 2005 absent changes in existing laws and regulations.

This reflects a situation in which rapid growth in the use of biofuels and other non-hydro renewable energy sources begins from a very low current share of total energy use, the share of a growing electricity market supplied from nuclear power falls despite projected new plant builds, and hydroelectric power production, which accounts for the bulk of current renewable electricity supply, is stagnant.

CO2 emissions continue to rise, although CO2 intensity declines. Click to enlarge.

Carbon dioxide emissions from energy use are projected to grow at an average annual rate of 1.2% per year, from 5,945 million metric tons in 2005 to 7,950 million metric tons in 2030, reflecting growth in fossil fuel demand. The carbon dioxide emissions intensity of the US economy is projected to fall from 538 metric tons per million dollars of GDP in 2005 to 353 metric tons per million dollars of GDP in 2030, an average decline of 1.7% per year.

Nuclear. The AEO2007 reference case projects that total operable nuclear generating capacity will grow to 112.6 gigawatts in 2030, including 3 gigawatts of additional capacity, and 12.5 gigawatts of new capacity stimulated in part by EPACT2005 tax credits and rising fossil fuel prices. Total nuclear generation is projected to grow from 780 billion kilowatthours in 2005 to 896 billion kilowatthours in 2030, but the nuclear share of generation falls from 20 percent in 2005 to 15 percent in 2030.

Natural gas. Natural gas consumption is projected to grow to 26.1 trillion cubic feet (tcf) in 2030, well down from projected consumption of 30 tcf or more that had been included in the AEO reference case only a few years ago. Much of this change results from projected natural gas prices that significantly cut the expected growth natural gas use for electricity generation over the last decade of the projection period. In the AEO2007 reference case, overall natural gas consumption is almost flat between 2020 and 2030, as growth in residential, commercial and industrial consumption over this period is nearly offset by a decline in projected gas use for electricity generation.

Coal. Coal remains the primary fuel for electricity generation. The coal share of generation increases from 50% in 2005 to 57% in 2030. The natural gas share of generation increases from 19% in 2005 to 22% around 2016, before falling to 16% in 2030. Over the entire period from 2005 to 2030, 156 gigawatts of new coal-fired generating capacity is projected to be added in the AEO2007 reference case, including 11 gigawatts at CTL plants and 67 gigawatts at Integrated Gasification Combined Cycle plants. Possible future changes in energy or environmental policies could significantly impact these projected generation shares.

Other highlights of the AEO2007 include:

  • Total energy demand is projected to increase from 100.2 to 131.2 quads between 2005 and 2030, an average annual increase of 1.1%, in a scenario where the US gross domestic product (GDP) grows at an average annual rate of 2.9%.

  • Real world crude oil prices (2005 dollars), which are expressed in terms of the average price of imported light low-sulfur crude oil to U233 refiners, are projected to decline gradually from their 2006 average level through 2015 as new supplies come to market in response to the higher prices and expanded exploration and development investments. After 2015, real prices begin to rise as demand continues to grow and higher cost supplies are brought to market. In 2030, real world crude oil prices are projected to reach over $59 per barrel in 2005 dollars, or about $95 per barrel in nominal dollars.

  • The net import share of total liquids supply, including crude oil and refined products, drops from 60% of total liquids supply in 2005 to 54% in 2009 and then increases, reaching 61% in 2030. Imports of refined petroleum products account for 20 percent of total net imports in 2030.

  • 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 drilling brings on new supplies and new import sources become available. After 2013, natural gas wellhead prices are projected to increase gradually, to about $6 per mcf in 2030 (equivalent to $9.63 per mcf in nominal dollars).

  • Major contributors to growth in natural gas supply include LNG imports, the completion of an Alaskan natural gas pipeline in 2018, and domestic unconventional production. Net LNG imports are projected to increase from 0.6 tcf in 2005 to 4.5 tcf in 2030, Alaskan production reaches 2.2 tcf by 2030, and unconventional production grows to 10.2 tcf in 2030, accounting for 50% of domestic US natural gas production in 2030

  • Projected real minemouth coal prices falls from $1.15 per million Btu ($23.34 per ton) (2005 dollars) in 2005 to $1.08 per million Btu ($21.51 per ton) in 2019 as prices moderate following the rapid run up that has been seen in last few years and relatively low-cost western mines continue to capture a larger share of the market. After 2019, the growing use of coal in new power plants leads to a gradual increase in coal prices. They reach $1.15 per million Btu ($22.60 per ton) in 2030.
  • After reaching a peak of 8.3 cents per kilowatthour (kwh) (2005 dollars) in 2006, average delivered real electricity prices decline to a low of 7.7 cents per kwh in 2015 and then increase to 8.1 cents per kwh in 2030. Without adjustment for inflation, average delivered electricity prices in the AEO2007 reference case are projected to reach 13 cents per kwh in 2030.

  • Consumption of renewable fuels is projected to grow from 6.5 quads in 2005 to 10.2 quads in 2030. More than 50% of the projected demand for renewables is for grid-related electricity generation, including combined heat and power, and the rest is for dispersed heating and cooling, industrial uses, and fuel blending.




Well, lets see. Oil,Coal,Coal, and no attempt to even try to catch up with the rest of the world on CAFE standards. In other words, BAU! No surprise there!



It's hard for the EIA to take into account any new technologies (like GreenFuel). And I think their numbers for biodiesel are WAY too low, given that this year the NBB expects to have 150 million gallons sold, up from 75 million in 2005. There's several hundred million more gallons of capacity currently under construction. We'll hit a full billion before the end of the decade, I think.

As for CTL, I don't see much choice over the short to medium term. There are climate risks, but I think that depending on countries like Nigeria and Saudi Arabia for our energy supplies is a bad idea.


I find numbers for corn ethanol overoptimistic and for hybrids overpessimistic.

Max Reid

Yes, they have completely discounted Bio-fuels, there is an article in which talks
about the progress of those fuels.

Ethanol consumption has increased from 3.6 billion gallons in 2004 to 4.2 billion in 2005. And 40 new
Ethanol refineries are being built. That 14.6 billion gallons they mentioned should be attained in
another 10 years and by 2030, it should hit 30 billion gallons + .

Sales of Flex-fuel have hit around 800,000 last year, but they are projecting only 2 million by 2030

In the last 3 years, the gas stations offering E10 has increased from just 10 % to 46 %. Similarly
stations offering E85 has increased from 300 to 1000.

Coal will dominate, but Oil consumption will not increase. Where will the extra oil come from.
Mexico's production in their largest oil well is declining by 10 %. So is the case of North Sea Oil.

The data for this article must be provided by some Oil company.

An Engineer

You are right. In 2005 the US used about 14% of its corn harvest to produce 4 billion gal of ethanol. The US annual corn harvest has been pretty flat over the past 10 years at about 9 billion bushels. So, to get to 14.6 billion gal of ethanol, more than half the US corn harvest would have to be dedicated to ethanol production! I guess the authors expect all Americans to be in top shape in 2030, in part because high prices for high fructose corn syrup (and a host of other foods) will make it nearly unaffordable (to the middle class at least).

An Engineer

Let's just say food->fuel is an exceptionally bad idea, one only the federal government could be promoting. I predict that within a year or two all those new corn ethanol plants are going to start going bankrupt, unable to win a bidding war for the available corn with other users (most of whom can pass the cost along to consumers). If ethanol prices go up (it is already more expensive than gasoline in terms of BTUs), they won't sell any, and OPEC will be having a good laugh at their expense.

Bob Bastard

Sounds basically like status quo with only marginal changes to me. Somehow, I don't think that the environment, economy, or world politics will allow the status quo to continue that long, and if it/we do, I'm guessing we're boned.

Bob Bastard

Sounds basically like status quo with only marginal changes to me. Somehow, I don't think that the environment, economy, or world politics will allow the status quo to continue that long, and if it/we do, I'm guessing we're boned.


It's just a forecast and anything more than a year out doesn't mean much. Anyway, new technology could come along (like better batteries) and change things alot with in 8 to 10 years.


The target for immediate change should be the 50% coal fired power plants. THIS is where conversion to green fueled H2 would make a lot of sense. The conversion path is pretty clear: coal fire and convert flue CO2 to grow algae for H2/biodiesel production. Eventually ramp the H2 production through to run the turbines.

Not that simple but a schematic anyway.


An Engineer,
Much of the current corn and wheat crop goes to livestock, as silage. Reduce beef and wheat production, and you will have enough corn for the job. Celluosic ethanol and BTL will factor in as well, since they get more finished product per ton biomass, than current sugar/starch fermentation methods, as well as the ability to use agri/forestry waste as feedstock.

Rafael Seidl

An Engineer -

since EPA insists on oxygenates for summer gasoline in certain parts of the country, the market for ethanol as a fuel ethanol won't dry up. However, there is a risk of an ethanol glut if the US dollar price of crude should unexpectedly drop. Btw, making corn more expensive might be a good idea in that in the future people may have to fit into much smaller cars.


I'm just wondering if an increase in the demand for corn and other agricultural products could finally lead to the U.S. and Europe dropping their farm subsidies that are so damaging to the economies of the third world.

Bill Young

I was reading thru this report today. EIA and peak oil people must not be on the same planet. EIA has production increasing thru 2015.

As far as alternatives, the report very explicitly states that this report is a "no policy changes" report. This means no carbon tax or cap/trade. An alternative scenario report with various policy effects comes out next year.

Bill Young

I was reading thru this report today. EIA and peak oil people must not be on the same planet. EIA has production increasing thru 2015.

As far as alternatives, the report very explicitly states that this report is a "no policy changes" report. This means no carbon tax or cap/trade. An alternative scenario report with various policy effects comes out next year.


Depending on what recoverable reserve figure and technology curve you use, and who you believe, peak oil was 2005, or will be ~2030. The view of the decline after the peak also varies. Some have a somewhat smooth decline. Others have declines and smaller peaks/upticks afterwards, as the general production trend shows a decline.
_The issue is do we use another trillion+ barrels of crude and 50 trillion cubic meters of natural gas, not to mention carbon intensive coal , w/all the GHGs that go with it? By 2030, we could have another 900+ million metric tons of CO2 in the atmosphere.


Over the years I’ve read quite a number of reports estimating huge potential of biomass, energy crops, wind, small hydro, solar, etc. Even compiled mine. Actually, all numbers basically are right and any of mentioned technologies technically could substitute most, if not all, our energy and fuel needs. This is the reason why I do not believe that energy deficit will ever seriously treat modern civilization, or whatever we call as such. Also I read (and believe it 100%) that Idaho potato growers could satisfy all calorific nutritional needs of entire US population. But who need such “potato diet”?

Corn ethanol and vegetable oil biodiesel technically could account for 30+% of US transportation fuel. The problem is cost. When economy kicks in, anything more than sensible use of agricultural overcapacity is not competitive with conventional oil or CTL. Ethanol is more expensive that gasoline right now, but nobody cares as long as it is used as mandated fuel oxygenate and octane booster additive. When ethanol will exceed 5-7% of gasoline and gradually become gasoline substitute, not just additive, further ethanol production will hit a brick wall.

That’s why I generally consider “waste to fuel” technologies (livestock manure and garden waste anaerobic digestion, agricultural waste to ethanol, pulp&paper and lumber industries bark waste gasification, spent oil and tallow etherification, etc.) as win-win technologies, which will work regardless of crude oil price, just because of environmental considerations and to get the biggest dollar kick-back from waste disposal. Same as for landfill gas collection and utilization, already commonplace.


Yeah, this report is definitely written by a govt faction. Time changes realities pretty quickly. I wonder what the EIA would have said just 8 years ago, when petroleum was dirt cheap and there was little buzz about peak oil and a whole slew of other concerns. Let's be honest, and I think the EIA should be honest here too. They can't accurately predict what the energy future will look like beyond a couple of years, 5 at the most. Who would have thought 5 years ago that we'd be all abuzz about ethanol, biodiesel, clean diesel cars in the US, solar energy, more nuclear power plants???

No surprise that a govt agency predicts a big ethanol future, meanwhile downplays biodiesel and diesel cars, hybrids, natural gas.

I won't try to pretend like I know what things will be like in 24 years, but here are some pretty safe bets as to what is going to happen within a decade:

Ethanol- will increase, then level off. The EIA estimates are too high. Ethanol won't get that big.

Biodiesel- will be bigger than EIA estimates. Part of the reason being that all car manufacturers will have diesels for all 50 states within by 2009. Diesels are so much more efficient than gas or E85 vehicles.

Petroleum oil- at best, the supply and demand will be equal to today, as other fuels increase. Prices will increase sharper than the EIA estimates as production in all countries dwindles.

Nuclear energy- EIA is pretty close on this one. I'd like to hope it will meet a higher percentage of our electricity needs, but the unsubstantiated fears of the public will prevent this from becoming real big.

Coal energy- will get bigger and bigger. For electricity, not much change percentage wise. Coal-to-liquids seems very promising. If a few companies can do it cheaply, CTL will become a huge industry.

Natural gas- will increase a bit over at least next 2 decades. Between LNG increases (better transport) and the rising demand by power companies and the newer technologies that may give nonconventional natural gas, natural gas should do well over next 2 decades at least.

Hybrid cars- will become bigger than the EIA estimates. Far more than 2 million sold per year in 2030. The economies of scale will allow them to be marketable to more people. The likelihood of plug-in hybrids will alone make this a big industry. 2 million per year sold before 2020, as long as the batteries can be supplied. By 2030, 5 million for cars and trucks. Hopefully quite a few for delvery trucks, big rigs.

Diesel cars- more than 2 million sold per year before 2030. Once the word is out that diesels are clean and so is the fuel (low sulfur, low nitrogen oxides) people will buy them more. Once word of mouth gets around about how much better mileage one gets, demand will skyrocket. Diesels will be 25% or more of all new cars sold by 2025. By 2030, probably more like 35%.

Overall, investing into almost any part of the energy sector looks good, except for the Big Oil companies in the long term.


I agree on with you on HEVs, but no mention of wind or solar. Current growth rates of of wind & solar mean they will take bigger share in future. Persistant double digit growth will produce exponential result.
Solar will over take wind because it is more widely available. Recent book "Solar Revolution" by Travis Bradford predict solar will come to dominate, based on fairly conservative 18% reduction in price per doubling of production. Based on Si technology with no real breakthroughs, which makes it very conservative.


Don't count wind out that much. Many farmers would still like to have a $1k-$10k/wind turbine/year check. Many Great Plains, Great Lakes, hilltop, and seaside farmers have enough land and wind for at least a few of multi MW turbines. There is the issue of transmission distance, though the Majave to LA is roughly as far as parts of Kansas and Nebraska to Kansas City. Similarly, the distance from the Bay Area to The Mojave is roughly that of from North Dakota to Minneapolis/St. Paul. The Tug Hill Plateau, and other areas downwind of Lake Erie, and Lake Ontario could supply Upstate NY, with the potential to expand to supply the larger Northeast market.


Dont forget folks all corn is is a grass. While you need good growing conditions to make sweet edible corn you dont need much to grow corn stalks wich is mostly what celulose ethanol uses. In fact its very likely the celulose corn wont even be edible by humans.


The national biodiesel board states that 583.5 million gallons of biodiesel production capacity is currently complete and another 1.4 billion gallons are currently under construction with many more plants in the planning stages. I think the EIA needs to check their figures.

Vin Diesel

Butanol-- if there are breakthroughs in this area, then we could see some major changes to consumption patterns. It's easier to transport than ethanol, and has a higher energy density. Who knows if the EIA even took butanol into account as a possible breakthrough in transportation fuels...

Norm Pettus

Considering Wind energy grew 27% last year and 26% this year, and considering that every turbine manufacturer is adding capacity, it seems other-worldly that EIA would project 1.5% growth for wind energy out through 2030. Wind couples well with Natural gas, allowing existing gas plants to be throttled back when the wind is blowing. This works economically even at today's gas prices. Given past trends in natural gas prices it seems that the solution of adding wind capacity will be even more profitable in future.

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