The National Academies’ National Resource Council has released three reports that emphasize a need for U.S. actions to reduce greenhouse gas emissions and to begin adapting to climate change impacts. The reports, which are the first in a series of five studies requested by Congress and known as America’s Climate Choices, include several recommendations for addressing climate change. Advancing the Science of Climate Change recommends that a single federal entity or program be given the authority and resources to coordinate a national, multidisciplinary research effort with the goal of improving both understanding and responses to climate change. Limiting the Magnitude of Climate Change recommends that the U.S. establish a greenhouse gas emissions budget that sets a limit on total domestic emissions over a set period of time and provides a clear, directly measurable goal. Adapting to the Impacts of Climate Change calls for a national adaptation strategy to support and coordinate decentralized efforts.

In preparing the Annual Energy Outlook 2010 (AEO2010), the Energy Information Administration (EIA) evaluated a wide range of trends and issues that could have major implications for U.S. energy markets. This overview focuses primarily on one case, the AEO2010 reference case.

Energy Outlook 2009 (updated AEO2009) reference case released in April 2009. Because of the uncertainties inherent in any energy market projection, particularly in periods of high price volatility, rapid market transformation, or active changes in legislation, the reference case results should not be viewed in isolation. Readers are encouraged to review the alternative cases when the complete AEO2010 publication is released in order to gain perspective on how variations in key assumptions can lead to different outlooks for energy markets.

Industrial

Slightly more than one-third of delivered energy consumption in the United States occurs in the industrial sector. The largest users of energy in this sector are the bulk chemical, refining, mining, and paper industries. These four industries together account for more than 60 percent of total industrial delivered energy consumption. Although the largest current user of energy is the bulk chemicals industry, the refining industry, which also uses energy for coal-to-liquids (CTL), natural gas-to-liquids (GTL), and biofuel production, becomes the largest energy-consuming industry starting in 2028 in the Annual Energy Outlook 2010 – (AEO2010) reference case.

Commercial

Despite faster growth in commercial square footage, higher energy prices lead to slower growth in commercial energy consumption in the AEO2009 reference case relative to the AEO2008 reference case, along with increased adoption of energy conservation and efficiency measures. Delivered commercial energy consumption grows from 8.5 quadrillion Btu in 2007 to 10.6 quadrillion Btu in 2030, about 0.7 quadrillion Btu less than in the AEO2008 reference case.

New lighting and refrigeration standards and Federal and State efficiency programs help offset increasing demand for electricity to power electronic equipment, holding growth in commercial electricity use to 1.3 percent per year from 2008 to 2035—the same as growth in commercial floor space. Higher near-term electricity prices combine with the 30-percent Federal investment tax credit to foster increased adoption of commercial photovoltaic systems and small wind turbines in the AEO2010 reference case relative to the updated AEO2009 reference case.

Residential

Residential delivered energy consumption in the AEO2010 reference case grows from 11.3 quadrillion Btu in 2008 to 11.9 quadrillion Btu in 2030, 0.3 quadrillion Btu less than in the updated AEO2009 reference case (Figure 3). Contributing to the lower level of residential energy use is the recent adoption of regional standards for heating and cooling equipment, which require a 90-percent efficiency rating for natural gas furnaces in the northern tier of the country.

Recently enacted efficiency standards for residential lighting products and incandescent lighting in EISA2007 significantly reduce electricity demand for lighting in the residential sector.

Shipments of ground-source (geothermal) heat pumps to the residential market increased 40 percent in 2008, as tax credits specified in the Energy Improvement and Extension Act of 2008 (EIEA2008) and greater consumer awareness have fostered significant growth in this emerging technology. The stock of ground-source geothermal heat pumps reaches 2.25 million units in 2030 in the AEO2010 reference case, 44 percent more than projected in the updated AEO2009 reference case. Even with the relatively large increase in the number of ground-source heat pump installations, the 2.25 million units represent only 2.2 percent of the heating market for single-family homes in 2030.

Transportation

Delivered energy consumption in the transportation sector grows to 31.3 quadrillion Btu in 2030 (only slightly higher than the 31.2 quadrillion Btu in the updated AEO2009 reference case) and 32.5 quadrillion Btu in 2035 in the AEO2010 reference case.

Energy consumption for LDVs grows to 17.2 quadrillion Btu in 2030, 0.7 quadrillion Btu higher than in the updated AEO2009 reference case, and to 17.7 quadrillion Btu in 2035 in the AEO2010 reference case. Lower fuel prices in AEO2010 and slightly higher total real disposable personal income combine to increase total vehicle miles traveled in 2030 relative to the updated AEO2009 reference case, offsetting the impact of slightly higher efficiency for new LDVs resulting from revised CAFE standards.

Recent changes in airfare pricing and their impact on the cost of air travel diminish growth in air travel in AEO2009 relative to AEO2008.

Energy demand for heavy trucks increases to 6.3 quadrillion Btu (3.2 million barrels per day) in 2030—compared with 6.6 quadrillion Btu in the updated AEO2009 reference case—and 6.8 quadrillion Btu (3.5 million barrels per day) in 2035 in the AEO2010 reference case. Fuel use by heavy trucks is lower in the AEO2010 reference case as a result of the incorporation of updated historical data, which includes a decrease in heavy truck travel.

AEO2010 assumes the adoption of CAFE standards jointly proposed by the EPA and NHTSA for LDVs in model years 2012 through 2016. The proposed fuel economy standards for model year 2016 then modestly increase through the 2020 model year to meet the requirements of EISA2007. CAFE standards beyond 2020 are similar to those used in the updated AEO2009 reference case. To attain the mandated fuel economy levels, the AEO2010 reference case includes a rapid increase in sales of unconventional vehicle technologies, such as flex-fuel, hybrid, and diesel vehicles, as well as slower growth in sales of new light trucks. Sales of hybrid vehicles, including plug-in hybrid electric vehicles (PHEVs), increase from 2.6 percent of new LDV sales in 2008 to 24.6 percent in 2035. PHEV sales grow rapidly as a result of the EIEA2008 tax credits, increasing to about 90,000 vehicles annually in 2015. In 2035, PHEVs account for 2.6 percent of new LDV sales and 1.7 percent of the total LDV stock.

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