COMMITTEE ON SCIENCE

U.S. HOUSE OF REPRESENTATIVES

 

Hearing Charter for

 

Hearing

on

 

The Nation’s Energy Future:  Role of Renewable Energy and Energy Efficiency

     

February 28, 2001

10:00 a.m. - 12:00 Noon

2318 Rayburn House Office Building

 

1.   Purpose of the Hearing

 

On Wednesday, February 28, 2001, the Committee on Science will hold a hearing on “The Nation’s Energy Future:  Role of Renewable Energy and Energy Efficiency.”  The purpose of the hearing is to address three questions:  (1) What are the current and projected near- and mid-term contributions of renewable energy and energy efficiency to the Nation’s energy mix? (2) Have renewable energy and energy efficiency performed as expected, and if not, why not? (3) What programs and/or policies are needed to ensure that renewable energy and energy efficiency achieve their potential?

 

The panel witnesses include:  (1) Ms. Mary J. Hutzler, Director, Office of Integrated Analysis and Forecasting, Energy Information Administration, U.S. Department of Energy; (2) Professor John P. Holdren, Harvard University, Chair, President’s Committee of Advisors on Science and Technology (PCAST) Energy Research and Development Panel; (3) Mr. Kenneth K. Humphreys, Staff Engineer, Energy, Science and Technology Division, Pacific Northwest National Laboratory; and (4) Mr. Joel Darmstadter, Senior Fellow, Energy and Natural Resources Division, Resources for the Future.

 

2.      Background

 

Affordable energy is essential to the Nation’s continued prosperity.   Volatile world oil markets, soaring natural gas and electricity prices, and energy shortages in a number of parts of the U.S. have replaced the relatively low energy prices enjoyed over most of the past two decades.  In addition, there are increasing concerns about the environmental impacts of energy use, particularly with respect to climate change.

 

Consequently, energy is again on the front burner of the Nation’s and the new Administration’s agenda.  President George W. Bush recently announced the creation of a high-level energy task force headed by Vice President Richard Cheney, and the Congress is expected to begin work on comprehensive energy legislation that will include energy research, development, demonstration, and commercialization measures under the jurisdiction of the Science Committee.

 

These factors have led to a renewed interest in the role of renewable energy and energy efficiency.  Renewable energy—e.g., sunlight, wind, hydro, geothermal, and biomass—offers the promise of clean, abundant energy for many applications, although hydro, particularly large-scale hydro, is controversial in its own right from an environmental perspective.  Energy efficiency focuses on ways to use energy more productively, so that fewer energy resources are needed.  Energy efficiency—including the use of new and improved technologies, conservation management techniques, financial incentives, regulations, and standards—can be considered an energy alternative to both conventional and renewable energy sources.

 

Current and Projected U.S. Energy Supply/Demand

 

Demand by Sector

 

According to the Energy Information Administration (EIA), U.S. energy consumption in 1999 totaled 96.1 quadrillion Btu[1] (Quads) in four sectors:  transportation, residential, commercial, and industrial.  As shown in Table 1, EIA’s December 2000 Annual Energy Outlook 2001 (AOE2001)[2] projects U.S. energy consumption in 2020 to total  127 Quads—a 32.1% increase—for its “reference case.”[3]  EIA projections incorporate efficiency standards for new energy-using equipment in buildings, as well as efficiency standards for motors mandated through Federal law.[4]

Table 1.  U.S. Energy Consumption by Sector

 

 

Year

 

 

1999

2005

2010

2015

2020

Sector

Quads

%

Quads

%

Quads

%

Quads

%

Quads

%

Transportation..................

26.4

27.5

30.2

28.2

33.1

29.0

35.9

29.7

38.5

30.3

Residential.........................

19.1

19.9

21.3

19.9

22.3

19.5

23.3

19.3

24.4

19.2

Commercial.......................

15.6

16.2

18.0

16.8

19.3

16.9

20.3

16.8

20.8

16.3

Industrial...........................

35.0

36.4

37.5

35.1

39.4

34.5

41.3

34.2

43.4

34.2

Total.................................

96.1

100.0

107.0

100.0

114.1

100.0

120.7

100.0

127.0

100.0

 

EIA’s AEO2001 reference case provides the following projections by sector:

 

·        Transportation sector energy demand is projected to increase 46% from 1999 to 2020.  Within that increase, however, the share of gasoline is expected to decline from about 60% to 55%, while the shares of diesel and jet fuels are expected to rise.  EIA’s projections incorporate expected higher new vehicle efficiencies, which are offset by increases in travel.

 

·        Residential sector energy demand is projected to increase 27.5%, with the most rapid growth coming from computer, electronic equipment, and appliances.

 

·        Commercial sector energy demand is projected to increase 33%.  Computers and office and telecommunications equipment are expected to account for most of the rise.

 

·        Industrial sector energy demand is projected to increase 24%, with increasing use of electricity and natural gas.  Non-energy-intensive manufacturing is expected to grow at nearly three times the rate of energy-intensive manufacturing.  Cogeneration capacity is projected to increase by 19 billion watts (gigawatts) by 2020.

 

Demand by Energy Source and Delivery

 

Table 2 shows how U.S. energy demand is projected to be met by oil, gas, coal, nuclear, renewables, and electricity imports for EIA’s AEO2001 baseline case; Table 3 shows in what form energy is to be delivered to consumers; and Table 4 provides a detailed breakdown of  U.S. electricity generation by energy source.

 

Table 2.  U.S. Energy Consumption by Source

 

 

Year

 

 

1999

2005

2010

2015

2020

Source

Quads

%

Quads

%

Quads

%

Quads

%

Quads

%

Oil.....................................

38.0

39.6

41.4

38.7

44.4

38.9

47.5

39.3

50.6

39.8

Coal...................................

21.4

22.3

24.2

22.6

25.2

22.0

25.7

21.3

26.2

20.6

Natural Gas.......................

22.0

22.8

25.9

24.2

28.8

25.2

32.4

26.8

35.6

28.0

Nuclear..............................

7.8

8.1

7.9

7.4

7.7

6.7

6.8

5.6

6.1

4.8

Hydro[5]..............................

3.4

3.5

3.1

2.9

3.1

2.8

3.1

2.6

3.1

2.5

Non-Hydro Renewables...

3.2

3.4

4.0

3.7

4.7

4.1

5.0

4.1

5.2

4.1

Electricity Imports............

0.3

0.4

0.6

0.5

0.3

0.3

0.2

0.2

0.2

0.2

Total.................................

96.1

100.0

107.0

100.0

114.1

100.0

120.8

100.0

127.0

100.0

 

Table 3.  U.S. Delivered Energy by Source

 

 

Year

 

 

1999

2005

2010

2015

2020

Source

Quads

%

Quads

%

Quads

%

Quads

%

Quads

%

Oil.....................................

37.0

38.4

41.1

38.4

44.3

38.8

47.3

39.2

50.4

39.7

Coal...................................

2.7

2.8

2.7

2.6

2.7

2.4

2.7

2.3

2.7

2.2

Natural Gas.......................

18.1

18.8

20.4

19.1

21.7

19.0

22.9

19.0

24.0

18.9

Renewables[6]......................

2.7

2.8

3.0

2.8

3.2

2.8

3.4

2.8

3.7

2.9

Electricity[7]........................

35.8

37.2

39.8

37.2

42.3

37.0

44.3

36.7

46.2

36.4

Total.................................

96.1

100.0

107.0

100.0

114.1

100.0

120.7

100.0

127.0

100.0


Table 4.  U.S. Electricity Supply by Source[8]

 

 

Year

 

1999

2005

2010

2015

2020

 

 

 

Source

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Oil.....................................

109.0

2.9

42.0

1.0

27.0

0.6

27.0

0.5

29.0

0.5

Coal..................................

1,880.0

50.5

2,137.0

50.8

2,248.0

48.6

2,298.0

46.2

2,350.0

44.2

Natural Gas......................

577.0

15.5

823.0

19.6

1,157.0

25.0

1,542.0

31.0

1,886.0

35.5

Other Gaseous Fuels[9].......

4.0

0.1

6.0

0.1

7.0

0.2

7.0

0.1

8.0

0.2

Nuclear.............................

730.0

19.6

740.0

17.6

720.0

15.6

639.0

12.8

574.0

10.8

Pumped Storage................

-1.0

0.0

-1.0

0.0

-1.0

0.0

-1.0

0.0

-1.0

0.0

Hydro...............................

308.0

8.3

297.7

7.1

299.9

6.5

299.0

6.0

299.3

5.6

Non-Hydro Renewables...

76.0

2.0

106.3

2.5

129.1

2.8

140.0

2.8

144.7

2.7

Other[10]..............................

5.0

0.1

5.0

0.1

5.0

0.1

5.0

0.1

5.0

0.1

Electricity Imports...........

32.0

0.9

52.0

1.2

29.0

0.6

21.0

0.4

21.0

0.4

Total................................

3,720.0

100.0

4,208.0

100.0

4,621.0

100.0

4,977.0

100.0

5,316.0

100.0

 

EIA’s AEO2001 reference case provides the following projections for conventional energy sources:

 

·        Between 1999 and 2020, oil demand is projected to grow 33%, led by growth in the transportation sector, which accounts for about 70% of U.S. oil consumption.  U.S. crude oil production is expected to decline from about 5.9 million to 5.1 million barrels per day.  To make up for declining domestic production and increased demand, oil imports should increase from about 51% to almost 64% of U.S. consumption by 2020. The average world oil price is projected to fluctuate over the period, eventually reaching $22.41 per barrel in 2020.

 

·        Over the same period, U.S. coal consumption is projected to increase 22%, with electricity generation constituting nearly 90% of the demand for coal.  The average minemouth price of coal is projected to decline from $16.98 per ton in 1999 to $12.70 per ton in 2020 due to increasing productivity in mining, a shift to lower-cost western production, and competitive pressures on labor costs.

 

·        Natural gas demand is projected to grow by 62% by 2020, primarily as a result of rising demand for its use in electricity generation.  The average wellhead price of natural gas is projected to fluctuate and reach $3.13 per thousand cubic feet in 2020. Technological improvements in natural gas exploration and production are expected to slow price increases.

 

·        Electricity demand is projected to increase 45% and average electricity prices to decline from 6.7 cents to 6.0 cents per kilowatt-hour in 2020.  Electricity industry restructuring is expected to contribute to lower prices through reductions in operating, maintenance, administrative, and other costs.

 

 

·        About 393 gigawatts of new generating capacity is expected to be needed by 2020, both to meet growing demand and to replace retiring nuclear plants and fossil-fueled units.  Of this new capacity, 92% is projected to be natural gas-fueled combined cycle or combustion turbine technology.  The share of natural gas for electricity generation is projected to increase from 16% to 36%, and the share of coal to decrease from 51% to 44% because of industry restructuring.  Nuclear’s share is also projected to decline almost 40% as nuclear capacity is taken out of service because of operating license expirations.  No new nuclear units are expected to become operable by 2020 because natural gas and coal plants are projected to be more economical.

 

Renewables

 

Table 5 shows the AEO2001 projected renewable electricity generation by source. In 2020, about 55% of renewables are used for electricity generation and the rest for dispersed heating and cooling, industrial uses (including cogeneration), and fuel blending.

  

Table 5.  Renewable Electricity Generation by Renewable Energy Source

 

 

Year

 

 

1999

2005

2010

2015

2020

 

 

 

Source

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Billion kilo-watt-hours

 

 

 

%

Hydro..............................

312.0

80.2

303.5

74.2

303.4

69.9

302.9

68.1

302.4

67.4

Geothermal......................

13.1

3.4

15.9

3.9

25.3

5.8

25.8

5.8

25.8

5.8

Municipal Solid Waste[11].

22.1

5.7

31.4

7.7

34.0

7.8

36.9

8.3

38.0

8.5

Wood and Other Biomass[12]........................

 

36.6

 

9.4

 

47.2

 

11.5

 

56.6

 

13.0

 

63.2

 

14.2

 

65.4

 

14.6

Solar Thermal..................

0.9

0.2

1.0

0.2

1.1

0.3

1.2

0.3

1.4

0.3

Solar Photovoltaic...........

0.1

0.0

0.5

0.1

1.6

0.4

2.0

0.5

2.5

0.5

Wind................................

4.5

1.1

9.4

2.3

12.3

2.8

12.8

2.9

13.1

2.9

Total...............................

389.1

100.0

408.8

100.0

434.4

100.0

444.9

100.0

448.5

100.0

 

The use of renewable energy technologies for electricity generation is projected to grow slowly in the EIA AEO2001 reference case because of the relatively low costs of fossil fuel-fired units and because of the advantages electricity restructuring confers to less capital-intensive natural gas technologies.  States with renewable portfolio standards, which specify a minimum share of generation or sales from renewable sources, contribute to the expected growth.  Growth in renewable fuel consumption, including ethanol for gasoline blending, will be primarily as a result of State mandates.

 

Hydro’s share of the electricity supply from renewables is expected to decline to 67% in 2020, compared to 80% in 1999.  Although a net 600 megawatts of new hydropower capacity is expected to be added, it does not offset the projected decline in generation from existing facilities, as increasing environmental and other competing needs reduce their average productivity.

 

Most of the projected growth in renewable electricity generation is expected from biomass, landfill gas, geothermal energy, and wind power.  The largest increase is projected for biomass, with cogeneration accounting for more than one-half of the expected growth.  Dedicated biomass plants and co-firing in coal plants account for the remainder.  Electricity generation from municipal solid waste, including landfill gas, is projected to increase 72% by 2020.  No new capacity additions are projected for plants that burn solid waste, but landfill gas capacity is projected to grow by 2.1 gigawatts.

 

Geothermal energy capacity is projected to nearly double.  Intermittent generation from wind power is expected to increase in the near term as a result of the extension of the Federal production tax credit through 2001 (at 1.7 cents per kilowatt-hour) and by additional State incentives.  Total wind capacity is projected to more than double by 2010, but capacity additions are expected to slow after 2010 without additional incentives.  High capital costs, lower output per kilowatt, and intermittent availability are among the competitive disadvantages of this technology relative to conventional generating technologies.  Grid-connected photovoltaics are projected to add nearly 900 megawatts but should remain small contributors to overall electric power supply.  Off-grid photovoltaics, which are not included in the projections, are expected to continue to increase rapidly.

 

EIA has also produced an AEO2001 “high renewables case” that assumes more favorable characteristics for non-hydro renewable energy technologies than in the reference case.  These assumptions include:  (1) a 24% average reduction in capital costs by 2020 relative to the reference case; (2) lower operations and maintenance costs; (3) increased biomass fuel supplies; and (4) higher capacity factors for solar and wind power plants.

 

While more rapid technology improvements are projected to increase renewable energy use, the overall lead of fossil-fueled technologies in U.S. electricity supply is not expected to change. Total generation from non-hydro renewables is projected to reach 242 billion kilowatt-hours in 2020, compared with 146 billion in the reference case. About 51 billion kilowatt-hours of the projected difference is from additional intermittent wind capacity and 41 billion is from additional baseload geothermal capacity.  Solar central station technologies are projected to remain too expensive, but small-scale photovoltaics are expected to grow more rapidly.

 

The projected increase in renewable energy use in the high renewables case reduces fossil fuel use relative to the reference case projection, lowering projected carbon dioxide emissions by 14 million metric tons carbon equivalent. Retail electricity prices are not projected to change significantly from the reference case.

 

Energy Efficiency

 

As noted earlier, energy efficiency—including the use of new and improved technologies, conservation management techniques, financial incentives, regulations, and standards—can be considered an energy alternative to both conventional and renewable energy sources.

 

One measure of energy efficiency’s role can be captured by energy intensity, measured as energy use per dollar of gross domestic product (GDP).  Between 1970 and 1986, energy intensity declined at an average annual rate of 2.3%—from about 19,000 Btu to 13,000 Btu per dollar—as the economy shifted to less energy-intensive industries and more efficient technologies.  Per capita energy use also declined by nearly 4%.  During this same period, total U.S. energy consumption grew by about 14%, with increases in the transportation and residential/commercial sectors of 29% and 26%, respectively, and a decrease of nearly 4% in the industrial sector.

 

Between 1986 and 1999, which had slower price increases—and price declines in some sectors—and growth in more energy-intensive industries, intensity declines moderated to an average of 1.3% per year.  Total U.S. energy consumption grew by 19%—almost 6% in the transportation sector, 7% in the residential/commercial sector, and 6.5% in the industrial sector. Per capita energy use also increased by nearly 10%.

 

AEO2001 projects energy intensity to decline at an average annual rate of 1.6%—from about 10,900 to 7,700 Btu per dollar in 2020, a drop of nearly 30%—as efficiency gains and structural shifts in the economy offset the expected growth in demand for energy services. GDP is estimated to increase by 86% between 1999 and 2020, compared with a 32% increase in primary energy use. Relatively stable energy prices are expected to slow the decline in energy intensity, as is increased use of electricity-based energy services. When electricity claims a greater share of energy use, consumption of primary energy per dollar of GDP declines at a slower rate, because electricity use contributes both end-use consumption and energy losses to total energy consumption.

 

Although residential energy consumption is projected to increase by 28% overall between 1999 and 2020, some 75% of this growth is related to increased use of electricity.  Under current building codes and appliance standards, however, energy use per square foot is typically lower for new construction than for the existing stock.  Building shell efficiency gains are projected to cut space-heating demand by nearly 10% per household in 2020.  In addition, a variety of appliances are now subject to minimum efficiency standards, including heat pumps, air conditioners, furnaces, refrigerators, and water heaters.  For example, current standards for a typical residential refrigerator limit electricity use to 690 kilowatt-hours per year, and revised standards are expected to reduce consumption by another 30% by 2002. Energy use for refrigeration has declined by 1.8% per year from 1990 to 1997 and is expected to decline by about 2% per year through 2020, as older, less efficient refrigerators are replaced with newer models.

 

The pace of energy growth in the commercial sector is expected to slow compared to its pace over the past three decades.  Energy consumption per square foot is projected to increase by a modest 0.1% annually, with efficiency standards, voluntary government programs aimed at improving efficiency, and other technology improvements expected to balance the effects of a projected increase in demand for electricity-based services and stable or declining fuel prices.

 

Since 1970, the use of more energy-efficient technologies, combined with relatively low growth in the energy-intensive industries, has dampened growth in industrial energy consumption. Consequently, total energy use in the sector grew by only 7% between 1978 and 1999 despite a 43% increase in industrial output.  These basic trends are expected to continue.

 

Perhaps the Nation’s greatest energy challenge is the transportation sector, which accounts about 70% of U.S. oil consumption and more than can be produced domestically.  Transportation is responsible for about a third of U.S. carbon dioxide emissions, and autos, trucks, and buses are one of the largest sources of local and regional air pollution.  Although the other demand sectors have greatly reduced their dependence on oil, the transportation sector is still nearly 97% oil dependent and is projected to remain over 95% dependent in 2020.  While fuel efficiency standards doubled new car mileage between the mid-1970’s and the mid-1980’s, fleet averages for personal vehicles have been dropping in recent years as more and more consumers are switching to minivans, light trucks, and sport utility vehicles. In addition, vehicle miles traveled have been increasing, putting additional pressure on oil supplies.

 

AEO2001 projects advanced technologies—gasoline fuel cells and direct fuel injection, as well as electric hybrids for both gasoline and diesel engines—to boost the average fuel economy of new light-duty vehicles by about 4 miles per gallon (mpg), to 28.0 mpg in 2020.  Larger percentage gains in efficiency are expected for freight trucks (from 6.0 mpg in 1999 to 6.9 in 2020).  New automobile fuel economy is projected to reach approximately 32.5 mpg by 2020, as a result of advances in fuel-saving technologies, such as advanced drag reduction, variable valve timing, and extension of four valve per cylinder technology to six-cylinder engines, each of which would provide between 7 and 10% higher fuel economy.

 

Carbon Dioxide Emissions

 

AEO2001 projects that energy-related emissions of carbon dioxide—the principal greenhouse gas of concern—will increase from 1,511 million to 2,041 million metric tons carbon equivalent between 1999 and 2020—a total increase of 27% and an average annual increase of 1.4%.  This projection includes certain voluntary actions to reduce energy demand and emissions, but does not include future legislative or regulatory actions that might be taken to reduce carbon dioxide emissions.

 

Bottom Line

 

The bottom line is that if EIA’s AEO2001 reference-case projections of near- and mid-term contributions of renewable energy to the Nation’s energy mix prove reasonably accurate, renewables will continue to play a relatively minor role through 2020.  Alternatively, the contributions from energy efficiency, as measured by improvements in energy intensity, are much greater.  The principal issue facing the Nation is finding the right mix of programs and policies that will ensure that renewable energy and energy efficiency achieve their full potential.



[1]One Btu is the amount of heat energy equal to the heat needed to raise the temperature of one pound of water at one atmosphere pressure and at 39.1°F by 1°F.  One quadrillion Btu is approximately equivalent to the annual energy consumption of 9.85 million U.S. households.

[2]See http://www.eia.doe.gov/oiaf/aeo.html.  EIA states that “[t]he projections in AEO2001 are not statements of what will happen but of what might happen, given the assumptions and methodologies used. The projections are business-as-usual trend forecasts, given known technology, technological and demographic trends, and current laws and regulations.  Thus, they provide a policy-neutral reference case that can be used to analyze policy initiatives.”

[3]EIA’s reference case is based on the results from its National Energy Modeling System (NEMS) and on Federal, State, and local laws and regulations in effect on July 1, 2000.  It also assumes, among other things, that long-term U.S. economic growth averages 3.0% per year through 2020.  EIA also focuses on four other cases that assume higher and lower economic growth and higher and lower world oil prices than in the reference case.

[4]These include those mandated by the National Appliance Energy Conservation Act of 1987 and the Energy Policy Act of 1992, including the refrigerator and fluorescent lamp ballast standards that become effective in July 2001 and April 2005, respectively.  These are the only standards that are finalized with effective dates and specific efficiency levels.

[5]Assumes a heat rate of 10,346 Btu per kilowatt-hour for hydropower generation.

[6]Includes electricity generated for sale to the grid and for own use from renewable sources, and non-electric energy from renewable sources.  Excludes nonmarketed renewable energy consumption from geothermal heat pumps, building photovoltaic systems, and solar thermal hot water heaters.

[7]Includes electricity-related losses, which is the amount of energy lost during generation, transmission, and distribution of electricity, including plant and unaccounted-for uses.  Losses account for 68.4% of total electricity in 1999, 67.8% in 2005, 66.5% in 2010, 65.5% in 2015, and 64.5% in 2020. 

[8]Includes grid-connected generation at all utilities and nonutilities, cogenerators, and small on-site generating systems in the residential, commercial, and industrial sectors.

[9]Includes refinery and still gas.

[10]Includes hydrogen, sulfur, batteries, chemicals, fish oil, and spent sulfite liquor.

[11]Includes landfill gas.

[12]Includes projections for energy crops after 2010.