Now that we have explored how the energy industry will likely change with regard to a transition towards a less carbon future, let’s dig deeper into what technologies could step up to fill the gap in an all-electric world. As previously mentioned in The Business Case for Oil and Gas lesson, the Federal Government has incentivized and made a push to transition away from fossil fuels towards a carbon-neutral economy. Where might we be in twenty years if the United States altered its course related to energy consumption?
Scientists, economists, statisticians and other professionals examine possible energy scenarios as part of their work at the U.S. Energy Information Agency (EIA). As the statistical and analytical agency within the U.S. Department of Energy, EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and its interaction with the economy and the environment. In this lesson we will use data from the EIA as our reference source as we consider our energy mix of the future.
Below you will see an EIA graphic showing how the United States consumed energy by primary fuel source (e.g., petroleum, natural gas, etc.) and for which sector (e.g., industrial, transportation, electric power, etc.). Note that some part of each primary fuel source is used in the power sector (secondary energy source) to create electricity for retail sales, and this electricity ends up feeding into other sectors of the economy.
Chart from the U.S. Energy Information Administration1https://www.eia.gov/energyexplained/us-energy-facts/, Energy Information Agency (EIA). U.S. Energy Information Administration, Monthly Energy Review, Table 1.3 and 10.1, April 2021, preliminary data. Accessed: 11/22/2021
The federal government could incentivize many courses of action; but for this lesson, let’s envision a scenario where U.S. policy incentivizes a drastic reduction in petroleum (gasoline and diesel) of ~68% over the next 20 years as part of transitioning towards an all-electric world. In 2020, 68% of our petroleum consumption was for transportation—our proposed 2040 scenario will replace that petroleum with electricity for electric vehicles. Therefore, we must replace the 68% reduction in petroleum with some other fuel source to maintain the status quo of consumption for 2040 in the transportation sector. Let’s take a look at how we might fill the gap and what challenges this scenario might present as we move toward 2040.
Let’s look at the fuel consumption mix, measured in quadrillion BTUs (1015 BTUs or often shortened to ‘quad’).
2020 Energy Consumption (Quads) Compared to a Potential 2040 Scenario2 https://www.eia.gov/energyexplained/us-energy-facts/, Energy Information Agency (EIA). U.S. Energy Information Administration, Monthly Energy Review, Table 1.3 and 10.1, April 2021, preliminary data. Accessed: 11/22/2021.
U.S. energy consumption by source in 2020, with a potential scenario for 2040. Energy measured in quadrillion BTUs (quads). *Actual numbers reported by EIA may differ between publications as reports of actual consumption are updated. For this study please refer to the April 2021 EIA data. ** Sum of components on EIA publications may vary slightly due to independent rounding.
In our scenario, if we move away from gasoline and diesel as a primary energy source for transportation, we fall short of our 2020 needs delivered from this source by 21.9 quads. As a strategy to make up for that gap (loss), let’s assume for our scenario an increase in renewable energy of 4.5 quads (~50% increase). Furthermore, our 2040 scenario includes an increase in natural gas of 3 quads (~3% increase). Natural gas is commonly touted as a bridge fuel into the future, given it has a much lower carbon footprint (less carbon emitted per BTU) than other fossil fuels such as coal. Even with the addition of renewables and natural gas to partially offset the reduction in petroleum, we would still face a total gap of 14.4 quads of energy generation. What do we need to do to compensate for this gap? Add even more natural gas? Increase nuclear? Ramp up renewables to more than 50%? What would you do?
The next few topic pages in this lesson will address the capability of different technologies (natural gas, nuclear, wind, solar) to step up and fill the gap if we were to move toward an increasingly electric world—in this case, a switch in the United States to all-electric vehicles.