The US EIA projected the future of electricity generation in 2001. Why were they so wrong?
By James Morton Turner, professor of environmental studies at Wellesley College and author of the forthcoming book Charged: A History of Batteries and Lessons for a Clean Energy Future. He published the lead editorial in the journal Sciencein its special climate change issue two weeks ago (June 24, 2022).
In 2001, the United States Energy Information Administration looked into its crystal ball and forecast the future of the United States’ electricity supply to the year 2020. Looking back, there is much to learn from this that the EIA got right and, if you care about the future of clean energy, what went wrong.
The EIA predictions looked much more the same. In short, they expected the beginning of the 21st century to look a lot like the end of the 20th century. They predict more coal, a small role for renewables and steady growth in total electricity demand. The only major change predicted by the EIA was a boom in the use of natural gas for power generation.
For natural gas, at least by the numbers, it seems the EIA got it right. As the agency had predicted, electricity production from natural gas has almost tripled. But the EIA expected the change to be driven primarily by the use of lower-cost, more efficient natural gas generators in electric utilities.
But that was only part of the story. What the agency missed was how much natural gas supply would change. Even in 2001, no one anticipated how hydraulic fracturing would transform the natural gas industry by increasing supply and keeping prices stable. In 2020, fractured natural gas accounted for two-thirds of national natural gas production.
The EIA did not anticipate the coal meltdown. In 2001, it seemed that America’s reliance on coal for power generation was a no-brainer. The EIA predicted that coal-fired electricity generation would increase by 27% between 2001 and 2020. As we now know, the reverse has happened. With the boom in natural gas production, the use of coal for power generation has fallen by 60%.
What explains the decline of coal? The obvious answer is the rise of natural gas. But that would amount to neglecting the role of renewable energies and the evolution of global electricity demand. In 1999, the EIA did not expect non-hydro renewables to be a major source of electricity. Whatever growth he anticipated, he expected to come from the burning of biomass and municipal solid waste (we can leave aside the question of whether these should be considered “ renewables”).
What is the role of wind and solar power? In the 2001 EIA analysis, this was not the case. The agency expected wind and solar to represent a rounding error in their analysis, barely adding up 0.5% of American electricity demand in 2020. And, on this point, the forecasts were terribly wrong. Wind and solar grew at a record pace after 2000, reaching 12% of U.S. electricity demand in 2020. That was twenty times more than the EIA forecast in 2001.
Why was the EIA so out of step when it came to wind and solar power?
Why was the EIA so far away? According to her, the high cost of renewable energy would continue to limit deployment. The agency could not foresee policies that would give renewables a head start in the early 2000s – including net metering for solar power and investment tax credits to support renewables . But, more importantly, the agency hadn’t expected the price of wind and solar to fall much faster than expected, especially as deployment began to expand.
The other interesting projection is the EIA forecast for total electricity demand. Even though the EIA adopted lower projections for electricity demand, based on the adoption of new efficiency standards and the adoption of more efficient equipment, it still expected that global demand for electricity increases by 34% by 2020. But it turns out that the transition to LED bulbs (and many other efficiency improvements) add up. Overall electricity demand increased by only 14%.
Put it all together and it reveals one final surprise. In 2001, the EIA predicted that CO2 emissions from electricity generation would increase by 28% to 2.73 billion metric tons in 2020. But slowing growth in electricity demand, the The rise of renewable energy and the switch to natural gas have radically changed the CO2 intensity of the electricity sector. In 2020, actual CO2 emissions from electricity totaled 1.55 billion metric tons, 43% lower than the EIA forecast in 2001. This means that US CO2 emissions from the electricity sector electricity are lower than they were in 1990, even though electricity production has increased by 33%. .
What lessons can we learn from the EIA’s energy projections as we anticipate a clean energy transition? The first lesson is how difficult it is to anticipate, let alone foresee, the rapid transformation of the electricity sector. This points to the second lesson. History reminds us that change can happen much faster than expected. And right now, given the urgency of tackling climate change, we need a lot of change.
This article is adapted from the forthcoming book by James Morton Turner, Charged: A History of Batteries and Lessons for a Clean Energy Future (August 2022). You can learn more about Accused at http://charged-the-book.com
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