Contents
Introduction 10
The National Energy Modeling System 10
Component modules 12
Macroeconomic Activity Module 12
International Energy Module 13
Residential and Commercial Demand Modules 13
Industrial Demand Module 13
Transportation Demand Module 14
Electricity Market Module 15
Renewable Fuels Module 15
Oil and Gas Supply Module 16
Natural Gas Transmission and Distribution Module 16
Liquids Fuels Market Module 17
Coal Market Module 18
Annual Energy Outlook 2015 cases 19
Carbon dioxide emissions 22
Notes and sources 24
Macroeconomic Activity Module 25
Key assumptions 25
International Energy Module 27
Key assumptions 27
Notes and sources 31
Residential Demand Module 32
Key assumptions 33
Housing Stock Submodule 33
Technology Choice Submodule 34
Appliance Stock Submodule 36
Fuel Consumption Submodule 37
Equipment efficiency 37
Miscellaneous electric loads (MELs) 37
Adjusting for the size of housing units 38
Adjusting for weather and climate 38
Short-term price effect and efficiency rebound 38
Shell efficiency 39
Legislation and regulations 39
American Recovery and Reinvestment Act of 2009 (ARRA2009) 39
Energy Improvement and Extension Act of 2008 (EIEA2008) 40
Energy Independence and Security Act of 2007 (EISA2007) 40
Energy Policy Act of 2005 (EPACT2005) 40
Notes and sources 41
Commercial Demand Module 42
Key assumptions 42
Floorspace Submodule 42
Existing floorspace and attrition 43
New construction additions to floorspace 43
Service demand Submodule 43
Shell efficiency 44
Distributed generation and combined heat and power 45
Technology Choice Submodule 45
Decision types 45
Behavioral rules 47
Time preferences 47
Technology characterization menu 48
End-Use Consumption Submodule 49
Equipment efficiency 49
Adjusting for weather and climate 49
Short-term price effect and efficiency rebound 51
Legislation and regulations 52
American Recovery and Reinvestment Act of 2009 (ARRA2009) 52
Energy Improvement and Extension Act of 2008 (EIEA2008) 52
Energy Independence and Security Act of 2007 (EISA2007) 52
Energy Policy Act of 2005 (EPACT2005) 52
Energy Policy Act of 1992 (EPACT1992) 53
Energy efficiency programs 54
Notes and sources 54
Industrial Demand Module 56
Key assumptions - manufacturing 57
Process/assembly component 58
Combined cement and lime industry 64
Aluminum industry 64
Glass industry 65
Petrochemical feedstock requirement 67
Buildings component 67
Boiler, steam, and cogeneration component 69
Combined heat and power 69
Key assumptions-non-manufacturing 74
Agriculture 76
Mining 76
Construction 77
Legislation and regulations 77
Energy Improvement and Extension Act of 2008 77
The Energy Independence and Security Act of 2007 (EISA2007) 77
Energy Policy Act of 1992 (EPACT1992) 77
Clean Air Act Amendments of 1990 (CAAA1990) 78
Maximum Achievable Control Technology for Industrial Boilers (Boiler MACT) 78
California Assembly Bill 32: Emissions cap-and-trade as part of the Global Warming Solutions Act of 2006 (AB32) 78
Notes and sources 80
Transportation Demand Module 81
Key assumptions 81
Commercial light-duty fleet assumptions 87
The light commercial truck component 89
Consumer vehicle choice assumptions 89
Freight truck assumptions 90
Freight rail assumptions 93
Domestic and international shipping assumptions 93
Air Travel Submodual 93
Air travel demand assumptions 94
Aircraft stock/efficiency assumptions 94
Legislation and regulations 99
Light-Duty Vehicle Combined Corporate Average Fuel Economy (CAFE) Standards 99
Heavy-Duty Vehicle Combined Corporate Average Fuel Economy Standards 99
Energy Independence and Security Act of 2007 (EISA2007) 99
American Recovery and Reinvestment Act of 2009 and Energy Improvement and Extension Act of 2008 100
Energy Policy Act of 1992 (EPACT1992) 101
Low-Emission Vehicle Program (LEVP) 101
Transportation alternative case 101
Notes and sources 108
Electricity Market Module 111
EMM regions 111
Model parameters and assumptions 112
New generating plant characteristics 113
Technological optimism and learning 115
Distributed generation 119
Demand storage 119
Coal-to-gas conversion 119
Representation of electricity demand 120
Operating reserves 120
Fossil fuel-fired and nuclear steam plant retirement 121
Biomass co-firing 121
Nuclear uprates 121
Interregional electricity trade 122
International electricity trade 122
Electricity pricing 123
Fuel price expectations 124
Nuclear fuel prices 124
Legislation and regulations 125
Clean Air Act Amendments of 1990 (CAAA1990) and Clean Air Interstate Rule (CAIR) 125
Energy Policy Acts of 1992 (EPACT1992) and 2005 (EPACT2005) 133
Energy Improvement and Extension Act 2008 (EIEA2008) 134
American Recovery and Reinvestment Act (ARRA) 134
American Taxpayer Relief Act of 2012 (ATRA) 135
Tax Increase Prevention Act of 2014 (TIPA) 135
FERC Orders 888 and 889 135
Notes and sources 136
Oil and Gas Supply Module 137
Key assumptions 137
Lower 48 onshore 141
CO2 enhanced oil recovery 146
Lower 48 offshore 147
Alaska crude oil production 150
Legislation and regulations 152
Oil and gas supply alternative cases 153
Tight Oil and Shale Gas Resource case 153
High Oil and Gas Resource case 153
Notes and sources 155
Natural Gas Transmission and Distribution Module 156
Key assumptions 157
Structural components 157
Capacity expansion and pricing of transmission and distribution 157
Pricing of services 158
Pipelines from arctic areas into Alberta 159
Supplemental natural gas 160
Natural gas imports and exports 161
Legislation and regulations 164
Notes and sources 165
Liquid Fuels Market Module 166
Key assumptions 167
Product types and specifications 167
Motor gasoline specifications and market shares 167
Diesel fuel specifications and market shares 169
End-use product prices 170
Crude oil quality 170
Capacity expansion 173
Non-petroleum fuel technology characteristics 174
Non-petroleum fossil fuel supply 178
Combined heat and power (CHP) 179
Short-term methodology 179
Legislation and regulation 179
Notes and sources 181
Coal Market Module 182
Key assumptions 182
Coal production 182
Coal distribution 184
Coal imports and exports 189
Coal quality 190
Legislation and regulations 192
Notes and sources 196
Renewable Fuels Module 197
Key assumptions 197
Nonelectric renewable energy uses 197
Electric power generation 197
Capital costs 198
Solar Submodule 199
Background 199
Assumptions 199
Wind Energy Power Submodule 200
Background 200
Assumptions 200
Geothermal Electricity Submodule 202
Background 202
Assumptions 203
Biomass Submodule 203
Background 203
Landfill Gas (LFG) Submodule 204
Background 204
Assumptions 204
Conventional Hydroelectricity Submodule 205
Legislation and regulations 205
State RPS programs 206
Notes and sources 208
Appendix A: Handling of federal and selected state legislation and regulations in the AEO 209
Residential sector 209
Commercial sector 212
Industrial sector 218
Transportation sector 220
Electric power generation 222
Oil and gas supply 227
Natural gas transmission and distribution 228
Liquid fuels market 230
Table 1.1. Summary of AEO2015 cases 21
Table 1.2. Carbon dioxide emission factors 23
Table 2.1. Growth in gross domestic product, nonfarm employment and productivity 26
Table 3.1. Worldwide oil reserves as of January 1, 2014 30
Table 3.2. Average annual real gross domestic product rates, 2010-40 30
Table 3.3. Average annual growth rates for total liquids demand in the Reference case, 2010-40 31
Table 4.1. 2009 Households 34
Table 4.2. Installed cost and efficiency ratings of selected equipment 35
Table 4.3. Capital cost and performance parameters of selected residential distributed generation technologies 36
Table 4.4. Minimum and maximum life expectancies of equipment 37
Table 5.1. 2003 Total floorspace by Census division and principal building activity 44
Table 5.2. Floorspace attrition parameters 44
Table 5.3. Capital cost and performance parameters of selected commercial distributed generation technologies 46
Table 5.4. Assumed behavior rules for choosing space heating equipment in large office buildings 48
Table 5.5. Assumed distribution of risk-adjusted time preference premiums for space heating and lighting equipment in 2015 48
Table 5.6. Capital cost and efficiency ratings of selected commercial space heating equipment 50
Table 6.1. Industry categories and NAICS codes 56
Table 6.2. Retirement rates 58
Table 6.3. Coefficients for technology possibility curve for manufacturing industries and all industrial scenarios 59
Table 6.4. Cost and performance parameters for industrial motor choice model 66
Table 6.5. Non-combustion use of fossil fuels, selected years 1980-2013 68
Table 6.6. 2010 Building component energy consumption 70
Table 6.7. 2010 Boiler fuel component and logit parameter 72
Table 6.8. Cost characteristics of industrial CHP systems 74
Table 6.9. Regional collaboration coefficients for CHP deployment 74
Table 6.10. 2010 UECs for non-manufacturing 75
Table 7.1. Standard technology matrix for cars 82
Table 7.2. Standard technology matrix for light trucks 84
Table 7.3. Car and light truck degradation factors 86
Table 7.4. Vehicle miles traveled equation coefficients, by age and gender cohorts 86
Table 7.5. Percent of fleet alternative fuel vehicles by fleet type by size class, 2005 87
Table 7.6. Commercial fleet size class shares by fleet and vehicle type, 2005 88
Table 7.7. Share of new vehicle purchases by fleet type and technology type, 2009 88
Table 7.8. Vehicle technology category for technology matrix for freight trucks 90
Table 7.9. Standard technology matrix for freight trucks 91
Table 7.10. Thirteen regions for the world model 94
Table 7.11. 2013 Regional population, GDP, per capita GDP, domestic and international RPM and per capita RPM 95
Table 7.12. 2013 Regional passenger and cargo aircraft supply 96
Table 7.13. Standard technology matrix for air travel 99
Table 7.14. EPACT legislative mandates for AFV purchases by fleet type and year 101
Table 7.15. High technology matrix for cars 102
Table 7.16. High technology matrix for light trucks 104
Table 7.17. High technology matrix for freight trucks 106
Table 7.18. High technology matrix for air travel 107
Table 8.1. Generating capacity types represented in the Electricity Market Module 112
Table 8.2. Cost and performance characteristics of new central station electricity generating technologies 114
Table 8.3. Learning parameters for new generating technology components 116
Table 8.4. Component cost weights for new technologies 118
Table 8.5. Component capacity weights for new technologies 118
Table 8.6. Coal plant retrofit costs 128
Table 8.7. Mercury emission modification factors 128
Table 8.8. Planned SO2 scrubber additions by EMM region 129
Table 8.9. Existing pulverized coal plant types in the NEMS Electricity Market Module 131
Table 8.10. Heat rate improvement (HRI) potential and cost (capital, fixed O&M) by plant type and quartile as used for input to NEMS 132
Table 9.1. Technically recoverable U.S. crude oil resources as of January 1, 2013 138
Table 9.2. Technically recoverable U.S. dry natural gas resources as of January 1, 2012 139
Table 9.3. U.S. unproved technically recoverable tight/shale oil and gas resources by play (as of January 1, 2013) 142
Table 9.4. U.S. unproved technically recoverable coalbed methane resources by play (as of January 1, 2013) 144
Table 9.5. Distribution of crude oil EURs in the Bakken 145
Table 9.6. Maximum volume of CO2 available 146
Table 9.7. CO2 availability assumptions 147
Table 9.8. Industrial CO2 capture and transportation costs by region 147
Table 9.9. Assumed size and initial production year of major announced deepwater discoveries 148
Table 9.10. Offshore exploration and production technology levels 149
Table 10.1. Assumptions related to CNG and LNG fuel prices 159
Table 10.2. Primary assumptions for natural gas pipelines from Alaska and Mackenzie Delta into Alberta, Canada 161
Table 10.3. Exogenously specified Mexico natural gas consumption, production, and LNG imports 162
Table 10.4. Exogenously specified Canada natural gas consumption, production, and LNG exports 163
Table 10.5. Charges related to LNG exports 164
Table 10.6. International natural gas volume drivers for world LNG Europe and Asia market price projections 164
Table 11.1. Petroleum product categories 167
Table 11.2. Year-round gasoline specifications by Petroleum Administration for Defense District (PADD) 168
Table 11.3. Market share for gasoline types by Census Division 169
Table 11.4. Petroleum product end-use markups by sector and Census Division 171
Table 11.5. State and local taxes on petroleum transportation fuels by Census Division 172
Table 11.6. Federal taxes 172
Table 11.7. Crude oil specifications 172
Table 11.8. Alternative fuel technology product type 174
Table 11.9. Non-petroleum fuel technology characteristics 176
Table 11.10. Non-petroleum fuel technology learning parameters 177
Table 12.1. Coal mining productivity by region 183
Table 12.2. Transportation rate multipliers 188
Table 12.3. World steam coal import demand by import region 191
Table 12.4. World metallurgical coal import demand by import region 192
Table 12.5. Production, heat content, sulfur, mercury and carbon dioxide emission factors by coal type and region 193
Table 13.1. Aggregate regional renewable portfolio standard requirements 207
Figure 1. National Energy Modeling System 12
Figure 2. World oil prices in three cases, 1995-2040 28
Figure 3. OPEC total liquids production in the Reference case, 1995-2040 29
Figure 4. Non-OPEC total liquids production in the Reference case, 1995-2040 29
Figure 5. United States Census Divisions 32
Figure 6. Electricity Market Model Supply Regions 111
Figure 7. States covered by the Clean Air Interstate Rule 126
Figure 8. Oil and Gas Supply Model regions 137
Figure 9. Natural Gas Transmission and Distribution regions 156
Figure 10. Liquid Fuels Market Module Regions 166
Figure 11. Coal Supply Regions 185
Figure 12. Coal Demand Regions 186