Estimates in the EIA’s annual energy outlook are based on the pace of economic recovery, which are unknown because of COVID-19, the EIA says. (Source: Hart Energy)
Updated at 4:24 p.m. on Feb. 3, 2021.
U.S. energy consumption may not return to 2019 levels until 2029 or even as late as 2050, the Energy Information Administration (EIA) forecast in its Annual Energy Outlook 2021, released Feb. 3.
“Depending on our economic growth assumptions, a return to 2019 levels of energy consumption could occur as early as five years or as long as 30 years,” EIA Assistant Administrator Angelina LaRose said during a webinar announcing the report’s findings.
The estimates are based on the pace of economic recovery, which is complicated by the continued impact of the COVID-19 pandemic. Low economic growth, the EIA said, could push the date back until as late as 2050.
“It will take a while for the energy sector to get to its new ‘normal,’” EIA Acting Administrator Stephen Nalley said in a statement prior to the report’s release. “The pandemic triggered a historic energy demand shock that led to lower greenhouse gas emissions, decreases in energy production, and sometimes volatile commodity prices in 2020. The pace of economic recovery, advances in technology, changes in trade flows and energy incentives will determine how the United States produces and consumes energy in the future.”
Competition from Renewables
EIA derived its projections for the report on the assumption that policies and regulations in effect in September 2020 would remain unchanged. Policy changes that have been or may be put into effect by the Biden administration are not factored into the modeling.
The pandemic hit hardest at transportation energy consumption. The EIA does not expect that segment to return to 2019 levels through the report’s time frame, or until 2050. Part of the decrease in 2020 was directly related to the pandemic—mobility restrictions, limitations on non-essential travel and increased working from home. However, future consumption will be tempered as assumed improvements in fuel economy offset projected growth in transportation.
In most of its scenarios, the EIA shows energy-related CO2 emissions dropping until 2035 before picking up again.
“The pandemic will have a lasting impact on U.S. energy consumption as well as energy-related carbon dioxide emissions,” LaRose said. “Compared to the financial crisis of 2008, the COVID-19-related decline in total delivered energy demand is about 70% larger.”
Natural gas will face increasing competition from renewable sources in the power generation sector due to government incentives and improvements in technology. Renewables are expected to account for 60% of additional capacity between 2020 and 2050, and more than double its share of the power generation market.
By contrast, the share controlled by natural gas will remain flat at about 36% through this period, while the market shares of coal and nuclear power are projected to be cut in half.
The EIA projects that domestic oil and gas production will continue to allow U.S. natural gas exports, but the trade balance in liquids will be strongly influenced by supply, demand and price. If oil and gas supply and prices remain high, the U.S. will likely export more energy products than it imports through 2050.
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