U.S. energy consumption will take years to rebound from pandemic, EIA says

Energize Weekly, February 10, 2021

It will take years for U.S. energy consumption and carbon dioxide emissions to return to 2019 levels after the severe impact of the COVID-19 pandemic on the country’s economy and the global energy sector, according to the federal Energy Information Administration (EIA).

Energy consumption in the agency’s “reference case” will likely rebound to pre-COVID levels by 2029, although the EIA cautions that forecast is “highly dependent” upon the economic recovery in the U.S. In a low-growth scenario, it will take until 2050 to return to 2019 levels.

The EIA’s reference case assumes present laws extend through 2050 with slower growth in energy consumption in an increasingly efficient U.S. economy.

Carbon emissions are projected to continue to decline – U.S. emissions dropped 10 percent in 2020 – until 2030 and then begin to increase.

“It will take a while for the energy sector to get to its new ‘normal,’” EIA Acting Administrator Stephen Nalley, said in a statement. “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.”

Electricity demand in the U.S. is projected to return to 2019 levels by 2025. Renewable generation will account for 60 percent of new capacity between 2020 and 2050, a pace that will double renewables’ share of the generating mix by 2050.

The EIA projects that natural gas generation will remain flat through 2050, accounting for 36 percent of total capacity, while both coal-fired and nuclear capacity will be pared.

Oil production is forecast to rebound to 2019 levels by 2023, with output remaining close to 13 to 14 million barrels per day through 2050.

Production from tight formations – such as shale – is the primary driver of the EIA forecast. “Most of this tight oil production comes from the Wolfcamp play in the Permian Basin, which spans parts of western Texas and eastern New Mexico, along with the Bakken play in the Williston Basin in Montana, North Dakota, and South Dakota,” the agency said.

The U.S. will continue to export more petroleum and other liquids than it imports. The balance of exports, however, will be very sensitive to supply, demand and price factors. “If prices or supply remain high, the United States is likely to export more energy than it imports through 2050,” the EIA said.

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