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EIA Publishes Early Release of Annual Energy Outlook 2016

On May 17, 2016, the U.S. Energy Information Administration (EIA) published an early release of its Annual Energy Outlook (AEO) for 2016. This early release contains projections for two scenarios: a Reference case, which includes the effects of the Clean Power Plan, and a “No Clean Power Plan” case, which examines a future in which there is no Clean Power Plan. Final versions of each of these cases, along with projections for numerous other scenarios, will be available on July 7, 2016. Until then, here are some of the key highlights in the latest AEO:

The AEO 2016 Reference case projects that the Clean Power Plan will raise electricity prices by just 3 percent compared to a future with no Clean Power Plan.

As a result of the Clean Power Plan, EIA projects that average electricity prices in the years 2025 to 2030 will be 3 percent higher than a future with no Clean Power Plan. However, the AEO 2016 Reference case (inclusive of the Clean Power Plan) features electricity prices 3 percent below the electricity prices forecasted just last year in the AEO 2015 Reference case.

Importantly, this 3 percent increase is limited just to electricity prices; EIA assumes that in the Clean Power Plan, electricity providers purchase CO2 allowances, the revenues of which are rebated to ratepayer bills (just as is currently done in Regional Greenhouse Gas Initiative states). As a result, the full effect on out-of-pocket spending on electricity by ratepayers is lower than 3 percent, or even zero.

The AEO 2016 Reference case models a 32 percent decrease in electric sector CO₂ emissions in 2030

By following the mass-based approach to the Clean Power Plan, AEO 2016’s Reference case reduces electric sector CO₂ emissions by over 30 percent by 2028 (compared to 2005 levels), and it sustains this reduction through 2040 (see Figure 1 below). This level of emissions is also nearly 30 percent lower than that projected in last year’s AEO 2015. Even in the No CPP case, CO₂ emissions are significantly lower than both historical emissions (a reduction of 16 percent compared to 2005) and what was previously projected (a reduction of 11 percent compared to last year’s AEO 2015 Reference case).

Figure 1. Electric power carbon dioxide emissions, historical and projected



Read more highlights on the Synapse blog.

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