NEF vs. EIA: Comparing Long Term Energy Outlooks

There are few industries more dynamic than the energy sector. Many factors can impact the role that energy plays in your organization, including generation, pricing, supply and demand, governmental regulations and policy decisions. All of these factors should be considered when creating your energy policy.

In 2017, this is even truer. Alternative energy sources like wind and solar are thriving, thanks to high-tech advances. According to a 2016 Economics and Financial Analyst Report from the Institute for Energy, in some parts of the world and the U.S., renewable prices are on par with natural gas.

Also, the Trump administration has an energy policy that differs from his predecessor. Here are some of the new administration’s policy objectives:

• Elimination of policies such as the Climate Action Plan and the Waters of the U.S. rule
• Unlocking access to shale oil and natural gas reserves rooted under U.S. soil and in coastal seaboards
• Energizing the coal industry, with a commitment to clean coal technology
• Achieving energy independence from foreign partners while maintaining diplomatic ties
• Responsibility for the environment, including investment in renewable infrastructure and protecting natural habitats

With so much change in the energy industry, it can be tough to make long-term plans about how energy’s role could change in the future. But the success of your organization depends on making sound energy decisions that will be sustainable and profitable today and 10, 20 and even 30 years down the road.

In order to clarify the changes to the industry, let’s compare and contrast outlooks from two expert voices on the subject—the United States Energy Information Administration (EIA) and Bloomberg New Energy Finance (NEF).

EIA Energy Outlook Through 2050

The EIA publishes its energy outlook yearly. This year’s forecast provides projections for the energy sector through 2050. Here are the takeaways from the EIA’s “2017 Annual Outlook”.

• Oil prices: The EIA makes two modeled forecasts on oil prices through 2040. On the High Price case, Brent crude reaches $226 (in 2016 dollars) per barrel by 2040. In the reference case, that figure comes in at $109, and in the Low Price case it will come in at $43 per barrel.

• Natural gas exports: Natural gas production is expected to account for nearly 40 percent of U.S. energy production by 2040. This will be driven by the shift to a largely liquefied natural gas (LNG) export model which will send more supplies to Europe. This is a break from the current conditions, which have historically seen most exports shipped via pipeline to Canada and Mexico.

• Coal-fired generation: According to the EIA’s “2017 Energy Outlook,” last year coal consumption hit its lowest point since 1980. That figure is anticipated to climb back up slightly through 2020 due to lower prices. But, long-term figures show coal consumption falling by about 30 percent between 2020 and 2040.

• Carbon emissions: From 2005 to 2016, the EIA states that energy-related carbon dioxide emissions fell at an average annual rate of 1.4 percent. This figure is likely to decline to 0.2 percent yearly through 2040.

• Renewables: At the same time, renewable energy consumption hit a record-high in 2016. Wind, solar, hydrothermal, biofuels and other renewable sources reached almost 10 quadrillion BTU. The EIA’s predictive model supports the claim of many energy experts that renewable consumption will continue to climb for the near future. That estimate is expected to increase by 50 percent by 2040

Bloomberg NEF Energy Outlook Through 2050

“New Energy Outlook” is the yearly publication from Bloomberg New Energy Finance which provides a long-term analysis of the world’s evolving power markets. Here are the key takeaways from this year’s report. 

• Coal and gas prices to stay low: Based on the findings of the 2017 NEO report, there is projected to be a supply glut for coal and gas commodities through 2050. While this will cut generation costs, it is doubtful to derail the advance of renewables.

• Renewables: Bloomberg NEF anticipates that wind and solar will become the cheapest electricity producers in many countries by the 2020s. By the next decade, this is expected to be true in most of the world. Based on 2016 figures, onshore wind costs are poised to fall by 41 percent, with solar photovoltaic costs dropping by 60 percent by 2040.

• Natural gas: Bloomberg NEF sees natural gas filling a transitional role in the coming decades as the world economy shifts away from fossil fuels towards renewables. However, that role will be partial outside the U.S. Bloomberg NEF expects only 3 percent growth in demand for power to 2040, with generation peaking in 2027.

• Coal generation: Bloomberg NEF’s figures for coal generation show the impact that regional economies can have on energy. Coal generation is already dropping in Europe. But in the U.S., coal generation won’t peak until 2020. In China, coal won’t peak until 2025. However, coal is projected to increase 7 percent globally due to rapid growth in emerging markets in Asia and Africa.

For the most part, there are more similarities than differences between these two reports. While the figures and dates vary slightly, there appears to be consensus on the increased role of renewables and their impact on related markets. But as we said before, there are few sectors more dynamic and fluid than that of energy. It is vital to stay updated on the latest energy news. Click here to view our subscription center and sign up for the energy news you need.