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Top US energy sources through 2040

By Patrick C. Miller | January 26, 2015

Presenting the State of American Energy 2015 address in Washington, D.C., last month, American Petroleum Institute President and CEO Jack Gerard noted that the U.S. is the world’s top producer of natural gas, the world’s leading refiner of petroleum products and could soon be the leading producer of oil.

“The United States is in the midst of a new era in domestic energy abundance characterized by rising use of renewable energy and increased oil and natural gas production that is strengthening our economic outlook and enabling America to emerge as a global energy superpower,” Gerard says. ”It is a remarkable transformation that has been made possible because America is uniquely rich in energy resources, a talented workforce and cutting-edge energy technologies.”

Despite falling prices, oil “represents the lifeblood of the U.S. economy” in meeting more than a third of the nation’s energy needs, a statistic that’s not expected to change markedly in the next 25 years, according to the report.

The report forecasts that the consumption of oil and gas will move in opposite directions from 2012 to 2040. Oil accounted for 92 percent of transportation fuels in 2014, but by 2040, that is expected to fall by 5 percent with natural gas and renewable fuels making gains. The use of natural gas for residential and commercial purposes is projected to rise from 76 percent in 2014 to 81 percent by 2040. Changes in energy consumption for industry and electric power generation are expected to be small.

The U.S. surpassed Russia as the world’s largest natural gas producer and is projected to become a net exporter within the next decade, a development made possible by advances in horizontal drilling and hydraulic fracturing. According to the Energy Information Administration, natural gas represented 28 percent of U.S. energy consumption in 2012 and is expected to grow to 30 percent by 2040.

The API reports stresses the importance of infrastructure—pipelines, railways, ports, waterways and transmission lines—to promote the development of diverse energy sources for reliable delivery to consumers and businesses. In the next 12 years, oil and gas industry infrastructure development alone is expected to contribute up to $120 billion annually to the economy while supporting 1.15 million jobs.

“A diversified portfolio of fuel and technology to supply power is fundamental to a reliable and affordable electricity system, and low-carbon sources will become ever-more valuable,” the report says. Other sources of energy including coal, nuclear, hydro, solar, wind, geothermal and biomass, are either forecast to expand or continue to meet significant portions of America’s energy needs. 

Although the nation’s consumption of nuclear energy is forecast to fall from 21 percent to 19 percent by 2040, it will continue to be part of the mix. Currently, 100 nuclear energy facilities in 30 states produce nearly 790 billion kilowatt hours of electricity each year. Because one nuclear power plant can provide electricity for 690,000 homes while emitting less carbon dioxide than one hybrid car, the report says it will play an important role in helping the U.S. Environmental Protection Agency in reducing CO2 emissions by 30 percent by 2030.

Hydropower, a source of renewable energy with no carbon footprint, could potentially expand from the current level of 100 gigawatts of electricity annually generated. A study found that 60,000 megawatts of new hydropower capacity could be added in the next 15 years, much of which could occur without the construction of new, large water infrastructure. About 10,000 MW of new capacity could be added with upgrades to existing hydropower plants.

2014 was the best year ever for solar energy in the U.S. as 7.4 GW of new capacity was installed, a 42 percent increase over 2013. Solar power became the fastest growing source of renewable energy in America, accounting for a record 53 percent of all new electric generation capacity installed during the first half of 2014. The current installed solar capacity of 20.2 GW is expected to nearly double by 2016. The International Energy Agency says solar energy could be the world’s largest source of electricity by 2050 if policymakers provide “clear, credible and consistent signals.”

In geothermal energy, the U.S. today accounts for 3.6 GW of the world’s 12.1 GW in nameplate capacity. Geothermal power capacity is expected to increase 4 to 5 percent each year for the remainder of the decade. Oil and gas production represent an important potential source of geothermal power in the western U.S. According to the API report, the industry produces 25 billion barrels of hot water annually, which could be used to generate up to 3 GW of electricity.

Although the EIA says the U.S. has the world’s largest recoverable coal reserves, this source of inexpensive, reliable energy that provides 40 percent of the nation’s electricity needs is in jeopardy because of EPA regulations. The Government Accountability Office estimates that 13 percent of coal-fired generating capacity will be retired by 2025, and warned that “some regions may face reliability challenges.”

Biomass has significant potential as an energy source. One scientific report estimates that up to 680 million tons of biomass “could be used for energy and fuels, resulting in 54 billion gallons of nonfood ethanol and biofuels, and enough electricity to meet 20 percent of U.S. energy demand by 2030.”

Zero emissions, lower power costs and stable prices have resulted in wind energy increasingly becoming the primary choice for new power in such regions as the Pacific Northwest, the Plains states and the Midwest. Between 2011 and 2013, wind energy provided 60 percent or more of all new electric generating capacity and delivered more than 80 percent in the upper Midwest. The U.S. has more than 62,000 MW of wind energy capacity, which generated 168 million MW hours in 2013.

The report notes that since the 1970s, energy efficiency has been “a quiet success story” for the U.S. The oil crisis of 1974 and energy shortages resulted in new strategies and technologies that use less energy to “deliver the same or better services to consumers and businesses.” Although America’s economy has continued to grow, energy use has slowed significantly. One study predicts that energy efficiency could further reduce energy requirements in America’s economy nearly by half by 2050.

“Today, different sectors of the economy rely on certain forms of energy. Transportation is largely fueled by oil, while electricity generation is powered by coal, nuclear, natural gas and renewables,” Gerard says. “Looking ahead a quarter century from now, this is not expected to change, which means each energy source—from oil and natural gas to solar and wind energy; from coal and nuclear to hydropower, geothermal and biomass—will remain essential to successfully meet America’s future energy needs.”