Post-Covid Energy Recovery Could Take Years: EIA
The US could potentially take “years” to recover to 2019 levels of energy consumption and CO2 emissions following the impact of the Covid-19 pandemic on the US economy and the global energy sector, the Energy Information Administration (EIA) said February 3 in its Annual Energy Outlook 2021(AEO 2021).
The Outlook’s reference case, featuring slower consumption growth but increasing supply driven by technological improvements in renewables, oil and natural gas, suggests that US energy consumption will return to 2019 levels by 2029. But that projection is highly dependent on the pace of economic recovery in the US: in a side case featuring low economic growth, consumption recovery is delayed until 2050.
"It will take a while for the energy sector to get to its new ‘normal,’” acting EIA administrator Stephen Nalley said in releasing AEO 2021. “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.”
Recovering from those shocks, he said, would depend on how quickly the US economy recovers, on technological advances, on how trade flows evolve and on available incentives.
In most of the EIA’s cases, electricity demand recovery is the most robust, reaching 2019 levels as early as 2025. Renewable generating technologies – aided by incentives and new technologies – will account for nearly 60% of the capacity additions between 2020 and 2050, led by solar additions of 435 GW, while the renewable share of total generation will more than double by 2050.
Natural gas capacity additions in the reference case are projected at 375 GW – offset by 49 GW of retirements – while the share of gas in the total generating mix will remain relatively flat at about 36%, the outlook suggests.
LNG 'could go either way'
Dry natural gas production grows “significantly” in most cases: in the reference case, it pushes past 40 trillion ft3 by 2050 from less than 35 trillion ft3 this year, but the outcomes of that growth, especially LNG exports, fall into a wide range, depending largely on supply and price.
In the reference case, LNG exports grow to 5 trillion ft3 by 2030 then level off; in the high oil price scenario (Brent reaching $173/b [in today's money] by 2050), exports continue growing over the next two decades, reaching 10 trillion ft3 by 2040 before levelling off.
LNG exporters took additional comfort in a decision by the US Senate’s energy and natural resources committee – also on February 3 – to advance the nomination of former Michigan governor Jennifer Granholm to the full Senate, where she is expected to be confirmed as energy secretary.
In written comments to the committee last week, Granholm said she wouldn’t “necessarily” oppose oil and natural gas or efforts underway to limit their climate impacts. Specifically, she said she supported exports of LNG, which “can have an important role to play in reducing international consumption of fuels that have greater contribution to greenhouse gas emissions.”