Air Pollution Control Equipment Services, Emissions

EIA forecasts show lower energy prices

Issue 2 and Volume 101.

EIA forecasts show lower energy prices

The new forecasts in the Energy Information Administration`s (EIA) Annual Energy Outlook 1997 (AEO97) show lower projected prices for all energy sources than in the Annual Energy Outlook 1996 (AEO96), published in January 1996.

Competitive pressures in the electricity industry, due to restructuring and lower prices for the fuels used to generate electricity, are expected to lead to lower electricity prices. Average electricity prices should decline from 7.1 cents/kWh in 1995 to 6.3 cents/kWh in 2015, about 10 percent lower than the AEO96 forecast of 7.1 cents/kWh in 2015. These prices are in real, inflation-adjusted 1995 dollars. Although AEO97 assumes that increased competition leads to a number of cost reductions, the full potential impacts of restructuring and deregulation are not included in the projections.

AEO97 projects that total energy consumption will rise to 111 quadrillion Btu in 2015 from 91 quadrillion Btu in 1995, 3 quadrillion Btu higher than projected for 2015 in AEO96. Consumption is higher, particularly in the transportation and industrial sectors, due to lower energy prices and economic growth projected at 0.2 percent higher annually.

Carbon emissions in AEO97 increase from 1,424 million metric tons in 1995 to 1,799 million metric tons in 2015, about 4 percent higher than the 1,735 million metric tons forecast in AEO96. Higher energy consumption and slower penetration of renewable energy sources, due to lower fossil fuel prices, lead to the higher emissions.

AEO97 includes the analysis of all legislation enacted as of Oct. 1, 1996, including many of the provisions of the Climate Change Action Plan, but it does not include impacts of pending legislation or legislation and programs for which funds have not been appropriated. AEO97 is available through EIA`s National Energy Information Center, Room 1F-048, Forrestal Building, Washington, D.C. 20585, (202) 586-8800 (phone).