Utilization

Increasing Use Trends

Overall need for natural gas (44.5% increase)

2007 2035
Consumption Quad BTU % Share Quad BTU % Share % Change
Liquid Fuels 174.7 35.3% 223.6 30.3% 28.0%
Coal 132. 4.26% 206.3 27.9% 55.8%
Natural Gas 112.1 22.6% 162.0 21.9% 44.5%
Renewables 48.8 9.9% 99.8 13.5% 104.5%
Nuclear Power 27.1 5.5% 47.1 6.4% 73.8%
Total 495.2 100.0% 738.7 100.0% 49.2%
Source: EIA, International Energy Outlook 2010.

The following charts show how the growing use of natural gas will be utilized in various industries or applications.
(Source: May 2010 U.S. Energy Information Administration Report)

Tax credits encourage installation of renewable technologies

More than one-half of the States have either binding RPS or nonbinding voluntary targets for renewable energy generation. The recent enactment of Federal ITCs for distributed renewable technologies through 2016 provides the greater assurance necessary for market development that will help States achieve their renewable energy goals.

Conventional natural-gas-fired turbines and engines account for the next-largest capacity increase, followed by microturbines and fuel cells.

Heat and power energy consumption increases in manufacturing industries

In 2008, about two-thirds of delivered energy consumption in the industrial sector was used for heat and power in manufacturing; that share increases to three-quarters in 2035 (Figure 50).

The rise in manufacturing heat and power consumption in the AEO2010 Reference case can be attributed primarily to a relatively large 36-percent increase in total energy use for the refining industry (although the value of shipments produced by the refining industry grows by only 11 percent over the same period). The strong growth in fuel use for refining results from higher industrial demand for lighter feedstocks, changes in the production mix as demand for diesel fuels increases, a shift by refineries from lighter to heavier crude oils, and growth in biofuels production.

Use of fuels as feedstocks declines in the chemical industry

Feedstock consumption trends in the AEO2010 Reference case reflect a switch from petrochemical feedstocks (naphtha and gas oils) to LPG feedstocks (ethane, butane, and propane) and a decline in basic chemical production. The shift occurs because of a growing divergence between more rapidly rising crude oil prices, which are the basis for petrochemical feedstock prices, and the slow pace of increase in natural gas prices—the primary basis for LPG prices.

Over time, more fuels are brought into the mix of industrial energy use

Liquid fuels and natural gas currently account for about two-thirds of industrial delivered energy use, and electricity, coal, and renewables make up the remainder (Figure 52). With fuel-switching opportunities often limited to boilers, kilns, and some feedstocks, changes in fuel shares tend to reflect long- term transitions among the mix of industries and capital investment. Although their use is declining, liquid fuels and natural gas are the leading industrial fuel sources throughout the projections. Almost one-half of industrial liquid fuel consumption is for use as a feedstock for the production of petrochemicals. Another large portion (28 percent) is generated as byproduct fuel and consumed at refineries. The decline in industrial use of liquid fuels and natural gas reflects a drop in chemical production, which accounted for a large share of industrial use of the two fuels (excluding natural gas lease and plant fuel) in 2008.

Increased coal use for CTL production more than offsets a decline in traditional industrial applications of coal, such as steam generation and coke production, largely because of environmental concerns about emissions from coal-fired boilers, along with improvements in manufacturing efficiency that reduce the need for process steam. Metallurgical coal use also declines, reflecting a decline in steel industry output and the greater penetration of electric arc furnaces.

Energy consumption growth varies widely across industry sectors

Energy consumption in the refining industry increases—despite a relatively flat trend in overall petroleum demand—given the industry’s needs to process heavier crude oils, comply with low-sulfur fuel standards, and produce biofuels as mandated in EISA2007. Energy use also increases in the food and paper and pulp industries, where rising shipments reverse recent declines.