On May 29, the U.S. Environmental Protection Agency (EPA) proposed a rule setting Renewable Fuel Standard (RFS) volumes for 2014 through 2016. Although these volumes could be modified before the final rule is issued, they are used in developing the current STEO. Ethanol production, which averaged 935,000 b/d in 2014, is forecast to remain near current levels in 2015 and 2016. Ethanol consumption, which averaged 878,000 b/d in 2014, is forecast to average 894,000 b/d in 2015 and 902,000 b/d in 2016, resulting in an average 9.9% ethanol share of the total gasoline pool in 2015 and 2016. EIA does not expect measurable increases in E15 or E85 consumption over the forecast period. The proposed RFS targets are expected to encourage imports of Brazilian sugarcane ethanol,which were just 3,000 b/d in 2014. Because of the expected increase in ethanol gross imports, net exports of ethanol are forecast to fall from 51,000 b/d in 2014, to 44,000 b/d in 2015, and to 36,000 b/d in 2016.
EIA expects the biggest effect of the proposed RFS targets to be on biodiesel consumption, which contributes to meeting the biomass-based diesel, advanced biofuel, and total renewable fuel RFS targets. Biodiesel production averaged an estimated 81,000 b/d in 2014 and is forecast to average 91,000 b/d in 2015 and 98,000 b/d in 2016. Net imports of biomass-based diesel are also expected to increase from 16,000 b/d in 2014, to 24,000 b/d in 2015, and to 35,000 b/d in 2016. EIA expects that a combination of higher biomass-based diesel consumption, higher consumption of domestic and imported ethanol, and banked Renewable Identification Numbers (RINs) will help meet the newly proposed RFS volumes through 2016.
Energy-Related Carbon Dioxide Emissions
EIA estimates that emissions grew by 1.0% in 2014. Emissions are projected to decrease by 0.2% in 2015 and then rise by 0.4% in 2016. These forecasts are sensitive to both weather and economic assumptions.
Electricity and Heat Generation from Renewables
EIA expects renewables used in the electric power sector will grow by 1.8% in 2015; conventional hydropower generation decreases by 2.0% and nonhydropower renewable power generation increases by 5.5%. The 2015 decrease in hydropower generation reflects the effects of theCalifornia drought, which are only partially offset by growth in use of hydropower elsewhere. Generation from hydropower is expected to increase by 5.4% in 2016. Total renewables consumption for electric power and heat generation decreases by 1.2% in 2015 and increases by 5.5% in 2016.
EIA expects continued growth in utility-scale solar power generation, which is projected to average 86 gigawatthours per day (GWh/d) in 2016. Because the growth is from a small base, utility-scale solar power averages only 0.8% of total U.S. electricity generation in 2016. Although solar growth has historically been concentrated in customer-sited distributed generation installations (rooftop panels), EIA expects utility-scale solar capacity will increase by 90% between the end of 2014 and the end of 2016, with more than half of this new capacity being built in California. Other leading states include North Carolina, Nevada, Texas, and Utah, which, combined with California, account for more than 90% of the projected utility-scale capacity additions for 2015 and 2016. According to current law, projects coming online after the end of 2016 will see a federal investment tax credit of 10%, below the 30% investment tax credit available for projects that come online before the end of 2016. This impending decline in the tax credit provides a strong incentive for projects to enter service before the end of 2016.
Wind capacity, which grew by 8.3% in 2014, is forecast to increase by 12.8% in 2015 and by 13.0% in 2016. Because wind is starting from a much larger base than solar, even though the growth rate is lower, the absolute increase in wind capacity is twice that of solar: 18 GW of wind compared with 9 GW of utility-scale solar between 2014 and 2016.