US to become net energy exporter as Trump budgets against renewables

The US will become a net energy exporter in 2022, according to the US Federal government energy data agency’s latest central scenario.

Almost all scenarios in the US Energy Information Administration (EIA)’s Annual Energy Outlook 2018 (AEO 2018) see the US move from being a net importer of energy, which it has been since 1953, to an exporter. This transition occurs earlier than 2022 in those scenarios with higher oil prices.

A continued growth in the US’ shale and tight oil and gas resources, along with a predicted modest growth in energy consumption, underpin the scenarios. AEO 2018’s reference case only incorporates existing US laws and policies.

‘The United States energy system continues to undergo an incredible transformation,’ said EIA Administrator Linda Capuano.

‘This is most obvious when one considers that the AEO shows the United States becoming a net exporter of energy during the projection period in the reference case and in most of the sensitivity cases as well – a very different set of expectations than we imagined even five or ten years ago.’

After 2040, the high oil and gas scenarios see exports decline due to lack of substantial improvements in technology, and as production moves to less productive regions.

The reference case for AEO 2018 has US energy consumption growing by 0.4% per year on average from 2017 to 2050, compared to a GDP growth estimate of 2% – due to energy efficiency improvements. It also projects that almost all new electricity generation after 2022 will come from renewable power or natural gas, due to continued low natural gas prices and the continued decline in the cost of renewables.  

Exemplifying the report’s shape of things to come, Bloomberg reported that the US delivered its first ever export of oil to the United Arab Emirates in December. 

The UAE, an OPEC oil producer, purchased US shale oil which arrived on a tanker from Houston, reportedly due to its light crude nature. The International Energy Agency (IEA) said that ‘such a development would have seemed incredible a few years ago, now it looks like the shape of things to come’.

The IEA’s latest Oil Market Report, released in mid-February, says that by the end of the year the US could overtake Saudi Arabia and then even Russia to become the global leader in oil production. 

The IEA says that in August to November 2017, US oil production increased by a ‘colossal’ 846,000 barrels per day. In November the US was producing 10mn barrels of oil per day.

On the renewables front, data for 2017 compiled by the US Federal Energy Regulatory Commission (FERC) indicates that new renewable energy generating capacity exceeded natural gas power installations. 

The organisation’s Energy Infrastructure Update indicates that renewable sources (biomass, geothermal, hydropower, solar and wind) accounted for 50% of the 25 GW of new US generating capacity installed in 2017. Natural gas accounted for 49%, and no new coal capacity was installed.

 The FERC data, analysed by the US SUN-DAY Campaign, show the fourth year in a row that new renewable capacity has exceeded natural gas, and renewables now account for over 20% of US generating capacity. 

The figures indicate that the US has 18% less coal capacity on the system than in 2012, and that the 30 GW of utility-scale solar now in place is eight times greater than that in 2012. In 2017 US nuclear power’s share of capacity declined by 1.5%.

‘Notwithstanding a year-long effort by the Trump administration and its congressional allies to prop up coal, nuclear, and natural gas at the expense of renewable energy sources, clean energy technologies have proven themselves to be amazingly resilient,’ said Ken Bossong, Executive Director of the SUN-DAY Campaign.

Notwithstanding the success of renewables the Trump administration is looking to make budgetary cuts to its renewable energy and energy efficiency programmes in 2019.

The Washington Post reports that the US government has asked Congress for an increase to its Department of Energy (DOE) budget of 1.3% (to total $30.6bn), but that the budget sees an increase in spending for DOE’s National Nuclear Security Association, and cuts, particularly to the Office of Energy Efficiency and Renewable Energy which would see funding on advanced technology cut by 66%.

Elizabeth Noll from the US Natural Resources Defense Council described the budget proposal as ‘absurd’. ‘Instead of leading the charge on the nation’s fastest-growing employment sector – wind and solar power – the administration is rushing to surrender America’s leadership on clean energy,’ she said. ‘A budget proposal like this ignores the benefits these investments spur in communities across the country.’

The budget follows the Trump administration putting levies of up to 30% on solar power equipment manufactured outside the US – which account for around 80% of the supply chain.