Ecobella Blog

U.S. Environmental Protection Agency will, for the first time, require large emitters of heat-trapping emissions to begin collecting greenhouse gas (GHG) data under a new reporting system. This new program will cover approximately 85 percent of the nation’s GHG emissions and apply to roughly 10,000 facilities.

“This is a major step forward in our effort to address the greenhouse gases polluting our skies,” said EPA Administrator Lisa P. Jackson. “For the first time, we begin collecting data from the largest facilities in this country, ones that account for approximately 85 percent of the total U.S. emissions. The American public, and industry itself, will finally gain critically important knowledge and with this information we can determine how best to reduce those emissions.”

EPA’s new reporting system will provide a better understanding of where GHGs are coming from and will guide development of the best possible policies and programs to reduce emissions. The data will also allow businesses to track their own emissions, compare them to similar facilities, and provide assistance in identifying cost effective ways to reduce emissions in the future. This comprehensive, nationwide emissions data will help in the fight against climate change.

Greenhouse gases, like carbon dioxide, are produced by burning fossil fuels and through industrial and biological processes. Fossil fuel and industrial GHG suppliers, motor vehicle and engine manufacturers, and facilities that emit 25,000 metric tons or more of CO2 equivalent per year will be required to report GHG emissions data to EPA annually. This threshold is equivalent to about the annual GHG emissions from 4,600 passenger vehicles.

The first annual reports for the largest emitting facilities, covering calendar year 2010, will be submitted to EPA in 2011. Vehicle and engine manufacturers outside of the light-duty sector will begin phasing in GHG reporting with model year 2011. Some source categories included in the proposed rule are still under review.

EPA

EPA Press Release

The past year has been a tumultuous one for world energy markets, with oil prices soaring through the first half of 2008 and diving in its second half. The downturn in the world economy has had a significant impact on energy demand, and the near-term future of energy markets is tied to the downturn’s uncertain depth and persistence. The recovery of the world’s financial markets is especially important for the energy supply outlook, because the capital-intensive nature of most large energy projects makes access to financing a critical necessity.

The projections in this report look beyond current economic and financial woes and focus on factors that drive U.S. energy markets in the longer term. Key issues highlighted include higher but uncertain world oil prices, growing concern about greenhouse gas (GHG) emissions and its impacts on energy investment decisions, the increasing use of renewable fuels, the increasing production of unconventional natural gas, the shift in the transportation fleet to more efficient vehicles, and improved efficiency in end-use appliances.

World Oil Prices, Oil Use, and Import Dependence

Despite the recent economic downturn, growing demand for energy—particularly in China, India, and other developing countries—and efforts by many countries to limit access to oil resources in their territories that are relatively easy to develop are expected to lead to rising real oil prices over the long term. In the AEO2009 reference case, world oil prices rise to $130 per barrel (real 2007 dollars) in 2030; however, there is significant uncertainty in the projection, and 2030 oil prices range from $50 to $200 per barrel in alternative oil price cases. The low price case represents an environment in which many of the major oil-producing countries expand output more rapidly than in the reference case, increasing their share of world production beyond current levels. In contrast, the high price case represents an environment where the opposite would occur: major oil-producing countries choose to maintain tight control over access to their resources and develop them more slowly.

Total U.S. demand for liquid fuels grows by only 1 million barrels per day between 2007 and 2030 in the reference case, and there is no growth in oil consumption. Oil use is curbed in the projection by the combined effects of a rebounding oil price, more stringent corporate average fuel economy (CAFE) standards, and requirements for the increased use of renewable fuels.

Growth in the use of biofuels meets the small increase in demand for liquids in the projection. Further, with increased use of biofuels that are produced domestically and with rising domestic oil production spurred by higher prices in the AEO2009 reference case, the net import share of total liquid fuels supplied, including biofuels, declines from 58 percent in 2007 to less than 40 percent in 2025 before increasing to 41 percent in 2030. The net import share of total liquid fuels supplied in 2030 varies from 30 percent to 57 percent in the alternative oil price cases, with the lowest share in the high price case, where higher oil prices dampen liquids demand and at the same time stimulate more production of domestic petroleum and biofuels.

Growing Concerns about Greenhouse Gas Emissions

Although no comprehensive Federal policy has been enacted, growing concerns about GHG emissions appear to be affecting investment decisions in energy markets, particularly in the electricity sector. In the United States, potential regulatory policies to address climate change are in various stages of development at the State, regional, and Federal levels. U.S. electric power companies are operating in an especially challenging environment. In addition to ongoing uncertainty with respect to future demand growth  and the cost of fuel, labor, and new plant construction, it appears that capacity planning decisions for new generating plants already are being affected by the potential impacts of policy changes that could be made to limit or reduce GHG emissions.

This concern is recognized in the reference case and leads to limited additions of new coal-fired capacity— much less new coal capacity than projected in recent editions of the Annual Energy Outlook (AEO). Instead of relying heavily on the construction of new coal-fired plants, the power industry constructs more new natural-gas-fired plants, which account for the largest share of new power plant additions, followed by smaller amounts of renewable, coal, and nuclear capacity. From 2007 to 2030, new natural-gas-fired plants account for 53 percent of new plant additions in the reference case, and coal plants account for only 18 percent.

There is also a wide divergence in electricity prices. In the no GHG concern case, electricity prices are 3 percent lower in 2030 than in the reference case; in the opposite case, they are 22 percent higher in 2030 than in the reference case.

Increasing Use of Renewable Fuels

The use of renewable fuels grows strongly in AEO2009, particularly in the liquid fuels and electricity markets. Overall consumption of marketed renewable fuels—including wood, municipal waste, and biomass in the end-use sectors; hydroelectricity, geothermal, municipal waste, biomass, solar, and wind for electric power generation; ethanol for gasoline blending; and biomass-based diesel—grows by 3.3 percent per year in the reference case, much faster than the 0.5-percent annual growth in total energy use. The rapid growth of renewable generation reflects the impacts of the renewable fuel standard in the Energy Independence and Security Act of 2007 (EISA2007) and strong growth in the use of renewables for electricity generation spurred by renewable portfolio standard (RPS) programs at the State level.

EISA2007 requires that 36 billion gallons of qualifying credits from biofuels be produced by 2022 (a credit is roughly one gallon, but some biofuels may receive more than one credit per gallon); and although the reference case does not show that credit level being achieved by the 2022 target date, it is exceeded by 2030. The volume of biofuels consumed is sensitive to the price of the petroleum-based products against which they compete. As a result, total liquid biofuel consumption varies significantly between the reference case projection and the low and high oil price cases. In the low oil price case, total liquid biofuel consumption reaches 27 billion gallons in 2030. In the high oil price case, where the price of oil approaches $200 per barrel (real 2007 dollars) by 2030, it reaches 40 billion gallons.

As of November 2008, 28 States and the District of Columbia had enacted RPS requirements that a specified share of the electricity sold in the State come from various renewable sources. As a result, the share of electricity sales coming from nonhydroelectric renewables grows from 3 percent in 2007 to 9 percent in 2030, and 33 percent of the increase in total generation comes from nonhydroelectric renewable sources. The share of sales accounted for by nonhydroelectric renewables could grow further if more States adopted or strengthened existing RPS requirements. Moreover, the enactment of polices to reduce GHG emissions could stimulate additional growth. In the LW110 case, the share of electricity sales accounted for by nonhydroelectric renewable generation grows to 18 percent in 2030.

Growing Production from Unconventional Natural Gas Resources

Relative to recent AEOs, the AEO2009 reference case raises EIA’s projection for U.S. production and consumption of natural gas, reflecting a larger resource base and higher demand for natural gas for electricity generation. Among the various sources of natural gas, the most rapid growth is in domestic production from unconventional resources, while the role played by pipeline imports and imports of liquefied natural gas (LNG) declines over the long term.

The larger natural gas resource in the reference case results primarily from a larger estimate for natural gas shales, with some additional impact from the 2008 lifting of the Executive and Congressional moratoria on leasing and development of crude oil and natural gas resources in the OCS. From 2007 to 2030, domestic production of natural gas increases by 4.3 trillion feet (22 percent), while net imports fall by 3.1 trillion cubic feet (83 percent). Although average real U.S. wellhead prices for natural gas increase from $6.39 per thousand cubic feet in 2007 to $8.40 per thousand cubic feet in 2030, stimulating production from domestic resources, the prices are not high enough to attract large imports of LNG, in a setting where world LNG prices respond to the rise of oil prices in the AEO2009 reference case. One result of the growing production of natural gas from unconventional onshore sources, together with increases from the OCS and Alaska, is that the net import share of U.S. total natural gas use also declines, from 16 percent in 2007 to less than 3 percent in 2030.

In addition to concerns and/or policies regarding GHG emissions, the overall level of natural gas consumption that supply must meet is sensitive to many other factors, including the pace of economic growth. In the AEO2009 alternative economic growth cases, consumption of natural gas in 2030 varies from 22.7 trillion cubic feet to 26.0 trillion cubic feet, roughly 7 percent below and above the reference case level.

Shifting Mix of Unconventional Technologies in Cars and Light Trucks

Higher fuel prices, coupled with significant increases in fuel economy standards for light-duty vehicles (LDVs) and investments in alternative fuels infrastructure, have a dramatic impact on development and sales of alternative-fuel and advanced-technology LDVs. The AEO2009 reference case includes a sharp increase in sales of unconventional vehicle technologies, such as flex-fuel, hybrid, and diesel vehicles. Hybrid vehicle sales of all varieties increase from 2 percent of new LDV sales in 2007 to 40 percent in 2030. Sales of plug-in hybrid electric vehicles (PHEVs) grow to almost 140,000 vehicles annually by 2015, supported by tax credits enacted in 2008, and they account for 2 percent of all new LDV sales in 2030. Diesel vehicles account for 10 percent of new LDV sales in 2030 in the reference case, and flex-fuel vehicles (FFVs) account for 13 percent.

In addition to the shift to unconventional vehicle technologies, the AEO2009 reference case shows a shift in the LDV sales mix between cars and light trucks. Driven by rising fuel prices and the cost of CAFE compliance, the sales share of new light trucks declines. In 2007, light-duty truck sales accounted for approximately 50 percent of new LDV sales. In 2030, their share is down to 36 percent, mostly as a result of a shift in LDV sales from sport utility vehicles to mid-size and large cars.

Slower Growth in Overall Energy Use and Greenhouse Gas Emissions

The combination of recently enacted energy efficiency policies and rising energy prices in the AEO2009 reference case slows the growth in U.S. consumption of primary energy relative to history: from 101.9 quadrillion British thermal units (Btu) in 2007, energy consumption grows to 113.6 quadrillion Btu in 2030, a rate of increase of 0.5 percent per year. Further, when slower demand growth is combined with increased use of renewables and a reduction in additions of new coal-fired conventional power plants, growth in energy-related GHG emissions also is slowed relative to historical experience. Energy-related emissions of carbon dioxide (CO2) grow at a rate of 0.3 percent per year from 2007 to 2030 in the AEO2009 reference case, to 6,414 million metric tons in 2030, compared with the Annual Energy Outlook 2008 (AEO2008) reference case projection of 6,851 million metric tons in 2030.

One key factor that drives growth in both total energy consumption and GHG emissions is the rate of overall economic growth. In the AEO2009 reference case, the U.S. economy grows by an average of 2.5 percent per year. In comparison, in alternative low and high economic growth cases, the average annual growth rates from 2007 to 2030 are 1.8 percent and 3.0 percent. In the two cases, total primary energy consumption in 2030 ranges from 104 quadrillion Btu (8.2 percent below the reference case) to 123 quadrillion Btu (8.6 percent above the reference case). Energy-related CO2 emissions in 2030 range from 5,898 million metric tons (8.1 percent below the reference case) in the low economic growth case to 6,886 million metric tons (7.3 percent above the reference case) in the high economic growth case.

Source: EIA

By Bjorn Lomborg

COPENHAGEN – Our current approach to solving global warming will not work. It is flawed economically, because carbon taxes will cost a fortune and do little, and it is flawed politically, because negotiations to reduce CO2 emissions will become ever more fraught and divisive. And even if you disagree on both counts, the current approach is also flawed technologically.

Many countries are now setting ambitious carbon-cutting goals ahead of global negotiations in Copenhagen this December to replace the Kyoto Protocol. Let us imagine that the world ultimately agrees on an ambitious target. Say we decide to reduce CO2 emissions by three-quarters by 2100 while maintaining reasonable growth. Herein lies the technological problem: to meet this goal, non-carbon-based sources of energy would have to be an astounding 2.5 times greater in 2100 than the level of total global energy consumption was in 2000.

These figures were calculated by economists Chris Green and Isabel Galiana of McGill University. Their research shows that confronting global warming effectively requires nothing short of a technological revolution. We are not taking this challenge seriously. If we continue on our current path, technological development will be nowhere near significant enough to make non-carbon-based energy sources competitive with fossil fuels on price and effectiveness.

In Copenhagen this December, the focus will be on how much carbon to cut, rather than on how to do so. Little or no consideration will be given to whether the means of cutting emissions are sufficient to achieve the goals.

Politicians will base their decisions on global warming models that simply assume that technological breakthroughs will happen by themselves. This faith is sadly – and dangerously – misplaced.

Green and Galiana examine the state of non-carbon-based energy today – nuclear, wind, solar, geothermal, etc. – and find that, taken together, alternative energy sources would get us less than halfway toward a path of stable carbon emissions by 2050, and only a tiny fraction of the way toward stabilization by 2100. We need many, many times more non-carbon-based energy than is currently produced.

Yet the needed technology will not be ready in terms of scalability or stability. In many cases, there is still a need for the most basic research and development. We are not even close to getting this revolution started.

Current technology is so inefficient that – to take just one example – if we were serious about wind power, we would have to blanket most countries with wind turbines to generate enough energy for everybody, and we would still have the massive problem of storage: we don’t know what to do when the wind doesn’t blow.

Policymakers should abandon fraught carbon-reduction negotiations, and instead make agreements to invest in research and development to get this technology to the level where it needs to be. Not only would this have a much greater chance of actually addressing climate change, but it would also have a much greater chance of political success. The biggest emitters of the twenty-first century, including India and China, are unwilling to sign up to tough, costly emission targets. They would be much more likely to embrace a cheaper, smarter, and more beneficial path of innovation.

Today’s politicians focus narrowly on how high a carbon tax should be to stop people from using fossil fuels. That is the wrong question. The market alone is an ineffective way to stimulate research and development into uncertain technology, and a high carbon tax will simply hurt growth if alternatives are not ready. In other words, we will all be worse off.

Green and Galiana propose limiting carbon pricing initially to a low tax (say, $5.00 a ton) to finance energy research and development. Over time, they argue, the tax should be allowed to rise slowly to encourage the deployment of effective, affordable technology alternatives.

Investing about $100 billion annually in non-carbon-based energy research would mean that we could essentially fix climate change on the century scale. Green and Galiana calculate the benefits – from reduced warming and greater prosperity – and conservatively conclude that for every dollar spent this approach would avoid about $11 of climate damage. Compare this to other analyses showing that strong and immediate carbon cuts would be expensive, yet achieve as little as $0.02 of avoided climate damage.

If we continue implementing policies to reduce emissions in the short term without any focus on developing the technology to achieve this, there is only one possible outcome: virtually no climate impact, but a significant dent in global economic growth, with more people in poverty, and the planet in a worse place than it could be.

Source: Project Syndicate

Nicolas Sarkozy, the French president, renewed his call for a European carbon tax on imports to the bloc on Thursday as he unveiled details of a new charge on fossil fuel products in France.

“I will not accept a system … that imports products from countries that don’t respect the rules [on carbon emission reductions]. We need to impose a carbon tax at [Europe’s] borders. I will lead that battle.”

The French president has in the past sparked accusations of protectionism after calling for European import tariffs on products from countries that do not abide by international targets on carbon emission reductions.

On Thursday economists warned that such an initiative – likely to be supported by some European countries such as Italy – could have catastrophic consequences for the ongoing attempts to strike a global trade deal.

“This would put the developed world on a collision course with China, India and other developing countries. It could do serious damage to the international trade system,” said Simon Tilford, chief economist of the Centre for European reform. “It would be seen as naked protectionism.”

Mr Sarkozy sought to defend his position, which is clearly aimed at making France’s own carbon tax more palatable in the face of strong public opposition.

“A carbon tax at the border is the natural complement to a domestic carbon tax. More importantly, a carbon tax at the borders is vital for our industries and our jobs. This has nothing to do with protectionism,” he said. “This is about fair play.”

France will become the largest economy to levy a carbon tax when it comes into effect next year.

Mr Sarkozy set the tax at €17 per tonne of carbon emissions, just above the €14 signalled by François Fillon, his prime minister, last week, but still far below the level recommended by environmental activists.

This represents about 4.5 cents per litre of diesel, or 4 cents per litre of gasoline and 0.4 cents per kilowatt hour of gas.

In a concession to concerns within his own party about the impact of a new tax on poorer and rural households, Mr Sarkozy said the tax would be offset by reductions in income tax or special “green cheques” for those below the tax threshold.

“The creation of the carbon tax will not increase charges in our country,” he said. No household or business would be worse off as a result, he added, and an independent commission would be set up to monitor the impact of the tax

Source: MINA

September 9, 2009 Release

Global Petroleum Overview. WTI oil prices hovered in the $67-to-$74-per-barrel range in August as expectations of an economic recovery and higher oil consumption in the future were weighed against weak current demand and high inventories. As long as oil prices remain in their current range, EIA expects the Organization of the Petroleum Exporting Countries (OPEC) to maintain its existing production targets.

Global Petroleum Consumption. Preliminary data indicate that global oil consumption declined by 3 million barrels per day (bbl/d) in the second quarter of 2009 compared with year-earlier levels. Members of the Organization for Economic Cooperation and Development (OECD) accounted for most of the decline; total non-OECD consumption was virtually unchanged. The current macroeconomic outlook assumes that the world economy begins to recover at the end of this year, led by non-OECD Asia. As a result, EIA expects world oil consumption to grow in the fourth quarter of 2009 compared with year-earlier levels, the first such growth in 5 quarters. Projected world oil consumption grows by 0.9 million bbl/d in 2010, with relatively strong growth in non-OECD countries being partially offset by a slight decline in OECD consumption.

Non-OPEC Supply. Total non-OPEC supply averaged 50.1 million bbl/d in the second quarter of 2009, about 0.3 million bbl/d higher than in the second quarter of 2008. The largest amount of growth came from Central and South America (0.3 million bbl/d) and the Former Soviet Union (0.3 million bbl/d), which was offset by a 0.3 million bbl/d decline in Europe. Over the forecast period, higher output from Brazil, the United States, Azerbaijan, Kazakhstan, and Canada offsets falling production in Mexico and the North Sea.

OPEC Supply. OPEC crude oil production was 28.7 million bbl/d in the second quarter of 2009, similar to first quarter levels, but down 3 million bbl/d from peak production in the third quarter of 2008. The combination of higher prices and OPEC’s historical tendency for weaker compliance with production targets over time suggests that OPEC crude oil production could rise over the remainder of the year, unless prices fall sharply from current levels. Projected OPEC crude oil production climbs to 29.3 million bbl/d in the second half of 2009, then averages 28.9 million bbl/d in 2010.

Global Petroleum Inventories. Based on preliminary data, OECD commercial oil inventories stood at 2.74 billion barrels at the end of the second quarter of 2009. At 61 days of forward cover, OECD commercial inventories were well above average levels for that time of year. EIA expects OECD oil inventories to remain at above-average levels throughout the forecast period because of weakness in global oil consumption and continuing contango in the futures market, i.e., relatively high future prices compared with current prices.

Crude Oil Prices. Equity-market and exchange-rate expectations continue to be cited by market analysts as proximate causes of oil-price behavior, in addition to changing expectations of global oil consumption growth. EIA projects that WTI crude oil prices will average $69 per barrel in the second half of 2009, $19 per barrel lower than in the second half of 2008. This projection is largely unchanged from last month’s Outlook and reflects the view that an expected economic upturn will restore oil demand growth and gradually work off the surplus oil inventories. Although a consensus seems to be forming that the global economic downturn may have bottomed out, there still remains considerable uncertainty regarding the timing and pattern of any economic recovery.

U.S. Petroleum Consumption. EIA forecasts total consumption of liquid fuels and other petroleum products to decrease by about 800,000 bbl/d (4 percent) in 2009 compared with 2008. During the first half of the year, consumption declined by almost 1.25 million barrels per day (6.3 percent) from the same period last year, one of the steepest declines on record. The year-over-year projected decline in petroleum consumption slows to 300,000 barrels per day (1.6 percent) in the second half of 2009 as economic recovery begins to take hold. Monthly average motor gasoline consumption in June showed an increase over the same month from the prior year for the first time since September 2007 and continues to grow over year-ago levels through the forecast. The modest economic recovery projected for 2010 contributes to a 260,000-bbl/d (1.4 percent) increase in total liquid fuels consumption, led by increases of 110,000 bbl/d (2.9 percent) in distillate consumption, 60,000 bbl/d (0.6 percent) in motor gasoline consumption, and 10,000 bbl/d (0.7 percent) in jet fuel consumption.

U.S. Petroleum Supply. EIA projects total U.S. crude oil production to average 5.24 million barrels per day in 2009 and increase to an average of 5.30 million bbl/d in 2010. Crude oil production from the new Thunder Horse, Tahiti, Shenzi, and Atlantis Federal offshore fields accounts for about 14 percent of Lower-48 crude oil production in the fourth quarter of 2010.

U.S. Petroleum Product Prices. EIA expects the monthly average regular-grade gasoline retail price to fall from $2.62 per gallon in August and September to an average $2.56 per gallon over the last 3 months of the year. Higher projected crude oil prices in 2010 (about $12 per barrel, or 29 cents per gallon, higher than the 2009 average) increase regular-grade gasoline prices to an average of $2.70 per gallon next year. Projected diesel fuel retail prices, which averaged $2.63 per gallon in August, increase over the next few months to average $2.74 during the fourth quarter of 2009 as the winter heating fuel season begins.

U.S. Natural Gas Consumption. EIA projects that total natural gas consumption will likely decline by 2.4 percent in 2009 and remain flat in 2010. Despite low relative prices for much of the year, industrial natural gas consumption declined by 12 percent in the first 6 months of 2009 compared with the same period last year. EIA expects this year-over-year consumption decline will continue through the second half of the year for industrial users, although the trend will be less pronounced. Conversely, EIA expects natural gas use in the electric power sector will increase by 4.3 percent on a year-over-year basis during the second half of 2009 as natural gas continues to compete with coal for a share of the baseload power supply at current prices.

EIA expects natural gas consumption will increase slightly in the commercial and industrial sectors in 2010 as a result of improved economic conditions and low prices. Consumption remains relatively flat in the residential and electric power sectors next year. The anticipated addition of new coal-fired generating capacity and rising natural gas prices limits the potential for significant increases beyond the forecast 2009 level in natural gas consumption by electric generators.

U.S. Natural Gas Production and Imports. EIA expects total U.S. marketed natural gas production to increase by 0.9 percent in 2009 and fall by 3.5 percent in 2010. Despite a 20-percent drop in prices and a 45-percent drop in working natural gas drilling rigs since the start of the year, total natural gas production increased slightly from January to June 2009. This current production trend reflects significant improvements in horizontal drilling technology and robust productivity from shale gas discoveries in Louisiana, Oklahoma, Arkansas, and Pennsylvania. While lower prices have caused a reduction in drilling activity by all rig types, according to data compiled by Smith International, working horizontal rigs have fallen by only 27 percent since the start of the year compared with a 65-percent decrease among vertically-directed rigs. Working horizontal drilling rigs now represent more than half of the active natural gas drilling fleet.

As U.S. natural gas inventories swell to record-high levels, some curtailment of production is expected. The sustained reduction in drilling activity and production curtailments are projected to result in a 5.7-percent decline in marketed production from the Lower-48 non-Gulf of Mexico (GOM) between the first and second half of the year. The projected 1.3-percent increase in Federal GOM production during the second half of 2009 over the first half results from the addition of new producing wells and continued recovery from damage sustained during last year’s hurricane season.

Projected U.S. liquefied natural gas (LNG) imports increase to about 460 billion cubic feet (Bcf) in 2009 from 350 Bcf in 2008 and rise to about 660 Bcf in 2010. Maintenance to existing LNG supply facilities and delays to new liquefaction projects, in addition to higher world oil prices during the second half of 2009, contribute to the 43-Bcf downward revision in the 2009 LNG import forecast from last month’s Outlook.

U.S. Natural Gas Inventories. On August 28, 2009, working natural gas in storage was 3,323 Bcf. Current inventories are now 501 Bcf above the 5-year average (2004–2008) and 489 Bcf above the level during the corresponding week last year. While weekly stocks could exceed reported end-of-month levels, EIA now expects working natural gas inventories to reach 3,840 Bcf at the end of the 2009 injection season (October 31). This would be 275 Bcf above the previous record of 3,565 Bcf reported for the end of October 2007. The working gas inventory forecast assumes weekly storage injections will average about 57 Bcf over the next 9 weeks, compared with average storage injections of about 60 Bcf per week over this period during the previous 5 years.

U.S. Natural Gas Prices. The Henry Hub spot price averaged $3.23 per Mcf in August, $0.25 per Mcf below the average spot price in July. Prices continue to be pushed lower as robust production adds to already high inventories. As electric power demand for air conditioning wanes, a continuation of recent natural gas supply trends could cause spot natural gas prices to fall below current projections before cooler temperatures induce higher demand for space heating. In the projections, prices rise modestly in 2010, reflecting increased economic activity and lower production levels as a result of the current drilling pullback. However, it will take some time to work off current inventory levels and enhanced production capabilities should limit significant increases in prices throughout the forecast period. On an annual basis, the projected Henry Hub spot price averages $3.65 Mcf in 2009 and $4.78 Mcf in 2010.

U.S. Electricity Consumption. Total U.S. electricity consumption fell by 4.4 percent during the first half of the year compared with the same period in 2008, primarily because of the effect of the economic downturn on industrial electricity sales. The expected year-over-year decline in total consumption during the second half of 2009 is smaller, a 2.3-percent decline, as residential sales begin to recover.

U.S. Electricity Generation. While generation from coal fell by 12 percent in the first half of the year compared with the same period in 2008, natural gas generation has risen by 3 percent. Lower coal prices relative to natural gas prices next year and the planned addition of up to 10 gigawatts of coal capacity during 2009 and 2010 could mitigate or reverse the fuel-switching trend.

U.S. Retail Electricity Prices. EIA significantly lowered its electricity retail price projections through 2010 from last month’s Outlook due to the dramatic decline in natural gas fuel costs for power generation. Although retail residential prices during the first half of this year are up by 5 percent from the same period last year, EIA expects prices during the second half will show little change from the second half of last year. The projected annual average 2010 residential electricity price of 11.4 cents per kilowatthour is about 2 percent lower than the 2009 price.

U.S. Coal Consumption. Electric-power-sector coal consumption fell by 11 percent in the first half of this year. The decline resulted from lower total electricity generation combined with increases in generation from natural gas, nuclear, hydropower, and wind. Coal is expected to regain a larger share of the baseload generation mix beginning in 2010, as natural gas prices begin to rise. Projected coal consumption in the electric power sector increases by almost 2 percent in 2010 but remains below the 1-billion short-ton level for the second consecutive year. Coal consumed for steam (retail and general industry) and coke production declined by 15 percent in the first quarter of 2009 compared with the first quarter of last year. In the forecast, lower consumption of coal in both sectors continues for the remainder of the year, followed by a combined increase in coal consumed by these sectors of more than 5 percent in 2010.

U.S. Coal Supply. Coal production for the first 6 months of 2009 fell by more than 5 percent in response to lower U.S. coal consumption, fewer exports, and higher coal inventories; these conditions persist in the forecast for the remainder of 2009. Projected production declines by 1.4 percent in 2010, despite increases in domestic consumption and exports. Reductions in coal inventories and increased imports offset the increase in U.S. coal consumption.

U.S. Coal Prices. The monthly average delivered electric-power-sector coal price reached a record high of $2.29 per million Btu in March 2009. The delivered cost of coal to the electric power sector had continued to rise, despite decreases in spot coal prices, lower prices for other fossil fuels, and declines in demand for coal for electricity generation, because a significant portion of power-sector coal contracts was entered into during a period of high prices for all fuels. The projected average power-sector coal price of $2.18 per million Btu for September 2009 represents the first decline in price from the same month of the prior year since 2002. Projected power-sector coal prices fall over the forecast to about $1.95 per million Btu in December 2010.

U.S. Carbon Dioxide Emissions

Projected carbon dioxide (CO2) emissions from fossil fuels fall by 6.0 percent in 2009 because of the weak economic conditions and declines in the consumption of most fossil fuels. Coal leads the drop in 2009 CO2 emissions, falling by nearly 10 percent because of fuel switching from coal to natural gas in the electric power sector. The projected recovery in the economy contributes to an expected 0.9-percent increase in CO2 emissions in 2010.

Source: EIA

Billionaire T Boone Pickens is working with US Congress and Senate to approve the Natural Gas Act of 2009 that would allow government to give a $65,000 production tax credit to the purchaser of new a class 5 to class 8 Diesel truck – big 18-wheeler trucks- to make up for the difference in price between Diesel engine and Natural Gas engine.

There are 6.5 million big Diesel trucks; so with this legislation its expected that in 5 to 7 years the US could cut in half its oil imports from 4.5 mbpd to 2.5 mbpd.

This would allow the US to take bigger control on its sources of transportation fuel while reducing the huge outflows of money to pay for this imported oil that currently accounts for 2/3 of the trade deficit.  In addition to that it allows reducing emissions from these vehicles by 50%.

Cash for Clunkers Wraps came to a close with nearly 700,000 clunkers taken off the roads, replaced by far more fuel-efficient vehicles. Rebate applications were $2.877 billion.

Cars made in America topped the most-purchased list, from the Ford Focus to the Toyota Corolla to the Honda Civic.

“American consumers and workers were the clear winners thanks to the cash for clunkers program,” said U.S. Transportation Secretary Ray LaHood. “Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life and consumers bought fuel efficient cars that will save them money and improve the environment.”

In addition, the program provides good news for the environment. That’s because the average fuel economy of the vehicles traded in was 15.8 miles per gallon and the average fuel economy of vehicles purchased is 24.9 mpg, a 58% improvement.

“This is a win for the economy, a win for the environment and a win for American consumers,” Secretary LaHood said.

Cars purchased under the program raised the average fuel economy of the fleet, while getting the dirtiest and most polluting vehicles off the road.

Now assuming the average car drives 20,000 miles per year, means the US saves 324 million gallons of fuel per year, at $2.75 per gallon saves of $890 million per year.  Over a 5 year span, the program provides a 28.3% Internal Rate of Return in fuel savings alone.  The IRR breaks even at 13,000 miles per year and for cars that run 25,000 miles a year the IRR goes to 51.0%.

Other factors like reduced carbon emissions, cleaner environment, savings on spare parts, increase safety, increased economic activity and new jobs are harder to measure and tally into the account.

If the US and other developed nations could replace a sizable proportion of their fleets, it may be an important factor on keeping the price of oil at reasonable levels, save trillions of dollars and thousands of lives.

Without looking into absolute number of tons reduced and into the different sectors, a company that pledges a reduction of 25%+ on its emissions over a short period of time, makes a strong statement.

Looking into EPA Climate Leaders, the following companies stand out meeting the 25%+ reduction:

1. 3Degrees pledges to achieve net zero U.S. GHG emissions by 2007 and maintain that level through 2012.
2. 3M achieved its initial goal by reducing total U.S. GHG emissions by 60 percent from 2002 to 2007.
3. Advanced Micro Devices pledges to reduce global GHG emissions by 33 percent per manufacturing index from 2006 to 2010. AMD achieved its initial goal by reducing global GHG emissions by 53 percent per manufacturing index from 2002 to 2006.
4. Burt’s Bees pledges to reduce U.S. GHG emissions by 35 percent per dollar sales from 2006 to 2011.
5. Cherokee Investment Partners pledges to achieve net zero U.S. GHG emissions by 2007 and maintain that level through 2011.
6. Cisco Systems pledges to reduce total global GHG emissions by 25 percent from 2007 to 2012.
7. Codding Enterprises pledges to reduce U.S. GHG emissions by 50 percent per square foot from 2005 to 2010.
8. Conservation Services Group pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2010.
9. Cummins pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2005 to 2010.
10. Deere & Company pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2005 to 2014.
11. Dell pledges to reduce global GHG emissions by 15 percent per dollar revenue from 2007 to 2012, and to achieve net zero global GHG emissions by 2008 and maintain that level through 2012.
12. Design Continuum pledges to reduce U.S. GHG emissions by 25 percent per square foot from 2007 to 2012.
13. DPR Construction pledges to reduce U.S. GHG emissions by 25 percent per employee from 2007 to 2015.
14. EarthColor pledges to reduce U.S. GHG emissions by 40 percent per dollar sales from 2006 to 2012.
15. Ecoprint pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2010.
16. Exelon Corporation achieved its initial goal by reducing total U.S. GHG emissions by 38 percent from 2001 to 2008.
17. Fairchild Semiconductor pledges to reduce U.S. GHG emissions by 30 percent per manufacturing index from 2003 to 2010.
18. FetterGroup pledges to reduce U.S. GHG emissions by 25 percent by sheets printed from 2007 to 2012.
19. First Environment pledges to achieve net zero U.S. GHG emissions by 2008.
20. Genzyme Corporation pledges to reduce global GHG emissions by 25 percent per dollar revenue from 2007 to 2012.
21. Green Mountain Energy Company pledges to achieve net zero U.S. GHG emissions by 2005 and maintain that level through 2009.
22. Intel Corporation pledges to reduce global GHG emissions by 30 percent per production unit from 2004 to 2010.
23. Johnson Controls pledges to reduce U.S. GHG emissions by 30 percent per dollar revenue from 2002 to 2012.
24. Lincus Incorporated pledges to reduce U.S. GHG emissions by 30 percent per square foot from 2006 to 2011.
25. Lockheed Martin pledges to reduce U.S. GHG emissions by 30 percent per dollar revenue from 2001 to 2010.
26. Melaver pledges to achieve net zero U.S. GHG emissions by 2006 and maintain that level through 2009.
27. National Renewable Energy Laboratory pledges to reduce total U.S. GHG emissions by 75 percent from 2005 to 2009. NREL achieved its initial goal by reducing U.S. GHG emissions by 10 percent per square foot from 2000 to 2005.
28. Owens Corning pledges to reduce U.S. GHG emissions by 25 percent per unit of production from 2006 to 2012.
29. PepsiCo pledges to reduce U.S. GHG emissions by 25 percent per ton of production from 2006 to 2015.
30. PSEG achieved its initial goal by reducing U.S. GHG emissions by 31 percent per kWh from 2000 to 2008.
31. Quad/Graphics pledges to reduce U.S. GHG emissions by 25 percent per page printed from 2003 to 2013.
32. Shaklee Corporation pledges to maintain net zero U.S. GHG emissions from 2006 to 2009.
33. Steelcase pledges to reduce U.S. GHG emissions by 40 percent per dollar sales from 2004 to 2009.
34. STMicroelectronics pledges to reduce U.S. GHG emissions by 50 percent per manufacturing unit from 2000 to 2010.
35. The Tower Companies pledges to achieve net zero U.S. GHG emissions by 2008 and maintain that level through 2012.
36. Unilever pledges to reduce global GHG emissions by 25 percent per ton of production from 2004 to 2012.
37. Xerox Corporation pledges to reduce total global GHG emissions by 25 percent from 2002 to 2012. Xerox achieved its initial goal by reducing total global GHG emissions by 18 percent from 2002 to 2006.

Reference:  EPA Climate Leaders