Thursday, September 22, 2011

EIA International Energy Outlook 2011:

The Nuclear Perspective

On September 19, 2011, the DOE Energy Information Administration (EIA) rolled out its latest International Energy Outlook, IEO 2011 at a briefing presented by the deputy director and acting director of EIA, Dr. Harold Gruenspecht, at the Center for Strategic and International Studies (CSIS) in Washington, DC. The report makes projections about the global supply and demand of different energy resources between now and 2035. I attended the event, so heard the overview of the report as well as the Q&A session that followed. I will not try to summarize the whole report, as much of it deals with oil and gas, and in any event, is available on the EIA website, as is a video of the presentation. However, I thought I could augment the report by making a couple of general observations about the IEOs in general, and also by highlighting a couple of comments Dr. Gruenspecht made that are not in the report itself.

I first want to recognize that the nuclear community has a long-standing ambivalence with past versions of this report. Over the years, many have complained that it is too pessimistic about the prospects for nuclear power. Indeed, when I worked at DOE, the projections of the Office of Nuclear Energy, where I worked, and the projections of EIA, which is an independent arm of the DOE, often differed significantly.

One fundamental reason for these differences is that the EIA makes its predictions based on existing policies and programs. In that sense, while their projection is not literally a straight-line projection, it has some of the characteristics of a straight-line projection. The projection does recognize population impacts and price impacts, but it doesn't assume that policies will change or that long-range plans will necessarily materialize, so it ends up off the mark when some of these plans actually come to pass. On the other hand, the Office of Nuclear Energy, the industry, and others often include anticipated policy changes and long-range plans in their projections, so their projections end up overestimating nuclear power growth when some of these plans and policies do not materialize.

Leaving aside the philosophical discussion about what anticipated changes one should or should not include when making projections, I found this year's report, and the discussion at the briefing, particularly interesting from a nuclear perspective.

In particular, the report has been a year in the making, and some of the information in it is already dated. The report shows the penetration of nuclear power increasing from 5% to 7% of total energy demand globally by 2035. However, Dr. Gruenspecht pointed out that the nuclear portion of the report was developed prior to the Fukushima event, and was not adjusted to reflect the decisions several countries have made following that event.

Dr. Gruenspecht did not attempt to quantify what he thought this effect might be, but he mentioned several countries whose changed nuclear stance would likely affect the projection. The countries he named were Germany, Japan, Italy, Switzerland, and China.

Now, I'm not disagreeing that the projected percentage is down--IAEA is making similar predictions (in terms of percent of global electricity demand). However, I found his list of countries a little puzzling. These countries have all announced very different decisions, and I would think their impacts on the 2035 IEO projection would range from significant to almost no change.

In the case of Germany, the change does indeed seem pretty clear. Japan is also certainly on a downward trend for the near future. In the case of Italy, Italy was only at the very beginning of their nuclear "revival" when Fukushima occurred, and since EIA doesn't factor in "plans" lightly, I have to wonder if Italy was even considered in arriving at the 2035 estimate, and therefore, if the Italian decision will affect the projection at all. Switzerland has already modified its initial statements, and I'm not sure that what it is saying now will lead to a significant change in the IEO projection. China has reportedly scaled back its new reactor plans somewhat, but many (myself included) always doubted whether their stated plans could be realized, so I seriously doubt whether the IEO projection for 2035 was based on the original Chinese plans anyway.

It will be useful to see a realistic projection, by country, taking into account 1) how optimistic or pessimistic the previous estimates were in the first place, and 2) seeing how the recent announcements by different countries have been factored in.

In that regard, however, the future of the IEO is unclear. Dr. Gruenspecht alluded to budget constraints possibly limiting EIA's ability to produce this report in the future. While some in the nuclear community will not mourn its loss, it has proved to be a useful report for many purposes. It does pull together a lot of useful information on resource estimates, price trends, population changes, and other factors.


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