1. The Paul H. Nitze School of Advanced International Studies December 14, 2009 Washington, DC Richard Newell, Administrator Richard Newell, SAIS, December 14, 2009 Annual Energy Outlook 2010 Reference Case

4. Oil prices in the reference case rise steadily; the full AEO2010 will include a wide range of prices Richard Newell, SAIS, December 14, 2009 2008 dollars per barrel Source: Annual Energy Outlook 2010 High oil price Low oil price AEO2010 reference Projections History AEO2009 reference

5. Oil to natural gas price ratio remains high over the projection Richard Newell, SAIS, December 14, 2009 Projections History Oil and natural gas prices Source: Annual Energy Outlook 2010 Crude oil U.S. natural gas wellhead Ratio of oil price to natural gas price 2008 dollars per million Btu

6. Non-fossil energy use grows rapidly, but fossil fuels still provide 78 percent of total energy use in 2035 Richard Newell, SAIS, December 14, 2009 quadrillion Btu Coal Liquid fuels Natural gas Projections History Nuclear Liquid biofuels Renewables (excluding liquid biofuels) Source: Annual Energy Outlook 2010

7. Energy and CO 2 per dollar GDP continue to decline; per capita energy use also declines Richard Newell, SAIS, December 14, 2009 index, 2005=1 Energy per capita Energy per dollar GDP Projections History CO 2 per dollar GDP Source: Annual Energy Outlook 2010

8. Richard Newell, SAIS, December 14, 2009 Energy efficiency gains reduce consumption 15% from where it would otherwise be; structural change is even larger Constant efficiency Constant intensity Efficiency change Structural change AEO2010 reference case 192 133 115 quadrillion Btu Source: Annual Energy Outlook 2010

9. U.S. reliance on imported liquid fuels is reduced by increased domestic production and greater fuel efficiency Richard Newell, SAIS, December 14, 2009 million barrels per day Consumption Production Net imports Projections History AEO2010 reference case Updated AEO2009 reference case 40% 45% 57% 60% Source: Annual Energy Outlook 2010

10. Biofuels meet most of the growth in liquid fuels supply Richard Newell, SAIS, December 14, 2009 million barrels per day Projections History Natural gas plant liquids Biofuels including imports Petroleum supply Net petroleum imports Source: Annual Energy Outlook 2010

11. Biofuels grow, but fall short of the 36 billion gallon RFS target in 2022, exceed it in 2035 Richard Newell, SAIS, December 14, 2009 billion gallon-equivalents Legislated RFS in 2022 RFS with adjustments under CAA Sec.211(o)(7) Biodiesel Other feedstocks Biomass-to-liquids Net ethanol imports Cellulosic ethanol Corn ethanol Renewable diesel Source: Annual Energy Outlook 2010

12. Richard Newell, SAIS, December 14, 2009 New light duty vehicle efficiency reaches 40 mpg by 2035 miles per gallon AEO2009 reference case Source: Annual Energy Outlook 2010

13. Mild and full hybrid systems dominate new light-duty vehicle sales by 2035 Richard Newell, SAIS, December 14, 2009 millions Projections History Source: Annual Energy Outlook 2010

14. Natural gas wellhead price is projected to rise from low levels experienced during 2008-2009 recession Richard Newell, SAIS, December 14, 2009 2008 dollars per thousand cubic feet Projections History AEO2010 reference case Updated AEO2009 reference case Source: Annual Energy Outlook 2010

15. Import share of natural gas supply declines as domestic supply grows Richard Newell, SAIS, December 14, 2009 trillion cubic feet Consumption Domestic supply Net imports Projections History AEO2010 reference case Updated AEO2009 reference case 2% 6% 13% Source: Annual Energy Outlook 2010

16. Shale gas has been the primary source of recent growth in U.S. technically recoverable natural gas resources Richard Newell, SAIS, December 14, 2009 Source: U.S. Geological Service, Mineral Management Service, private data, and EIA . trillion cubic feet Unproved shale gas & other unconventional Unproved conventional (including Alaska*) Proved reserves (all types & locations) * Alaska resource estimates prior to AEO2009 reflect resources from the North Slope that were not included in previously published documentation.

17. Shale gas and Alaska production offset declines in supply to meet consumption growth and lower import needs Richard Newell, SAIS, December 14, 2009 trillion cubic feet Alaska Non-associated offshore Projections History Associated with oil Coalbed methane Net imports Non-associated onshore Shale gas Source: Annual Energy Outlook 2010

18. Growth in electricity use continues to slow Richard Newell, SAIS, December 14, 2009 3-year rolling average percent growth Projections History Period Annual Growth 1950s 9.8 1960s 7.3 1970s 4.7 1980s 2.9 1990s 2.4 2000-2008 0.9 2008-2035 1.0 Structural Change in Economy - Higher prices - Standards - Improved efficiency Source: Annual Energy Outlook 2010

19. Natural gas and renewables account for the majority of capacity additions from 2008 to 2035 Richard Newell, SAIS, December 14, 2009 Coal 312 (31%) Natural gas 338 (33%) Hydropower* 99 (10%) Nuclear 101 (10%) Other renewables 40 (4%) Other 119 (12%) * Includes pumped storage Coal 31 (12%) Natural gas 116 (46%) Hydropower* 1 (0.4%) Nuclear 8 (3%) Other renewables 92 (37%) Other 2 (1%) 2008 capacity Capacity additions 2008 to 2035 1,008 gigawatts 250 gigawatts Source: Annual Energy Outlook 2010

20. Renewables gain electricity market share; coal share declines Richard Newell, SAIS, December 14, 2009 billion kilowatthours and percent shares Natural gas Renewable Projections History Nuclear Oil and other Coal 48.5 43.8 21.4 20.8 19.6 17.1 9.1 17.0 1.4 1.5 Source: Annual Energy Outlook 2010

21. Nonhydropower renewable sources meet 41% of total electricity generation growth from 2008 to 2035 Richard Newell, SAIS, December 14, 2009 billion kilowatthours Wind Projections History Solar Biomass Geothermal Waste Source: Annual Energy Outlook 2010

22. Assuming no new policies, growth in energy-related CO 2 is driven by electricity and transportation fuel use Richard Newell, SAIS, December 14, 2009 0.3% per year 8.7% growth Transportation 1,925 (33%) Buildings and Industrial 1,530 (26%) Electric Power 2,359 (41%) 2008 5,814 million metric tons 2035 6,320 million metric tons Transportation 2,115 (33%) Buildings and Industrial 1,571 (25%) Electric Power 2,634 (42%) Source: Annual Energy Outlook 2010