Introduction

Introduction

Energy has many advantages such as providing mobility, national wealth, power, and comfort, yet has negative consequences such as climate change, degraded air quality, and even wars. People want energy that is cheap, reliable, and environmentally benign, but we forget there are no magic bullets, and at this point in time, no single energy source alone meets all three criteria. Understanding energy systems is critical to making informed decisions about everything from deciding which household appliances to buy, locating power plants, incentivizing the use of natural gas, and drafting national energy policies.

Many Americans take their energy-intensive lifestyles for granted—unless the electricity goes off or gasoline prices reach $4 a gallon—but the commercial production of energy is relatively recent. Just 80 years ago, few rural residents had electricity. Similarly, our demand for petroleum only exceeded national production beginning in the 1950s.

It should come as little surprise that in the past 25 years, energy consumption by primary energy sources (oil, hydro, coal, gas and nuclear—to name a few) has increased throughout the world. Worldwide, electricity generation has doubled since 1980—a similar doubling is projected by 2030, according to the International Energy Agency’s World Energy Outlook. What may be surprising is who is driving that increase.

Electricity consumption in the U.S. and Europe has stayed reasonably flat over the past couple of decades and, as a percentage of world consumption, has actually fallen nearly 10 percent since 1990. In the U.S., the current rate of growth of electricity consumption is about zero—attributable to a combination of a sputtering economy and energy-efficiency/conservation awareness and programs. Still, U.S. electricity use in 2010 was more than 13 times greater than electricity use in 1950, according to the U.S. Energy Information Agency.

The growth in demand is largely from developing countries where millions and millions of people do not have access to electricity. China’s consumption is growing at about 10 percent a year. Between 2006 and 2010, China doubled its electric power system. Projections are that a similar doubling will occur in the next few years. India is embarking on similar electrification with a rate of growth of electricity consumption of about 5 percent. Estimates are that by 2030, India will have increased its power consumption fivefold. The graph below shows annual total global energy use over the last 25 years in million tonnes of oil equivalent, which is approaching 14 billion tonnes per year, a nearly 60% increase in global energy use over the last 25 years.

Primary annual global energy consumption in million tons of oil equivalent from 1992-2017.

Source: Data obtained from BP Statistical Review of World Energy

Three main fuels dominate the global energy picture: oil, natural gas, and coal. While OPEC—the cartel of oil-producing nations—gets a lot of press, those countries produce only about a third of oil consumed. North America, Russia, the United Kingdom and Norway together produce about what OPEC produces in a year. The remainder of world oil production comes from a large group of small producers – primarily Asian countries and former Soviet states. OPEC is not as big a player in the natural gas market. The largest gas producers in the world are Russia, the U.S., and Canada, which together produce a little less than half of the world’s supply of natural gas. As can be seen in the pie chart below, the US utilized 97.7 quadrillion Btus of energy in 2017, with 37% coming from petroleum (36.1 quadrillion Btus), 29% from natural gas (28.3 quadrillion Btus), 14% from coal (13.7 quadrillion Btus), 11% from renewables (10.7 quadrillion Btus), and 9% from nuclear power (8.8 quadrillion Btus).

Figure 2.1: U.S. Energy Consumption by Energy Source, 2017.

Click for a text description of Figure 2.1

Total = 97.7 quadrillion British thermal units (Btu)

• Petroleum - 37%
• Natural Gas - 29%
• Coal - 14%
• Nuclear Electric Power - 9%
• Renewable Energy - 11% (Total = 11.0 quadrillion Btu)
  • Hydroelectric - 25%
  • Biomass - 45%
    • Wood - 19%
    • Biofuels - 21%
    • Biomass waste - 4%
  • Wind - 21%
  • Solar - 6%
  • Geothermal 2%

Note: Sum of components may not equal 100% because of independent rounding. 

Source: U.S. Energy Information Administration, Monthly Energy Review, Table 1.3 and 10.1, April 2018, preliminary data.

The two charts below show U.S. consumption and production of energy from 1950-2017. The consumption of energy has increased nearly 3-fold over this duration, from roughly 35 to 97.7 quadrillion Btus of energy during 1950-2017. The production of energy in the US currently stands at about 87.5 quadrillion Btus of energy in 2017, up from 35 quadrillion Btus of energy in 1950. Note the trends of production versus consumption over this time period. What can we conclude about how much energy we imported 1950 to present? What do you believe are some of the causes of relatively flat consumption over the last decade versus a spike in production over the same time frame?

Figure 2.2: U.S. Primary Energy Consumption by Major Sources, 1950 - 2017.

Click for a text description of Figure 2.2

Listed from lowest to highest:

• Coal, starting (approx.) 13 quadrillion Btu & peaking at (approx.) 20 quadrillion Btu
• Natural Gas, starting (approx.) 18 quadrillion Btu & peaking at (approx.) 45 quadrillion Btu
• Petroleum, starting (approx.) 32 quadrillion Btu & peaking at (approx.) 89 quadrillion Btu
• Nuclear, starting (approx.) 32 quadrillion Btu & peaking at (approx.) 96 quadrillion Btu
• Renewables, starting (approx.) 35 quadrillion Btu & peaking at (approx.) 100 quadrillion Btu

Source: U.S. Energy Information Administration, Monthly Energy Review, Table 1.3, April 2018.

Figure 2.3: U.S. Primary Energy Production by Major Sources (with NGPL), 1950 - 2017.

Click for a text description of Figure 2.3

Listed from lowest to highest:

• Coal, starting (approx.) 14 quadrillion Btu & peaking at (approx.) 21 quadrillion Btu
• Natural Gas, starting (approx.) 20 quadrillion Btu & peaking at (approx.) 46 quadrillion Btu
• Crude Oil, starting (approx.) 32 quadrillion Btu & peaking at (approx.) 67 quadrillion Btu
• NGPL, starting (approx.) 34 quadrillion Btu & peaking at (approx.) 70 quadrillion Btu
• Nuclear, starting (approx.) 34 quadrillion Btu & peaking at (approx.) 89 quadrillion Btu
• Renewables, starting (approx.) 36 quadrillion Btu & peaking at (approx.) 99 quadrillion Btu

Note: NGPL is natural gas plant liquids

Source: U.S. Energy Information Administration, Monthly Energy Review, Table 1.2, April 2018.

The U.S. has more coal than any other country in the world. This is good news for large electricity consumers since about 30 percent of U.S. electricity generation comes from coal, but bad news for the environmentally-minded who are concerned about greenhouse gases and other emissions, particulate matter, and heavy metals such as mercury. Recent federal regulations placing restrictions on a large group of pollutants (including emissions of carbon dioxide and other heat-trapping gasses) seem likely to shutter some coal-fired generation plants—and thereby, reduce some emissions. Demand for coal, however, is likely to remain strong, particularly as China and India ramp up electricity generation.