Greenhouse gas (GHG) emission standards and CAFE standards increase new LDV fuel economy through model year 2025 and beyond, with more fuel-efficient new vehicles gradually replacing older vehicles on the road and raising the fuel efficiency of the LDV stock by an average of 2.0% per year, from 21.5 mpg (10.9 l/100 km) in 2012 to 37.2 mpg (6.3 l/100 km) in 2040. The large decline in LDV energy consumption in AEO2014 shrinks the LDV modal share of total transportation energy consumption from 60% in 2012 to 47% in 2040.

Among the more detailed transportation projections in AEO2014 are:

• LDVs powered by gasoline remain the dominant vehicle type in the AEO2014 Reference case, retaining a 78% share of new LDV sales in 2040, down from their 82% share in 2012. The fuel economy of gasoline-powered LDVs continues to increase, and advanced technology fuel efficiency subsystems are added, such as micro hybridization, which is installed on 42% of gasoline LDVs in 2040.

• LDVs powered by fuels other than gasoline, such as diesel, electricity, or E85, or equipped with hybrid drive trains, such as plug-in hybrid or gasoline hybrid electric, increase modestly from 18% of new sales in 2012 to 22% in 2040.

• Ethanol FFVs account for 11% of overall vehicle sales in 2040, followed by hybrid electric vehicles (excluding micro hybrids) at 5% of new sales in 2040, up from 3% in 2012; diesel vehicles at 4% in 2040 up from 2% in 2012; and plug-in hybrid vehicles and electric vehicles at about 1% each, both up from negligible shares in 2012.

• New vehicle sales shares are generally similar in AEO2014 and AEO2013 but with moderate variation. In AEO2013, the new vehicle sales share of gasoline vehicles was 80% in 2040 (with 36% of those vehicles including micro hybridization), followed by 7% for ethanol FFVs, 6% for hybrid electric, 3% for diesel, 2% for plug-in hybrids, and 1% for electric vehicles. The differences from AEO2013 to AEO2014 result from different fuel prices, updated manufacturer product offerings, changing technology attributes, and an updated view of consumer perceptions of infrastructure availability for E85 vehicles.

• Delivered energy demand for heavy-duty vehicles (HDVs) in AEO2014 increases from 5.3 quadrillion Btu in 2012 to 7.5 quadrillion Btu in 2040, similar to the 2040 level of 7.6 quadrillion Btu in AEO2013, and represents the largest growth among all transportation modes.

• HDV VMT averages a 1.9% per year increase from 2012 to 2040. HDV energy demand is tempered somewhat by an average 0.5% annual increase in fuel economy from 2012 to 2040 as a result of GHG emission and fuel efficiency standards for medium- and heavy-duty vehicles and engines.

• Natural gas prices significantly increase the demand for LNG and compressed natural gas in AEO2014, from an insignificant share in 2012 to 8% of HDV energy consumption in 2040. This is, however, less than the 13% share projected in AEO2013 because of the lower prices of competing fuels in AEO2014.

• The rapid growth of energy consumption by HDVs in AEO2014 increases their modal share of total transportation energy consumption from 20% in 2012 to 29% in 2040.

• Energy demand for aircraft grows in the AEO2014 Reference case from 2.5 quadrillion Btu in 2012 to 2.7 quadrillion Btu in 2040, which is less than the AEO2013 projection of 2.9 quadrillion Btu in 2040. Personal air travel (billion seat-miles) grows by an average of 0.7% per year in AEO2014, but improved fuel efficiency (by an average of 0.5% per year) reduces the effect on energy consumption.

• Energy consumption by marine vessels increases from 0.9 quadrillion Btu in 2012 to 1.0 quadrillion Btu in 2040 in AEO2014, reflecting the impacts of increased foreign trade on international shipping and higher incomes on recreational boating.

This decline in transportation sector delivered energy consumption is markedly different from the historical trend of 1% average annual growth in transportation energy consumption from 1975 to 2012, EIA noted. Transportation energy consumption is considerably lower in AEO2014 (25.5 quadrillion Btu in 2040) than projected in the AEO2013 Reference case (27.1 quadrillion Btu in 2040) with energy consumption by nearly all transportation modes reduced in AEO2014 as a result of lower macroeconomic indicators, higher energy efficiency, changing demographics, and the revised calculation of VMT.

In developing its projections, the EIA implemented a new approach to forecasting VMT, based on an analysis of VMT by age cohorts and the aging of the driving population over the course of the projection. This resulted in the significantly lower level of VMT growth after 2018 compared with AEO2013.

AEO2014 sees total US primary energy consumption growing by just 12% between 2012 and 2040. The fossil fuel share of total primary energy demand falls from 82% of total US energy consumption in 2012 to 80% in 2040 as consumption of petroleum-based liquid fuels falls, largely as a result of slower growth in LDV VMT and increased vehicle efficiency.

Domestic crude oil production increases sharply in the AEO2014 Reference case, with annual growth averaging 0.8 million barrels per day (MMbbl/d) through 2016, when domestic production comes close to the historical high of 9.6 MMbbl/d achieved in 1970.

While domestic crude oil production is projected to level off and then slowly decline after 2020 in the Reference case, natural gas production grows steadily, with a 56% increase between 2012 and 2040, when production reaches 37.6 trillion cubic feet (Tcf). The full AEO2014 report, to be released this spring, will also consider alternative resource and technology scenarios, some with significantly higher long-term oil production than the Reference case.

Some other key findings of the AEO2014 Reference case include:

• Low natural gas prices boost natural gas-intensive industries. Industrial shipments are expected to grow at 3.0% per year over the first 10 years of the projection and then slow to 1.6% annual growth through 2040. Bulk chemicals and metals-based durables account for much of the increased growth in industrial shipments. Industrial shipments of bulk chemicals, which benefit from an increased supply of natural gas liquids, grow by 3.4% per year from 2012 to 2025. The competitive advantage in bulk chemicals diminishes in the long term. Industrial natural gas consumption is projected to grow by 22% between 2012 and 2025.

• Natural gas overtakes coal as the largest fuel for US electricity generation. Projected low prices for natural gas make it a very attractive fuel for new generating capacity. In some areas, natural gas-fired generation replaces power formerly supplied by coal and nuclear plants. In 2040, natural gas accounts for 35% of total electricity generation, while coal accounts for 32%. Generation from renewable fuels, unlike coal and nuclear power, is higher in the AEO2014 Reference case than in AEO2013. Electric power generation from renewables is bolstered by legislation enacted at the beginning of 2013 extending tax credits for generation from wind and other renewable technologies.

• Higher natural gas production supports increased exports of pipeline and liquefied natural gas (LNG). In addition to increases in domestic consumption in the industrial and electric power sectors,US exports of natural gas also increase in the AEO2014 Reference case. US exports of LNG increase to 3.5 trillion cubic feet (Tcf) before 2030 and remain at that level through 2040. Pipeline exports of natural gas to Mexico grow by 6% per year, from 0.6 Tcf in 2012 to 3.1 Tcf in 2040. Pipeline exports to Canada grow by 1.2% per year, from 1.0 Tcf in 2012 to 1.4 Tcf in 2040. Over the same period, pipeline imports from Canada fall by 30%, from 3.0 Tcf in 2012 to 2.1 Tcf in 2040, as more demand is met by domestic production.

• The Brent crude oil spot price declines from $112 per barrel (bbl) (in 2012 dollars) in 2012 to $92/bbl in 2017. After 2017, the Brent spot oil price increases, reaching $141/bbl in 2040 due to growing demand that requires the development of more costly resources. World liquids consumption grows from 89 MMbbl/d in 2012 to 117 MMbbl/d in 2040, driven by growing demand in China, India, Brazil, and other developing economies.

• Energy use per 2005 dollar of gross domestic product (GDP) declines by 43% from 2012 to 2040 in AEO2014 as a result of continued growth in services as a share of the overall economy, rising energy prices, and existing policies that promote energy efficiency. Energy use per capita declines by 8% from 2012 through 2040 as a result of improving energy efficiency and changes in the way energy is used in the US economy.

• With domestic crude oil production rising to 9.5 MMbbl/d in 2016, the net import share of US petroleum and other liquids supply will fall to about 25%. With a decline in domestic crude oil production after 2019 in the AEO2014 Reference case, the import share of total petroleum and other liquids supply will grow to 32% in 2040, still lower than the 2040 level of 37% in the AEO2013 Reference case.

• Total US energy-related CO₂ emissions remain below their 2005 level (6 billion metric tons) through 2040, when they reach 5.6 billion metric tons. CO₂ emissions per 2005 dollar of GDP decline more rapidly than energy use per dollar, to 56% below their 2005 level in 2040, as lower-carbon fuels account for a growing share of total energy use.

To provide a basis against which alternative cases and policies can be compared, the AEO2014 Reference case generally assumes that current laws and regulations affecting the energy sector remain unchanged throughout the projection (including the implication that laws that include sunset dates do, in fact, expire at the time of those sunset dates).

The full AEO2014 will be released this spring with side cases that examine the effect of alternative resource and demand assumptions as well as changes to some existing policies on the energy sector.