Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

Ethanol and Synthetic FuelsU.S. Demand for Ethanol Fuel VariesWith World Oil Price ProjectionsFigure 95. U.S. ethanol fuel consumption in threeprice cases, 1995-2030 (billion gallons per year)1510HistoryProjectionsHigh priceReferenceLow priceSynthetic Fuel Production GrowsRapidly in the High Price CaseFigure 96. Coal-to-liquids and gas-to-liquidsproduction in two price cases, 2004-2030(million barrels per day)2.01.5High price51.00.5Reference01995 2000 2004 2010 2015 2020 2025 2030EPACT2005 repealed the oxygenate requirementfor Federal RFG. The only economically feasible oxygenatesare ethanol and MTBE. It is easier to meetthe other requirements for RFG, such as volatilityand aromatics emissions limits, with MTBE; however,MTBE readily contaminates groundwater whenblended gasoline is leaked or spilled. Refiners see therepeal of the oxygenate requirement as increasingtheir liability for MTBE pollution of water. They areexpected to stop making and blending MTBE by 2008,but ethanol blending into RFG is expected to continue,because ethanol is a clean, high-octane blendingcomponent that can be used to replace MTBE.Ethanol is a substitute for hydrocarbons, and whencrude oil prices increase, more ethanol is used to meetdemand for gasoline (Figure 95). In 2030, ethanolblending into gasoline ranges from about 5 percent ofthe gasoline pool in the low price case to almost 9 percentin the high price case.Virtually all the fuel ethanol produced in the UnitedStates is distilled from corn. EPACT2005 requires theuse of 250 million gallons per year of ethanol distilledfrom cellulosic materials, starting in 2012. Decliningcorn prices in real terms and improvements in grainethanol technology prevent further penetration ofcellulosic ethanol use in the reference case. Corn ethanolproduction is near practical limits in the referencecase, however, and production of ethanol fromcellulose feedstocks begins in 2010. In the high pricecase, cellulosic ethanol production exceeds the levelmandated in EPACT2005.0.02004 2010 2015 2020 2025 2030GTL and CTL processes are used to convert naturalgas and coal, respectively, into high-quality blendingcomponents for diesel fuel. Naphthas, waxes, andlubrication oil components are produced asbyproducts.Per unit of capacity, CTL and GTL plants are moreexpensive to construct than are petroleum refineries.The natural gas needed to feed a GTL plant is alsoexpensive. In the reference case, the cost of naturalgas makes GTL unattractive, and no U.S. plants arebuilt by 2030. Coal, however, is much cheaper thannatural gas, and CTL fuels enter the market in 2011(Figure 96). CTL production in 2030 totals 760,000barrels per day in the reference case and makes up 13percent of distillate fuel supply.Higher crude oil prices encourage the substitution ofnatural gas and coal for oil. In the high price case,GTL enters the market in 2020, and productiongrows to 194,000 barrels per day in 2030. CTL productiongrows to 1.69 million barrels per day in 2030in the high price case. Together, GTL and CTL provide32 percent of the Nation’s distillate fuel supply in2030 in the high price case. Neither GTL nor CTLfuels are economically feasible in the low price case.Energy Information Administration / Annual Energy Outlook 2006 97