 Good morning. Why don't we go ahead and get started? I'm sure that Adam's presentation is going to create a lot of questions, so to leave room for that, we'll get underway. I'm David Pumphrey. I'm co-director and senior fellow in the Energy and National Security Program. It is really a great pleasure to welcome Adam Saminsky here to do this presentation on the International Energy Outlook. We've worked very closely with Adam for a number of years, and we're very pleased when he moved into this job as the head of the Energy Information Administration. He brings to it skills and analytical skills that I think are unparalleled, and it's done a really great job in moving forward. The other thing that's really important from our perspective is that after two years he has brought back the International Energy Outlook, one of the for us standards for understanding the developments in the international energy world, and it makes a great contribution to our work. We have underway now a major study on the geostrategic implications of changing oil flows, especially with the North American energy renaissance, if you will, oil and gas renaissance, and so this will be a very important piece in addition to our work, so Adam, we're very pleased that you're doing that. I think everyone should have gotten a copy of this bio, so I won't go ahead and read through all that, and with no further ado, Adam, if you'd like to get started. Thank you. Maybe you should save that until after I get done. Dave, thank you very much. It's a pleasure to be here with the entire CSIS team. John Hamery came down and said hello. Frank Barastro, Sarah Ladislaw, everybody, Annie Hudson for helping set all this up. Other people that need to be thanked, I thank for the international energy outlook. We didn't do this last year for budget reasons. There were some questions about whether we would have the resources to do it all. We figured out, I think it's international energy statistics is very, very important and are very important. I could have said data, data is important. So we figured out a way to make this happen. John Conti, Sam Napolitano, and Linda Dohmann, come on, stand up, stand up. John, you know, is the assistant administrator for energy analysis, and Sam Napolitano runs our international energy team, and Linda Dohmann worked really, really hard on all of this. So the parts that you like, you can thank them, and if there are mistakes in here, I'll take credit for those. So let's talk about some of those key findings. So in the past, I'm going to try not to repeat this every time. This is, I'm going to present our reference case. So the reference case is not really, it's the one that includes existing law and regulation. So EIA tries to stay out of the business of forecasting policy changes. We're supposed to be independent, nonpartisan, and we're supposed to stay out of the policy debate and leave that up to the policymakers. We're supposed to provide the facts that surround and inform the policy debate. And we're trying to do that. So let's go through the key findings. We'll probably see an increase of more than half in global energy consumption. GDP rising at 3.6% annually and a 56% increase in world energy use, with half of that coming from China and India alone. You know, I think that you have to look at this as some people would say, that's going to be a problem. I think you have to look at this as good news. This is rising prosperity. So the question is, how do we accommodate rising prosperity and still maintain energy security and a good environmental outlook? Renewable energy and nuclear power, world's fastest growing energy sources. So about 2.5% per year each. But fossil fuels are still going to be supplying 80% of the world's energy use in the year 2040. Natural gas is the fastest growing of the fossil fuels. And that'll be supported especially by shale gas growth here in America. Coal grows faster than petroleum until after 2030. And then coal slows down in our view as the Chinese economy shifts more towards services and away from manufacturing. And I'll talk a little bit about that. Finally, you know, without further constraints of some type, worldwide energy-related carbon dioxide emissions are projected to increase by not quite half by 2040 from around 31 billion metric tons in 2010 to 45 billion metric tons in 2040. That is going to have to be addressed, I think, in some way. So economic activity and population are the main drivers. So prosperity in China and India, as I said, is rising faster than intensity falls. So those two biggest brown and blue lines in the middle there for China and India. So GDP per capita going up very sharply in China and India, intensity, so that's energy efficiency, is improving but not as rapidly as GDP is rising. And as a consequence, you get a lot of growth in those activities. I said earlier, we believe world GDP will be rising at about 3.6 percent per year, 2.2 percent in the OECD countries, 4.7 percent per year in the non-OECD countries. Lots of differences across regions and, of course, countries in this outlook. The population growth in China, South Korea, and OECD Europe have significantly lower growth rates than in the U.S. and India. So that's kind of an interesting one. U.S. population actually growing faster than a number of other countries where people have traditionally thought about population growing very rapidly. Non-OECD Asia accounting for more than half of the increase in the world's energy use. So the blue there is the developed countries, the OECD. The non-OECD countries are shown in the two green shades with non-OECD Asia in the light green, and that one, of course, growing the fastest. So the role of the Asian developing economies in the world energy markets is a very important one. Non-OECD Asia, there are 60 percent of the total increase in world energy use. As I said earlier, China and India, about half of that, the world increment of that world increment out to 2040. In 2010, China and India combined, accounted for nearly 25 percent of world energy consumption, and that number should be up closer to 34 percent or a third of total world energy use in 2040. China's energy demand is likely to be more than double the U.S. number by 2040. So let's take a look at that chart. This focuses in on the impact that China has on world energy consumption. China, which recently became the world's largest energy consumer, is projected to consume significantly more than the U.S. as we move out over time. Even though energy use in India more than doubles over the projection, it still will end up being a little bit less than half of the U.S. energy number in 2040. So since 1990, energy consumption in both India and China as a share of total world energy use has increased significantly, and together they've accounted for about 10 percent of world energy consumption in 1990, and that number is now up to closer to 25 percent today. How does this look across the different fuels? So here we show the distribution of energy use by final consumption across the fuels. Nuclear continuing to grow in our forecast. Renewables also, as I said, growing very sharply. Increase in natural gas, including a slight increase in market share. Market share increases for both renewables and nuclear as well. Coal's market share, despite its growth, goes down a little bit by the end of the forecast period, and liquid's market share also goes down. All these fuels are growing through a combination of GDP and population. Nuclear power and renewable, as I said, are the fastest growing. And fossil fuels continue to supply a huge portion of the world's energy. Oil remains the largest source of energy, but its share of world marketed energy consumption declines. The growth rate that we see for natural gas is about 1.7 percent per year, and a lot of that is going to be supported by things like LNG production all around the world and shale gas development as well. China largely defines the coal trend line, and that drop towards the end has a lot to do with China, so let's just take a look at some of the factors behind that. This is industrial sector energy consumption in China. As you can see, we expect that renewables, natural gas, and liquids will continue to go up. Electricity rising, beginning to level off towards the end of the period in 2035 out to 2040, but coal coming down sometime after the 2030 period, and that helps the total energy sector, industrial sector in China taper off. Why? So these are gross output curves. The one on the left is the output curve for iron production, very coal dependent. The chart on the right is output for chemical production, and that's more oil dependent, oil and gas liquids. So these gross output curves explain energy use in the sector. Iron production in China, very coal intensive. The decline in coal use in China's industrial sector in the out years basically represents the shift in China away from a manufacturing economy towards a service economy. Chemicals on the other hand are largely petroleum intensive, and petroleum tends to still be important even in service oriented, and chemicals, still very important even in service oriented economies. Now let's talk a little bit more detail about the liquid fuels markets. Tight supply and demand balances in oil markets mean even in modest actual or anticipated changes in supply or demand conditions can lead to large movements in oil prices. Did everybody get why I said that? That small shifts can lead to large changes in oil prices. That's for me to be able to say that no, I can't predict gasoline prices, and if they go to $4.50, I didn't do it. All right, let's talk a little bit about this chart that we have up on this screen. OPEC member countries contribute almost half of the total increase in increase, so that's the change in world liquid supplies over the forecast period. So what you see is that non-OPEC share of oil is growing faster than OPEC in the period out towards 2020, 2025, then non-OPEC production begins to slow down, and OPEC makes up that gap so that OPEC's output and share of global markets begins to rise after a period in the near term where they're under a lot of pressure. Now, a lot of that is going to have to do with output of overall non-OPEC production, and especially what happens with production of shale oil in the US. As you know, we just published a very thick study of global shale gas and shale oil resources. We did the shale gas study, so this is kind of a repeat of the shale gas study from a couple of years ago, but we added oil this time. And in our view, the curves or the take-up that we saw in shale gas might not be quite as fast on the oil side as it was for gas. So we're a little bit more skeptic than some out there about how rapidly non-OPEC oil production could climb after 2025. One of the total oil production that we're estimating, if you add those numbers up, there is close to 115 million. I'm looking at these numbers and they need to add up to something, and I'm not quite getting there, so we don't have everything on here. The non-petroleum contribution. So down at the bottom, 2 million barrels a day, going to roughly 5 million barrels a day of non-petroleum liquids. So that's things like biodiesel, ethanol, and other ways of achieving liquid fuels. So if you add up to 5 and the 49 and the 62, you're going to get about 115 million barrels a day of oil in 2040. So one of the things that I want to remind everybody is that back in 2007, the Wall Street Journal quoted several top oil executives saying projections of oil production over 100 million barrels a day were unrealistic. There were a few that said that peak oil was not just around the corner, and that included EIA's forecast. Now, we were more aggressive back in 2007. We said 118 million barrels a day by 2040. But I don't think that this is so much of a supply problem, right? Why are we now saying, excuse me, 118 was 2030, so now we're saying 115 and 2040. The difference between those two I think has more to do with demand than it does with supply. So I think that that's a very important thing to think about. In the annual energy outlook, which we published in December, and then we did the side cases and published those just what John, a month and a half ago or so, a couple of months ago. What we said in the annual energy outlook for the United States was that just incorporating the fuel efficiency standard changes that were implemented last year by EPA and NHTSA removed almost a million and a half barrels a day of gasoline demand in the U.S. numbers alone for the year 2030. So what I think we're seeing is through improved energy efficiency ratios, and it's not just in automobiles. We may see substitution and transportation of natural gas fuels and other things that we're achieving a lot of progress on the demand side. There's a lot more that could be done, I would imagine, in residential and commercial and industrial facilities to move that along as well. Okay. So let's now take a look at non-OPEC petroleum supply growth and where it's coming from by country. There are five key countries here, Brazil, Canada, Kazakhstan, the United States, and Russia. Just looking at this, what I would say is the possibility that a stronger resource assessment or resource base could allow the U.S. numbers to go up is got a reasonable probability. The other thing that I would say is that Brazil is going to have to, I think, be a little bit better in how they're organizing production activities there in order to make this forecast. This is deep water pre-salt in Brazil, it's oil sands in Canada, and it's shale oil in the U.S., and a combination of conventional and shale oil possibilities in Russia that drive these numbers. And I'll come back to this in a bit with just a bit more detail. If you look at that number that I said was adding up to about five million barrels a day, that's the non-crude-based liquid fuels. Brazilian and U.S. biofuels and Chinese coal-to-liquids account for almost two-thirds of the total increase in non-petroleum supplies in the forecast out to 2040. So it's small, but it's increasing. World production of non-petroleum liquids, which in 2010 totaled 1.6 million barrels a day, that was about 2% of total liquids production globally, gets up to not quite, but almost, five million barrels a day in 2040, and it'll count then for about 4% of total liquids production. Brazil and the U.S. kind of leading the charge on biofuels, China doing an awful lot in the coal-to-liquids area, and gutter, and I think maybe the U.S. coming in after gutter on gas-to-liquids. So one of the other key issues that I think has to be looked at in any kind of long-term energy forecast is production profiles in the Middle East. So these are scenarios that we have for Iran, Iraq, and Saudi Arabia. So one thing that we thought was impossible for EIA to do was to actually make individual country forecasts for these three countries. So we tried very hard to make individual country forecasts. You know, we'll do one for the U.S. We could try to figure out what we think Canada's going to do, and you saw numbers for Brazil and Russia and so on. The problem in trying to do that with Iran, Iraq, and Saudi Arabia is that if you go to what we think is potentially possible in those three countries, you get numbers that add up to a total that's incompatible with the overall supply and demand balance for petroleum. So what we did was four scenarios. One we called past as prologue, and that's that second column there. And on that one, you just want to look at the Saudi number. If market shares kind of continue as they currently are in these three countries, the Saudis get up to a little over 15 million barrels a day. The second one is Iraq success. So here what we say is so Iraq manages to move up towards its resource and reserve potential. And in that case, they get up to about 11 million barrels a day. In the next column, we have Iran. So if Iran can follow the same path as Iraq, then they might in our scenarios get up to something like 13, excuse me, 8 million, a little over 8 million barrels a day. So the range in this is very high. So as you see in that final column, there's a upside and downside within this scenario for Saudi Arabia of almost 10 million barrels a day, 4 million barrels a day for Iran, and almost 8 million barrels a day for Iraq. So the Iranian thing is kind of interesting because it's not just sanctions. I was in Iran in 2004, and there was a big debate going on in Iran at that time over the contract structure and how to attract foreign capital. And Iran even before the U.N. and U.S. and European sanctions that are holding back Iranian production now was struggling to attract capital to develop these oil resources. So this is not just a sanction story. It's a question of how countries are able to organize internally how they develop their resource base. Natural gas markets. The reference case for the 2013 international energy outlook, as I said at least three times already has natural gas as the world's fastest growing fossil fuel. A 1.7% growth rate between now and 2040. So this is how that is split up in the OECD in blue and the non-OECD in green again. In 2010, you see about 60, a little less than 60 trillion cubic feet each. My numbers crunching side of my brain works better with billion cubic feet a day. And so we put that scale on the right hand side. So there's a total world gas consumption in 2010 of about 300 billion cubic feet. So to put that into perspective, current production and consumption in the U.S. is running in the neighborhood of with some Canadian imports about 70 billion cubic feet a day. So 300 billion cubic feet world gas market. Gas market in 2040 is going to be closer to 500 billion cubic feet. Instead of a 50-50 split, it's going to look more like 60-40 with 300 billion cubic feet in the non-OECD countries alone and 200 billion cubic feet in the OECD. So in the non-OECD, we have consumption growing at 2.2 percent a year and about a 1 percent growth rate for natural gas in the OECD countries. All right. So what about elsewhere in the world? The largest production increases from 2010 to 2040 occur in non-OECD Europe and Eurasia. And it's hard for me to do this here, but if you kind of break that top line up, Russia and the U.S. both account for about 12 billion cubic feet, or excuse me, 12 trillion cubic feet in 2040. This is the change, so growth. And the other, so the difference between 12 and 19 in that top line is everybody else. In the Middle East, the way that's divided up is roughly Iran grows five, Gutter grows five, and everybody else in the Middle East grows about five, and that gets you to that 16 TCF change number. The U.S., as I said, is 12. So the United States and Russia increase natural gas production by about the same amount and account for nearly one-third of the total increment in natural gas production, fairly big numbers from those two countries. Electricity markets. Electricity is the world's fastest-growing form of end-use energy consumption in our reference case. World net electricity generation nearly doubles between 2010 and 2040. Total net electricity generation in the non-OECD countries increases by a little over 3%, and it's even faster than that in China. So looking at this chart, coal still provides the largest share of world electricity generation in 2040, although its share does decline from about 40% in 2010 down to 36%. In 2040, the liquid share of total generation also falls in the reference case. We have relatively high oil prices in the reference case, and that tends to limit the growth in oil going into electricity, particularly in places in the non-OECD countries. Solar is the fastest-growing component of renewable energy. Nuclear powers share of generation increases from, and we don't have that on there because the numbers we're going to get a little too small, from about 13% in 2010 to 14%. So share going up and actual generation rising fairly decently. I'll come back to which countries that we see growing the fastest in nuclear in just a bit. In fact, let's just do that right now. That top line is really pretty stunning. The green color is 2010, and the blue color is 2040. Chinese growth of 150 gigawatts of nuclear capacity in the period between 2010 and 2040. Growth in OECD Europe, not so much, in the Americas. A little other non-OECD, fairly decent there. The China story is an interesting one. This is going to be a reach and a stretch, I think, for China to do this and to manage it. But given the overall level of population and given the need for electricity, we think that this is our reference case of view of where this is going. The full extent to which governments, especially in Europe and Japan, might withdraw their support for nuclear power remains uncertain. The German and Swiss governments have already announced planned nuclear phaseouts, and in Italy there's been a country-wide referendum that rejected plans to build new nuclear power plants. Turkey, Poland, and the UK have reiterated plans for actually adding nuclear. France, we expect to continue to rely fairly strongly on nuclear power, but even there in one of the nations that has the highest percentage of its electricity being delivered by nuclear power, there has been a lot of popular opposition to the idea. So environmental concerns seem to be being weighed differently against energy security as people try to consider where things are going on the nuclear side, and I think that that's pretty important. So we're getting pretty close to the end, and then we'll do some Q&A. I'm going to end up talking a little bit about carbon dioxide emissions that are related to energy consumption. Because of rising GDP in China, rising population in India, we're going to see a lot of growth in energy use. Non-OECD Asia is going to account for more than two-thirds of the world's increase in energy-related carbon dioxide emissions over the forecast period. The continuing strong reliance on fossil fuels is obviously the driving factor in carbon dioxide emissions that's going to occur globally, especially in Asia. China's energy-related carbon dioxide emissions in 2010 were already more than 40% of the U.S. number higher than those in the United States, and by 2040 it will be close to twice the level of U.S. emissions. If we look at this by fuels, what we see is that coal is still the most carbon intensive fossil fuel contributing to carbon dioxide emissions. It was true in 2010 and continues to be in 2040. The natural gas share of carbon dioxide emissions remains relatively small by comparison. 19%, if you go back to 1990, at the beginning of the time frame in this graph, and it holds at about 22% of total emissions in 2040. The world's top three national sources of coal-related emissions are China, the United States, and India, and it remains that way throughout the forecast period. I'm going to close with some comments on uncertainty in these forecasts. In some presentations that I give, I actually start off with a slide that says why we will be wrong. If you think about this, reference cases, particularly a reference case that's based on existing law and regulation, we know laws and regulations are going to change. We know technology is going to change, but we don't know when the technology is going to change. We don't know how rapidly it's going to change. We don't know about a lot of things, and I just want to highlight some of the things that I believe will ultimately make a big difference in how these numbers work out. The long-term effects of economic issues that we're seeing in the United States, in Europe, and even China, just over the last few weeks, for example, there have been increasing concerns raised about how the Chinese economy is performing and the possible movement of these short-term questions about the Chinese economy into the longer term, I think it's a realistic concern. The timing of Japan's recovery in nuclear after the tragedy at Fukushima. We have forecasts that we will see a return of a substantial portion of the nuclear power facilities in Japan, and with the new government there, I think they are moving cautiously in this direction, but the implications of how rapidly this happens, how much you can bring back has big implications for things like global natural gas markets and other substitutes for nuclear power in Japan. Social unrest, like we've seen over the past couple of years in the Middle East and North Africa, and the potential for unrest elsewhere could make a big difference not just on the supply side, but possibly even on the demand side. Shale gas and shale oil production potential is another area that I think where things could really change. I know there are other forecasts out there that have much more aggressive shale oil production growth rates than we're currently using at EIA, and of course that would make a difference. One of the other things that we don't know is, well, what if we have further regulation of hydraulic fracturing, because that's how shale gas and shale oil are being produced, and if that regulation changes the cost structure enough, we might get less than some people believe, and so that's something that, again, is very difficult for EIA to put into its forecasts. I highlighted the issues that we see potentially developing in terms of market share within OPEC between Saudi Arabia, Iraq, and Iran, and then finally climate policies. We have fairly substantial growth in CO2 emissions built into our reference case forecast, and just given a lot of emphasis that's being placed on climate initiatives in Europe, in the United States, and globally, it's certainly possible that that would change the landscape, either from a pricing or a regulatory standpoint, and we do have and have run some side cases in the 2013 international energy outlook. So we have four alternative cases that examine sensitivity, mostly to GDP growth and oil prices. We have looked at carbon cases in, for the U.S., in the annual energy outlook, and I encourage you all to take a look at the AEO and other white papers that we've developed at EIA on that issue, but we've looked at high economic growth cases, low economic growth cases, high oil prices, low oil prices, and so on. All of those things lead to uncertainty, but what I presented to you here today is our best shot at it with what we know now, so, Dave, with that, I'll be happy to take questions. Thank you. Thank you, Adam. It's a great presentation. Before we start the questioning, I was going to take the prerogative of being the moderator to actually... Hold on just a second. I was rearranging that stuff. I'm going to rearrange this too, so that I can see the people... Adam, I can do this. No, no, no. I love doing that. Come on, sit here. Adam's a hands-on guy, if you haven't seen him. I've always thought if you want it done, do it yourself. So, you spend a long time in your career working in a banking environment where you would look at forecasts like this and then go to the people you worked with and say, okay, here's where I think it's going to diverge from that. So, you gave us a nice list of things that will impact it, but you didn't really tell us which way it might go. So, imagine we're all... You're in your former, and I know you can't actually get totally out of your current environment, but you're in your former environment and you're advising people about, well, my gut tells me this is where things may go when markets, given these uncertainty factors, or is it very hard to tell because they counterbalance and what we get is a world of significant volatility over time rather than one where you can say, my gut tells me we're going to be on a lower trajectory for prices, a higher trajectory, et cetera. So, we actually do have tried. In fact, let me... I'm going to grab my papers off here. On the question of oil price trajectory, we have a high-price case that actually gets up to $237 a barrel in 2040, in real terms, and the low oil price case is $75 a barrel in real terms. Our middle ground is... Our middle ground is... Right. I watched Guy Caruso, another fine contributor here to the energy team at CSIS. I watched Guy get excoriated, I think, one time up on giving some testimony. It's hard for the public to understand why prices move around as quickly as they do, and reference case forecasts, as I said, are designed to try to help inform, to create a base to make decisions around, but they're not going to be a perfect forecasting tool. And so, you come back to the oil question or gasoline prices. One of the things that economists will tell you is that both oil production is very inelastic in the short term. It's hard to increase oil production even with very sharp oil price increases. It's hard to curtail demand in the short run with sharp increases in oil prices. So, all it takes is a little bit of an imbalance in global markets and those very steep price elasticity curves work against you, both on the supply and demand side. And so, the only way to rebalance markets when you have shortages, for example, losing a million and a half barrels a day of light-sweet crude oil from Libya, as happened several years ago, is to see a sharp increase in prices. You need the price to go up to remove demand from the market and to encourage producers to bring on more supply. That just took me about two minutes to explain that, and the normal amount of the time that you have at hearings is about 15 seconds. So, we're trying to build in something that we believe realistically captures the potential range. So, your question was, how do we think that this would really move over time, you know, based on some of the uncertainties that are out there? I think that possibility, and I urge you all to read the section on Middle Eastern OPEC production levels, that it's very realistic possibility that over the next few years, as non-OPEC production is rising and demand remains relatively flat, that we could see a possible flatness in oil prices or maybe even weakness based on competition for market share among key OPEC member countries. The other thing, so I would say predicting, you know, where shortages could occur, though, unrest in any major producing country or accidents could drive prices up. I suspect that over the near term that market forces are tending to drive prices down, but geopolitical actions probably are adding that upside potential in the crude oil. So, just a few ground rules on the Q&A session. If you can wait for microphones to come to you, we've got people roving with microphones. If you can introduce yourself and your affiliation and hopefully frame a question out of whatever statement you'd like to make, that would be useful. So, we'll take one right here in the front. Get the microphones moving. My name is Charlie Curtis. I'm retired, gratefully. Adam. Is that, I don't know whether it's working. Can you hear Charlie? Okay, I see people. Now they can. Just a question. Did you do, or do you have available any energy trade balances among nations arising out of this analysis? For example, China's forecasted contribution to electricity production from nuclear. How does that affect China's oil import dependency particularly? So, is there a forecast case that people can see where the trade flows are in energy, in particular in fossils? Right. So, we don't have specific trade balance forecasts in the IEO, but we certainly do look at import dependency. You know, you could calculate import dependency ratios from how much is being produced versus how much is being consumed. Trade balance issues are important. China's import bill for oil will be rising. And interestingly, given where we're going, at least certainly over the next five to 10 years, the chances are pretty good that the U.S. import bill is going to decline substantially. We've already seen U.S. oil imports as a proportion of our total oil demand go down from like 60% in 2005 to below 40% now, and we're continuing to drift lower on those numbers. We are a net exporter of oil products. We're a net exporter of coal. We are likely to be in the AEO 2013 forecast, a net exporter of natural gas around the year 2020. And although we don't have, in our reference case, the U.S. becoming a net exporter of oil, we did run a side case that said that it's possible, given the right circumstances on both the resource side and the demand side, that the U.S. could go flat on oil imports sometime after the year 2030. So why don't I start, I'll work my way across the room, because I often don't get to the wing. So when we start with one here, followed by a question in the back. Yes. Thank you. Thank you for your talk. I'm Robert Lanza with ICF. You said earlier in your talk that Brazil needed to become more organized in order to meet projections. Is that just because pre-salt's difficult to produce, or are there other issues that you were referring to? Most of the issues, so the question, just to make sure everybody heard it, is the question was, I had said that Brazil's got some above ground issues. That's how I would answer that, is what could possibly slow down Brazil's oil development? And the answer in almost all cases when you look around the world are not so much in the major oil countries. It's not the resource base so much as it is the above ground issues of what are the rules and regulations associated with oil production, how easy is it to attract capital, and so on. Brazil has been experimenting with local content laws for drilling that I think have slowed down oil output in Brazil, and other issues similar to that. It's not just Brazil. Many people have noted that there are above ground issues with attracting capital in Mexico because of the constitutional ban on foreign companies operating in Mexico. There are above ground issues in producing shale gas in Europe where countries have instituted bans on the use of hydraulic fracturing and so on. There are lots of above ground issues when you think about them that have to do with how strong the drilling companies are from a technology standpoint. How easy it is to get access to land. What the incentives are for the company that's drilling and producing relative to the landowner or royalty holders and a host of other issues like that. And as a consequence, it just adds uncertainty to all these numbers for everybody, not just any individual country. I think there's a question in the back of that section. Can you hear me? Blake Subject with Energy Wire. I just had a quick question about uncertainties from the technological perspective. There's been a lot of buzz lately about methane hydrates. I guess what's your favorite technological uncertainty going forward to 2040? What's my favorite technological uncertainty? Well, that's actually kind of an interesting line. Maybe you could go through fuels. There's probably lots of different ways to cut that, but let me try to do it by going through fuels. For coal, I would say can we figure out some way to do carbon sequestration. For natural gas, it might actually be that too. But on the natural gas side, let's say that the major technological question will be how do we make sure that we properly manage hydraulic fracturing? And could technology play a role in that? I mean, there's been an effort made, for example, to reduce the amount of water that's needed to fracture wells. There's been an effort to move away from, to think of ways to do this that might not even use water at all. Nuclear, I would say there. Probably the most interesting thing would be, is there going to be an opportunity for SMR, small modular reactors? And could that, and waste disposal issues on the technology side? And would that give a new boost to nuclear power on a global basis and for oil? I would say that the key technological question for oil is not so much in oil itself, but probably what would we see on the technology side that would take oil's market share away in fuels? And that would be developments in electric batteries and developments in technologies that would allow natural gas to be more economically used in transportation, like LNG in heavy trucks and rail locomotive applications, marine applications. So, interesting question. Thanks for that. Just a few uncertainties. Okay, so I'll take one here and one back. Well, okay, these three right here in the middle section will take in order. Roger Humpherville with BP. Your projection showed significant increase in biofuels production in the U.S. and in Brazil. Did the study look at how that will evolve in terms of conventional biofuels versus advanced lignocellulose? Right. So the question was, we do have growth in biofuels occurring in the U.S. and Brazil. Have we looked at the split between conventional and newer technologies, cellulosic technologies we have? We've actually, I think we've, when did we have published or will shortly publish a fairly sizable document looking at, you know, I know we've looked at carbon and I think we've done some stuff on, this is John Conti. Our detail projections for biofuels, you can find our energy outlook. And it basically, you know, we go straight up to the corn limit in the RFS and then there's some additional advanced technologies and it's unclear exactly, you know, we have a forecast in there, which we've reduced a couple of times over the past few years. But we intend to see cellulosic ethanol and the like going forward at the time. Maybe not the levels mandated in the RFS, but there we expect them to penetrate that and other sources. For Brazil, we don't do the same detailed analysis we do for the AEO. However, we believe there'll be sufficient quantities of advanced, what we consider advanced in the United States, ethanol. I did testify a couple of weeks ago on renewable fuels issues and one of the things that we've said is that since the renewable fuels law was passed, and I think it was 2007, we've been, EIA has been arguing that the target for 36 billion gallons of renewable fuels that was set for 2022 was going to be extremely difficult to achieve. I think we started off saying difficult and then we went to extremely difficult and I believe what I said two weeks ago was impossible. So it's that the technology is not developed as rapidly as many people were expecting and the number of advanced biofuels plants that have been built really got slowed down very dramatically by the 2008-2009 recession. And so we're seeing a couple of startups just recently and we'll have to see how all of that works out. But it'll be, you know, there's, it's coming, but it's coming slower and at lower volumes than were originally anticipated by most of the people I think who were looking at this. So there's a question here in the front and then we'll take one at the back. My name is Asmukh Shah from Business Times. As we understand, the Obama administration has given top priority to the energy security, which is reflected in recent trade missions of the Secretary John, carries mission to India last month on strategic dialogue. I had just two days back Vice President Joe Biden's meeting also with the Indian Prime Minister, other things. Energy security was the top topic of the discussion. So India also looks for the energy security and in two areas there are tremendous opportunities of cooperation, sale gas supply, as well as nuclear energy. But there are several concerns and constraints between both the issues. So Mr. Siemensky, can you highlight about this? What is the status? Because President Obama has agreed to forego the, to, about the free trade agreement is not in India, but still he is prepared to supply the natural sale gas to India. So what is the latest situation on these two points? Right. So that question had to do with energy security and a three state agreement on nuclear activities. That's really beyond the scope of EIA. You mentioned the Secretary, but you said Secretary Kerry, he's at the State Department. I'm at the Energy Department. And we do have people working on nuclear power issues, but it's mainly from the standpoint of existing law and regulation. And so I really don't have a comment on that. I do think that you're highlighting something that is extremely critical. And there's something that I think it used to be called the CSIS triangle of energy security, the economy, and the environment. And I like to think of it more along the lines of, for those engineers out there, a Venn diagram. So a Venn diagram is circles. And it's three overlapping circles. And in the middle, if you thought of these overlapping circles of energy security, which you asked about the environment and the economy, is that energy policies, the sweet spot is that middle part where if you do something that it's good for energy security, it's good for the environment, and it's good for the economy. And I think that we used to believe, and I think that many people still do, that natural gas kind of fits nicely into that sweet spot as an example. But it's very difficult. There are lots of things that get done for energy security reasons that have environmental or economic consequences. And it works around that chain. But highlighting energy security issues, I think, is an important thing. And on the nuclear side, finding ways to have low or no carbon energy growth, nuclear and renewables still, I think, very important. And managing the security aspects around all of that also very important. So I have a question there. And then, Adam Siegel, I run the energy security program, Insight Through Analysis. First of all, thank you very much. I love thinking the Venn diagram. Very much. I appreciate your visualization, your words to provide the visualization. One of the strengths and weaknesses of a baseline case scenario reference case is it's using government policy. Obviously, U.S. But how do we apply this worldwide? One of the numbers jumps out to me. The Chinese, I think it's in the five-year plan, say they're going to peak coal in 2015, yet what this is saying is a peak in 2030 timeframe that has huge implications, carbon and otherwise. The Chinese government says they're peaking in three to four years and many of the purchases of technology that I'm tracking go right with that, yet you're saying they're not going to peak for another 15 years after that. You know, I keep turning this mic off and I have to learn to just leave it on. I'm hoping somebody else will answer that question. That's why I turned my mic off. Well, how do we do evolving rules and regulations in other countries? It's hard enough for us to deal with that here in the U.S. It's increasingly, you know, problematic as you move out into other countries. I suspect that what we're doing is kind of relying more on existing trends and a slower move in things like that just based on how we are seeing those numbers develop. We do have a number of people here from EIA and why don't you come up and grab, you know, Sam Napolitano or John Conte afterwards and we'll get one of our coal experts or China experts to look into that. Candace Dunn on our staff who I don't think made it over here. Is Mike, Mike, where are you? Do you want to answer this question, Mike? Go ahead. Take the microphone. Yeah, we, is it working? Yep. I mean, we do look at it, but I think it's just we must have higher energy demands and that sort of thing that, you know, really kind of keep us from seeing that kind of five-year plan for China. I know we've kind of looked at it and it's kind of hard for us to decipher how they're really going to be able to do that given that, you know, the economic growth they have and the demand growth that we're seeing for China. So the point that was made was that when you do a reference case based on existing law and regulation, that you might end up, you know, missing the trend. So the way we try to address that is in these alternative cases. We didn't do as many alternative cases for the IEO as we do for the US and the AEO, but in the US, for example, we do look at different cases like for carbon fees. That was a big part of the AEO and that makes a huge difference. I mean, just in the US, and I can speak to those numbers, something like a $15, a metric ton charge fee or the equivalent thereof over the time frame out to 2035 or 2040 makes an enormous difference in what the fuel structure for electric generation looks like. You get less of the carbon intensive fuels, coal, for example, and more of the less carbon intensive fuels, a little bit more natural gas, for example, and a lot more nuclear. And I agree with you that it's important and that's why we try to do the side cases. The problem that we always run into is that the more side cases we do, the longer it takes to do the study, the more complicated it gets, the more tables there are in the back. And so we try to highlight what we think are important in the side cases, but we can't do it all. But I think that the question you've raised is a good one. And I think China in general, I mean, when you look at China in these numbers, the economic growth that's occurring there is stunning. That is fantastic in terms of the number of people who have been lifted out of poverty. On the other hand, it has consequences for both the energy and the environment that are significant. And the data from China to allow us to make a lot of these assessments is very difficult. There are lots of issues associated with simple things like what's the level of coal reserves in China? And will coal reserves move China towards other fuels? Not just the lack thereof move China. So we don't really quite think so, but it's an issue. Some of the other things that come up in at least as far as the oil area is concerned is the lack of a lot of data once you get outside of the U.S., Japan, Germany, and a few of the other OECD countries on oil inventories. We don't know what oil inventory pictures look like in a lot of countries, and I think it's critically important to understanding world oil supply and demand balances, and we just don't have that data. I don't have it from China, I don't have it from a number of other countries, including Russia and others, and it makes it very, very difficult. And that ends up why we have this big range in our oil price forecast. I would add, Adam, that one of the reasons we're very glad to see the IEO come back is that it does carry on this tradition of trying to look at forecasts without doing policy overlays. And in contrast to the decision that the IEA made with the WIO to highlight a set of policies that they assume will happen, which you then have to understand better. So I think that's one reason we're really glad that you made the decision to go back to publishing that. So question here, and then one over there. Greg Miller, Georgetown University. In your, one of the uncertainty factors that you highlighted in your forecast here was climate policies, but to what extent did your projections kind of take into account changes in the climate itself, such as rivers drying up and affecting hydro or droughts affecting agriculture, and therefore biofuels or storms and flooding affecting coastal production and refining capacities? Right. So did we look at the impacts of, of changes in weather, floods, forest fires, ocean level, you know, increases, temperature changes, and the answer is no. I had a related, actually, question. So about CO2, you have CO2 emission projections. Okay. My question is if those numbers are plugged into some climate models, whatever they are, what, when, when the temperature increases by two degrees, four degrees, etc. Specifically, I think there was a paper saying like, when we reach cumulative CO2 emissions, one trillion metric ton, cumulative, that's when we get two degrees Celsius. So question is when we're gonna, by which year we're gonna reach trillion metric ton emission total? Which year? Do you estimate? So the, the question, I need a piece of tape on this. Maybe I can move my papers up there, so then I won't see that red button. So the question is what's the annual growth in, in CO2 emissions? Right. Are we trying to, is EIA trying to relate CO2 emissions to temperature? No. I mean, that's, we're not climate scientists at EIA, and there are plenty of other parts of the, the government, EPA, the United Nations, and elsewhere who are, you know, making a strong effort at trying to understand those relationships, but we're not, we're sticking to the energy side. I want to come back to the issue of, you know, are we thinking at all, at all about floods, forest fires, hurricanes, and so on at EIA? And yes, we are. At least for the United States, we have dramatically over the past year improved our mapping capabilities, and I urge you to go to the EIA website and look at our mapping systems. Just recently, we've added to our mapping that can get down to the county level on a lot of things in terms of energy facilities, you know, where the resources are, resources and reserves, where the production facilities are, where power plants are, transmit, all these things that we can show to the detail that's allowed by Homeland Security. And there's plenty of that in there that you can look at. We have map overlays, and one of the things that we just added is the direct feed from NOAA on hurricanes. So if you want to, when a hurricane comes in, you can see where that's headed towards production facilities or electric power plants and that kind of thing. We are, I think we're in a beta stage with an overlay that shows where forest fires are around the country and how that might impact electric transmission lines. We're looking at storm surge levels and adding a layer in for storm surge levels. This is in the aftermath of Hurricane Sandy. So we are looking at that for the US, not so much from the standpoint of attempting to predict any of those things. That's not going to be possible, but certainly trying to understand what the impact would be on our energy infrastructure is something that we're taking pretty seriously and doing a lot of work on. Question here. I didn't see anything out to the far right there. Mark, if you don't mind waiting one second. You're in the same line of point. Matt Heldane Reuters was wondering about what you think, if there are any implications for the data you're putting out, what you think the implications are on public policy, here in the US, whether that's related to climate change or global trade and exports and how that'll impact relations with countries like China and India. It goes off on its own. I'm not doing it. Okay. That makes me feel better. I wonder why does that go off? I think my reply to that one is going to be very similar to the question on nuclear security. That's really something that's in the State Department and is not really an EIA issue. Thank you. Neilish Nurikar from there are people from the State Department that are here and you can come up afterwards and talk to them. Go ahead, Mark. I was just waiting to see if Neilish would duck under his chair. Mark Finley with BP. It says we're an equal opportunity employer here at EIA. All direct questions to all of the various departments. I'd like to thank you for an invaluable service that you and the DIC headed team at EIA provided with this outlook. Thank you, first of all. You mentioned transportation as an uncertainty for oil. You mentioned the potential for batteries and for natural gas and transport. I'm just wondering if you could talk a little bit about what you actually see in your base case in that regard. Does oil keep its monopoly in transport? Right. Who wants to answer that question? Yeah, you want me to answer that question. I actually have read this entire study, but I haven't memorized it all yet. You will be able to get into some of that detail in the tables. Oil is clearly going to maintain a very strong market share in transportation. I think EIA has actually upset and we did so in the AEO. I'm not going to be able to give you a lot of detail on what's going to happen internationally, but we could 94% of that. Right. Pretty slow penetration of electric vehicles. I'll bet you anything that of that 6% remaining that 5% of it is gas electric hybrids rather than all battery vehicles and all electric. One of the things that we will have in the 2014 annual energy outlook and one of the things that we will be doing, look, everybody is under a budget pressure and I'm not just talking about the EIA or federal agencies, but households. The drop in the economic activity that we saw in 2008 and 2009 is still reverberating across the economy in terms of how much money people have in their pocket to spend. And it's true for EIA as well as it is for people that have been hit very hard by high gasoline prices just as an example. So what are we trying to do internally to deal with this at EIA? And one of the things that John Conte and his team came up with was that we could try to do alternating years. So a light and regular year for the AEO and the IEO. And so next year we're going to institute the first year where we're going to do full AEO, but a smaller version will update the tables and particularly the petroleum side of the international energy outlook. And then in 2015 we'll do a scaled back version of the U.S. outlook and get back to a fuller version of the international outlook. So let me come back and address at least part of your question from a U.S. perspective. One of the things that I'm pretty sure that will be different in the 2015 AEO in the U.S. is greater penetration of natural gas into transportation. And I suspect that it's going to be mostly LNG. We are seeing a lot of experimentation going on right now in LNG into heavy-duty trucking, LNG into rail transport. Several railroads are this year experimenting with LNG as a fuel to drive what they used to call diesel electric engines. Diesel fuel powering generators to make electricity and it's very easy to convert a diesel engine to run on natural gas and the railroads are experimenting with this. And I do know that there are some freighters that apply the inter-coastal U.S. trade that are under construction in Louisiana that are going to run on LNG. They will probably be dual fueled capable of doing both marine fuel but LNG as well. And I think that that is something that we missed out on in the AEO 2013, but we're going to capture that development looking out. One thing that I think we've learned, Mark, across all fuels, all technologies is that that things take a long time. Even shale, which everybody says, wow, this miracle happened in the last five years. Well, it's become very apparent in the last five years, but the technology for doing horizontal drilling and 3D seismic and hydraulic fracturing has been worked on by both government and industry people all the way back into the late 1980s, early 1990s. And so it's really the cycle, even for things like shale gas, which we think is just so recent, is really a lot longer thing. And so I think that that slows these penetration rates down quite a bit. So we've got time, I think, for maybe two more questions. So if I see any... Wow, we'll end ahead of time. Well, let me follow up a little bit on the nuclear side, and I know you probably don't want to go back there again. So one last question. You're showing the aggressive China growth, which I think everyone expects, but you're also showing some significant growth in the Americas as such. And looking at where the U.S. nuclear industry is going, it looks like we're perhaps not even building more and perhaps we're declining. So I was wondering where this growth may be happening. Are you seeing in Latin America, Canada, someplace? Yeah, I think we're expecting Brazil to grow nuclear, even in the U.S. Our forecast suggests slight growth in nuclear output in the U.S. that we will build a few new nuclear power facilities, so existing technology, and that retirements will be more than offset by the additional plants and upgrades to some of the existing plants and so that we'll actually have greater nuclear generation in the U.S. So, yeah, it's a combination of the U.S. and a few other countries in Latin America. I don't know whether we... I'm not sure what we have in for Canada, but I suspect that some of those numbers... In which country? In Canada. So three gigawatts in Canada and sound about right? So, okay. Well, I think Adam, we've... Oh, we've got one last question. Or a comment. That's Iaka Jones from EIA. So Iaka, did you want to talk about coal too? Yeah, I'm trying to answer that question on China, that gentleman's question. Yeah, so there are a few points. First of all, the five-year plan is now binding. I don't think on the coal target historically, like in the past few years, 2008, they have surpassed the 2000 year or 2010, no question. They have passed the target that the government set. And second of all, I'm not sure if the five-year plan really means the peak coal by 2015. Maybe the five-year, they said they will cap coal, but going forward, after this 12 to 15 year, what's happened? I don't think it's clear. And third of all, based on our projection for coal consumption is based on our GDP outlook and result in the power demand outlook. And we... In that supply mix of electricity, we already built a very aggressive nuclear plant, as you can see the slides Adam just show. And we also built in hydro development. The only wild card is natural gas. We've built in a reasonable story we think might work, given the above ground issues for uncomfortable gas development. If that's the only wild card for coal consumption to peak by 2015, natural gas have to take off by 2015. I don't think... An unconventional natural gas have to take off that early, which we don't think that's reasonable. Yeah. Thanks, Yaka. So actually that reminds me of a couple of things that I wanted to say. So the last point of the three that I made was the uncertainty surrounding coal, excuse me, natural gas in China. And I talked about a lot of these above ground issues. It's not a below ground issue. And this comes from EIA's report on global oil and shale gas resources. And you see that China, according to our numbers and numbers from ARI, Advanced Resources International, has an abundance of shale gas resources. So the possibility that some of that could be developed is very strong. I think it's kind of interesting that you also see on the gas side, Argentina, Algeria, and of course Canada, but even Mexico. So we're back to if Mexico can deal with some of the above ground issues that they have, the potential for development of gas resources there is very strong. On the left hand side, I mentioned earlier that Russian oil production, we expect will actually be higher in 2040 than it is now. The Russians have a lot of potential shale oil, again, even bigger than our estimate for the US. And there's shale resources, oil resources in China, Argentina, and Libya as well. And so all of that creates uncertainty. The second point that I wanted to make, and I'm really pleased that you jumped in on that, is one of the things that I found since arriving at EIA a year ago in June is the unbelievable number of smart, dedicated public servants. Charlie Curtis and I were talking about public service here in Washington. And I feel myself choking up a little about this. EIA is chock-full of people who really want to be accurate, objective, and relevant. And we're trying real hard to do that. Thank you. I think with that, Adam, I just let me thank you very much for taking time out to come and do this presentation. It's really great to have you back here. And I promise the next time you come for a public session in our new building, it won't be this cold. Thank you very much.