 Good morning and welcome to the Energy and National Security event at the CSIS, which this morning will be hosting the launch of the Energy Information Administration's International Energy Outlook 2010 with projections to the year 2035 for the first time. They'll be extending the outlook in additional five years. So we're very pleased to be able to host the EIA event this morning. For those I haven't met, I'm Guy Caruso with the Energy and National Security Program here headed by Frank Verastro. And we've now been lucky enough to host the launching of the International Energy Outlook for about, I guess, about five years now, five years. And we're especially pleased to have Howard Grunspeck, the Deputy Administrator of EIA, here to present the outlook this morning. Those of you who have been around the energy community within Washington know Howard very well through his distinguished career as a public servant. And he's had experience as an academician at Carnegie Mellon after his PhD from Yale. And is one of the leading energy and environmental experts around the world. And so I was very lucky to have Howard as my deputy for six and a half years at EIA. So it's doubly pleased to introduce him this morning. The IEO is one of those benchmark publications, much like the International Energy Agency's World Energy Outlook and those published by private sector as well. It's looked upon as one of those publications that sets, gives you an idea of where trends are headed. It isn't so much the precise numbers, but it's the shift in trends that we've observed over the years. I'm just looking today at the outlook and seeing that oil now is projected to be about 30% of the world's energy in 2035 when I first presented the IEO seven or eight years ago. That was close to 40%. So there has been a dramatic change in the trends, in the big picture for energy, fuel-wise and geopolitically where demand and supply are coming from. And those are the kinds of things that we really look for in the IEO and the kinds of insights that someone with Howard's experience and perspective brings to us. So you've got the more detail about Howard's background, so I won't belabor that. I just want to once again thank you all for coming. And we really appreciate the quality of the types of individuals that come to our events here. I just wanted to thank you all for taking the time to be here. And I want to thank Howard and the EIA team for the continuing excellence that you bring to this position. So Howard, thank you for coming. Thank you, guys. Well, good morning. Thank you for the very kind introduction, Guy. And I'd like to thank both you and Frank for hosting us today. We really appreciate the opportunity to share our views with such a knowledgeable audience. If we present this in DOE headquarters, all we get is short-term questions about what OPEC's going to do next week and what's going to happen in the Gulf. I assume we'll get those questions anyway, but at least we get some other questions. The International Energy Outlook 2010 is the EIA's latest assessment of world energy markets. And this year, as Guy indicated, we have projections through 2035. Unlike many other long-term outlooks, which usually incorporate at least the expected value of policy changes that can significantly influence energy outcomes, the IEO is based on existing laws and regulations. As is the case with all data and analyses from EIA, the views presented in the outlook are ours alone and do not necessarily represent those of the Department of Energy or the administration. Before turning to the outlook itself, I want to recognize those who really do the work to put it together. John Cotty directs EIA's long-term modeling office. Glenn Sweetnham led the division that produces this outlook. He led it until his recent detail to the staff of the National Security Council to help out on energy issues. Linda Dohmann, always a critical player, has stepped up to a leadership role in his absence. I should also mention that Richard Newell, EIA's administrator, had planned on making this presentation but could not be here due to his participation in the strategic and economic dialogue between the US and China and that's just wrapping up in Beijing. So he's, I think he's on his way back, he'll be back on Thursday, but unfortunately he wasn't here, so you'll have a real treat when you see him next year. So without further ado, the IEO 2010 reference case reflects a scenario in which current laws and policies remain unchanged throughout the projection period, just a little context for getting started, the global recession that began at the end of 2007 and continued into 2009 has had a profound impact on world energy use. Total marketed energy consumption contracted by 1.2% in 2008 by another 2.2% in 2009 as manufacturing and industrial energy use was particularly hard hit. In the reference case, however, as the economic situation improves, most nations returned to the economic growth patterns that were anticipated before the recession began and we expect total world energy consumption to increase by nearly 50% to 2035. As you can see from the chart, the most rapid growth occurs in nations outside the organization for economic cooperation and development, which I'll just refer to as non-OECD in this talk. Total non-OECD energy consumption increases by 84% in the reference case, in contrast within the OECD, energy use increases by only 14% over this period of time. Guy already mentioned this, this is sort of the big picture view of where our energy comes from or where we think it may be coming from and the composition of global energy use as well as its level is expected to change over time. With higher and rising world oil prices through most of the projection period, the share of liquid fuels and total energy use falls from 35% in 2007 to a projected 30% in 2035. And I should point out that that 30% includes biofuels. If you knock biofuels out, probably another little 1 to 2% of that 30% is biofuels. Renewables are the fastest growing source of world energy over the 2007 to 2035 period, but they start from a relatively low base. Their projected share rises to 14% in 2035 or 16% if liquid biofuels are included. The protected market share of coal, natural gas and nuclear power are relatively stable over this outlook. But overall, despite the growth in renewable energy use, fossil fuels are still projected to provide about 79% of marketed energy in 2035. So, at least in the current laws and policies world, we would expect fossil fuels to continue to be very important. Those of you who do global climate change modeling and long-term energy modeling know a lot about the Kaia, what's called the Kaia identity, this is a figure that shows really the roles of economic growth, population growth, and energy intensity improvement in the different regions of the world. Certainly, economic growth is a key driver of energy projections. And in our outlook, world economic output increases at an average annual 3.2% from 2007 through 2035. As shown by the, like I said to check colors, shown by the green bars, it's pretty clear that economic output grows faster in the developing world than in the mature industrial economies. Outside the OECD, the economic growth averages 4.4% per year over the projection, while the growth rate in the OECD is 2% per year. So, it's sort of a good news story in terms of well-being. And if you look at countries like China and India, their economic growth is significantly exceeding their population growth rates. So that per capita income is growing, but this has some significant implications for international energy markets over the next several decades as per capita income grows. Expected improvements in energy intensity, shown by the gold bars, which fortunately all point downward, moderate the effect of economic growth on projected growth in energy use. Like everyone else, EIA is paying considerable attention to world oil markets. Recent experience demonstrates that oil prices can be quite volatile. We're all familiar with the increase in prices from 2003 to mid-July 2008, when prices collapsed in 2009. Oil prices trended upward throughout the year, from about $42 a barrel in January to $74 per barrel in December. Prices generally have been moving up through the first four months of this year, but a fairly sharp move down over the last three weeks. EIA's short-term energy outlook, which we update each month, contains our forecast of energy markets over the next 12 to 24 months. The international energy outlook that we are discussing today should not be used for this purpose. Even over the long term, however, oil prices can vary over a very broad range, as they are substantially influenced by both economic and non-economic above the ground issues as well as by geology. Recognizing the uncertainty in long-term oil prices, our outlook provides three cases that span a very broad range of potential prices. And even those cases do not encompass all the possibilities. But I'll focus mostly on our reference case, and as the world economies recover, the reference case does reflect a return to higher oil prices with the price of US light sweet crude, which is what we use as our benchmark for these graphs, increasing to $95 per barrel in 2015, and that's in real terms, $2008 and $133 a barrel in 2035. The relationship between the growth in global liquids demand and the growth in non-OPEC liquid supply is an important touchstone of the IEO oil price cases. Reference case prices continue to rise as world economies recover and global demand once again grows more rapidly than non-OPEC liquid supply. So the call on OPEC is increasing. By 2035, global liquids use, including biofuels, is about 111 million barrels a day, roughly 60% of which is produced outside of OPEC. Petroleum liquids projections continue to run somewhat below those in the International Energy Agency's recent World Energy Outlook 2009. That only goes out to 2030, so we can't discuss 2035, but in 2030, our reference case is about 5 million barrels per day, less petroleum in 2030 than the WIO. But again, these different price trajectories are very different futures. So in the low price trajectory, where oil remains at $51 a barrel through 2035, projected non-biofuels liquids demand is 120 million barrels per day in 2035. While under the high oil price case, in which oil prices rise steadily to over $200 per barrel in 2035, non-biofuels liquids demand in 2035 is about 90 million barrels per day. So it's more than today's oil demand, but not by much. So again, there's certainly a wide range of possibilities. So where does the oil come from in this outlook? To meet the increase in world demand in the reference case, liquids production increases by a total of 25.8 million barrels per day from 2007 to 2035. The reference case assumes that OPEC countries invest in incremental production capacity in order to maintain approximately a 40% share of total world's liquids production through 2035. And that's really consistent with their share over the past 15 years. There have been a lot of certainly changes in developments in oil markets. But if you look at the OPEC share of total liquids, it has been, for one reason or another, about 40% over the past 15 years. Increasing volumes of conventional liquids, that's crude oil, lease condensate, natural gas, plant liquids, and refinery gain from OPEC contribute 11.5 million barrels a day to the total increase in world liquids production. And conventional supplies from non-OPEC countries add another 4.8 million barrels per day. Now I think an important part of this is how do we get up to the 25.8? And the answer is unconventional resources. And in that group, we include oil sands, extra heavy oil, biofuels, coal to liquids, gas to liquids, and at the end, even a little bit of shale oil, from both OPEC and non-OPEC sources grow by an average of 4.9% a year over the projection period. And world production of unconventional liquid fuels increases by 9.5 million barrels a day. And by the end, by 2035, they account for 13% of production. So they're definitely a significant part of the picture. Not a major part, but a major part of the increment between where we are today and where we're going in this reference case. When I think of the National Security and Energy Program at CSIS, I do think of oil. So I'm going to drill a little more deeply into oil, then talk a little bit about natural gas, which is of great interest, a tiny bit about coal. So that's the agenda, if you wonder where I'm taking you. So looking deeper into oil, I'm now drilling into the OPEC production of conventional liquids. And we see virtually all of the increase in OPEC conventional production occurs in the Middle East. And really, three countries have the story here, Saudi Arabia, Iraq, and Kuwait. Saudi Arabia remains the largest liquids producer in OPEC with conventional production, increasing to 15.1 million barrels per day in the reference case. And keep in mind, this is all production, not just crude. So the natural gas, plant liquids are included and the least condensate are included in this. Iraq is projected to increase its liquids production at an average rate of almost 4% a year in the reference case, which is the highest annual growth rate among all OPEC producers. Iraq's conventional production increases from 2.1 million barrels per day in 2007 to 3.1 million barrels per day in 2020 and then to 6.1 million barrels per day in 2035. Now, were OPEC to raise its production more quickly as it discusses, and that's certainly a possibility, in this kind of setup, it's likely that Saudi Arabia would be the one to reduce its production. So again, these are just an example of how things could be put together. Iran and Venezuela are two OPEC countries that are not projected to see the major increase in production. Moving outside of OPEC but staying in the conventional side, I guess this one is set up with areas with expected conventional oil production growth on the left and those with expected declines more to the right. So you can see that we do see a growth in conventional OPEC, sorry, conventional non-OPEC oil production despite the fact that there's maturity of many of these non-OPEC producing basins. And the increases are led by production gains in Brazil, in Russia, in Kazakhstan, and the United States. I should note that the U.S. projections, which were developed before the recent oil spill in the Gulf of Mexico, include expanded production of oil on the federal outer continental shelf. So that is definitely a part of this projection. And as you know, currently, the federal outer continental shelf in the Gulf of Mexico provides about 30% of U.S. crude oil production. Among non-OPEC producers, the lack of many prospects for new large conventional petroleum liquids projects and declines in production from existing conventional fields result in heavy investment in the development of smaller fields. Producers are expected to concentrate their efforts on more efficient exploration of fields that are already in production, either through the use of more advanced technology for primary recovery efforts or through enhanced oil recovery techniques. And there's a lot of potential in enhanced oil recovery techniques. So moving from the conventional to the unconventional, these resources, oil sands, extra heavy oil, biofuels, coal to liquids, gas to liquids, and shale oil, from both OPEC and non-OPEC sources, do become increasingly competitive in the reference case. And again, oil production grows quite significantly. Oil sands from Canada and biofuels, and the biofuels are largely from the United States and Brazil, are the largest components of future unconventional production in the international energy outlook reference case, providing a combined 70% of the incremental unconventional supply over the projection period. So again, the extra heavy oil, which is pretty much tied to what goes on in Venezuela, coal to liquids, gas to liquids, and shale oil are relatively smaller contributors. Now again, to illustrate the effect of these oil price cases, I should note that the three cases that we look at each reflect alternative assumptions about the sources and costs of world supplies. So prices are not the only factor that differ across these cases. So in the high oil price case, key non-OPEC countries, including Russia, Brazil, and Kazakhstan, further restrict access to or increase taxes on production from respective areas, and OPEC member countries, including Saudi Arabia and Iraq, restrain increases to production substantially compared to the reference case. So this leads to oil prices substantially in excess of the reference case path, and that dampens demand for liquid fuels. Because even if in the short run, the response to higher prices is relatively small over time, higher prices do make a difference to demand. Higher prices also enable increased production from both high cost conventional and from unconventional non-OPEC resources that are still accessible and attractive for exploration and development. So in the high cost case, demand for liquids other than biofuels is about 90 million barrels per day in 2035. About 17 million barrels per day less than in the reference case projection. So again, I think it's important to keep these other cases in mind, not overly focused on the reference case. I'm not going to discuss the different economic growth cases that will be provided in the full outlook. Those also have a tremendous impact on energy demand. Again, sometimes we're very concerned about energy demand in its relationship to prices. It is critical to recognize that economic growth and energy demand are intimately related. And I think we've all seen that over the last several years. So maybe I don't have to emphasize that as much as I might have in the past. Moving to natural gas, we see projected uses increasing by nearly 50%. Red by growth in OECD Asia, the Middle East, and North America. Again, with the world oil prices that we have in our reference case, and prices remaining high throughout the end of the projection period, consumers opt for comparatively less expensive natural gas for their energy needs whenever possible. In addition, because natural gas produces less carbon dioxide when it's burned, then does either coal or petroleum. Governments implementing national or regional plants to reduce greenhouse gas emissions may encourage its use to replace other fossil fuels, particularly in electric power generation and in the industrial sector. Where, for example, newly constructed petrochemical plants are expected to rely increasingly on natural gas as a feedstock. So that's the demand picture for natural gas. What about supply? Most of the increase in natural gas production is expected to come from the non-OECD countries, which account for about 89% of the total increase in world supply to 2035. Major increments come from the Middle East, non-OECD Asia, Africa and Russia, and the other countries of non-OECD Europe and Eurasia. Natural gas production from the OECD increases by five trillion cubic feet from 2007 to 2035, and the largest increase among these nations is projected for the United States. Shell gas is a key contributor to the growth in U.S. production. So this graph really looks at the unconventional gas picture and where it makes a huge difference. And it's clear that the extent of the world's tight gas, shale gas, and coal-bed methane resources has not yet been fully assessed. But based on what we do know, we are projecting a substantial increase in these supplies. In the United States, which we do know best, rising estimates for shale gas resources has helped increase total-proof natural gas reserves by almost 50% over the past decade. And shale gas rises from about 6% of total U.S. natural gas production in 2007, it was 13% in 2009, so it really has risen fast, to 26% in 2035 in the reference case. If you look at all the unconventionals together, tight gas, shale gas, and coal-bed methane, these resources are also very important for the future of natural gas supplies in Canada and China, where they're projected to account for 63% and 56% of total production respectively in 2035. And you can see that in the United States, it also accounts for in the 60% range of total production in 2035 in this projection. So again, unconventional gas, critically important. Turning to coal, as noted at the beginning, we do see a significant rise in absolute coal use over the projection, with the share of coal use remaining flat. However, in contrast to the projected rise in natural gas use, which occurs in nearly all parts of the world, the nations of non-OECD Asia, especially China and India, account for 95% of the total net increase in coal use over the projection period. Increasing demand for energy to fuel electricity generation and industrial production in this region is met significantly with the use of coal. So in this region, in the US, coal is used almost exclusively for electricity generation. In China, coal is used for both electricity generation and in industry. In fact, I believe there may be more use of coal in industry than in electricity generation. Installed coal fire generating capacity in China more than doubles from 2007 to 2035, and coal use in the industrial sector grows by 55%. So again, a substantial increase in the use of coal. Looking at electricity, again, we expect generation to increase rapidly. Total net generation in the non-OECD countries increases by 3.3% per year on average, as compared with 1.1% per year in the OECD nations. From 2007 to 2035, the renewable share of total electricity generation increases from 18% to 23%. Hydro and wind supply much of the growth in renewable energy consumption over the projection period. Nuclear power generation is attracting new interest as countries seek to increase the diversity of their energy supplies, improve energy security, and provide a low-carbon alternative to fossil fuels. While nuclear power projections are highly uncertain, we do incorporate improved prospects for world nuclear power. And the projection for nuclear generation is 9% higher than the projection published in last year's outlook. Some of the largest increases occur in China. There are some increases in Europe as well, where there has been some policy change over the past year in Belgium, in Italy. I think Sweden has passed some laws that envision nuclear power continuing for some time, and I believe the German government will reconsider their position on nuclear power. So looking at transportation, some of these sort of integrated sectors from the demand side, the transportation share of world liquid fuel use increases over the projection. Again, in the OECD, in fact, transportation energy use fell dramatically over the past few years. But outside the OECD, transportation use for energy increased in 2007 and in 2008. And even in 2009, it grew by an estimated 3.2% despite the slowdown in the economy. This, in part, reflects some of the subsidies that are provided. With robust economic growth expected to continue in China and India and other non-OECD nations, we think there's growing demand for business and personal travel. And we expect non-OECD transportation energy used to more than double from 2007 to 2035. OECD energy use for transportation is a different story. In fact, it declined in the past two years. And in the reference case, it doesn't even regain its 2007 level until 2020 and grows only slightly thereafter. So again, a very different picture in terms of transportation. I think in transportation, we often think mostly about personal vehicle transportation, which we talk about a lot as a matter of policy in this country. In 2007, about 2 thirds of transportation energy use in the OECD countries was for passenger travel. For the non-OECD countries, passenger travel accounted for 56% of total transportation energy use in 2007. So again, the share of freight was higher. We do see freight transportation energy growing faster than personal transportation energy, in part because projected efficiency gains are much more robust for light-duty passenger vehicles than for freight modes of transport. We have not reflected the president's announcement about his plans for heavy trucks in this projection. And many of the potential freight-related transport efficiencies have already been realized in the existing fleet because some of the barriers to adoption of cost-effective energy efficiency in the private sector in the personal transportation market don't apply to the freight transportation market. So both passenger and freight travel increase over the projection period, but worldwide energy consumption for freight travel increases at about twice the rate of energy use for passenger transportation. So the last slide is the bottom line on greenhouse gas emissions. This reference case does not include specific policies to limit greenhouse gas emissions. And energy-related carbon dioxide emissions are projected to rise from under 30 billion metric tons in 2007 to about 42 billion metric tons in 2035 an increase of 43%. Again, strong economic growth, continued heavy reliance on fossil fuels. Much of the increase in carbon dioxide emissions occurs among developing nations of the world, especially in Asia. Again, China and the US had very similar emissions of energy-related carbon dioxide emissions in 2007, about 6 billion metric tons in 2035 built into this projection. US emissions are 6.3 billion metric tons, so relatively small growth, while China's emissions are projected at 13.3 billion metric tons. So with that, these are mostly just a repeat of some of the key trends. So I appreciate your attention. I welcome your questions. I look forward to the dialogue. Thank you very much. Thank you very much, Howard, for a very clear and precise exposition of the latest outlook by the Energy Information Administration. I'm going to open up the floor to questions, because I know there are so many good questions that we're here. But while I'm calling on it, there's one thing that jumped out at me on the demand side, and that is a relatively strong improvement in the energy intensity or energy relationship between GDP and the emerging economies is what's your primary assumptions with respect to the relationship between GDP and other economic activity and energy use in places like China and India? Well, we do see significant improvements in energy intensity. One of the things is that improvements in energy intensity are often linked to the building of new capital equipment. And generally, the developing countries are adding a lot of new capital equipment, much more so than the mature economies. I think we can see that in lots of places. We see that in the industrial sector. We see that in the electric power sector. We do see as the economies grow, there will be some shift in the composition of the economies as well. Structural change also matters. So the growing role of services in those economies should help with their energy intensity as well. But we do expect industry to remain important in those economies as they develop, although its share of the total as the growth occurs will decline. So it's a combination of reductions in intensity due to the relative modernity of the capital stock plus some composition shift toward services. Thank you. Secretary Slesinger, is there a yes, Nitzan? A couple of questions. First, we see the growth of demand within the OPEC countries, domestic demand. And some of the projections show internal demand in Saudi Arabia rising to eight or nine million barrels a day as opposed to your top projection of 15 million barrels. And similarly with some of the other Gulf countries. The consequence would be less oil, relatively speaking, for the international market. Have you factored that into your projections? And if so, what is the implication? Secondly, the Iraqis keep insisting that they're going to be producing about 16 million barrels a day. Your projection is 6 million for the year 2035, which means that you put a very high rate of discount on Iraqi projections of their growth. Would you comment on that? Well, maybe the right answer is to link the two questions and say that if the Saudis consume more of their production that the Iraqis will produce more to export to us. But not linking them, we do reflect both the demand and supply from the Middle East. We do think that there will be an interest in, given the relative price of petroleum and natural gas, that there will be an interest in substituting some natural gas for the growth in energy consumption in the Middle East region, which does, I think, tend to free up some oil for the world market, despite the growth in demand for oil and natural gas in the Middle East. Again, with respect to the Iraqis, it is early days to know how the aspirations and the plans will relate to the reality. There are several ways of looking at this. One, EIA is often accused of being very optimistic about the potential for conventional oil resources. So it's maybe a little refreshing to be accused of being too pessimistic. But another, certainly other possibilities include a world with a lot more oil supply looks a lot more like our low oil price case world. I mean, if Iraq is really going to produce at those levels, and if demand is going to be consistent with the kind of track that we've laid out here, then something got to give. I mean, either demand has to be a lot higher, and there are people who believe that. Someone like Adermot Gaitley has made the argument that these projections for demand of both EIA and the IEA are much too low. So there could be higher demand, or there could be lower prices leading to higher demand. So there are a lot of different ways that the puzzle could be put together. And in our outlook, we try to talk about the reference case, but we do recognize that there are other ways that the puzzle could be put together. But higher Iraqi production is certainly one possibility. Joe Duker. Howard, in the current version of NEMS, how are natural gas prices projected? Specifically, how closely in the 2010 outlook do they track world oil price? And to what extent does the model reflect the divergence between oil prices and natural gas prices that we've actually seen? Well, we do have a divergence between oil and natural gas prices in North America, in NEMS. I should point out that when we look at energy markets, oil is clearly the globally traded, globally priced commodity. Natural gas is certainly globally traded to some extent. But transportation is a much bigger piece, if you will, of the price of natural gas, liquid faction and transporting LNG. So the world gas market is not nearly as integrated as the world oil market. And we definitely think that natural gas prices can differ regionally across the world in significant ways, whereas we generally view oil as having a single price, at least before subsidies and taxes, around the world. So in North America, in NEMS, we have on an energy equivalent basis, we have the price of oil about three times higher than the price of natural gas on a BTU equivalent basis throughout the projection in North America. So the price of oil rises, the price of gas rises at a much slower rate, in part because of the shale gas resource in North America and the strong resource space we have here. And we do expect oil and natural gas prices in North America to diverge significantly. And that can happen in North America, even if it's not happening as much in the rest of the world. Couldn't it happen in Europe also? It could happen in Europe also. There's clearly a lot of pressure on the oil-linked pricing of natural gas. And it's a question as to what extent that system of oil-linked contracts can remain intact. It is giving around the edges already, as you know. Yes, sir. Egypt, please identify your side, please. Andy Patterson with EBI. Howard, can you talk about what happens to, let's say, nuclear and coal power project plants when the tax credits fall off? EIA has traditionally taken the view that we don't get to end the plant. Market doesn't provide enough incentive once you get past the 6,000 megawatts that have the tax credits. The market doesn't just stimulate more production, more purchases of those kinds of plants. How do you defend that view when Congress wants to get off of the tax incentives and push things to the end of the plant if it's not really happening? What are in your assumptions? Well, I think a big question about nuclear power, certainly in the US context, is what are the costs of the plant? I mean, we have been in a mode recently where estimates of the cost of these plants has been rising. Certainly, the assumptions we use in our modeling, those plants have been getting more expensive. We have been building some plants beyond the six gigawatts that get the production tax credits. We have projected that in our loan guarantees. Sorry, we have projected that. Congress is looking at loan guarantees. Congress is obviously looking at some of these issues in the context of the Kerry Lieberman proposal, which would change permanently the tax treatment of nuclear. So there's a role of a price on carbon itself, which we don't address in this framework. But we do see increasing interest in nuclear power, both in the US and in Europe, and certainly in developing Asia. And we do reflect that in this outlook. Coal with CCS, we don't have really any significant coal with CCS being built in this outlook under current laws and policies. We have, I think, a small number of plants that are demonstration plants that are directly funded. But in terms of economic building of coal with CCS, absent climate policy, it's not in this outlook. We do have some industrial CCS. Frank? All right, thanks very much. This is a great presentation. I guess my question goes to you. So in the reference case, sorry, thanks. This is our own rules, and I want them. In the reference case, you talk about how 2035, no change in policy. You're still looking at roughly 80% fossil fuels. If you were to run this case with the administration's proposal for 80% greenhouse gas reductions by 2050, how different would it look? And is the closest approximation, the work that you've done on, or would it be a good approximation to use the Waxman market analysis? Yeah, I mean, obviously, the key issue is reductions in the world. So in this context, what happens in the rest of the world is also important. But in terms of cases with less greenhouse gas emissions, we do, in our domestic analysis, and I think this would apply globally as well, we do think the electric sector is probably the place where the bulk of the early emission reductions associated with energy would occur. Transportation seems like a tougher nut to crack at the present time, although there are certainly a lot of interest in alternative paths for transportation. I think a key thing we found in our domestic analysis was the availability of offsets, international offsets, played a key role in what we actually did domestically to meet the Waxman market. And then finally, the sort of the, I guess, going back to the question about nuclear and coal with CCS, I mean, those are really big question marks. And we did look at some cases where, for one reason or another, those technologies weren't available, whether due to public acceptance concerns or technology development concerns or much higher costs than anticipated. And it's a much tougher world in those cases. You do see a lot more natural gas coming in in those cases. And you do see significantly higher carbon prices in those cases. So but we still see electricity first in those cases. It does seem that that sector, that's the sector where you have existing demonstrated technologies that are much less carbon intensive, that are already in use, that don't have the sort of have to make a change in the energy using technology as well as the energy supply technology. So for a whole host of reasons, electricity does seem to be where, if there's flexibility in where you can take the emission reductions, that's where you take them. Did you make any projections with regard to temperature? Or is that outside of a bailiwick? That's outside. Well, as everyone knows the, well, not as everyone. As you certainly know, the energy use and emissions projections are uncertain in and of themselves. And then the relationship of atmospheric carbon dioxide emissions concentrations to temperature change are also uncertain. So I don't think it's easy to tie what you can calculate pretty easily the impact of this scenario for atmospheric concentration. But tying the atmospheric concentration of greenhouse gases directly back to a temperature level, I think is quite difficult. OK, my answer is, we did not do that. Yes, sir. Hi, my name's Simon Lomax. I'm with Bloomberg News. I'm probably going to ask you one of the questions that you're referring to earlier. Crude oil is off about 20% this month. And I'm wondering if you could speak to how that would affect, firstly, your next short-term energy outlook and then how that would influence a longer-term energy outlook like the one you've just rolled out. I'm not sure it would have a significant influence on the longer-term energy outlook. In terms of the short-term, again, when we look a lot at obviously the current situation, we look at the amount of oil and storage. We look at floating stocks of oil, which are going up. It's also the case, though, that there doesn't appear to be any consensus within OPEC to reduce their production targets at the present time. Again, current prices are pretty similar to the prices that we had in December. They're a little bit lower than the prices that we have now. We're certainly going to look at it. But I don't think it's a radical change. If you asked us for our projection of summer gasoline prices next month, I know it'll be lower than what we published in the May outlook. I think we had something like a 295 per gallon average summer price in the May outlook with an average oil price of $83 per barrel. If prices were to drop or to remain where they are now in the low 70s, you might drop 25 cents a gallon off of that price. But I'm not sure we'll go that far. Because again, the markets are telling us that there's significant short-term uncertainty in oil prices. I mean, the probability of oil prices exceeding $100 a barrel in September, which at the beginning of the month were probably 1 in 5. They're now something like 1 in 20. But again, prices could go back up again. So I'm not sure that we'll take the full adjustment. Are there any? Yes, in the back. Hi, I'm Catherine Ling with Greenwire. I was wondering if you could speak a little bit more about how you worked efficiency into these projections. You talked a little bit about it with the freight. But I guess I'm talking about overall energy use. Are you just thinking that technology will pretty much stay the same, or how are you figuring that? No, our projections of energy intensity improvement really reflect improvements in efficiency. And we do that in detail. I mean, there's a lot more detail in our US projections. But we have more efficient houses, more efficient appliances, more efficient equipment is built in. We look explicitly at the turnover. We look explicitly at standards where they exist. So energy efficiency is definitely part of the energy intensity improvement story. Yes. Will Pearson with Eurasia Group. I feel like it just needs to be brought up the shale gas outlook, the variation in how much you think shale gas and other unconventionals in your reference case versus your high end and low end for unconventionals. How much of a variation do you see, both in North America with potential environmental regulation and in other countries, potential growth in production? How much do you account for that in your outlook? I don't think we really do price sensitivities. On natural gas, in the same way we do them on oil. Clearly, there's a lot of, as I said, it's still quite early days in the evaluation of the shale gas resource. It's further along in the United States than in other places. So a lot remains to be seen. There's certainly a lot of interest in shale in other parts of the world. We do see, we know Canada with the Horn River, that's likely to go. Certainly, China looks like a country where again, a lot of the issue is really demand and supply, not just supply. So in the U.S., you could imagine that there would be even more natural gas production and more shale gas production, but the issue is how are you gonna use the gas unless you think that we're gonna become a gas exporter or we're gonna create liquid fuels from the gas, which is very, very, very expensive? Then the issue is you gotta find a way to balance demand and supply for gas. So it comes down to industrial demand for gas and electricity generation demand for gas at a time when electricity demand is not growing that rapidly, at a time when we're bringing a lot of renewables into the electricity sector. So I imagine in other parts of the world, it's sort of a similar issue. It's not just a supply picture, it's a supply and demand picture. And again, I think a lot of the sort of basic resource evaluation that is just going on in the United States now still has to go on to a greater extent in other parts of the world. We do, yeah, in our, sorry, in our U.S. outlook, John Conkey points out that we do look at the implications of not having shale gas in the United States or having a more abundant shale gas resource in the United States. And it makes a huge difference in terms of the price of gas. And clearly it has knock-on impacts throughout the world because it affects significantly the market for LNG and the like. So there are sensitivities on shale gas in our domestic outlook, but not in our international outlook. Andy? With Kerry Lieberman introduced now, we noted that when EPA did their analysis of Waxman-Markey, they basically came out with a surprising finding that a lot more energy efficiency tends to push off renewable energy. Would EIA see that interface similarly that a lot of energy efficiency pushes off renewable energy rather than gas and coal? I don't want to comment on EPA's analysis in detail, but I would point out that our building of renewables is really driven to a large extent by a combination of federal policies, production tax credits. It's driven by some of the provisions in the stimulus. It's also driven by some of the state-level mandates for renewable energy. So in our view, the stuff that is mandated in a current laws and policies scenario gets built. Once it's built, the electric system is sort of dispatched on an economic paradigm. The renewables, like the nuclear plants, sort of run when they're available. And so it is gas and coal, and coal typically would run ahead of gas, although again, one of the examples that came up about the shale gas and gas production in that in 2009, say, with the dramatic fall-off in gas demand, particularly industrial gas demand, you had very low gas prices, and in some regions of the country, you had gas running ahead of coal. But generally, we get the result that that gas over time gets a little bit pushed out by cheaper, by easier to dispatch technologies. In a climate change scenario, a lot depends on the nuclear and coal with CCS. In a world where you can't build those, there you see an awful lot of gas and renewables. Since Andy mentioned the Kerry Lieberman EPA analysis, just say a little bit about where you are in EIA's response to the Senator Kerry as a request for your analysis. Well, we had been talking with them quite early in the process and said, we can tell you when you do it, when you tell us what you want us to do. We received the request for modeling in late April, and we estimated that we could provide an initial response in six to eight weeks time. And on that schedule, we're looking at a sort of mid-June to late-June response, something we're working on quite hard at the present time. Thank you. I think there's one far in the back. Hi, Brian Kennedy, I'm with the Government Northwest Territories in Canada. You mentioned the domestic demand might be so-so going in according to your model in the years ahead. I'm just wondering, and you're suggesting that that demand may be probably met by deposits of shale gas. I'm just wondering where that puts pipeline projects, such as the Alaska Pipeline Project and the Mackenzie Valley Gas Pipeline Project, which are both in the works. But I'm wondering now, in your mind, would they be pushed back significantly because of the deposits of shale gas and the so-so demand that you projected over the years? Test my memory of the annual energy outlook. I think that the Alaska Pipeline we have in our reference case coming on in about 2023. So it's pushed back a little bit. But interestingly, when we look at these sensitivity cases with respect to shale, if we do this thought experiment and said if you didn't have any shale, we would expect the Alaska Pipeline to come on earlier in about 2020. And I think when we looked at the case where we had a lot more shale resource, the Alaska Gas Pipeline did not come on until 2030. So you're, because of the impact on prices. So the shale gas resource and our ability to use it has an impact on natural gas prices in North America and that has an impact on the viability of these pipelines. So I think your intuition is correct that shale as an alternative to the pipelines transporting distant conventional gas to the demand areas is a significant factor. Okay, well, if there are no further questions that just leaves me to, Jim, do you have one final one? Policy makers have a lot of work to do. With that, please join me in once again thanking Howard and the EIA team, thanks. Thank you.