addition to these three that might better elucidate the possible outcomes and benefits of individual programs. This is discussed in more detail later in this chapter.

The results matrix that the committee recommends is presented in Figure 3-1. It is identical to the matrix shown in Figure 2-2.

SCENARIOS

The benefit of a new technology will often depend on developments quite unrelated to the technology itself. For example, the benefit of energy-efficient lighting will depend on the cost of electricity, which in turn depends on the costs of fuels like natural gas and coal used to generate electricity. Similarly, the economic benefits associated with carbon sequestration will depend on carbon emissions being constrained or taxed and the level of constraint. Thus, assumptions about the future of prices and environmental constraints, among other things, can have a significant effect on the prospective benefits of a technology.

The scenarios in Figure 3-1 represent three possible future states of the world that are likely to affect the benefits associated with a wide variety of DOE applied R&D programs. It is recommended that the same three scenarios be used to evaluate all the programs. The use of a common set of scenarios across program evaluations will allow reviewers to consider many programs without having to learn defi

FIGURE 3-1 Results matrix for evaluating benefits and costs prospectively.

nitions for multiple scenarios and will facilitate comparisons across programs. To ensure consistency, it is important for the scenarios used in the review of different programs to be built on precisely the same assumptions (e.g., the same oil and gas price assumptions); it is not sufficient for them to be similar in some high-level or vague sense.

The committee used the three scenarios that are currently used by DOE’s Office of Fossil Energy (FE) in its own benefits analysis (NETL, 2004). The committee reviewed these scenarios and felt that they succinctly highlight key issues that have wide-ranging effects across all of the FE and Office of Energy Efficiency and Renewable Energy (EE) programs. Moreover, having already been used by DOE, these scenarios provide consistency and familiarity for future analyses. The three scenarios are as follows:

  1. The Reference Case, developed by the Energy Information Administration and described in the Annual Energy Outlook (AEO) (EIA, 2004). The AEO provides detailed forecasts of U.S. energy supply, demand, and prices through 2025. This scenario represents the government’s official base-case forecast. The 2004 Reference Case assumes as follows:

    • World oil prices decrease from their current levels to about $24 in 2010 and then increase to about $27 per barrel in 2025.

    • Significant increases in natural gas consumption—i.e., 23 trillion cubic feet (Tcf) to 26 Tcf in 2010 and 31 Tcf in 2025—with prices decreasing from current levels to $3.49 per thousand cubic feet (Mcf) in 2010, then increasing to $4.47 per Mcf in 2025.2

    • An increase in primary energy consumption from 97.7 quadrillion British thermal units (quads) in 2002 to 136.5 quads in 2025.

    • GDP growth of 3.0 percent per year to 2025.

    • Carbon dioxide emissions from energy consumption growing from 5,729 million metric tons in 2002 to 8,142 million metric tons in 2025.

  1. The High Oil and Gas Prices scenario assumes that oil prices will remain very high throughout the period and that constraints on natural gas supply lead to higher natural gas prices and higher electricity prices. For example, the oil price in 2012 in this scenario is $33.41 versus $23.98 in the Reference Case, and the natural gas price in 2012 is $4.53 per Mcf versus $3.92 per Mcf in the Reference Case.

  2. The Carbon Constrained scenario, developed by the DOE, assumes that U.S. emissions of carbon are constrained in response to environmental concerns. Specifically, this scenario assumes that the Global Climate Change Initiative goal of an 18 percent reduction in national greenhouse gas intensity (below the 2002 level) is achieved by 2012 (White House, 2002) and that annual emissions are held constant at

2  

All prices are stated in 2002 dollars and thus do not reflect inflation.



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