The U.S. energy system is undergoing a significant transition, driven by technological advancements, policy shifts, and evolving consumer preferences. This transformation will reshape market dynamics, present new challenges for industries, and influence energy-related greenhouse gas emissions. OnLocation, a KeyLogic company, has produced a report using its enhanced National Energy Modeling System (OL-NEMS) to explore these evolving dynamics. The report presents two scenarios: Reference and Advanced Technologies, showcasing the potential impact of clean technology innovation and supportive policies that could accelerate decarbonization.
The report, known as OnLocation’s Energy Outlook (OL EH), provides a comprehensive view of the U.S. energy system through 2050, serving as a valuable resource for policymakers and stakeholders seeking to make informed decisions. By considering the effects of existing and potential policies and technologies, OL EH projects energy supply and demand, analyzing their impact on energy-related greenhouse gas emissions. OL EH is a series of modeled projections based on consistent input assumptions. While uncertainties exist regarding long-term factors like prices, technology development, economic growth, and geopolitical events, OnLocation leverages the expertise of its energy experts, informed by historical trends and anticipated future changes, to establish quantitative central pathways for model input assumptions. These pathways form the foundation of the OL EH Reference scenario and can be adjusted in sensitivity scenarios to assess the influence of parameter uncertainty on the energy system.
The OL EH Reference scenario acts as a baseline against which policy action can be compared. It assumes current laws and regulations remain in effect throughout the projection period, allowing for the modeling of proposed policy actions or technology improvements as sensitivity scenarios. The impact of the OL EH Advanced Technologies scenario is determined by comparing its results with the Reference scenario.
The ongoing and rapid changes in the energy system are not a recent phenomenon. To guide policymaking in this dynamic environment, the U.S. Energy Information Administration (EIA) regularly captures the current state of knowledge about the U.S. energy system in its Annual Energy Outlook (AEO). However, citing the need for additional time to incorporate new features into the underlying NEMS model to reflect recent energy system changes, EIA has decided not to produce an AEO this year. Recognizing the importance of providing insights to the energy and climate modeling community, OnLocation has stepped in to release OL EH.
With a history spanning over 40 years, OnLocation has collaborated with EIA in building and maintaining components of NEMS, the energy-economy model used for producing AEOs. Leveraging its expertise, OnLocation has developed its own version of the model, OL-NEMS, incorporating new features and policy updates to address energy system challenges and CO mitigation strategies relevant to its clients. OL EH represents a culmination of OnLocation’s expertise in energy systems, presented in a modeling framework familiar to AEO users.
OL-NEMS is built upon AEO 2023, with enhancements incorporating publicly available data, policy updates, and new capabilities. These updates differentiate OL EH significantly from EIA’s AEO 2023, with OnLocation assuming full responsibility for the assumptions and results presented in OL EH. A comprehensive report will include a detailed list of OL-NEMS model updates and OL EH scenario assumptions.
Key modifications implemented in OL-NEMS result in greater CO reductions in most energy sectors by 2050 compared to AEO 2023, particularly in the power and transportation sectors, as illustrated in Figure 1. These reductions are attributed to a faster phase-out of conventional fossil fuels, favoring clean energy sources like renewable energy and electric vehicles in the OL EH Reference scenario compared to AEO.
While the Reference scenario projects a decline in CO emissions over time, net emissions in the Advanced Tech scenario are considerably lower than the Reference scenario (Figure 2). A pivotal contributor to these reductions is the power sector achieving net zero CO emissions by 2040, facilitated by a combination of new renewables, battery storage, and CO capture technologies, including bioenergy with carbon capture (BECCS). Other sectoral emissions are offset by negative emissions from both direct air capture (DAC) and BECCS in industries, biofuels, and hydrogen production.
OL EH is accessible to organizations seeking to explore potential future projections of the U.S. energy system more effectively and identify strategies for influencing its trajectory. OnLocation is planning to release additional reports later this year covering Data Center (AI & ) Energy Demands, Employment Impacts of the U.S. Energy Transition, and Critical Materials Demands of the U.S. Energy Sector. OnLocation assists public and private entities in employing quantitative tools to evaluate structural and regulatory challenges facing the U.S. energy system. For further information or to schedule a free consultation, please visit the OnLocation website or email the company directly.
