The Annual Energy Outlook 2011 (AEO2011) reference case released by the U.S. Energy Information Administration (EIA) presents updated projections for U.S. energy markets through 2035. These reference case projections do not include the effects of potential future policies that have not yet become law.

“Our reference case projection shows the growing importance of natural gas from domestic shale gas resources in meeting U.S. energy demand and lowering natural gas prices,” said Richard Newell, EIA administrator. “Energy-efficiency improvements and the increased use of renewables are other key factors that moderate the projected growth in energy-related greenhouse gas emissions.”

According to the reference case, a higher updated estimate of domestic shale gas resources will support increased natural gas production at prices below those in last year’s outlook. This larger resource is projected to lead to about double the shale gas production and more than 20 percent higher total Lower 48 natural gas production in 2035, with lower natural gas prices, than was projected in the AEO2010 reference case.

In addition, the reference case predicts that nonhydro renewables and natural gas to be the fastest growing fuels used to generate electricity, but the case predicts that coal remains the dominant fuel because of the large amount of existing capacity. However, the EIA is not projecting any new central station coal-fired power plants, beyond those already under construction or supported by clean coal incentives.

The EIA predicts the generation share from renewable resources will increase from 11 percent in 2009 to 14 percent in 2035 in response to federal tax credits in the near term and state requirements in the long term. Natural gas also will play a growing role due to lower prices and relatively low capital construction costs that make it a more attractive fuel than coal. The share of generation from natural gas will increase from 23 percent in 2009 to 25 percent in 2035.

The reference case projections from the early release overview of the AEO2011 are available at The full AEO2011 report, including projections with differing assumptions on the price of oil, the rate of economic growth and the characteristics of new technologies, will be released in spring 2011, along with regional projections.