2: Understanding Energy Outlooks
Overview
Overview
In this lesson, we provide links to outlooks from 8 different entities, reflecting views from government, non-governmental organizations, academic institutions, think tanks, and industry. These are just a few examples and you are free to search for others. We have included a short narrative as to the nature of the organization preparing the outlook. When you explore the links provided, there is opportunity to learn even more about the organization.
In Lesson 2, we will learn about “what” an outlook is. In Lesson 3, we will learn how to use this information to draw conclusions about energy supply and demand. We will be looking at the same readings for both lessons, but from different perspectives.
Learning Outcomes
By the end of this lesson, you should be able to:
- Describe the purpose of energy outlooks
- Identify the types of outlooks and who prepares them
- Recognize differences and similarities among various outlooks
Lesson Activities
| Read | Lesson 2 content |
|---|---|
| Write | 325 word (+/- 10%) essay |
Questions?
If you have questions, please feel free to post them to the Questions about EGEE 401 Discussion forum in Canvas. While you are there, feel free to post your own responses if you, too, are able to help a classmate.
What are Energy Outlooks?
What are Energy Outlooks?
Energy outlooks are all about reflecting “supply and demand.” They are projections of energy demand and availability looking out into the future. Whether combined into one document, or done as different products, outlooks can be short term, such as week to week or month to month, and others are longer term, some looking out a number of years. Whereas these outlooks may forecast 20 to 40 years, they are typically updated annually because conditions change frequently and many times unpredictably. So they are actually rolling predictions of 20 to 40 years, updated annually. For example, the COVID pandemic had an unexpected and profound impact on energy demand. We will discuss COVID impact again in a later lesson.
As you can imagine, in order to create such projections, some rather important assumptions must be made. These may be based on past energy supply and demand history combined with other patterns, such as population growth and distribution or economic development. Secondly, different types of organizations create outlooks because they wish to highlight specific trends or tell a story. In theory, all of the outlooks would be the same, or put another way, we would only need one to be done. However, in reality, not everyone agrees on what assumptions should be made and not everyone agrees on how to present the information.
It would be convenient if there were one master outlook, but in reality, there are a number of such outlooks, prepared by different organizations. A popular and important one is developed by the Energy Information Administration, which is an office of the U.S. Department of Energy.
Understanding An Outlook
Understanding An Outlook
In order to help you understand how to review/analyze these outlooks, we’re going to take a look at one together. We chose the EIA outlook because it is probably one of the more comprehensive options, is relatively “neutral” in terms of possible biases, and has some excellent navigation and interactive features.
Go to the link for the EIA [4]. You see on the landing page a layout of how to access information. As you scroll down the webpage, you will note that there are several options for how the information is presented. What EIA has done is divide the full report into many sub-publications that focus on specific aspects. The landing page also provides quick access information such as key takeaways and supporting information as well as a link to download the most recent outlook report.
LEARNING POINT 1:
Understand the overall layout and structure of the outlook.
As to the linked documents, they provide reports on energy supply sectors such as petroleum, natural gas, and electricity. EIA also provides reports by user sector, such as industrial, residential, and transportation. Finally, they provide supporting information such as related emissions data.
LEARNING POINT 2:
Understand how the information is sorted and presented.
Open the full report by scrolling down to the "Narrative" section and open the link "Read the full narrative." In the Foreward and Executive Summary the refernce case and side cases are discussed. This is very important information that explains how EIA developed their projections, what assumptions they use, and how things could be different. This type of information is critical to know when using any outlook because it puts the data into context.
LEARNING POINT 3:
Make sure to have some understanding of how the projections were developed in terms of sources of information and assumptions made.
Realizing that it is likely different outlooks might show different trends, it is important to recognize why that may be.
Finally, on the main page click on the "Interactive" icon under the "Data Tables - Reference Case Tables" header. Arguably, this is one the best features of this outlook, and I think makes EIA one of the better sources. I would recommend you “play around” with this interactive viewer. You will note several drop-down menu tabs where you can select many different variations of the information and see how the trends vary going into the future. The Publications Tables tab will let you pick an outlook year, and the Scenarios tab will let you pick the assumptions case, for example the aforementioned Reference Case. You will also see options for the various side cases. The Regions tab lets you see trends by geographic region. There are also tabs to show information either as a curve or on a map. The Map tab is particularly interesting in that you can run it as a time lapse animation to see how information changes. We will come back to this interactive Table Viewer in the next lesson where we explore the actual data.
This short tour through the EIA Outlook gives you a general sense of the kinds of information presented in outlooks.
Considerations:
I mentioned the terms alternate cases, sectors, and fuel types. It is easy to get confused as to what they all mean and why some outlooks are sorted one way, but others use a different format. It is all about the story they are trying to tell. For example, you may see energy demand sorted by user sector. These can include industrial, municipal/public, or commercial. Some even further subdivide industrial into types of industry. Sorting by user sector gives the reader of the outlook a sense of how our energy resources are shared among users. It also gives a sense of where the greatest demand is or is projected to be.
Another way to sort is by “energy sector,” or supply type. This type of sorting is used to demonstrate supply and tells us how much of each type is available and projected to be available in the future. In Lesson 3, we will take advantage of these sorting options to draw conclusions about projected supply and demand.
Particularly, but especially in the EIA outlook, they refer to alternate cases. As you can imagine, energy supply and demand in the future will be very dependent on many variables such as population growth, economic development, and policy decisions, among others. Clearly, no one can totally and accurately predict these variables, so in order to make projections, certain assumptions are made. Alternate cases are projections using other assumptions for certain variables. You are encouraged to explore some alternate cases in terms of which ones are used in the outlooks you explore. In Lesson 3, we will drill deeper into what the differences in results are between cases.
Comparing outlooks
Comparing Outlooks Assignment Overview:
On the following page, there is a list of organizations with links to the outlooks they have produced. Your task is to review two of these, ideally from different types of organizations, to get a sense of what these are and what they tell us. Do not be too focused on the actual data. In a future lesson, we will deep dive into these same outlooks and explore the data in more detail. For now, the idea is to understand outlooks and start to get a sense of which types you would want to review based specifically on what you want to know.
Purpose:
To successfully complete this assignment, you will write an essay which compares two or more outlooks to identify their priorities and how those relate to the Four Factors [Reliability, Security, Accessibility, Sustainability] discussed in this course.
Identify connections:
As you review the outlooks, keep in mind the four key attributes of energy in our society- reliability, accessibility, security, and sustainability. As you explore the outlooks, see if you can find how these attributes are reflected. For example, the World Energy Council states: “Securing flows of clean, reliable, affordable and sustainable energy to everyone, anywhere at any time is the ultimate vision of the World Energy Council.” You may explore how they use their publication to illustrate that point.
Successfully completing this assignment:
In 325 words (plus or minus 10%) write an essay that compares two outlooks and addresses the following points. Remember that for this lesson, we are focused on the general attributes of the outlook and not the specific information. Try to avoid comparing the data. Your essay should be submitted using Microsoft Word and will address the following questions:
- What is the purpose and focus of the outlooks you have chosen?
- Briefly describe the organizations that created the outlook- what is their purpose and focus? Priority area?
- How do they differ from each other?
- In general, how are the differences between the preparers reflected in the nature and format of information presented?
- Recall the exercise from Lesson 1 when you played the role and had to prioritize reliability, accessibility, security, and sustainability.
- How would these outlooks help you make that decision?
- In your opinion, when would you feel it appropriate to use one over the other, or does it matter?
- Could these outlooks help inform progress towards SDG #7?
Outlooks for Review
Energy Information Agency:
The Energy Information Administration (EIA) is an office within the U.S. Department of Energy and was established in 1977. It is primarily a statistical and analytic agency and provides neutral data for others to use.
International Energy Agency:
The International Energy Agency was established in 1974 in the wake of the oil crisis of 1973 and has evolved to be an information source of oil market and other energy sector data.
World Energy Outlook 2024 [5]International Renewable Energy Agency:
The International Renewable Energy Agency (IRENA) is an organization supporting the movement towards a sustainable energy future, mainly through the promotion of renewable energy sources.
World Energy Transitions Outlook 2024 [6]
World Energy Council:
The World Energy Council (WEC) is a bit different in that their mission is more about sharing information and experiences, such as case studies, to help the delivery of energy. Forecasting is a component of what they do, and the World Energy Scenarios link below is their closest product to a traditional outlook.
World Energy Trilemma 2024 [7]
Resources for the Future:
Resources for the Future (RFF) is a private nonprofit ‘think tank” which provides neutral and unbiased research to help inform energy-related decision and policy making. In addition to their outlook publication, which is available at the links below, they offer a succinct summary of key findings on the landing pages of these links.
Global Energy Outlook 2024 [8]
McKinsey and Company:
McKinsey and Company is a private sector diversified worldwide consulting firm. They have a highly varied suite of clients in the private and public sector. One of their products is providing studies and analyses. They prepare an oil and gas outlook.
Global Energy Perspective 2024 [9]ExxonMobil:
ExxonMobil is an energy company that provides energy sources such as oil and gas. They provide full life cycle services from exploration for new supplies of oil and gas, through producing fossil fuels from their fields, and all the way through refining, and marketing. ExxonMobil has diversified over the years to include non-fossil fuel sources such as wind and solar. ExxonMobil was born from the merger of Exxon and Mobil oil corporations- two long standing American icons of the industry.
ExxonMobil Outlook for Energy [10]
BP:
Like ExxonMobil, BP is an energy source company that over time has diversified from only oil and gas, to now include renewables. BP used to be known as British Petroleum but changed its name to Beyond Petroleum to capture their expanded portfolio of sources.
BP Energy Outlook [11]