#Petroleum and Liquid Fuels

As shown in Figure 34, the demand for liquid fuels declines by a factor of 3-6 by 2050 due primarily to the electrification of on-road transportation. Moreover, the use of fossil-based petroleum products to meet liquid fuel demand declines further as biofuels and synthetic liquid fuels replace them. In the Reference scenario, final energy demand for gasoline, diesel, and jet fuel is around 9 quad Btu, of which around 6 quad Btu are supplied from fossil resources, down from around 28 quad Btu of fossil-based liquid fuel use today. Most of the remaining liquid fuel demand is in the medium- and heavy-duty transportation sector (including aviation) because there is higher penetration of electric vehicles in light-duty vehicles. In the Net-Zero All Options case, the value of negative emissions from bio-refining with CCS results in an increase in biofuel use and a slight increase in liquid fuels overall relative to the Reference case, although fossil-based liquids decline. In the Net-Zero Higher Fuel Cost case, the price for liquid fuels increases more steeply, which leads to lower demand, offset by increased electrification, direct use of hydrogen, and efficiency. In the Net-Zero Limited Options case, liquid fuel demand is further reduced, with no supply from petroleum. Around half of the supply is from biofuels, with the other half from synthetic fuels produced using captured carbon (from biofuel production) and hydrogen (from electrolysis). Combined with a very high equilibrium price for bioenergy feedstocks, given their limited supply and increased demand, this pathway results in very high wholesale liquid fuel prices.

Other petroleum products, including propane, petroleum coke, and non-energy products (such as chemical feedstocks, asphalt, lubricants, and waxes) are included in the analysis but not shown in Figure 34.^[1] Currently, the US-REGEN model does not include alternative supply technologies for these products; thus, any residual demand is assumed to be supplied by petroleum. Future analysis will consider the possibility of bioenergy or other low-carbon pathways for supplying these products. Propane demand is projected to decline through substitution with electricity, gas, or hydrogen, though a small amount of demand remains by 2050. Demand for non-energy products is assumed to increase over time in all scenarios, but their prices rise steeply, particularly in the Net-Zero Limited Options scenario, leading to increased investments in efficiency to offset increased service demand. These products are assumed to be largely non-emitting, although some fraction of their carbon content is emitted, which represents a large part of the residual positive emissions in the Net-Zero Limited Options case. One implication of these scenario results is that petroleum refining activity is significantly reduced but not eliminated, with the product mix of the remaining refineries much more heavily weighted toward non-energy products than liquid fuels.