Another year, another U.S. Energy Information Agency (EIA) assessment report that makes the agency's own forecasters look foolish.

In the latest Electric Power Monthly report, which covers all twelve months of 2015, the EIA revealed that renewable energy sources accounted for nearly 13.5-percent of the nation’s utility-scale electrical output. This is up by more than 2-percent over 2014. But get this: less than three months earlier, in the “Short-Term Energy Outlook,” the agency predicted “total renewables used in the electric power sector to decrease by 1.8% in 2015.”

The EIA’s record for long-term forecasts is no better. In fact, it’s consistently worse.

As Ken Bossong, Executive Director of the SUN DAY Campaign, recently pointed out, the agency’s “Annual Energy Outlook 2012” forecast that non-hydro renewables would provide about 250,000 thousand megawatt-hours of electricity by 2015. The new EIA tallies put that figure at over 300,000 thousand megawatt-hours, roughly 20-percent higher than predicted. (You could more simply state this as the 300,000 gigawatt hours actually produced in 2015 is 20-percent higher than the 250,000 gigawatt-hours predicted, but for some reason, the EIA likes to use the clunky “thousand megawatt-hours" factor.)

"Just a few years ago EIA had forecast that renewables might provide 15% of the nation's electricity by 2035," said Bossong. "It now appears that goal could be reached within the next two years and quite possibly sooner!"

This isn’t the rare instance of the EIA getting something wrong. Rather, it’s something of an annual tradition. Consider these examples, taken at random (and culled from links I’ve bookmarked over the past few years under the tag, “EIA wrong”):

• “In 2009, the federal government’s Energy Information Administration made a forecast for the next two decades: U.S. wind power would grow modestly, reaching 44 gigawatts of generating capacity in 2030, while solar power would remain scarce, inching up to 12 GW. Just six years later, U.S. wind capacity is already up to 66 GW, and solar has shot up to 21 GW. There's now enough installed wind and solar to power 25 million American homes— more than three times what the EIA expected before President Obama took office.” Michael Grunwald in Politico
• “In 2005, EIA forecast that U.S. solar power capacity would hit about 1.2 GW in 2013. Where are we right now [in 2013]? According to Greentech Media, the U.S. is closing in (if it already hasn’t passed) the 10 GW mark in solar PV capacity right about now, and that’s not even counting solar thermal power generating capacity (according to this article, you can add another 1 GW or so of U.S. solar thermal power capacity). In sum, EIA forecast 1.2 GW of U.S. solar power capacity in 2013; the actual figure is around 11 GW – nearly 10 times higher than EIA forecast!” Former EIA employee Lowell Feld, in 2013.  
• “The report this year [2015] predicts that by 2040, the U. S. will have added only 48 gigawatts of solar generating capacity. The Solar Energy Industries Association (SEIA) expects that the industry will add half of that by the end of 2016. “ Samantha Page in ThinkProgress
• In an update on June 2015, the EIA projected that the cheapest solar deployed in 2020 would cost $89 / mwh, after subsidies. That’s 8.9 cents / kwh to most of us. (This assumes that the solar Investment Tax Credit is not extended.)…How has that forecast worked out? Well, in Austin, Greentech Media reports that there are 1.2GW of bids for solar plants at less than $40/mwh, or 4c/kwh. And there are bids on the table for buildouts after the ITC goes away at similar prices. Ramez Naam

So why does this matter? That predictions about something as complex as energy markets are always wrong shouldn't come as much of a surprise.

Yet, as Jeff Deyette, an analyst with the Union of Concerned Scientists, told ThinkProgress about the EIA forecasts, "real policies are being designed around these assumptions."

This becomes particularly troubling when the assumptions consistently favor investment in fossil fuels, and shortchange the potential of renewables.

Steve Yetiv and Lowell Feld break it down further in an important article for the Journal of Energy Security called, "Why Energy Forecasting Goes Wildly Wrong."

Why does any of this matter, and why should any of us care if energy forecasts are off base most of the time? To the extent that policymakers believe erroneous forecasts, they can make wildly incorrect policy choices. For instance, if they believe that oil prices will remain far lower in the future than is the case, their forecasts will undermine efforts to conserve or to switch to alternatives. Why would nations, businesses, entrepreneurs, and individual consumers take such steps if oil prices are predicted to remain low? At a minimum, this will be one factor working against conservation and movement away from fossil fuels.

Crucially, these forecasts are used by governments to guide policymaking. And this goes all the way to the top.

As Lorne Stockman notes, "The White House’s key energy policy document cites the EIA’s oil demand forecast, and its outlook for steady oil demand decades into the future, as the basis for the latest round of lease sales in the Outer Continental Shelf, which includes areas in the Atlantic Ocean offered for the first time in decades together with new areas made available north of the Arctic Circle in the Chukchi Sea."

Two years ago, a group of CleanTechnica readers were so alarmed by the EIA's 2014 Annual Energy Outlook, they wrote a letter to the Secretary of Energy suggesting that the forecasting and reporting methods and models be overhauled.

We also feel that the EIA has made thousands of forecasts in the past which never seem to be publicly visited again, for example in the 2010 AEO it was forecast that we would reach 0.45 GW of solar PV on the grid by 2035, in November 2013 we reached 7.11 GW according to the FERC.

Surely, in making new predictions it would be appropriate for the EIA to address how their models could produce a 25 year forecast which has already been surpassed 16 times over in less than 3 years. What changes have been made to the models to improve this terrible forecasting record? If none, then should the renewable forecasts come with a disclaimer that they are highly unreliable and have a history of massive underestimation of renewable growth, surely burying them deep in the data of the report is not an appropriate strategy.

Solar and wind trade groups are also outspoken about the need to reform the EIA's outlooks.

"All forecasts are going to be inaccurate. What is concerning is when you see consistent systemic bias in your projections from EIA," said Michael Goggin, of the American Wind Energy Association. "There seems to be consistent bias in EIA's projections against renewable energy, and that's a different thing from being inaccurate."

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The shift away from coal and towards renewable sources of energy is slowly beginning to gain traction, two recently-released reports from American and global energy agencies show.

“The biggest story is in the case of renewables,” International Energy Agency executive director, Fatih Birol, told the Guardian as this year's World Energy Outlook was released. “It is no longer a niche. Renewable energy has become a mainstream fuel, as of now.”

Almost half of the new power generation added in 2014 came from wind, solar, wave or tidal energy, the report found, and renewables now represent the world's second largest source of electricity after coal. Coal, whose share of the world's energy mix has been rising since 2000, has peaked, the agency indicated, predicting that within two decades, renewable energy sources will replace coal as the backbone of the world's electricity source.

Domestically, the growth of renewable energy has been especially pronounced in Texas and other states long famous for their drilling and mining histories, data released by the U.S.-based Energy Information Administration shows.

Texas has become the largest wind-power supplier in the country, helping to slash as much carbon from the state's emissions in 2013 as both Vermont and New Hampshire combined produced that year, if Texas had gotten that power through burning an equal mix of coal and natural gas instead of wind.

Still, the transition away from fossil fuels is coming too slowly to prevent catastrophic climate change, the IEA warned.

"There are unmistakeable signs that the much-needed global energy transition is underway," the agency wrote in its report, "but not yet at a pace that leads to a lasting reversal of the trend of rising CO2 emissions."

For the world to have a shot at keeping emissions below the 2 degree of warming threshold, the agency identified five key steps: the least-efficient coal plants must be banned, many fossil fuel subsidies must be ended, infrastructure like buildings and transportation need efficiency improvements, investment in renewable power must rise from $270 billion in 2014 to $400 billion by 2030, and methane leaks from oil and gas companies must be slashed.

The good news? Those measures could be taken at "no net economic cost," the agency concluded.

All told, this year, renewable energy sources represented over 17 percent of the U.S. electrical generating capacity — an unprecedentedly high number, but still far less than fossil fuels.

Remaining dependent on fossil fuels brings economic as well as environmental risks. The IEA warned that while oil prices remain low currently, the cost of a barrel is expected to roughly double over time, and that in some situations, the world's oil industry would be vulnerable to shocks that cause oil prices to spike.

But many policy makers have yet to absorb this message. Despite concerns about the environmental and economic prospects for fossil fuels, the oil, gas, and coal industries continue to benefit from roughly four times the amount of government subsidies as the renewable energy sector, the IEA said.

"[W]e estimate this global subsidy bill [for fossil fuel consumption] at around $490 billion in 2014, although it would have been around $610 billion without reforms enacted since 2009," the agency wrote. "Subsidies to aid the deployment of renewable energy technologies in the power sector were $112 billion in 2014 (plus $23 billion for biofuels)."

Not Just CO2

While energy agencies are primarily focused on carbon emissions, evidence is growing that methane leaks from oil and gas drilling, fracking, pipelines, and other infrastructure pose a grave climate threat that the U.S. government has underestimated.

"Because of the increase in shale gas development over recent years, the total greenhouse gas emissions from fossil fuel use in the USA rose between 2009 and 2013, despite the decrease in carbon dioxide emissions," Prof. Robert Howarth, a scientist whose pioneering work on methane emissions suggests that burning natural gas — which the IEA predicts will be the only fossil fuel to gain market share — may be even worse for the climate than burning coal, wrote in a peer-reviewed paper published in the journal Energy and Emission Control Technologies. 

Methane, especially from shale gas sites, is leaking from the gas industry at a far higher rate than previously believed, Howarth said, writing that while the Environmental Protection Agency estimates that leak rates are just 1.8 percent, those conclusions are based in part on flawed data collection.

The true methane leak rate, Howarth concluded after reviewing the available research, may in fact be more than 10 times that rate in some cases — and on average,12 percent.*

There are some signs that energy experts worldwide are increasingly taking note of the hazards of methane leaks.

"Emissions of methane, a powerful greenhouse gas, along the supply chain will dent the environmental credentials of gas if there is no concerted policy action to tackle these leaks," the IEA noted in its report, though it also labeled the fuel "a good fit for a gradually decarbonising energy system."

But the carbon emissions from burning natural gas are significant as well. In 2013, the U.S. produced roughly 2.17 billion tons of carbon from burning oil and 1.7 billion tons from burning coal — and another 1.4 billion tons came from burning natural gas, the EIA reported, making natural gas responsible for 26.7 percent of America's CO2 pollution.

A Shift to Pure Renewables?

The Obama administration has made its support for an "all of the above" energy strategy that envisions increasing reliance on natural gas in the short term as a "bridge" to the eventual shift to renewable energy.

But even without subsidies, there are already some markets where renewable energy remains competitive against fossil fuels, even as oil and gas prices have nose-dived this year.

In Houston, TX a newly built solar plant is expected to provide electricity for an average of 4.8 cents per kilowatt hour for 20 years.  That's roughly half a cent more than Houston's fossil-fuel based power plants in today's over-supplied market — but two cents per hour cheaper than the 5-year average cost of conventional fuels, highlighting the unpredictability of the market for those fuels.

And wind power in that state has become so abundant that the New York Times is reporting it is literally too cheap to meter at night.

Meanwhile, keeping oil and gas flowing is expected to become increasingly costly. The IEA estimates that “just to compensate for declining production at existing fields and to keep future output flat at today’s levels,” the oil industry will require $630 billion in investments.

And building new pipelines to deliver oil and gas from areas like shale drilling regions adds to the expected costs.

“Keeping these project costs under control (contrary to numerous recent examples of overruns) will be vital to the future competitive positioning of gas,” the IEA said.

Crunching numbers like these has some environmentalists targeting a near-term transition away from all fossil fuels, not just oil and coal.

“The impossible is becoming possible. The global breakthrough of renewable energy has happened much faster than anticipated,” Emily Rochon, global energy strategist at Greenpeace International, told EcoWatch. “We believe that with the right level of policy support, the world can deliver 100 percent renewable energy for all by 2050.”  

*Ed note: This sentence was clarified following a reader's suggestion.

Photo Credit: Arial view of a solar farm under construction in the UK, via Shutterstock  

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.