‹ Analysis & Projections

Annual Energy Outlook 2014

Release Dates: April 7 - 30, 2014   |  Next Early Release Date: December 2014   |  See schedule

Market Trends — U.S. energy demand

In the United States, average energy use per person declines from 2011 to 2040

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Population growth affects energy use through increases in housing, commercial floorspace, transportation, and economic activity. The effects can be mitigated, however, as the structure and efficiency of the U.S. economy change. In the AEO2013 Reference case, U.S. population increases by 0.9 percent per year from 2011 to 2040; the economy, as measured by GDP, increases at an average annual rate of 2.5 percent; and total energy consumption increases by 0.3 percent per year. As a result, energy intensity, measured both as energy use per person and as energy use per dollar of GDP, declines through the projection period (Figure 52).

The decline in energy use per capita is brought about largely by gains in appliance efficiency and an increase in vehicle efficiency standards by 2025. From 1970 through 2008, energy use dipped below 320 million Btu per person for only a few years in the early 1980s. In 2011, energy use per capita was about 312 million Btu. In the Reference case, it declines to less than 270 million Btu per person in 2034—a level not seen since 1963.

After some recovery through 2020, the economy continues to shift away from manufacturing (particularly, energy-intensive industries such as iron and steel, aluminum, bulk chemicals, and refineries) toward service industries. The energy-intensive industries, which represented about 5.9 percent of total shipments in 2011, represent 4.4 percent in 2040 in the Reference case. Efficiency gains in the electric power sector also reduce overall energy intensity, as older, less efficient generators are retired as a result of slower growth in electricity demand, changing dispatch economics related to fuel prices and stricter environmental regulations.

Industrial and commercial sectors lead U.S. growth in primary energy use

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Total primary energy consumption, including fuels used for electricity generation, grows by 0.3 percent per year from 2011 to 2040, to 107.6 quadrillion Btu in 2040 in the AEO2013 Reference case (Figure 53). The largest growth, 5.1 quadrillion Btu from 2011 to 2040, is in the industrial sector, attributable to increased use of natural gas in some industries (bulk chemicals, for example) as a result of an extended period of relatively low prices coinciding with rising shipments in those industries. The industrial sector was more severely affected than the other end-use sectors by the 2007-2009 economic downturn; the increase in industrial energy consumption from 2008 through 2040 is 3.9 quadrillion Btu.

The second-largest increase in total primary energy use, at 3.1 quadrillion Btu from 2011 to 2040, is in the commercial sector, which currently accounts for the smallest share of end-use energy demand. Even as standards for building shells and energy efficiency are being tightened in the commercial sector, the growth rate for commercial energy use, at 0.5 percent per year, is the highest among the end-use sectors, propelled by 1.0-percent average annual growth in commercial floorspace.

Primary energy use in the residential sector grows by 0.2 percent per year, or about 1.6 quadrillion Btu from 2011 to 2040, but it does not increase above the 2011 level until 2029. Increased efficiency reduces energy use for space heating, lighting, and clothes washers.

In the transportation sector, light-duty vehicle (LDV) energy consumption declines as a result of the impact of fuel economy standards through 2025. Total transportation sector energy use is essentially flat from 2011 through 2040, increasing by about 140 trillion Btu.

Renewables and natural gas lead rise in primary energy consumption

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The aggregate fossil fuel share of total energy use falls from 82 percent in 2011 to 78 percent in 2040 in the Reference case, while renewable use grows rapidly (Figure 54). The renewable share of total energy use (including biofuels) grows from 9 percent in 2011 to 13 percent in 2040 in response to the federal renewable fuels standard; availability of federal tax credits for renewable electricity generation and capacity during the early years of the projection; and state renewable portfolio standard (RPS) programs.

Natural gas consumption grows by about 0.6 percent per year from 2011 to 2040, led by the increased use of natural gas in electricity generation and, at least through 2020, the industrial sector. Growing production from tight shale keeps natural gas prices below their 2005-2008 levels through 2036. In the AEO2013 Reference case, the amount of liquid fuels made from natural gas (360 trillion Btu) is about three times the amount made from coal.

Increased vehicle fuel economy offsets growth in transportation activity, resulting in a decline in the petroleum and other liquids share of fuel use even as consumption of liquid biofuels increases. Biofuels, including biodiesel blended into diesel, E85, and ethanol blended into motor gasoline (up to 15 percent), account for 6 percent of all petroleum and other liquids consumption by energy content in 2040.

Coal consumption increases at an average rate of 0.1 percent per year from 2011 to 2040, remaining below 2011 levels until 2030. By the end of 2015, a total of 6.1 gigawatts of coal-fired power plant capacity currently under construction comes on line, and another 1.5 gigawatts is added after 2016 in the Reference case, including 0.9 gigawatts with carbon sequestration capability. Additional coal is consumed in the CTL process and to produce heat and power (including electricity generation at CTL plants).