‹ Analysis & Projections

AEO2014 Early Release Overview

Release Date: December 16, 2013   |  Full Report Release Date: Early Spring 2014   |  correction   |   Report Number: DOE/EIA-0383ER(2014)

Delivered Energy Consumption by Sector22

Transportation


figure data

Delivered energy consumption in the transportation sector declines from 26.7 quadrillion Btu in 2012 to 25.5 quadrillion Btu in 2040 in the AEO2014 Reference case (Figure 7) because of a significant decline in energy consumption by LDVs that more than offsets growth in energy consumption for other modes. The decline in transportation sector delivered energy consumption is markedly different from the historical trend of 1% average annual growth in transportation energy consumption from 1975 to 2012.23 Transportation energy consumption is considerably lower in AEO2014 than projected in the AEO2013 Reference case (27.1 quadrillion Btu in 2040) with energy consumption by nearly all transportation modes reduced in AEO2014 as a result of lower macroeconomic indicators, higher energy efficiency, changing demographics, and a revised calculation of VMT.

LDV energy consumption declines in the AEO2014 Reference case from 16.0 quadrillion Btu in 2012 to 12.1 quadrillion Btu in 2040, compared with 13.0 quadrillion Btu in 2040 in the AEO2013 Reference case. GHG emission standards and CAFE standards increase new LDV fuel economy through model year 2025 and beyond, with more fuel-efficient new vehicles gradually replacing older vehicles on the road and raising the fuel efficiency of the LDV stock by an average of 2.0% per year, from 21.5 miles per gallon (mpg) in 2012 to 37.2 mpg in 2040. The higher fuel economy of LDVs more than offsets increases in VMT that average 0.9% per year from 2012 to 2040, a reduction from the AEO2013 projection that reflects changes in driving behavior related to changing demographics. The average fuel economy of the vehicle stock is higher, and travel by LDVs is lower in AEO2014 than projected in AEO2013. The large decline in LDV energy consumption in AEO2014 shrinks the LDV modal share of total transportation energy consumption from 60% in 2012 to 47% in 2040.

LDVs powered by motor gasoline remain the dominant vehicle type in the AEO2014 Reference case, retaining a 78% share of new LDV sales in 2040, down from their 82% share in 2012. The fuel economy of LDVs powered by motor gasoline continues to increase, and advanced technology fuel efficiency subsystems are added, such as micro hybridization, which is installed on 42% of new motor gasoline LDVs in 2040. The numbers of LDVs powered by fuels other than gasoline, such as diesel, electricity, or E85, or equipped with hybrid drive trains, such as plug-in hybrid or gasoline hybrid electric, increase modestly from 18% of new sales in 2012 to 22% in 2040. Ethanol FFVs account for 11% of overall vehicle sales in 2040, followed by hybrid electric vehicles (excluding micro hybrids) at 5% of new sales in 2040, up from 3% in 2012, diesel vehicles at 4% in 2040, up from 2% in 2012, and plug-in hybrid vehicles and electric vehicles at about 1% each, both up from negligible shares in 2012. New vehicle sales shares are generally similar in AEO2014 and AEO2013 but with moderate variation. In AEO2013, the new vehicle sales share of motor gasoline vehicles was 80% in 2040 (with 36% of those vehicles including micro hybridization), followed by 7% for ethanol FFVs, 6% for hybrid electric, 3% for diesel, 2% for plug-in hybrids, and 1% for electric vehicles. The differences from AEO2013 to AEO2014 result from different fuel prices, updated manufacturer product offerings, changing technology attributes, and an updated view of consumer perceptions of infrastructure availability for E85 vehicles.

Delivered energy demand for HDVs in AEO2014 increases from 5.3 quadrillion Btu in 2012 to 7.5 quadrillion Btu in 2040, similar to the 2040 level of 7.6 quadrillion Btu in AEO2013, and represents the largest growth among all transportation modes. Growth in industrial output in AEO2014 leads to solid growth in HDV VMT, averaging 1.9% per year from 2012 to 2040. HDV energy demand is tempered somewhat by an average 0.5% annual increase in fuel economy from 2012 to 2040 as a result of GHG emission and fuel efficiency standards for medium- and heavy-duty vehicles and engines. Competitive natural gas prices significantly increase the demand for LNG and compressed natural gas in AEO2014, from an insignificant share in 2012 to 8% of HDV energy consumption in 2040, which is less than the 13% share projected in AEO2013 because of the lower prices of competing fuels in AEO2014. The rapid growth of energy consumption by HDVs in AEO2014 increases their modal share of total transportation energy consumption from 20% in 2012 to 29% in 2040.

Energy demand for aircraft grows in the AEO2014 Reference case from 2.5 quadrillion Btu in 2012 to 2.7 quadrillion Btu in 2040, which is less than the AEO2013 projection of 2.9 quadrillion Btu in 2040. Personal air travel (billion seat-miles) grows by an average of 0.7% per year in AEO2014, but improved fuel efficiency (by an average of 0.5% per year) reduces the effect on energy consumption. The difference between AEO2014 and AEO2013 stems from lower demand for personal air travel in AEO2014 as a result of lower economic growth. The aircraft share of total transportation energy consumption in AEO2014 increases from 9% in 2012 to 11% in 2040.

Energy consumption by marine vessels increases from 0.9 quadrillion Btu in 2012 to 1.0 quadrillion Btu in 2040 in AEO2014, reflecting the impacts of increased foreign trade on international shipping and higher incomes on recreational boating. Pipeline energy use rises modestly, from 0.7 quadrillion Btu in 2012 to 0.8 quadrillion Btu in 2040, as increasing volumes of natural gas are produced but closer to end-use markets. Rail energy consumption remains nearly flat at 0.5 quadrillion Btu from 2012 to 2040 in AEO2014, as a result of a plateau in coal shipments and increases in fuel efficiency, which offset growth in rail transportation of other industrial commodities.

Other energy use in the transportation sector, which includes both lubricants and military energy use, increases from 0.8 quadrillion Btu in 2012 to 0.9 quadrillion Btu in 2040. Marine, pipeline, other transportation, and rail energy use all are relatively minor pieces of the overall transportation energy consumption picture in AEO2014, each accounting for less energy demand than in the AEO2013 projections, as a result of lower economic growth in the AEO2014 Reference case.

Industrial

Approximately one-third of total U.S. delivered energy in 2012, 23.6 quadrillion Btu, was consumed in the industrial sector, which includes manufacturing, agriculture, construction, and mining. In the AEO2014 Reference case, total industrial delivered energy consumption grows to 30.2 quadrillion Btu in 2040—1.5 quadrillion Btu, or 5%, higher than the AEO2013 Reference case projection. The industrial sector becomes the largest energy consuming sector by 2018 and remains so for the rest of the projection period.

The growth rate for total industrial energy consumption in the AEO2014 Reference case is greater than in AEO2013 as a result of lower natural gas prices, which boost industrial production, and greater availability of natural gas liquids (NGL).24 The industry that consumes the most energy is bulk chemicals, where total energy consumption grows from 5.5 quadrillion Btu in 2012 to 7.0 quadrillion Btu in 2040. In the AEO2014 Reference case, energy consumption by the bulk chemicals industry in 2040 is 1.2 quadrillion Btu higher than projected in AEO2013.

Total manufacturing shipments in the AEO2014 Reference case also increase more rapidly than in the AEO2013 Reference case, from $4.5 trillion in 2012 to $8.4 trillion in 2040, or 87%. The growth rate for shipments in energy-intensive manufacturing is one-half the rate for non-energy-intensive manufacturing, reflecting the continuing shift toward less energy-intensive manufacturing, such as transportation equipment, computers, and other durable metal goods. The rate of growth in all manufacturing industries is higher from 2012 to 2025 than after 2025, as a result of increased international competition in the later years of the projection.

Shipments in the energy-intensive industries—refining, food, paper, bulk chemicals, glass, cement and lime, iron and steel, and aluminum—grow from $1.6 trillion in 2012 to $2.3 trillion in 2040 in the AEO2014 Reference case, an annual rate of growth of 1.3%, compared to 1.0% in the AEO2013 Reference case. The rate of increase in AEO2014 is much faster from 2012 to 2025 (2.0% per year) than from 2025 to 2040 (0.7% per year). Shipments of bulk chemicals, iron and steel, and aluminum peak in the late 2020s and decline thereafter, as export growth slows. Total energy consumption in the energy-intensive industries increases by 0.7% per year from 2012 to 2040, with almost all the growth occurring in the 2012-25 period.

Energy use for heat and power in the energy-intensive industries grows from 11.5 quadrillion Btu in 2012 to 13.1 quadrillion Btu in 2040, averaging 0.9% per year from 2012 to 2025 and 0.1% per year from 2025 to 2040. With energy intensity declining in the energy-intensive industries, largely because of improvements in efficiency, the growth of energy use for heat and power is slower than the growth of shipments. In the bulk chemicals and petroleum refining industries, demand for feedstocks—which include HGL,25 petroleum (usually naphtha), and natural gas—grows by 1.3% per year on average, from 3.5 quadrillion Btu in 2012 to 5.0 quadrillion Btu in 2040, with average increases of 2.9% per year from 2012 to 2025 followed by a decline from 2025 to 2040 averaging 0.1% per year.

Only the bulk chemical industry uses liquid feedstocks (HGL and petrochemical feedstocks), which are used to produce organic chemicals, inorganic chemicals, resins, synthetic rubber, and fibers. With demand for bulk chemicals higher in the AEO2014 Reference case than in AEO2013, consumption of liquid feedstocks also is higher in AEO2014. HGL feedstocks and petrochemical feedstocks (naphtha and heavier inputs) often can be interchanged to some degree, depending on price and the product slate. In the AEO2014 Reference case, HGL feedstock consumption totals 2.2 quadrillion Btu in 2012, 2.9 quadrillion Btu in 2025, and 2.7 quadrilion Btu in 2040; and petrochemical feedstock use totals 0.8 quadrillion Btu in 2012, 1.5 quadrillion Btu in 2025, and 1.6 quadrillion Btu in 2040.

Shipments from the nonenergy-intensive manufacturing sector increase by 2.7% per year from $2.9 trillion in 2012 to $6.1 trillion in 2040 in the AEO2014 Reference case, with growth rates of 3.2% per year from 2012 to 2025 and 2.3% per year after 2025. Energy consumption for nonenergy-intensive manufacturing grows from 3.6 quadrillion Btu in 2012 to 4.9 quadrillion Btu in 2040, averaging 1.0% per year—the same rate as in the AEO2013 Reference case. In parallel with the growth of shipments, energy consumption in the nonenergy-intensive manufacturing sector grows more rapidly from 2012 to 2025 (1.3% per year) than from 2025 to 2040 (0.8% per year).

In the nonmanufacturing industries—agriculture, construction, and mining—shipments grow by 1.6% per year from 2012 to 2040 in the AEO2014 Reference case, slightly less than the annual growth rate of 1.8% in the AEO2013 Reference case over the same period. Growth in the AEO2014 Reference case averages 2.8% per year from 2012 to 2025 and slows to 0.7% per year after 2025. Energy consumption by nonmanufacturing industries grows by 1.2% per year, from 4.8 quadrillion Btu in 2012 to 6.8 quadrillion Btu in 2040. While energy intensity declines somewhat in the agriculture and construction industries, it increases in the mining industry as exploration activities move over time to less desirable—and more energy-intensive—resources.

Residential

Residential delivered energy consumption remains roughly constant in the AEO2014 Reference case from 2012 to 2040. However, consumption levels are lower than those in AEO2013 for most fuels. In addition to lower population growth projections, the lower consumption levels in the AEO2014 Reference case are explained in part by incorporation of the 2009 RECS data, which include characteristic information such as the mix of building types in each region of the country, equipment stocks, and appliance saturation levels, as well as energy consumption estimates for three major end uses—space heating, space cooling, and water heating. In addition, weather-related demand elasticities for heating and cooling also have been updated to better align AEO projections with those in EIA's Short-Term Energy Outlook.

The AEO2014 Reference case removes the 2013 federal efficiency standard for condensing gas furnaces, based on challenges to the DOE rulemaking, first by an association of natural gas utilities and later by equipment distributors. Although natural gas use tends to be lower when the standard is included, consumption in the AEO2014 Reference case (without the standard) is lower than in AEO2013 (with the standard) through most of the projection period, largely because of changes in the end-use allocations from the 2009 RECS.

An EIA-contracted report26 provides updated estimates of the installed stock and consumption of several miscellaneous electric loads, including televisions, computers, and related equipment. This update generally resulted in lower electricity consumption for these appliances than was projected in the AEO2013 Reference case.

For AEO2014, outdoor lighting was added to the residential model as a separate application. In addition, cost and performance attributes for most residential lighting types were updated on the basis of EIA-contracted technology reports27 and market studies from DOE.28 Lower costs and wider availability of LEDs result in lower energy consumption after 2020 in AEO2014 relative to AEO2013.

Commercial

Commercial sector delivered energy consumption grows from 8.3 quadrillion Btu in 2012 to 10.2 quadrillion Btu in 2040 in the AEO2014 Reference case, similar to the AEO2013 Reference case despite slower growth in the near term. Commercial electricity consumption increases by 0.8% per year from 2012 to 2040 in AEO2014, lower than the 1.0% average annual growth in commercial floorspace, in part because projected demand for cooling and lighting is lower than in AEO2013. Also, more rapid reductions in energy use for personal computers than previously estimated, largely because of a shift to more efficient portable devices, result in a projected 5.6% annual decline in electricity demand for commercial PC equipment in the AEO2014 Reference case. Following slower-than-expected adoption of new data centers as a result of the recent recession, installations of new data center servers increase more in AEO2014 than in AEO2013.

Growth of natural gas consumption in the commercial sector averages roughly 0.7% per year from 2012 to 2040, similar to the AEO2013 Reference case.


Footnotes

22The amount of energy delivered to the sector; no adjustment is made for the fuels consumed to produce electricity or district sources.

23S.C. Davis, S.W. Diegel, and R.G. Boundy, Transportation Energy Data Book, ORNL-6989 (Edition 32 of ORNL-5198) (Oak Ridge, TN: July 2013), Chapter 2, Table 2.1, "U.S. Consumption of Total Energy by End-Use Sector, 1973-2012."

24Natural gas liquids include ethane, propane, normal butane, isobutane, and pentanes plus.

25HGL includes NGL, ethane, propane, normal butane, isobutane, natural gasoline (pentanes plus), and olefins.

26Navigant Consulting, Inc., Analysis and Representation of Miscellaneous Electric Loads in NEMS (Washington, DC, May 2013), prepared for the U.S. Department of Energy, U.S. Energy Information Administration.

27U.S. Energy Information Administration, "Updated Buildings Sector Appliance and Equipment Costs and Efficiency" (Washington, DC: August 7, 2013), http://www.eia.gov/analysis/studies/buildings/equipcosts/.

28U.S. Department of Energy, Energy Efficiency & Renewable Energy, Residential Lighting End-Use Consumption Study: Estimation Framework and Initial Estimates (Washington, DC: December 2012), http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2012_residential-lighting-study.pdf, and 2010 U.S. Lighting Market Characterization (Washington, DC: January 2012), http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/2010-lmc-final-jan-2012.pdf.