‹ Analysis & Projections

AEO2013 Early Release Overview

Release Date: December 5, 2012   |  Report Release Schedule: April 15 - May 2, 2013   |   Report Number: DOE/EIA-0383ER(2013)

Energy Consumption by Sector


figure data

Delivered energy consumption in the transportation sector remains relatively constant at about 27 quadrillion Btu from 2011 to 2040 in the AEO2013 Reference case (Figure 6). Energy consumption by LDVs (including commercial light trucks) declines in the Reference case, from 16.1 quadrillion Btu in 2011 to 14.0 quadrillion Btu in 2025, due to incorporation of the model year 2017 to 2025 GHG and CAFE standards for LDVs. Despite the projected increase in LDV miles traveled, energy consumption for LDVs further decreases after 2025, to 13.0 quadrillion Btu in 2035, as a result of fuel economy improvements achieved through stock turnover as older, less efficient vehicles are replaced by newer, more fuel-efficient vehicles. Beyond 2035, LDV energy demand begins to level off as increases in travel demand begin to exceed fuel economy improvements in the vehicle stock.

Sales of alternative-fuel vehicles in the AEO2013 Reference case are lower than those in AEO2012. The majority of the reduction relative to AEO2012 is reflected in sales of flex-fuel vehicles (FFVs), which in 2035 are about 1.3 million, or less than one-half the 2.9 million FFV sales in the AEO2012 Reference case. Sales of battery-powered electric vehicles also are considerably lower in the AEO2013 Reference case than in AEO2012, with annual sales in 2035 estimated to be about 119,000, or 65 percent lower. Reductions in battery electric vehicles are offset by increased sales of hybrid and plug-in hybrid vehicles, which grow to about 1.3 million vehicles in 2035—about 20 percent higher than in the AEO2012 Reference case. Continued fuel economy improvement in vehicles using other alternative fuels, gasoline, and diesel, combined with growth in the use of hybrid technologies (including micro, mild, full, and plug-in hybrid vehicles), limit the use of electric vehicles over the projection. Although about one-half of new LDV sales in 2040 use diesel, alternative fuels, or hybrid technology, only a small share, less than 1 percent, are all-electric.

Energy demand for heavy trucks increases from 5.2 quadrillion Btu in 2011 to 7.1 quadrillion Btu in 2035 (compared with 6.2 quadrillion Btu in 2035 in the AEO2012 Reference case) and then to 7.6 quadrillion Btu in 2040. Higher industrial output in AEO2013 leads to greater growth in vehicle-miles traveled by freight trucks, which leads to higher energy demand by heavy vehicles in AEO2013 as compared with AEO2012. Factors used to calculate the economic effectiveness of heavy-duty alternative-fuel vehicles have been updated to represent the travel behavior of first-time buyers and economic breakeven hurdles that, when coupled with very competitive natural gas prices, significantly increase demand for natural gas fuel in heavy trucks. As a result, natural gas use in heavy-duty vehicles increases to 1.7 trillion cubic feet in 2040, displacing 0.7 million barrels of liquid fuels per day. The AEO2013 Reference case includes the GHG Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles published by the EPA and the National Highway Traffic Safety Administration in September 2011.4


Approximately one-third of total U.S. delivered energy, 24.0 quadrillion Btu, was consumed in the industrial sector in 2011. In the AEO2013 Reference case, total industrial delivered energy consumption grows by 16 percent, to 27.8 quadrillion Btu in 2035 (0.8 quadrillion Btu higher than in the AEO2012 Reference case) and 28.7 quadrillion Btu in 2040. The rate of growth in total industrial energy consumption is greater from 2011 to 2025 than after 2025 in AEO2013, as industry responds to the lower natural gas prices resulting from the expansion of shale gas production in the near term. After 2025, increased international competition and rising natural gas prices as a result of more modest growth in shale gas production lead to slower growth in industrial energy consumption. The industry that consumes the most energy is bulk chemicals, where energy consumption grows from 5.7 quadrillion Btu in 2011 to 6.6 quadrillion Btu in 2024, before declining to 6.0 quadrillion Btu in 2035 and 5.8 quadrillion Btu in 2040.

The energy-intensive industries initially exhibit strong growth in shipments and energy consumption, but most of the growth in shipments and energy consumption occurs before 2025. In 2011, the energy-intensive industries constitute 27 percent of shipments and 63 percent of industrial energy consumption. In 2040, the energy-intensive industry share of shipments falls to 20 percent, and their share of energy consumption falls to 56 percent. Shipments decline noticeably after 2025 for the aluminum, bulk chemicals, and iron and steel industries, because those industries are more affected by international competition than others. Energy use in the energy-intensive industries increases by 0.9 percent per year from 2011 to 2025 and then falls by 0.2 percent per year from 2025 to 2035.

Non-energy-intensive industries show a different pattern of shipment growth and energy consumption, in part because they are not affected as much as the energy-intensive industries by international competition and energy prices. Non-energy-intensive industry shipments and energy consumption grow throughout the period from 2011 to 2035 in the AEO2013 Reference case, with shipments increasing by 51 percent from 2011 to 2025 and 22 percent from 2025 to 2035, and energy consumption growing at an annual rate of 1.2 percent from 2011 to 2035 (plastics is the only non-energy-intensive industry that shows a decline in energy use). However, the rate of growth in their energy consumption from 2011 to 2025 is roughly twice as high as the rate after 2025, because growth in shipments is slower after 2025. In 2035, the non-energy-intensive industries constitute 53 percent of total industrial shipments and 41 percent of industrial energy consumption.

Two new environmental policies that affect parts of the industrial sector are incorporated in the AEO2013 Reference case. California's AB 32 is a comprehensive law limiting the state's GHG emissions, including those from stationary sources; and the extension of the National Emissions Standards for Hazardous Air Pollutants to industrial boilers and process heaters addresses the maximum degree of emission reduction possible using the maximum achievable control technology (Boiler MACT). Although both AB 32 and the Boiler MACT policies have minimal effects on industrial energy consumption, AB 32 results in a relatively low GHG allowance price, as is also shown in California's own analyses.5


Residential delivered energy consumption remains roughly constant in the AEO2013 Reference case from 2011 to 2040, reflecting consumption levels lower than those in AEO2012. Delivered electricity consumption is 5.7 quadrillion Btu and natural gas consumption is 4.3 quadrillion Btu in 2035 in the AEO2013 Reference case, compared with 5.9 quadrillion Btu and 4.8 quadrillion Btu, respectively, in the AEO2012 Reference case. The lower consumption levels in the AEO2013 Reference case are explained in part by a change in the handling of data on heating and cooling degree days in the projection. The AEO2013 Reference case uses a 30-year trend of historical data as the basis for degree days in both the residential and commercial sectors. Previously, average data for the most recent historical decade were used to represent degree days for the projection period without reflecting any trend over time, which tended to underestimate cooling demand and overestimate heating demand. The change, in combination with updated population projections, results in 6 percent fewer population-weighted heating degree days and 12 percent more population-weighted cooling degree days in 2035, which reduces energy consumption for space heating and increases energy consumption for space cooling. Since more energy is consumed for heating than cooling, this results in a net reduction of delivered energy in AEO2013 when compared with AEO2012.

The updated technology and cost parameters for residential lighting lead to lower electricity consumption. The first round of standards in the Energy Independence and Security Act of 2007 (EISA) are implemented in years 2012 through 2014, with 2014 lighting consumption about 18 percent below its 2011 level. EISA also established a second-tier standard in 2020. In the AEO2012 Reference case, the standard was assumed to be met with improved, halogen-type incandescent technology; but in AEO2013, halogen-type incandescent bulbs are not available in 2020 and beyond, and households adopt more efficient technologies, such as compact fluorescent and light-emitting diode bulbs.


Commercial sector energy consumption grows from 8.6 quadrillion Btu in 2011 to 10.2 quadrillion Btu in 2040 in the AEO2013 Reference case, slower than in the AEO2012 Reference case, despite similar growth in square footage in both cases. Growth in commercial electricity consumption averages 0.8 percent per year from 2011 to 2040 in AEO2013, lower than the 1.0-percent average annual growth in commercial floorspace. Changing trends for personal computer adoption, increasing data center efficiency, and slower-than-expected adoption of new data centers as a result of the recent recession all lead to lower electricity consumption in the AEO2013 Reference case than in AEO2012. In addition, decreasing costs for solid-state lighting technologies contribute to an increase in shipments throughout the commercial sector. Distributed generation and combined heat-and-power systems generate 63 billion kilowatthours of electricity in 2035, 47 percent more than in the AEO2012 Reference case. Decreasing technology costs and rapidly increasing capacity in the near term, especially in existing construction, account for higher levels of electricity generation in the commercial sector in the AEO2013 Reference case. Growth of natural gas consumption in the commercial sector continues to average roughly 0.4 percent annually in the AEO2013 Reference case, similar to the rate in the AEO2012 Reference case.


4U.S. Environmental Protection Agency and National Highway Traffic Safety Administration, "Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles; Final Rule," Federal Register, Vol. 76, No. 179 (September 15, 2011), pp. 57106-57513, website www.gpo.gov/fdsys/pkg/FR-2011-09-15/html/2011-20740.htm.

5See California Environmental Protection Agency, Air Resources Board, "Allowance Price Containment Reserve Analysis," website www.arb.ca.gov/regact/2010/capandtrade10/capv3appg.pdf.