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International Energy Outlook 2013

Release Date: July 25, 2013   |  Next Release Date: September 2014   |  correction |  Report Number: DOE/EIA-0484(2013)

Buildings sector energy consumption

Overview

The buildings sector represents energy use in places where people reside, work, and buy goods and services. The sector excludes industrial facilities used for producing, processing, or assembling goods. In 2010, the buildings sector accounted for more than one-fifth of total worldwide consumption of delivered energy. While energy consumption increases in all end-use demand sectors, energy use in the buildings sector grows fastest throughout the projection. This growth, along with unprecedented changes in the underlying living standards and economic conditions, will make developments within the buildings sector important in understanding future world energy markets.

Figure 97. World buildings sector delivered energy consumption, 2010-2040
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In the IEO2013 Reference case, total world delivered energy demand for buildings increases from 81 quadrillion Btu in 2010 to nearly 131 quadrillion Btu in 2040, an average annual growth rate of 1.6 percent per year (Figure 97). In the OECD, consuming patterns are well-established and are slow to change, given aging populations and relatively mature economies. This is not the case in the non-OECD countries, where developing economies experience strong economic growth as living standards rise and the energy infrastructure expands, leading to increased energy demand for space heating and cooling, lighting, and energy-using appliances. The higher level of economic activity in the non-OECD region also leads to increased energy demand in commercial and service industries, as square footage grows to house and operate new and expanding enterprises. Non-OECD buildings sector energy consumption increases by 2.7 percent per year and accounts for nearly 80 percent of the growth in the world's total buildings sector energy consumption over the projection period. OECD buildings sector energy use grows much more slowly, increasing by an average of 0.6 percent per year from 2010 to 2040.

Households in many non-OECD countries still rely heavily on traditional, nonmarketed energy sources, including wood and waste, for heating and cooking. Much of Africa remains unconnected to power grids, and the International Energy Agency estimates that 1.3 billion people do not have access to electricity, most of them located in sub-Saharan Africa [286]. About 2.6 billion people, mostly in Africa and non-OECD Asia, still rely on traditional biomass for cooking fuel. As incomes rise and more people gain access to electricity and move from rural areas to cities in the developing world [287], households replace traditional fuels with modern fuels, such as natural gas and electricity. The trend toward replacing traditional fuel sources (including fuel wood, charcoal, animal dung, and agricultural residues) is reflected in the growth in demand for marketed fuels.

Residential energy consumption

Energy use in the residential sector is defined as the energy consumed by households, excluding transportation uses.41 In the residential sector, energy is used for equipment and appliances that provide heating, cooling, lighting, water heating, and other household demands. Energy consumption, income, and energy prices all affect the way energy is consumed in the residential sector. However, residential energy use also is affected by various other factors, such as location, building and household characteristics, weather, type and efficiency of equipment, energy access, availability of energy sources, and energy-related policies. As a result, the type and amount of energy use by households can vary widely within and across regions and countries.

In general, the average household in OECD nations uses more energy than those in non-OECD nations, largely because higher income levels allow OECD households to have larger homes and purchase more energy-using equipment. In the United States, for example, average GDP per capita in 2010 was $42,130 (in real 2005 dollars per person), and annual residential energy use per capita was estimated at 36.8 million Btu. In contrast, India's per-capita income in 2010 was $2,989 (about 7.1 percent of the U.S. level), and its residential energy use per capita was 1.4 million Btu (about 4 percent of the U.S. level).

Residential energy consumption is also affected by fuel prices. For example, if energy prices increase, householders may react in the short run by adjusting their thermostats to reduce fuel use. In the long run they may also switch to less expensive fuels or use more efficient appliances or equipment, to the extent possible. On the other hand, in many emerging economies energy prices may be subsidized, which can affect consumption growth, particularly growth of electricity use in urban areas with access to electricity.

For residential buildings, the physical size of a structure also influences the amount of energy used by its occupants. Controlling for other factors, larger homes generally require more energy to provide heating, air conditioning, and lighting. In addition, occupants of larger homes tend to be more affluent and, as a result, tend to own more energy-using appliances, including multiple television sets, computers, and a wide array of other electronic devices. The operation of those devices can consume considerable amounts of electric power [288].

The number of people living in a home also affects the amount of energy consumed. Energy consumption per person generally increases as household size gets smaller, in part because major energy end-use services (heating, cooling, major appliances) tend to be shared within a household. Population growth, particularly in urban areas, leads to higher demand for housing and an increase in the number of smaller households. According to a study by Lawrence Berkeley National Laboratory, the average urban household size in China will decline to 2.9 persons in 2020 from 3.1 persons per household in 2000, as more people migrate to urban areas [289]. Other household characteristics that affect the amount and type of energy consumption are labor force participation rates and the age of household members.

Local climates are a key factor causing fluctuations in energy use for space heating and cooling. In the United States, for example, population growth has shifted generally to the South and West over the past 30 years, affecting the mix of energy services and energy used. Because the southern United States is warmer than the national average, cooling demand in the South is higher and heating demand is lower.

Lifestyle and behavior also affect residential energy consumption. In emerging economies, such as India, there are significant differences in energy consumption patterns between rural and urban areas [290]. Biomass is widely used for cooking in rural areas. As people's quality of life improves, they switch to more efficient and modern fuels. Over the years, improvements in energy efficiency standards and building codes have affected world residential delivered energy consumption, particularly in the developing nations. However, a lack of consistent and detailed data makes it difficult to quantify their effects.

In the IEO2013 Reference case, energy use in the residential sector accounts for about 14 percent of world delivered energy consumption in 2040, excluding traditional fuels. World residential delivered energy consumption increases by 57 percent from 2010 to 2040 in the Reference case, mainly as a result of growth in non-OECD residential demand (Table 15). Total non-OECD residential delivered energy consumption increases at an average annual rate of 2.5 percent, compared with 0.4 percent in the OECD regions. China and India continue to lead the growth in world residential delivered energy demand as a result of their rapid economic and population growth. In 2040, their combined residential energy use is almost three times higher than in 2010 and accounts for nearly 31 percent of total world residential delivered energy consumption.

In 2010, the average OECD resident used more than five times as much residential energy as the average person living in the non-OECD (Table 16). Per capita residential energy use in the OECD does not change very much over the projection period due to improvements in energy efficiency and energy management. In the non-OECD nations, per capita residential energy use grows by almost 60 percent from 2010 to 2040, as energy infrastructure expands to more homes and living standards rise with a corresponding increase in the penetration and use of energy-using equipment and appliances in homes. This trend is most evident in the non-OECD Asia region, where per capita energy use in the residential sector grows from 2.9 million Btu per person in 2010 to 6.7 million Btu per person in 2040.

Figure 98. World residential sector delivered energy consumption by energy source, 2010-2040
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Electricity and natural gas are the main energy sources for marketed residential use worldwide; together, they account for 72 percent of world residential delivered energy consumption in 2010 and 84 percent in 2040 (Figure 98). Nevertheless, households in many developing, non-OECD countries still rely heavily on traditional fuels, including wood and waste. In general, traditional fuels are used because of a lack of access to modern fuels and low per-capita income. As incomes and living standards improve, the use of the traditional fuels will decline.

The residential sector share of world electricity use increases in the IEO2013 Reference case, from 28 percent in 2010 to 31 percent in 2040. By 2020, electricity overtakes natural gas as the major source of residential delivered energy consumption, increasing from 34 percent in 2010 to 46 percent in 2040. The natural gas share remains flat at about 38 percent throughout the projection. The shift is more pronounced in non-OECD regions.

OECD

Figure 99. Average annual change in OECD residential sector energy consumption, 2010-2040
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In the IEO2013 Reference case, residential delivered energy consumption in the OECD increases from 28 quadrillion Btu in 2010 to 32 quadrillion Btu in 2040, an average increase of 0.4 percent per year (Figure 99). The slow growth is a result of relatively slow growth in GDP and population, along with improvements in building shells and the efficiency of appliances and equipment. The OECD share of the world's residential delivered energy consumption declines from 54 percent in 2010 to 39 percent in 2040, as demand among the non-OECD emerging economies rises.

Electricity replaces natural gas as the main source of OECD residential energy consumption, accounting for 46 percent of total residential consumption in 2040, as demand for household electronics increases. Shares of other fuels, mainly natural gas, liquids, and coal, decrease in the IEO2013 Reference case. Electricity and natural gas consumption grow by 1.1 percent and 0.3 percent per year, respectively, while coal use in the sector decreases by 1.4 percent per year, and liquid fuels consumption decreases by 0.8 percent per year.

OECD Americas

Figure 100. OECD Americas residential sector delivered energy consumption by country, 2010 and 2040
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The countries of the OECD Americas (United States, Canada, Chile, and Mexico) accounted for about one-fourth of the world's total residential delivered energy consumption in 2010. Within the OECD Americas, the United States is by far the largest consumer of residential energy, accounting for 87 percent of total residential delivered energy consumption in 2010, but its share is expected to decline to 81 percent in 2040. Residential energy consumption in the United States grows minimally between 2010 and 2040, as state and federal energy efficiency standards for residential equipment restrain the growth in energy use (Figure 100).

The energy efficiency of residential equipment and appliances in the United States plays a key role in determining the amount of energy used in homes. Since their inception in the 1970s, federal efficiency standards have expanded to cover an extensive range of residential equipment. After 2020, lighting sees the largest efficiency gains, as the Energy Independence and Security Act of 2007 (EISA2007) requires the phased replacement of most incandescent lamps with technologies that are roughly three times more efficient than those widely marketed today [291].

In addition to realizing substantial energy savings through efficiency gains, the U.S. residential energy mix also changes. Consumption of liquids and natural gas in the U.S. residential sector declines, while the use of electricity increases in the IEO2013 Reference case. Electricity remains the main energy source, with its share increasing from 43 percent in 2010 to 52 percent in
2040, partially due to the increasing penetration and saturation of new electronics and small appliances in U.S. households.

In Canada, where residential energy is used mostly for space heating, residential energy consumption increases by an average of 0.8 percent per year in the IEO2013 Reference case. By 2020, Canada's residential energy consumption per capita overtakes the United States, because of greater energy demand for space heating in Canada's colder climate [292]. Canada's residential energy use per capita declines in the Reference case by 0.1 percent per year on average from 2010 to 2040, compared with an average decline of 0.8 percent per year in the United States.

Canada's residential delivered energy consumption is influenced by recent improvements in the energy efficiency of residential buildings and equipment, particularly after 1990. The 1992 Energy Efficiency Act, Canada’s first comprehensive law on energy efficiency, took effect in 1995, covering more than 30 products including space heating and cooling and water heating [293]. The ENERGY STAR program was introduced in Canada in 2001 [294]. At present about 50 items are eligible for the ENERGY STAR label [295]. The buildings code, which was modified in 2012, has a significant impact on improving Canadian residential energy consumption efficiencies in the IEO2013 Reference case [296].

Mexico and Chile combined accounted for about 5 percent of total residential delivered energy consumption in the OECD Americas in 2010, and their share nearly doubles by 2040. Mexico/Chile have the highest GDP growth rates within the OECD, at 3.7 percent per year from 2010 to 2040, compared with 2.5 percent per year for the United States and 2.2 percent per year for the OECD overall. This strong economic growth translates to rising living standards and an increase in energy demand for residential space conditioning and energy-consuming household appliances. Residential energy consumption in Mexico/Chile grows by 2.4 percent annually.

Petroleum and other liquid fuels accounted for the largest share of residential energy use in Mexico/Chile in 2010. High sustained world oil prices and opportunities for switching to more efficient energy technologies mean that liquid fuels consumption grows by only 0.1 percent per year, while consumption of electricity and natural gas grows by 4.0 and 3.4 percent per year, respectively. The share of liquids declines from 54 percent in 2010 to 28 percent in 2040, as electricity becomes the major energy source in Mexico/Chile, with its share growing from 38 percent in 2010 to 61 percent in 2040.

OECD Europe

Figure 101. OECD Europe residential sector delivered energy consumption by energy source, 2010-2040
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Households in OECD Europe accounted for 22 percent of the world's total residential delivered energy consumption in 2010; however, their share falls to 17 percent in 2040. Increasing efficiency and low population growth translate to slower growth in energy consumption than in most other nations in the world. Total residential demand for energy in OECD Europe increases from 12 quadrillion Btu in 2010 to 14 quadrillion Btu in 2040, an average of 0.6 percent per year (Figure 101). Electricity use accounts for most of the increase in OECD Europe's residential sector energy consumption, rising by an annual average rate of 1.4 percent. This is followed by natural gas consumption, which increases by 0.7 percent per year. All other energy sources decline in Europe's residential sector over the projection period.

Many countries in OECD Europe have enacted measures to improve energy efficiency in the buildings sector. Those efforts are, in part, reflected in the slow increase in residential energy use. For instance, the European Union, which includes the largest economies in OECD Europe, has enacted "a set of binding legislation which aims to ensure the European Union meets its ambitious climate and energy targets for 2020" [297]. In March 2007, the European Commission enacted the 20-20-20 plan, which creates a 20-percent improvement target for energy efficiency in the European Union. Recently, the European Union moved to strengthen the energy efficiency provisions of the 20-20-20 plan, and on October 25, 2012, it adopted the European Energy Efficiency Directive 2012/27/EU [298]. The key provision of the directive is to obligate energy suppliers to achieving energy savings of 1.5 percent per year among their customers [299].

OECD Asia

Figure 102. OECD Asia residential sector delivered energy consumption by country, 2010-2040
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The nations of OECD Asia (Japan, South Korea, Australia, and New Zealand) account for 12 percent of the OECD's total residential delivered energy consumption through the projection. Residential demand for energy in OECD Asia increases by 0.5 percent per year from 2010 to 2040. Japan has the largest residential energy sector in the region (Figure 102), accounting for about 57 percent of total delivered residential energy consumption in OECD Asia in 2040. Japan's residential sector energy consumption grows by 0.1 percent annually from 2010 to 2040 in the IEO2013 Reference case, as its GDP grows by 0.6 percent and its population declines by 0.4 percent a year. A key factor affecting current residential energy consumption is the impact of Japan's strict Top Runner standards [300]. These standards set mandatory efficiency standards for a variety of energy-consuming goods, including residential heating and cooling systems, lighting, refrigerators, and electronics.

The residential sector accounts for more than one-third of total electricity consumption in Japan through the projection, mostly for residential electronics. After the earthquake and tsunami that struck the northeast coast of Japan in March 2011 and the disruption of electricity generation that followed, a Restriction on Use of Electricity law was approved in 2011, which encouraged electricity users in the buildings sector to conserve energy to meet the government's goal of a 15-percent reduction in total electricity consumption [301]. As a result, residential electricity use declined and is not expected to reach 2010 levels again until 2015.

The IEO2013 Reference case assumes that demand for electricity in Japan will recover to pre-earthquake and tsunami levels as the infrastructure is repaired and electricity supplies return to pre-disaster levels. Electricity remains Japan's main residential energy source throughout the projection period, increasing by 0.6 percent per year on average from 2010 to 2040. The country continues to account for the largest portion of OECD Asia residential energy consumption throughout the projection, but its share declines between 2010 and 2040.

South Korea has the highest rate of GDP growth in OECD Asia in the IEO2013 Reference case, averaging 3.3 percent per year from 2010 to 2040. In 2008, space and water heating accounted for 68 percent of the country's residential delivered energy consumption [302]. Residential energy consumption in South Korea grows by 1.2 percent per year from 2010 to 2040, but its share of total residential energy consumption in OECD Asia increases from 23 percent to 28 percent over the projection period. In 2010, residential energy consumption per capita in South Korea was similar to that in Japan. However, its per-capita residential energy consumption is 15 percent higher than Japan's in 2040, partly due to faster growth in South Korea's GDP per capita over the period. In the IEO2013 Reference case, residential delivered energy consumption in Australia and New Zealand combined grows by an average of 1.1 percent per year. Natural gas and electricity meet the increase in total residential energy demand, growing by 1.5 percent and 1.0 percent per year, respectively. The increases in electricity and natural gas use result mainly from increased use of electric appliances and natural gas space heating [303].

Non-OECD

Delivered residential energy in the non-OECD region, which accounted for 46 percent of the world's total delivered residential energy consumption in 2010, grows to 51 percent of the world's total in 2020 and 61 percent in 2040 as a result of generally faster economic and population growth than in the OECD. Total non-OECD residential delivered energy consumption increases from 24 quadrillion Btu in 2010 to 50 quadrillion Btu in 2040, an average increase of 2.5 percent per year (Figure 103). Growth in electricity consumption, which rises from 7 quadrillion Btu in 2010 to 23 quadrillion Btu in 2040, is the main source of the increase in residential energy consumption. Electricity grows from 29 percent to 47 percent of non-OECD residential energy, with many emerging economies building out their electric infrastructure, transitioning from traditional fuels42 to modern energy sources, and improving standards of living for residents.

Figure 103. Non-OECD residential sector delivered energy consumption by region, 2010-2040
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Non-OECD Asia

In the non-OECD Asia nations, particularly China and India (Figure 104), growth in population, income, and urbanization drives increases in residential energy consumption. In the IEO2013 Reference case, China and India account for about 31 percent of the world's residential energy consumption in 2040, up from 16 percent in 2010. In non-OECD Asia as a whole, residential delivered energy use grows from 11 quadrillion Btu in 2010 to 30 quadrillion Btu in 2040, an average rate of 3.5 percent per year (Figure 105).

Figure 105. Non-OECD Asia residential sector delivered energy consumption by region, 2010-2040
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The importance of China in world residential delivered energy consumption continues to grow. In 2010, China's residential energy consumption was 60 percent of residential energy consumption in the United States, but in 2040 it is almost twice as high as in the United States, as China becomes the world's largest residential energy consumer. In 2040, residential energy consumption in China accounts for about 24 percent of total world residential delivered energy use.

Energy use in China grows by an average of 3.6 percent per year from 2010 to 2040 in the IEO2013 Reference case, from 6.9 quadrillion Btu in 2010 to 20.0 quadrillion Btu in 2040. In 2010, the residential sector accounted for nearly 10 percent of China's total delivered energy consumption. In 2040, its share is 14 percent.

The rapid growth in China's energy consumption is mainly a result of strong economic growth and urbanization, as lifestyle and energy use patterns vary widely between urban and rural populations [304]. China's population peaks in 2026 and thereafter declines through 2040. According to the United Nations, nearly three-fourths of the Chinese population will live in urban areas by 2040 [305]. China's demand for energy services increases as per capita incomes and quality of life improve, accompanied by an increase in urban population and increased access to modern fuels in rural areas. Over the projection period, China's residential energy use per capita grows by 3.6 percent per year, from about 5 million Btu per person to 15 million Btu per person, or more than one-half of U.S. energy use per capita in 2040.

China's residential fuel mix shifts toward electricity and natural gas over the period from 2010 to 2040. In the IEO2013 Reference case, residential natural gas consumption grows faster than electricity consumption in China, as natural gas prices decline and China's central government promotes natural gas as a preferred energy source [306]. Natural gas consumption grows by 7.2 percent per year and electricity consumption by 5.7 percent per year, while consumption of liquid fuels and coal declines by 1.0 percent and 0.2 percent per year, respectively. By 2017, electricity becomes the major energy source, and in 2040 it accounts for 46 percent of residential delivered energy consumption. Natural gas accounts for 35 percent at that point.

Since the 1980s, the Chinese government has engaged in promoting energy efficiency in residential buildings. It will continue to promote building energy efficiency during the 12th Five-Year Plan (2011-2015). Even with the strong emphasis on improving building energy efficiency, the country's residential delivered energy consumption grows strongly due to various factors, including fast economic growth, improved standards of living, and annual additions of new buildings to house the expanding urbanized population [307].

In India, economic growth and population growth have been the two key factors leading to growth in energy consumption [308]. Urban areas, which accounted for 31 percent of India's population in 2010, account for 46 percent of the population in 2040 [309]. India has the world's most rapid rate of economic growth in the IEO2013 Reference case, at 6.1 percent per year. Further, India's population grows faster than China's, and India becomes the world's most populous country by 2021. Despite faster growth in GDP and population, growth in India's residential energy consumption resembles that of China, increasing by 3.7 percent per year, from 1.7 quadrillion Btu in 2010 to 5.0 quadrillion Btu in 2040.

The government of India has been engaged in various energy efficiency programs for household appliances and buildings, particularly since 2002, with the establishment of the Bureau of Energy Efficiency [310]. Further improvements in the energy efficiency of residential buildings and equipment will affect India's residential sector energy consumption, although again, similarly to China, residential sector delivered energy consumption continues to increase as a result of improving standards of living and rising urbanization.

From 2010 to 2040, India's residential sector fuel mix changes from mainly liquids to electricity, most of which is used for appliances. In 2008, lighting and refrigeration accounted for nearly 50 percent, and space cooling (fans and air conditioners) accounted for 24 percent of total residential electricity consumption [311]. As incomes increase and more people have access to electricity, the ownership of electricity-using appliances also increases [312]. Residential electricity demand in India, which accounted for 35 percent of the country's total residential delivered energy consumption in 2010, increases to 76 percent in 2040. Electricity use grows more rapidly than total residential delivered energy consumption, averaging 6.4 percent per year as compared with total residential energy consumption growth of 3.7 percent per year.

Non-OECD Europe and Eurasia

Figure 106. Non-OECD Europe and Eurasia residential sector delivered energy consumption by region, 2010-2040
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The residential sector in non-OECD Europe and Eurasia accounted for about 27 percent of total non-OECD residential delivered energy consumption in 2010, and its share declines to 17 percent in 2040. Residential delivered energy consumption in non-OECD Europe and Eurasia grows from 6.3 quadrillion Btu in 2010 to 8.6 quadrillion Btu in 2040 (Figure 106), an average of 1.0 percent per year. Increased urbanization and GDP growth of about 3.8 percent per year contribute to the increase in residential delivered energy consumption over the
projection period [313]. Russia has non-OECD Europe and Eurasia's largest economy and consumes the largest amount of energy in the residential sector, accounting for about 58 percent of total residential delivered energy consumption in the region in 2040.

Russia has the highest residential energy consumption per capita among the non-OECD countries. The country's total residential energy demand grows by 0.8 percent per year in the IEO2013 Reference case. Inefficient heating systems and energy price subsidies, along with the cold climate in much of the country, are some of the factors causing higher per capita consumption in Russia [314]. The Russian government, acknowledging that considerable energy savings would be possible with improved energy efficiency of residential buildings, passed an Energy Efficiency Law in November 2009 that included mandated metering in newly commissioned buildings and various other provisions aimed at measuring building efficiency [315]. Further, a study by the International Finance Corporation estimated that about 60 percent of Russia's multifamily apartment buildings (which account for approximately 70 percent of its total housing stock on a square footage basis) are in urgent need of capital repair [316]. There is considerable uncertainty about the extent to which Russia's existing efficiency law will result in substantial improvements in consumption. Some efficiency improvements occur in the Reference case, but strong economic growth that results in higher living standards and increased demand for energy-consuming appliances and devices offsets the savings, resulting in growing residential energy use through 2040.

Outside of Russia, residential energy consumption in non-OECD Europe and Eurasia increases by 1.3 percent per year, from 2.4 quadrillion Btu in 2010 to 3.6 quadrillion Btu in 2040, with a rapid increase in economic development accompanied by higher GDP per capita. As the standard of living improves, energy consumption per capita increases by an average of 1.2 percent per year from 2010 to 2040. The growth is attributed mainly to increases in consumption of electricity and natural gas, as the fuels combine for about 89 percent of total residential delivered energy consumption in 2010 and 94 percent in 2040.

Middle East

The countries of the Middle East accounted for about 6.4 percent of total world residential delivered energy consumption in 2010. In 2010, the region made up less than 4 percent of the world population, but its population growth averages 1.5 percent per year from 2010 to 2040. There are wide differences in income across the countries of the Middle East, but the overall economy grows by an average of 2.2 percent per year over the projection period. Residential energy consumption in the region grows at an annual average rate of 1.2 percent, from 3.4 quadrillion Btu in 2010 to 4.8 quadrillion Btu in 2040. The electricity share of the fuel mix increases from 34 percent to 41 percent, as households shift away from other fuel sources, particularly liquids. The increase in electricity demand results from increased use of electric appliances, particularly for space cooling. Despite a slight decline in its share of the overall fuel mix, natural gas remains the dominant fuel of choice in the residential sector through 2040.

Although residential energy use per capita in the Middle East declines by an average of 0.3 percent per year, from 16 million Btu per person in 2010 to 15 million Btu in 2040, it remains higher than the world average. Low prices, high energy subsidies, and the absence of stringent building codes and energy efficiency standards contribute to the relatively high intensity of residential energy use [317]. However, with continued strong growth in demand for energy in the residential sector, several countries in the region have begun to look at ways to improve energy efficiency. If successful, such measures could slow the future rate of growth in residential energy use. In 2010, Saudi Arabia established the Saudi Energy Efficiency Center, with one of its primary roles being to develop energy conservation policies. Saudi Arabia's household electricity use has grown rapidly, averaging nearly 7 percent per year since the 1990s [318].

Africa

Residential delivered energy consumption in Africa grows by an average 2.4 percent per year from 2010 to 2040 in the IEO2013 Reference case. Much of Africa still is not connected to a power grid and relies heavily on biomass as an energy source. In 2010, the region accounted for 15 percent of the total world population but only 3 percent of total world residential energy consumption. In 2040, Africa's shares of world population and energy consumption grow to 20 percent and 4 percent, respectively.

Central and South America

Figure 107. Central and South America residential sector delivered energy consumption by region, 2010-2040
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In non-OECD Central and South America, residential energy consumption grows from 2.0 quadrillion Btu in 2010 to 3.7 quadrillion Btu in 2040, accounting for about 7 percent of total
non-OECD residential energy consumption in 2040 (Figure 107). In Brazil, the region's largest economy, residential energy use grows by 2.2 percent per year from 2010 to 2040 in the
Reference case. Brazil's residential sector fuel mix shifts away from liquids and increasingly to electricity and natural gas, but while the natural gas share grows, electricity remains the largest source of energy in 2040, followed by liquids. Electricity's share of total residential energy consumption in Brazil grows from 58 percent in 2010 to 73 percent in 2040, while the natural gas share grows from 1 percent in 2010 to nearly 6 percent in 2040, and the liquids share declines from 41 percent to 21 percent. Many of the government policies to improve energy efficiency are targeted at lighting (such as programs to eliminate incandescent light bulbs) or appliances (through minimum energy efficiency standards adopted in 2007 for refrigeration and air-conditioning devices).

Commercial energy consumption

The commercial sector brings together categories of stationary energy use associated with profit-seeking and nonprofit enterprises that provide services, including those for public administration. The sector focuses on energy consumed by heating and cooling systems, lights, water heaters, and other equipment in the buildings where businesses, institutions, and other organizations are located. Examples of commercial sector buildings include schools, retail stores, restaurants, hotels, hospitals, office buildings, and leisure and recreational facilities. Some nonbuilding energy use is included in the commercial sector, where it contributes to such public services as traffic lights and water and sewer systems. In the IEO2013 Reference case, total world delivered commercial sector energy consumption grows at an average annual rate of 1.8 percent from 2010 to 2040, making it the fastest-growing demand sector (Table 17).

The non-OECD region leads the growth of commercial delivered energy consumption, accounting for about 30 percent of global commercial energy consumption in 2010 and growing to a 46-percent share in 2040, mainly as a result of population and economic growth. Generally, the need for services (health, education, leisure, and government, among others) increases as populations grow and economic growth increases the capacity of enterprises to provide those services. The non-OECD region contained more than 80 percent of the world's population in 2010, and its population growth rate is almost twice that of the OECD through the projection. The non-OECD countries accounted for slightly less than one-half of the world's GDP (on a purchasing power parity basis) in 2010, and their share increases to about 66 percent in 2040.

Figure 108. World commercial sector delivered energy consumption by energy source, 2010-2040
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Dynamics within the overall economic and population growth trends that affect commercial delivered energy consumption include employment rates, productivity, and the amount of
commercial activity that occurs as a part of total economic activity. Some other broad factors are important as well, including climate, availability of resources, and the efficiency of energy consumption. In the commercial sector, the energy efficiencies of building shells and commercial equipment generally are determined by management decisions during the construction and operation of commercial buildings and enterprises. Those decisions can be guided by national energy policies and laws.

Electricity is increasingly the preferred energy source in the commercial sector (Figure 108). In 2010, electricity accounted for about 51 percent of world commercial energy use, and its share grows to nearly 64 percent in 2040. OECD electricity use grows from 10.4 quadrillion Btu in 2010 to 15.7 quadrillion Btu in 2040, while non-OECD electricity use grows from 4.3 quadrillion Btu in 2010 to 15.4 quadrillion Btu in 2040. Electricity and natural gas taken together remain the most prominent fuels in the commercial sector, accounting for about 80 percent of total world fuel consumption in 2010 and 89 percent in 2040.

OECD

OECD Americas

Figure 109. OECD Americas commercial sector delivered energy consumption by country, 2010 and 2040
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In the OECD Americas, energy use in the U.S. commercial sector was more than 8 times Canada's and more than 40 times Mexico/ Chile's in 2010 (Figure 109). However, from 2010 to 2040 commercial energy consumption in the United States grows at about one-third the rate of Canada's commercial sector energy use and about one-seventh the rate of Mexico/Chile's. U.S. commercial energy use remains much higher than Canada's and Mexico/Chile's in 2040 and the largest in the world through the projection. Commercial energy consumption is similarly proportioned in the United States and Canada relative to the energy demand in other sectors (residential, industrial, and transportation), remaining between 10 percent and 14 percent of total delivered energy consumption for the entire projection period. In Mexico/Chile, the commercial sector share of total delivered energy consumption is much smaller, at 3 percent of total energy demand in 2010 and 5 percent in 2040.

In the United States, federal efficiency standards, which help to foster technological improvements in end-use equipment, act to limit growth in delivered energy consumption compared with growth in commercial floorspace [319]. Efficiency improvements in the United States are expected for lighting, refrigeration, space cooling, and space heating, as a result of the Energy Independence and Security Act of 2007 (EISA2007) and the Energy Policy Act of 2005.

Electricity is the most common commercial energy source in the OECD Americas, accounting for about one-half of commercial energy consumption in 2010. The electricity share grows to more than 80 percent in 2040 in Mexico/Chile but remains below 63 percent in the United States and Canada. The United States and Canada also get roughly one-third of their commercial energy from natural gas throughout the projection period, compared with less than 8 percent in Mexico\Chile, where access to natural gas resources is limited [320]. Although Mexico/Chile used liquid fuels to meet more than one-third of their combined commercial delivered energy consumption in 2010, much of that energy demand switches to electricity by 2040 in response to sustained high oil prices.

OECD Europe

Figure 110. OECD Europe commercial sector delivered energy consumption by energy source, 2010-2040
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In 2010, the economy of OECD Europe was slightly larger than the U.S. economy but consumed 24 percent less commercial energy. Many countries in OECD Europe have instituted regulations and policies aimed at increasing energy efficiency in commercial buildings. Implementation of those rules, along with relatively slow growth in GDP and population, results in slow growth in energy consumption in OECD Europe through 2040. OECD Europe's total commercial energy consumption grows from 6.5 quadrillion Btu in 2010 to 9.0 quadrillion Btu in 2040, an average of 1.1 percent per year (Figure 110). Natural gas maintains a one-third share of energy use in the region's commercial sector through the projection, while most new consumption comes from expanded electricity use.

The October 2012 enactment of the European Union's Energy Efficiency Directive improves energy efficiency in the buildings sector [321]. In addition, a number of individual countries in OECD Europe have introduced initiatives to improve energy efficiency in the commercial sector. For example, the Netherlands strengthened its building standards in 2009, requiring newly constructed or renovated nonresidential buildings to be 40 percent more energy efficient than previous standards [322].

OECD Asia

Figure 111. OECD Asia commercial sector delivered energy consumption by country, 2010-2040
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In OECD Asia, Japan had the highest level of commercial delivered energy consumption in 2010, at 2.7 quadrillion Btu; however, Japan also has the lowest growth rate of commercial energy consumption from 2010 to 2040 at 0.3 percent per year, reaching 3.0 quadrillion Btu in 2040 (Figure 111). Commercial sector delivered energy consumption increases by 2.1 percent per year in South Korea and by 1.2 percent per year in Australia/New Zealand. In 2010, South Korea's commercial sector energy consumption was equal to only about 30 percent of Japan's, but it is about 50 percent of Japan's in 2040, as a result of South Korea's rapid GDP growth and Japan's continued efforts to conserve energy [323].

In 2010, about 46 percent of Japan's commercial energy consumption was met by electricity, with the other half split almost equally between natural gas and liquids. In 2040, electricity use is about 27 percent higher, natural gas use is about 12 percent higher, and liquids use is more than 23 percent lower. In comparison, electricity provided a larger share of commercial energy
consumption in South Korea in 2010, and the use of both electricity and natural gas grow more rapidly from 2010 to 2040 than in Japan. In Australia/New Zealand, the electricity share of commercial energy consumption was the region's highest in 2010 at 73 percent—and the second highest globally behind the Central and South America region. From 2010 to 2040, most of the growth in Australia/New Zealand's commercial energy use is fueled by electricity and nearly all of the remainder by natural gas.

Non-OECD

Non-OECD Asia

Figure 112. Non-OECD Asia commercial sector delivered energy consumption by country, 2010-2040
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With strong economic growth fueling rising standards of living and growing demand for services, non-OECD Asia has the world's fastest growth in commercial energy consumption from 2010 to 2040, at 3.9 percent per year (Figure 112). Non-OECD Asia accounted for 14 percent of the world's commercial sector delivered energy consumption in 2010, but its share grows to 18 percent in 2020 and 27 percent in 2040 in the IEO2013 Reference case. China's commercial sector consumed about 2.5 quadrillion Btu in 2010, which was almost twice the level of any other country in the non-OECD. In India, which has the world's highest economic growth rate in the IEO2013 Reference case, commercial sector energy consumption grows at an average rate of 5.4 percent per year, which is also the world's highest.

In both China and India, the commercial sector share of total delivered energy consumption remains between 2 percent and 6 percent throughout the 2010-2040 period. India's commercial sector is fueled mostly by electricity and coal, with the electricity share growing from about 59 percent in 2010 to 80 percent in 2040. In China, where 43 percent of commercial sector energy consumption was met by liquids in 2010, electricity use for commercial activity grows rapidly, reaching 58 percent of the country's total commercial sector energy consumption in 2040. Consumption of liquids in the commercial sector drops by 0.7 percent per year in China over the projection period, while the use of natural gas and electricity rises dramatically, with growth rates averaging 7.1 percent and 6.5 percent per year, respectively. In 2010, more than 21 percent of commercial sector energy consumption in China was met by coal, making it one of only a few countries, along with India, using significant amounts of coal in the commercial sector.

Unlike the increase in India, coal use in China's commercial sector is virtually unchanged from 2010 to 2040, although the coal share of total commercial sector energy use declines to 7 percent.

Non-OECD Europe and Eurasia

Non-OECD Asia

Figure 113. Russia commercial sector delivered energy consumption by energy source, 2010-2040
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In non-OECD Europe and Eurasia, Russia consumes the second-largest amount of energy in the commercial sector among all non-OECD countries in 2010, but its commercial energy consumption grows by an average of only 1.6 percent per year from 2010 to 2040 in the Reference case. Russia's economic growth rate is the second slowest in the non-OECD region, after the Middle East. The commercial sector accounted for about 6 percent of Russia's total delivered energy consumption in 2010, the largest share among all non-OECD countries. Most of the energy consumed in Russia's commercial sector comes from electricity and natural gas. In 2010, coal accounted for slightly less than 14 percent of Russia's commercial energy consumption, and liquids accounted for about 8 percent. Both of those shares are smaller in 2040, as use of the two fuels declines in the Reference case, while electricity use and natural gas use increase on average by 2.8 percent and 0.7 percent per year, respectively (Figure 113). In 2040, about 65 percent of Russia's commercial energy consumption is supplied by electricity and about 26 percent by natural gas.

Middle East

Figure 114. Middle East commercial sector delivered energy consumption by energy source, 2010-2040
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Commercial sector delivered energy consumption in the Middle East doubles in the IEO2013 Reference case, from 1.0 quadrillion Btu in 2010 to 2.0 quadrillion Btu in 2040. The Middle East currently has the second-highest energy intensity in the non-OECD region (after Russia) in terms of commercial energy consumption. The region's energy intensity remains high as the availability of inexpensive, subsidized oil and natural gas discourages efforts to conserve energy [324]. Electricity, natural gas, and liquids account for all commercial energy consumption in the Middle East region through 2040 (Figure 114).

Africa

In the IEO2013 Reference case, Africa's economic growth averages 4.6 percent per year from 2010 to 2040—a full percentage point higher than the world average of 3.6 percent per year. To date, however, Africa continues to use relatively little energy in its commercial sector, which accounts for 3 percent of total delivered energy consumption in 2010 and about 5 percent of the total in 2040. The share in 2010 represents the second-smallest share among all country groups in 2010; and the share in 2040 is the smallest. Many of Africa's sub-Saharan nations rely on nonmarketed, traditional fuels for commercial activities [325]. In the countries that have developed national energy infrastructures, most of the activity in their commercial sectors is powered by electricity. Although a significant portion of Africa's population does not have access to national electric power grids, in some countries, such as South Africa, there is beginning to be an interest in constructing more energy-efficient buildings, particularly in the public sector. In 2011, South Africa released new regulations as part of its South African Bureau of Standards SANS 10400 XA standards, which include a mandate for all new building construction to meet minimum requirements for insulation in order to minimize energy use for space conditioning [326]. The program is geared toward improving the penetration of energy-saving equipment and construction techniques over the next decade.

In addition to electricity, Africa's commercial sector consumes significant amounts of liquids (about 20 percent of commercial energy consumption in 2010) and coal (about 10 percent of commercial energy consumption in 2010) but a minimal amount of natural gas. The switch to electricity from liquids and coal is evident in the Reference case, with electricity supplying more than 80 percent of the energy consumed in the commercial sector in 2040, up from 68 percent in 2010.

Central and South America

Figure 115. Central and South America commercial sector delivered energy consumption by region, 2010-2040
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Commercial sector delivered energy consumption in Central and South America is relatively small compared with the rest of the world. The region's commercial energy consumption amounted to only about 3 percent of the world commercial total in 2010. In the IEO2013 Reference case, Central and South America's commercial sector energy consumption increases rapidly, by an average of 3.1 percent per year from 2010 to 2040, compared with the world average increase of 1.8 percent per year. The increase is driven largely by a high annual economic growth of 3.3 percent during the period.

Brazil is Central and South America's largest economy and largest commercial sector energy consumer. In 2010, Brazil's commercial sector consumed almost 0.5 quadrillion Btu of energy, nearly equal to the commercial energy use of the rest of Central and South America combined (Figure 115). Brazil's commercial sector is powered almost entirely by electricity, which makes up more than 90 percent of commercial energy consumption in 2010. For some time, Brazil's government has been concerned about overreliance on electricity. In 2001, after a severe drought caused electricity shortages and a national energy emergency, the government enacted the Law of Energy Efficiency [327], and in 2009 it released energy efficiency rules for commercial buildings in an effort to improve energy efficiency. The goal of the initiative is to manage growth in energy consumption through improvements in commercial building shells, heating and cooling systems, and lighting.