U.S. Energy Information Administration Independent Statistics & Analysis www.eia.gov

Macro Industrial Working Group (MIWG)

Industrial Team: Kelly Perl, Team Leader; Peter Gross, Susan Hicks, Paul 

Otis, and Mark Schipper

September 11, 2012 | Washington, DC

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES 

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Macro Industrial Working Group

Preliminary Industrial Results for AEO2013
Overview

• Aluminum process flow (2nd in series)

• Non-manufacturing

• NGL price drivers & bulk chemicals

• Environmental updates

• CHP updates 

2

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Process flow: Aluminum results

• New aluminum model allows for technology choice in all 

facets of raw aluminum and finished products;

• No new potlines/primary smelters built in U.S.; but use of 

primary capacity varies as potlines at smelters are allowed to 

come back (subject to projected electricity prices) on line as 

aluminum industry recovers; 

• Energy consumption higher in both electricity and natural gas

– Industrial output

– Update in retirement assumptions

3

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Aluminum: natural gas consumption

4

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

0

5 0

100

150

200

250

300

2010 2015 2020 2025 2030 2035 2040 Energy Consumption in Trillion BTUs

NEMS run 9/4/12

AEO2012 reference case
Aluminum: electricity consumption

5

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

0

5 0

100

150

200

250

300

2010 2015 2020 2025 2030 2035 2040 Energy Consumption in Trillion BTUs

NEMS run 9/4/12

AEO2012 reference case
Aluminum: total energy consumption

6

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

0

100

200

300

400

500

600

2010 2015 2020 2025 2030 2035 2040 Energy Consumption in Trillion BTUs

NEMS run 9/4/12

AEO2012 reference case
 Non-manufacturing

• Non-manufacturing energy consumption drivers 

“endogenized” with buildings and transportation module 

energy efficiency drivers

• Mining (coal + oil & gas sectors) includes productivity drivers

• Energy consumption increases with shipments; energy 

supplies

7

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Non-Manufacturing heat and power energy 

consumption

(units in quadrillion btus)

8

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

• NEMS 9/4/2013 • 2012 Reference Case

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2010 2015 2020 2025 2030 2035 2040 2010 2015 2020 2025 2030 2035 2040

Renewables

Steam Coal

Purchased Electricity

Natural Gas

Petroleum
 Natural Gas Liquids (NGL) pricing & Bulk 

Chemicals

• NGL prices relative to naphtha

• Feedstock requirements of additional petrochemical 

capacity

• Don’t forget shipments!

9

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Natural Gas Liquids (NGL) pricing & Bulk 

Chemicals

• Multi-team effort to forecast NGL prices

– Regression-based but allowing for more than “typical” explanatory 

variables

– Bayesian approach/Dynamic Linear Models

– Sectoral propane prices

– Useful for chemical feedstock choice and as input for chemical gross 

output

– Feedstock choice to be based on demand for basic petrochemicals 

and relative feedstock pricing

10

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
NGL/LPG pricing to industrial customers

11

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

$ 0

$ 5

$10

$15

$20

$25

$30

$35

$40

2010 2015 2020 2025 2030 2035 2040 Price in $2011 / million BTU 

NEMS run 9/4/12

AEO2012 reference case
 Bulk Chemicals: feedstock consumption

(units in quadrillion btus)

12

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

• NEMS 9/4/2013 • 2012 Reference Case

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2010 2015 2020 2025 2030 2035 2040 2010 2015 2020 2025 2030 2035 2040

Natural gas

NGL

Petrochemical
 Environmental

• California Global Warming Solutions Act of 2006: AB32 cap & 

trade

– Multi-module adaptation: EMM, LFMM, IDM, Integration

– Interpretation challenge: cannot pick up California macro changes

– Cannot measure leakage in NEMS, although the California Air Resources 

Board (CARB) has measures to prevent or reduce

• U.S. EPA: Boiler MACT 

– Estimated compliance cost represented as change in industrial final demand

– Food, Iron & Steel, Chemicals, BOM most affected

– Update fuel cost/selection factors to represent and incent compliance primarily 

through ‘fuel switching’

13

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Combined Heat and Power (CHP)

• Economic Assessment: Utilization

– Lowered assumptions for utilization; since AEO2012, IDM simulates the 

utilization of installed CHP systems based on historical utilization rates and is 

driven by end-use electricity demand – i.e., updated appraisal incorporates 

historical rather than assumed capacity factors for new CHP facilities

– Utilization of new CHP additions now expanded to allow for both industry and 

regional differences

– Update industrial CHP based on EIA’s historical data; preliminary 2011 data 

from EIA Office of Energy Statistics (OES)

– Will update regional CHP scorecards when ACEEE data becomes available

• Industrial CHP Coverage

– Starting with AEO2012, regulated generators are modeled under EMM

• Modeling impact is movement of a few hydropower facilities from industrial 

sector to power sector

14

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Thank you for your attention!

15

Macro-Industrial Working Group 

Washington DC, 9/11/ 2012 

Macro Team:

Kay Smith (202) 586-1132 | kay.smith@eia.gov

Vipin Arora (202) 586-xxxx | vipin.arora@eia.gov 

Russell Tarver (202) 586-3991 | russell.tarver@eia.gov

Elizabeth Sendich (202) 586-7145 | elizabeth.sendich@eia.gov

Industrial Team: EIA-OECEAIndustrialTeam@eia.gov

Kelly Perl (202) 586-1743

Peter Gross (202) 586-8822

Susan Hicks

Paul Otis 

Mark Schipper (202) 586-1136

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE