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

Macro Industrial Working Group (MIWG)

Industrial Team: Kelly Perl, Team Leader; Peter Gross, and Mark Schipper

July 24, 2012 | Washington, DC

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Macro Industrial Working Group:

Industrial Plans for AEO2013
Overview

• Aluminum process flow

• Non-manufacturing

• NGL price drivers & bulk chemicals

• Environmental updates

• CHP updates 

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Macro-Industrial Working Group

Washington DC, July 24, 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Process flow models

• General:

– Replace energy consumption based on engineering judgment with specific 

technology/equipment choice/diffusion, e.g., wet vs. dry process for clinker 

production and ball vs. rolling mills for grinding 

– Technologies are primarily based on CIMS data from DOE’s Pacific Northwest 

National Laboratory 

• Cement and Lime – completed for AEO2012

– Technologies include: raw grinding, kilns and burners, and finish grinding

• Aluminum

– Challenge is primary v. secondary production, as each has vastly different 

energy profiles and requirements. To be implemented for AEO2013.

– Technology/equipment choice implemented (e.g., anodes, recycling equipment) 

– Similar challenges likely in other energy-intensive industries with significant 

recycling (glass, paper)

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Macro-Industrial Working Group

Washington DC, July 24, 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
Aluminum industry energy use

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Macro-Industrial Working Group

Washington DC, July 24, 2012 

consumption by fuel, trillion Btu

Source: EIA, Manufacturing Energy Consumption Survey, 2006

0

50

100

150

200

250

300

350

aluminum sector total secondary smelting and 

alloying

sheet, plate, and foils extruded products

-----------selected subsectors-----------

all other fuels

natural gas and

liquified petroleum gases

electricity

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Non-manufacturing

• Agriculture completed for AEO2012

• New for AEO2013

– Non-manufacturing energy consumption drivers “endogenized” with buildings 

and transportation modules

– Construction 

– Mining

• Coal (“endogenized” with coal module’s productivity, underground vs. 

surface)

• Metal & non-metal

• Oil & gas extraction (uses production and well count numbers)

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Macro-Industrial Working Group

Washington DC, July 24, 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 and ethane 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

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Macro-Industrial Working Group

Washington DC, July 24, 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE
 Environmental

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

– Industrial results depend crucially on supply modules, especially EMM and 

LFMM

– Interpretation challenge: cannot pick up California macro changes

• Macro neutral

• Leakage confined to Region 4

• U.S. EPA: Boiler MACT 

– Estimated compliance cost provided to macro as part of industrial final demand

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

– Apply price fuel factors to incentivize fuel switching

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Macro-Industrial Working Group

Washington DC, July 24, 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 OES

– Will update regional CHP scorecards when ACEEE data becomes available

• Industrial CHP Coverage

– Starting with AEO2012, regulated generators are covered under EMM

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

sector to power sector

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Macro-Industrial Working Group

Washington DC, July 24, 2012 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

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

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Macro-Industrial Working Group

Washington DC, July 24, 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 

Mark Schipper (202) 586-1136

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE