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

Second Macro-Industrial Working Group Meeting 

Updates and preliminary results

September 30, 2021 | Washington, DC

By

Office of Integrated and International Energy Analysis

Office of Long-Term Energy Modeling
Annual Energy Outlook 2022 (AEO2022) Macro-Industrial 

Working Group: Overview

• AEO2022 macroeconomic updates and preliminary results

• AEO2022 industrial updates and preliminary results

• Longer-term plans for industrial modeling

• Discussion and questions

AEO2022 Macro-Industrial Working Group 

September 30, 2021 2

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Review of preliminary AEO2022 

macroeconomic results

AEO2022 Macro-Industrial Working Group 

September 30, 2021 3

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Key preliminaryAEO2022 macro results

• AEO2022 real GDP grows an average of 2.1% per year from 2021 to 2050

• Average growth of consumption is 2.5% over the projection period

• Nonresidential fixed investment is projected to grow 2.9% per year from 

2021 to 2050 in the AEO2022

• Growth of nonfarm business productivity averages 1.9% over the projection 

period

AEO2022 Macro-Industrial Working Group 

September 30, 2021 4

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
AEO2022 Macro-Industrial Working Group 

September 30, 2021

Summary of the Macroeconomic Activity Module (MAM) in the 

National Energy Modeling System (NEMS)

5

NEMS

MAM

NEMS macro 

baseline variables

NEMS energy 

variables

Other NEMS modules

MAM variables used 

as inputs in NEMS

Macroeconomic submodule runs 

the New Scenario using new Energy 

Inputs from NEMS

Industrial submodule runs the New 

Scenario of values of shipments by 

industry sectors

Employment submodule runs the 

New Scenario of employment by 

sector

Commercial floorspace 

submodule

MAM applies the 

ratios of the 

New Scenario 

values more 

than the 

Baseline values 

onto the Macro 

Baseline 

variables to 

obtain solution

Regional submodule

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
U.S. economy recovered in second quarter of 2021 from 

31.4% real GDP contraction in the second quarter of 2020

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: IHS Markit May 2021 Long-Term U.S. Macroeconomic Model

6

average annual percent growth

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

-40

-30

-20

-10

0

10

20

30

40

1959Q11960Q21961Q31962Q41964Q11965Q21966Q31967Q41969Q11970Q21971Q31972Q41974Q11975Q21976Q31977Q41979Q11980Q21981Q31982Q41984Q11985Q21986Q31987Q41989Q11990Q21991Q31992Q41994Q11995Q21996Q31997Q41999Q12000Q22001Q32002Q42004Q12005Q22006Q32007Q42009Q12010Q22011Q32012Q42014Q12015Q22016Q32017Q42019Q12020Q2
Growth in GDP and its components are slower in the 

AEO2022 projection than historically

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

7

average annual percentage growth

2.5%

2.7%

4.3%

0.9%

4.7%

5.2%

2.2%

2.6%

3.1%

0.0%

3.5%

4.1%

0.0 1.0 2.0 3.0 4.0 5.0 6.0

real GDP

consumption

fixed nonresidential investment

fixed residential investment

exports

imports

Projected 30 Year Growth (2020 to 2050)

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

Previous 30 Year Growth (1989 to 2019)
Impact of the pandemic makes comparison of preliminary 

AEO2022 projections to past AEOs difficult

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

8

average annual percentage growth

2.1%

2.5%

2.9%

-0.4%

3.4%

3.8%

2.1%

2.4%

3.0%

1.0%

3.5%

3.8%

1.9%

2.0%

2.5%

1.1%

3.2%

2.8%

-1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

real GDP

consumption

fixed nonresidential investment

fixed residential investment

exports

imports

AEO2022 (2021-50)

AEO2021 (2020-50)

AEO2020 (2019-50)

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Inflation remains moderate throughout the projection and 

bond yields gradually rise from historic lows

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

9

-2

0

2

4

6

8

10

12

-1

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2050

2.6%

3.2%

CPI inflation

percentage (%)

10-year Treasury yield

percentage (%)

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Consumption gains in share of the demand mix

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

10

4.8%

-3.6%

-0.8%

-2.0%

0.0%

0.6%

2.1%

2.4%

-5.2%

2.4%

-0.7%

1.1%

2.1%

2.1%

-6 -4 -2 0 2 4 6

consumption

government

nonresidential investment

residential investment

inventories

import

export

AEO2022 (2021-50)

AEO2021 (2020-50)

change in GDP share over projection period

percentage points

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
AEO2022 real GDP growth is similar to other projections

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Source: U.S. Energy Information Administration, Annual Energy Outlook 2022 preliminary run

11

annual average growth in real GDP

-6

-4

-2

0

2

4

6

8

10

201520162017201820192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050

AEO2022 AEO2021 IHSM CBO OASDI Oxford

Projection 2020-50

AEO 2022 2.2%

AEO 2021 2.1%

IHSM (May 2021) 2.2%

CBO (Mar 2021) 1.8%

OASDI (2021) 2.0%

Oxford (May 2021) 2.1%

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Macroeconomic Module changes for AEO2022

• Update of IHS Markit U.S. macroeconomic model

• Update of Industrial Output model historical data

• Update of Employment by Industry model historical data

AEO2022 Macro-Industrial Working Group 

September 30, 2021 12

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Review of preliminary AEO2022 

industrial results

AEO2022 Macro-Industrial Working Group 

September 30, 2021 13

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
AEO2022 major updates for industrial—current status

• Incorporate 2018 Manufacturing Energy Consumption Survey results to 

establish updated historical baseline (in progress)

• Improve combined-heat-and-power calculations (completed)

• Allow ethane and naphtha feedstock switching in bulk chemical 

subroutine (completed)

• Update ethane and propane price methodology (in progress)

• Integrate more effective fuel price sensitivity in process flow models 

(pushed to AEO2023)

AEO2022 Macro-Industrial Working Group 

September 30, 2021 14

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Manufacturing Energy Consumption Survey (MECS) 2018

• Updating unit energy consumptions for manufacturing industries based on 

MECS 2018 results

– The amount of energy needed to produce one unit of output for a given industry

• Updating non-manufacturing industries using other data sources

– Sources:

• Economic Census 2017 (U.S. Census Bureau)

• National Agriculture Statistics Survey (U.S. Department of Agriculture)

• Fuel Oil and Kerosene Sales report (EIA)

– Most significant changes are in construction (more natural gas) and agriculture (less overall 

fuel use) 

• Changing the base year for the Industrial Demand Module to 2018

AEO2022 Macro-Industrial Working Group 

September 30, 2021 15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
MECS energy consumption changes 2014–2018

• We conduct the survey every 

four years, and we released 

2018 data this year.

• MECS supplies baseline energy 

consumption by manufacturing 

industry and fuel.

• MECS 2018 versus MECS 2014

– Higher natural gas, hydrocarbon gas 

liquid consumption

– Lower coal consumption

– Similar electricity purchases

AEO2022 Macro-Industrial Working Group 

September 30, 2021

*excluding natural gasoline

16

MECS first use of fuel and feedstock

trillion British thermal units

4,809 4,894 

2,600 2,591 

6,412 7,320 

2,446 

2,898 1,578 

1,119 1,586 1,481 

0

5,000

10,000

15,000

20,000

2014 2018

biomass

coal

hydrocarbon

gas liquids*

natural gas

net electricity

petroleum/

other

Sources: U.S. Energy Information Administration, MECS 2014, MECS 2018

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Energy intensity increased for natural gas and HGLs

• Comparing 2018 to 2014, 

manufacturing industries as a whole 

use more natural gas and less coal 

per unit of output.

• The decrease in coal consumption is 

most significant in paper and 

chemicals.

• Hydrocarbon gas liquid (HGL) 

intensity increases.

– More use as chemical feedstock

AEO2022 Macro-Industrial Working Group 

September 30, 2021

*excluding natural gasoline

17

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

natural

gas

coal electricity biomass HGLs*

2014 2018

Manufacturing industries fuel intensities

thousand British thermal units per 2012 dollar of shipments

Sources: U.S. Energy Information Administration, MECS 2014, MECS 2018, Annual Energy Outlook 2022 preliminary run

WORKING GROUP PRESENTATION FOR 

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• Retirement of less-efficient 

equipment, replacement with 

newer, more-efficient equipment 

decreased energy intensity for 

many industries.

• The bulk chemicals industry built 

many new, energy-intensive 

facilities (like ethylene crackers)

– Feedstock has been a major source of 

demand growth, but doesn’t become 

more efficient

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Energy intensity declined in most heavy industries

Sources: U.S. Energy Information Administration, MECS 2014, MECS 2018, Annual Energy Outlook 2022 preliminary run

18

Energy intensities of selected manufacturing industries

thousand British thermal units per 2012 dollar of shipments

WORKING GROUP PRESENTATION FOR 

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CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.

0 10 20 30 40

food

aluminum

glass

iron and steel

paper

bulk chemicals

cement and lime

total manufacturing

2014

2018
Combined heat and power (CHP)

• Improved iron and steel, paper 

calculations

– CHP in specific technologies is now 

counted.

– The paper industry can now sell 

electricity to the grid.

• Implemented new technology 

parameters from 2020 study, 

adjusted weighting parameters in 

code

– Results vary by industry, but generation is 

lower overall.

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Sources: U.S. Energy Information Administration, Annual Energy Outlook 2021, Annual Energy Outlook 2022 preliminary run

19

Combined heat and power electricity generation

billion kilowatthours

100

150

200

2015 2020 2025 2030 2035 2040 2045 2050

AEO2022 preliminary

AEO2021

history projections

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Chemical submodule changes

• The chemicals industry is the largest industrial energy consumer, and has 

recently been growing significantly.

– Energy-intensive, with limited efficiency opportunities

• Changes allow switching between ethane and naphtha as feedstock for 

ethylene production, based on cost of feedstock and values of co-products.

– Naphtha substitution is not expected to occur in the Reference case, but it could happen in 

some side cases (such as Low Oil Price).

• Substitute propane and normal butane for ethane when model reaches U.S. 

ethane production limit

• Update ethane and propane pricing model to reflect supply and demand 

dynamics between projected domestic feedstock production

AEO2022 Macro-Industrial Working Group 

September 30, 2021 20

WORKING GROUP PRESENTATION FOR 

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Example ethane and naphtha capacity switching

AEO2022 Macro-Industrial Working Group 

September 30, 2021 21

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2025 2030 2035 2040 2045 2050

baseline naphtha consumption

ethane consumption

flexible naphtha consumption

ethane more economical than naphtha

more flexible 

capacity is built

naphtha more economical than ethane

trillion British thermal units

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
New chemical model changes the feedstock makeup

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Sources: U.S. Energy Information Administration, Annual Energy Outlook 2021, Annual Energy Outlook 2022 preliminary run

22

WORKING GROUP PRESENTATION FOR 

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0

1,000

2,000

3,000

4,000

5,000

6,000

2020 2025 2030 2035 2040 2045 2050

0

1,000

2,000

3,000

4,000

5,000

6,000

2020 2025 2030 2035 2040 2045 2050

natural gasoline

isobutane

normal butane

propane

naphtha

ethane

propylene

AEO2021 Reference case

trillion British thermal units

AEO2022 preliminary Reference case run

trillion British thermal units
Updated ethane and propane price projection methodology

• Considers constrained 

ethane supply

• Explicitly includes ethane 

and propane feedstock 

consumption drivers

• 2021 is a “historical” data 

point

AEO2022 Macro-Industrial Working Group 

September 30, 2021

Sources: U.S. Energy Information Administration, Annual Energy Outlook 2021, Annual Energy Outlook 2022 preliminary run

23

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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0.00

4.00

8.00

12.00

16.00

20.00

2015 2020 2025 2030 2035 2040 2045 2050

propane AEO2021

propane AEO2022

ethane AEO2021

ethane AEO2022

Ethane and propane price

2020 dollars per million British thermal units
Longer-term modeling and data enhancements • Incorporate electric boilers

• Integrate more effective fuel price sensitivity in process flow industries

• Enhance sensitivity of industrial energy intensity to changes in capacity 

utilization

• Consider more carbon functionality (hydrogen, electrification, carbon capture) 

• Continue to investigate the source of the extra natural gas left for the nonmanufacturing sectors

• Restructure the industrial module more broadly: convert some parts into 

Python, allow for more systematic data importation from annual data sources

AEO2022 Macro-Industrial Working Group 

September 30, 2021 24

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.
Questions or comments?

AEO2022 Macro-Industrial Working Group 

September 30, 2021 25

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

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Contact information:

AEO economic activity and STEO macroeconomic projections

AEO2022 Macro-Industrial Working Group 

September 30, 2021 26

• Russ Tarver Russell.Tarver@eia.gov (202) 586-3991

WORKING GROUP PRESENTATION FOR 

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27

Contact information:

EIA Industrial Group

• Peter Gross (technical lead) Peter.Gross@eia.gov (202) 586-8822

• Nicholas Skarzynski Nicholas.Skarzynski@eia.gov (202) 586-4821

• Daniel Agee Daniel.Agee@eia.gov (202) 287-6077

• Matthew Skelton Matthew.Skelton@eia.gov (202) 287-5660

• Kelly Perl (senior analyst) Kelly.Perl@eia.gov (202) 586-1743

AEO2022 Macro-Industrial Working Group 

September 30, 2021

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE BECAUSE RESULTS ARE SUBJECT TO CHANGE.