January 21, 2021

MEMORANDUM FOR: Angelina LaRose

Assistant Administrator for Energy Analysis

FROM: Jim Diefenderfer

Director, Office of Long-Term Energy Analysis

SUBJECT: Summary of AEO2021 Macro-Industrial Working Group held on 

Thursday, September 17, 2020

This memorandum summarizes the presentation and discussion at the Annual Energy Outlook 2021

(AEO2021) Macro-Industrial Working Group meeting. First, the Industrial team presented 

• A review of key Annual Energy Outlook 2020 industrial sector energy trends

• Preliminary results, focusing on trends in gross domestic product (GDP) and business investment

• Module updates incorporated into AEO2021

• Changes to the value of shipments (which come from the macroeconomic module and are the 

primary driver of industrial energy use) and industrial energy consumption

• Plans for longer-term modeling and data enhancements 

After the presentation, presenters addressed questions and comments from attendees.

Macroeconomic Activity Module updates

EIA staff discussed the key updates to the Macroeconomic Activity Module. Because of the severe and 

lasting economic impacts of the COVID-19 pandemic along with the uncertainty about the timing and 

strength of the recovery, in the fall of 2020, EIA staff updated, for a second time, the IHS Markit longterm U.S. model scenarios for the Reference case and high and low economic activity cases.

Industrial Demand Module updates 

EIA staff discussed the key updates made to the industrial module, including

• Implementing Manufacturing Energy Consumption Survey benchmarking of process flow 

industries
• Updating relative energy intensities (REIs) for equipment in the food, metal-based durables, and 

bulk chemicals industries

• Implementing technology possibility curves for process flow industry technologies

• Aligning petroleum coke consumption data with the refinery industry

Changes to macroeconomic shipments also affected industrial energy use. Although most industries 

experienced a decrease in shipments relative to AEO2020 because of responses to the COVID-19 

pandemic, total shipments from energy-intensive industries returned to approximately the same level 

by 2030, while total shipments from non-energy-intensive industries never return to AEO2020 levels. As 

a result, energy consumption in the industrial sector remains lower over the projection period than in 

AEO2020.

Discussion

An attendee asked about the increased GDP growth rate between AEO2020 and AEO2021, and whether 

it was all a result of recovery from the pandemic. EIA staff said the difference resulted from computing 

the growth rate at 2020’s low, pandemic-driven level. If the projection for 2020 from AEO2020 was used 

as the starting point, the growth rate in AEO2021 would be the same as AEO2020, i.e., 1.9%.

An attendee asked where the industrial module got its natural gas price. EIA staff responded that 

natural gas prices came from the Natural Gas Markets Module (NGMM) and EIA’s Short-Term Energy 

Outlook (STEO). The attendee was also referred to the NGMM working group. 

An attendee asked whether technology specifications in the process flow part of the industrial module 

were publicly available. EIA staff responded that this and other unpublished inputs were available upon 

request.

An attendee asked for more details on how petroleum coke (petcoke) projections were derived. EIA staff 

responded that petcoke is used in refineries (where it is produced), other industries such as cement, and 

to a minor extent in the power sector. EIA does not consider petcoke to be a feedstock. EIA staff 

explained that there are two kinds of petcoke: catalytic coke (catcoke), which is unusable outside of 

refineries, and marketed coke, which is used as a fuel in industries outside petroleum refining. EIA’s

Petroleum Supply Annual provides historical data and the STEO provides short-term projections of 

petcoke consumption. Published data representing marketed petcoke is a residual and is computed as

total petcoke minus catcoke. EIA staff said they were working with the Liquid Fuels Market Module to 

increase the accuracy of the historical split in petcoke consumption between refining and the rest of the 

industrial sector.

An attendee asked whether the primary driver of combined-heat-and-power (CHP) growth in the bulk 

chemicals industry was either chemicals growth or the return of chemical industries to the United 

States. EIA staff responded that both factors drive CHP growth because we base CHP growth on that 

industry’s large power and heat/steam demand.
An attendee asked more generally about the reshoring of supply chains to the United States and 

whether EIA’s projections reflect that reshoring effect was reflected in EIA’s projections. EIA staff 

responded that the module did not currently have that ability, but it would be considered in the future.

An attendee asked if the National Energy Modeling System needed to address plastic recycling. EIA staff 

agreed that it needed to be thought about, both in the plastics industry and for bulk chemical 

feedstocks. EIA staff hopes to model it in the future.

An attendee asked about the granularity of REIs, and if they went as far as industrial subsectors. EIA staff 

responded that REIs exist for specific end-use activities, such as heating and cooling, and sub-industries, 

such as grain milling in food or organic chemicals in bulk chemicals.

An attendee asked if there was any meaningful macroeconomic growth given national factors. EIA staff 

responded that the only positive growth in 2020 was in government spending at 1.9%. We project real 

GDP to decline 4.8% in 2020 and the economy to resume growing in 2021 (real GDP growth of 3.1%). 

Further, the economy won’t match its 2019 performance until 2022 (real GDP growth of 4.4%).

An attendee asked what accounted for the decline in the share of government spending relative to 

AEO2020. EIA staff responded that the decline in the share of government spending was the result of 

unwinding stimulus packages that will be gone by 2050. EIA staff noted that overall growth of 

government spending is 0.7%, up 0.2 percentage points from AEO2020.

EIA staff were asked to say more about differential recovery pathways in terms of value of shipments for 

energy-intensive versus non-energy-intensive industries. EIA staff said many of the non-energy-intensive 

industries supply retail (textiles, printing), household formation (furniture, paint, appliances), shipping 

(wood products), the automotive sector (transportation equipment), and capital investment 

(machinery), which are sectors of the economy that may experience more lasting impacts from the 

COVID-19 pandemic.

An attendee asked if EIA was considering running decarbonization cases in the Reference case or side 

cases for AEO2021. Another attendee asked about electrification of industries in terms of a 

decarbonization strategy, which EIA staff said was not yet modeled as a method of decarbonization. EIA 

staff said it would consider it in the future, as well as the potential use of hydrogen as a large part of 

decarbonization.
Attendees

Guests (Webex/phone)

Martha Moore ACC

R. Neal Elliott III ACEEE

Andrew Hoffmeister ACEEE

Ed Rightor ACEEE

David Shin American Petroleum Institute

Kevin Dubina BLS

Katy Laurence BLS

Carl Bozzuto CIBO

Joe Cresko DOE

Bob Gemmer DOE

Keith Jamison DOE

Betsy Dutrow EPA

Serpil Kayin EPA

Danny Macri EPA

Walt Tunnessen EPA

Dylan Sawyer-Villers Equitrans Midstream

Paul Kress ETRN

Rishi Garg FERC

Eric Fox Itron, Inc.

Mike Russo Itron, Inc.

William Morrow Lawrence Berkeley National Laboratory

John Meyer Leidos

Sugandha Tuladhar NERA

Peri Ulrey NGSA

Rob Boteler Nidec Motor Corporation

Cheryl Marcum Nidec Motor Corporation

Alberta Carpenter NREL

Frances Wood OnLocation, Inc.

Robert Hershey Professional

Robert Terry Professional

Whitney Herndon Rhodium Group

Ben King Rhodium Group

Hannah Kolus Rhodium Group

Hannah Pitt Rhodium Group

Brian Atkins Southern Company

Francesco Memoli Tenova Inc.

Eric Masanet UC Santa Barbara

Sarah Kuhnell Worthington Industries

Shellee Simmons-Taylor Worthington Industries
EIA attendees (Webex/phone)

Daniel Agee EIA

Lindsay Aramayo EIA

Nicholas Chase EIA

Jim Diefenderfer EIA

John Duff EIA

Joshua Eiermann EIA

Mindi Farber-DeAnda EIA

David Fritsch EIA

Peter Gross EIA

Angelina LaRose EIA

Perry Lindstrom EIA

Tom Lorenz EIA

Farah Naz EIA

Kelly Perl EIA

Elizabeth Sendich EIA

Nicholas Skarzynski EIA

John Staub EIA

Russ Tarver EIA

James Turnure EIA

Warren Wilczewski EIA