WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE.

May 22, 2018

MEMORANDUM FOR: Ian Mead

Assistant Administrator for Energy Analysis

FROM: James Turnure

Director of Office of Energy Consumption and Efficiency Analysis 

Kelly Perl

Lead of Industrial Efficiency and Consumption Analysis Team

SUBJECT: Summary of first AEO2019 Industrial Working Group Meeting, held on 

May 22, 2018

This memorandum provides an overview of presentation given at the first Annual Energy Outlook 2019 

(AEO2019) Industrial Working Group meeting and a summary of the discussion that followed. The meeting 

was a recap and discussion of industrial results from the Annual Energy Outlook 2018 and a solicitation for 

feedback to improve AEO2019. The presentation given at this meeting is provided in a separate document.

Model results (AEO2018)

The presentation highlighted the following modeling results: 

• Value of shipments show fastest growth in the AEO2018. The average annual growth rate 2017-2050

is presented for industries and since shipments change some related energy use change.

• Natural gas is the most consumed energy source in the industrial sector, while industry consumption 

shares remain mostly steady. Information on natural gas fuel consumption is also crucial to many 

manufacturing industries, even though three industries (bulk chemicals, refining, and food) consume 

the majority of it. 

• Combined heat and power (CHP) is also increasingly natural gas fired, with bulk chemicals 

constituting an ever increasing share. CHP in refining, paper and food are also significant. 

• Steel blast furnaces (BF) and electric arc furnaces (EAF) shares remain steady; small declines in energy 

intensity over time. Steel EAF proportion steady at 67% throughout projection.

• Paper energy consumption increases 1%/year, where renewables and natural gas is fastest growing

source of energy usage. Shifted inputs for two recovery technologies increase black liquor output.

Model development (AEO2019)

The preview of potential AEO2019 model updates included a review of the types of pulp used in the paper 

industry. In addition, research will be focused on how paper composition is expected to change over time,

the trend in recent retirements of coal CHP, and the acceleration of bulk chemicals CHP coal retirements.

Further, updates to physical output measures for the process flow industries (aluminum, cement includes

lime, glass, paper, and steel) will be considered.

Not all of these updates may be immediately reflected in AEO2019. In addition, a recycling side case may 

also be considered in subsequent AEOs. 
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

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

Discussion

Some discussion after the presentation revolved around sources of industrial output measures that will be 

used. EIA staff indicated that they would be using Federal Reserve Industrial tables as a data source. Staff 

also indicated that they would provide the lists to anyone interested after the meeting.

Some participants wondered whether physical units could be provided as an output of EIA’s model. EIA staff 

indicated that predicting physical output over the entire projection period is difficult and the exercise is 

fraught with measurement issues when looking beyond a handful of industries. As a result, EIA does not 

officially release such information as part of the AEO. However, process flow industries do have measures of 

output associated with them that are included as part of the technology choice results, which are available 

upon request.

There was also a discussion of how macroeconomic conditions are connected to the energy sector. Some 

people thought that because unit energy consumption declines over time, long-term U.S. macroeconomic 

growth might increase as a result. While this is a possibility, EIA staff indicated that the United States may not 

necessarily become more competitive in that regard because other countries may reap the rewards of lower 

energy intensity as well and there are many other factors that are traditionally thought of as determinants of 

long-run economic growth.

A discussion ensued related to the steel industry technologies of EAFs and BFs. Three EAF plants have been 

announced recently, and there is indication that there may be a small increase of EAF from 67% to 70%

within the next five years. This proportion would remain steady unless there was a large increase in 

infrastructure spending. The EAF is an advantage in terms of EAF revamping strategy for reducing operating 

costs, energy needs, and particulate emissions while increasing yield and productivity.

One participant asked whether there will be tariffs side case for the AEO2019. Staff indicated that there will 

not be a special side case because it was a short AEO year. However, EIA will continue to monitor the 

situation for the Reference case.

Another participant asked whether projected increases in natural gas prices may result in the use of less

natural gas in the industrial sector. Staff indicated that natural gas is becoming more of a primary fuel used in 

the sector. In addition, one must consider the price of natural gas in relation to the prices other fuels, so such 

as result is not an absolute given.

One final question related to the use of renewable fuel use in the paper industry. Staff indicated that the 

industry is not currently focused on greatly increasing the use of renewables and over near horizon, but some 

increase over the typical AEO projection period is possible. Currently, such an increase is not expected to be 

large.
WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES ONLY.

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

Attendees

Non-EIA Attendees (in person) Affiliation

Joe Cresko DOE Advanced Manufacturing Office

Robert Hershey Self

Keith Jamison Energetics

John Meyer Leidos

Guests (WebEx/phone) 

Nate Aden World Resources Institute 

Kevin Blaser Energy Buyer/Trader Saginaw Chippewa Indian Tribe of Michigan

Paul Donohoo-Vallett DOE-HQ

R. Neal Elliott III Sr. Director, Research ACEEE

Paul Friley Self

Rebecca Hanes DOE National Renewable Energy Laboratory

Lukas Hansen Market Analyst National Energy Board of Canada 

Rudy Kahsar DOE-Energy Efficiency and Renewable Energy

Skip Laitner Principal, Economic and Human Dimensions Research Associates

Eric Masanet Professor, Northwestern University

Francesco Memoli Executive Vice President TENOVA INC.

William Morrow Lawrence Berkeley National Laboratory

Hannah Pitt Research Analyst Rhodium Group

Michael Russo ITRON.com

Robert Schutz CTO LEENA Laboratories

Walt Tunnessen EPA

Brian Walker DOE-Energy Efficiency and Renewable Energy

EIA attendees (in person)

Bob Adler

Angelina LaRose

Paul Otis

Kelly Perl 

Elizabeth Sendich 

Matthew Skelton 

EIA attendees (WebEx/phone)

Mark Schipper