WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES 

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

August 2, 2012 

MEMORANDUM FOR: JOHN CONTI 

ASSISTANT ADMINISTRATOR FOR ENERGY 

ANALYSIS 

 PAUL HOLTBERG 

TEAM LEADER 

ANALYSIS INTEGRATION TEAM 

JAMES TURNURE 

DIRECTOR 

OFFICE OF ENERGY CONSUMPTION & EFFICIENCY ANALYSIS 

FROM: MACROECONOMIC & INDUSTRIAL ENERGY 

CONSUMPTION & EFFICIENCY ANALYSIS TEAMS 

SUBJECT: First AEO2012 Macro-Industrial Working Group Meeting Summary 

(presented on 07-24-2012) 

Attendees: Aaron Bergman (ORM) 

 Frances Wood (OnLocation) 

 Keith Jamison (Energetics) 

 Liwayway Adkins (DOE-PI) 

 Neal Elliott (ACEEE) 

 Tom Lorenz (EIA) 

 Bob Adler (EIA) 

 Vipin Arora (EIA) 

 Russ Tarver (EIA) 

 Kevin Lillis (EIA) 

 Joe McGervey (SRA – International) 

 Prakash Rao (LBNL) 

 Don Hanson (Argonne) 

 Amelia Elson (ICF) 

 Skip Laitner (ACEEE) 

 Gale Boyd (Duke University) 

 

Presenters: Kay Smith, Elizabeth Sendich (Macro) 

Kelly Perl, Mark Schipper, Peter Gross (Industrial)

 
2 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES 

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

Macro: The macro presentation provided a viewing and discussion of GI’s (Global Insights’) 

long-term forecast of GDP. There was no presentation of specific industrial output projections 

because the EIA macro team has not yet received GI’s industrial output forecasts. Highlights for 

AEO2013 macro model changes included additional gross output detail in the food and 

chemical sectors which would be available to the industrial model, better representation of the 

influence of energy exports (e.g., coal, LNG) quantities on the macro model, and 

implementation of a dynamic price driver (comprised of the oil/natural gas price) for the 

organic chemical output forecast. 

 Specific discussion/questions: 

1. It was commented that Moody’s Analytics has published a GDP forecast that has a 

significantly lower growth rate than GI’s. This commentator made the point that 

there may be a paradigm shift in store for the U.S. economy which would require a 

forecast of GDP to go well beyond a trend analysis, and in particular they pointed to 

Moody Analytics’ assumptions regarding a very different (lower) productivity growth 

in the future than has been witnessed historically. Kay Smith responded that this 

was interesting, but that a) EIA does not do forecasts, but rather projections and b) a 

low macro economic growth side case will be published which would likely 

approximate Moody Analytics’ own forecast. Kay Smith also said that she and her 

team welcome comparing other macro forecasts with GI’s, but that EIA does not 

subscribe to Moody Analytics. 

2. Two participants asked if the oil/natural gas price ratio was sufficient as a price 

driver for organic chemical shipments forecast, and Peter Gross and Elizabeth 

Sendich responded that this price driver is a stepping stone to more detailed NGL 

(natural gas liquid) price drivers (e.g., ethane, propane) which are to be provided 

soon by the LFMM and would be used by the macro module in AEO2014. Elizabeth 

Sendich also pointed out that the lack of specificity in the proposed oil/natural gas 

price driver was not necessarily a limiting assumption given the lack of detail in GI’s 

organic shipment forecast which covers a broad swath of both organic and 

petrochemicals. 

Industrial: The industrial part of the working group presentation provided general model 

development plans associated with major changes/updates for the AEO2013 version of the 

Industrial Demand Module (IDM). These included: 

(1) implementing the new aluminum process flow model; 

(2) implementing the models for non-manufacturing sectors including construction, coal 

mining, oil & gas extraction, and other mining; 

(3) enhancing the CHP model diversified utilization to include industrial sub-sectors and 

four census regions; 

(4) updating of the CHP database with preliminary 2011 data from EIA’s Office of Energy 

Statistics (OES); 

(5) expanding the chemical model to include price-drive feedstock choices from NGLs ; 
3 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES 

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

(6) implementing the environmental regulations from Assembly Bill 32 (State of 

California) and Boiler MACT. 

Specific discussion/questions: 

1. A participant asked how the “old” detailed chemical model which was replaced by a 

simpler version for AEO2012 would be re-instated for AEO2013. Peter Gross 

responded that the “old” model would be partially rehabilitated for AEO2013 in that 

econometrically-derived demands for basic petrochemicals would be included. 

These product demands would specifically drive feedstock demands of NGLs and 

naphtha. 

2. It was asked if comparisons with previous AEOs would still be possible given the 

changes in adding new macro and industrial detail. Elizabeth Sendich replied yes, in 

particular the aggregate energy consumption and macro tables would still be 

completely amenable to direct comparison with previous AEOs, although there 

would be slight changes in specific industrial tables (the recent change to cement 

with the inclusion of lime production was mentioned) with on-going model changes 

to the IDM. 

3. One participant inquired if, given the implementation of Boiler MACT, there were 

any levers within the IDM to further incentivize boiler fuel switching to natural gas 

other than the existing price-driven logit-based fuel share function. Mark Schipper 

replied no, and that no such specific retirement driver/lever currently exists to 

address fuel switching. Steam demand in the industrial model is a function macro 

shipments, MECS-based steam intensity, Technology Possibility Curves (TPCs) which 

drive down the energy intensity, and CHP builds. An extra coal boiler 

environmentally-driven retirement lever is not something the industrial team plans 

on adding, either, for AEO2013. Lastly, the reconsidered Boiler MACT rule is still at 

the Office of Management and Budget and had been expected to be published in the 

Federal Register in June 2012, but that date was changed to July 2012. 

4. A question was raised about a link or driver in the IDM between steam production 

and electricity (i.e., could prices of industrial electricity affect steam demand?). This 

issue was new to the EIA presenters, as none had any knowledge of such a link in the 

IDM, perhaps because the discussant thought that such a link might have been 

included in the IDM from 5 years back or so. Mark Schipper and Peter Gross will 

review and provide a complete answer for ACEEE. 

5. A participant asked if Boiler MACT was applicable to the cement industry given as 

Mark Schipper had mentioned in his presentation given that the cement industry 

has only process heating and not boilers. This participant said that he thought 

cement emissions from process heaters would fall under the EPA’s National 

Emissions Standards for Hazardous Air Pollutants (NESHAP) instead. Mark Schipper 

said he would investigate this as part of the effort to regionalization the cement and 

lime submodule. 

6. One participant mentioned that some of his own work on industrial energy 

efficiency might be informative for the IDM. The EIA industrial team thanked this 
4 

WORKING GROUP PRESENTATION FOR DISCUSSION PURPOSES 

DO NOT QUOTE OR CITE AS RESULTS ARE SUBJECT TO CHANGE

participant and will look at their work. Mark Schipper pointed out that this work 

would be more relevant to energy efficiency (EE) side cases and that any 

authoritative EE research is welcomed by EIA. 

The next scheduled joint macro-industrial work group meeting is on September 11, 2012.