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

AEO2021 Macro-Industrial Working Group: 

Updates and preliminary results

September 17, 2020

By

Office of Energy Markets & Financial Analysis

Office of Energy Consumption & Efficiency Analysis 
AEO2021 Macro-Industrial Working Group: Overview

• Review of AEO2020

• AEO2021 macro updates and preliminary results

• AEO2021 industrial updates and preliminary results

• Longer-term plans for industrial modeling

• Discussion & questions

AEO2021 Macro - Industrial Working Group 

September 17, 2020 2

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Review of Industrial AEO2020 results

AEO2021 Macro - Industrial Working Group 

September 17, 2020 3

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 Macro - Industrial Working Group 

September 17, 2020

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

Industrial sector energy consumption increases fastest for natural gas and 

hydrocarbon gas liquids in the AEO2020 Reference case, and bulk chemicals and 

nonmanufacturing are the fastest-growing industries in the sector

4

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE

Industrial energy consumption by energy source and subsector (AEO2020 Reference case)

quadrillion British thermal units
AEO2021 Macro - Industrial Working Group 

September 17, 2020

In the AEO2020 Reference case, energy intensities decline in most heavy 

industries, reflecting industrial capital stock turnover and adoption of new, 

more energy-efficient technologies

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

5

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 Macro - Industrial Working Group 

September 17, 2020

Self-generation from combined heat and power (CHP), especially for bulk chemicals, 

accounts for most AEO2020 Reference case growth in industrial sector electricity 

consumption as quantities of purchased electricity remain fairly flat

Source: U.S. Energy Information Administration, Annual Energy Outlook 2020

6

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 updates and preliminary results 

AEO2021 Macro - Industrial Working Group 

September 17, 2020 7

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 and COVID-19

• AEO2021 will reflect updated macroeconomic projections (GDP and industrial 

shipments) that underlie industrial energy consumption 

• STEO forecast incorporates short-term impacts of COVID-19 on broad industrial 

energy consumption for coal, natural gas, and purchased electricity.

• EIA released a Trends and Expectations Report which describes the impact of the 

pandemic on the energy sector and identifies key issues that are being considered in 

the development of AEO2021: 

https://www.eia.gov/outlooks/aeo/trends_expectations.php

• EIA will host a series of workshops on the near- and long-term impacts on energy 

markets, with the macro and demand workshop on September 25 at 1:00 PM EST. 

See: https://www.eia.gov/outlooks/aeo/workshop/energy_markets/

AEO2021 Macro - Industrial Working Group 

September 17, 2020 8

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Key preliminary macro results

• Preliminary AEO2021 real GDP grows an average of 2.1% per year from 

2020 to 2050, up two tenths of a percent from AEO2020.

• Average growth of consumption is 2.4% over the projection period in AEO 

2021 as compared to 2.0% in AEO2020.

• Business investment is projected to grow 3.0% per year from 2020 to 2050 

in the AEO2021, up five tenths from AEO2020. 

• Growth of nonfarm business productivity averages 1.6% over the projection 

period as compared to 1.5% in the AEO2020.

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Source: AEO2021 Preliminary run and AEO2020 Reference run

9

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 Macro - Industrial Working Group 

September 17, 2020

Summary of the Macroeconomic Activity Module (MAM) in the 

National Energy Modeling System (NEMS)

10

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 AS RESULTS ARE SUBJECT TO CHANGE
-40

-30

-20

-10

0

10

20

average annual percent growth

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Worst ever real GDP in US history with the economy contracting 

32.9% in the 2nd quarter of 2020

11

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
2.5%

2.7%

4.3%

0.9%

4.7%

5.2%

2.1%

2.4%

3.0%

1.0%

3.5%

3.8%

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)

average annual percent growth

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Growth in GDP and most of its components is slower in the 

preliminary AEO2021 projection than history

Source: AEO2021 Preliminary run

12

Previous 30 Year Growth (1989 to 2019)

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
2.1%

2.4%

3.0%

1.0%

3.5%

3.8%

1.9%

2.0%

2.5%

1.1%

3.2%

2.8%

1.9%

2.0%

2.5%

1.2%

3.6%

3.0%

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

average annual percent growth

AEO2021 Macro - Industrial Working Group 

September 17, 2020

The preliminary AEO2021 projection for GDP and most of its 

components is quicker than recent projections

Source: AEO2021 Preliminary run

13

AEO2021 (2020-50)

AEO2020 (2019-50)

AEO2019 (2018-50)

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
-2

0

2

4

6

8

10

12

-1

0

1

2

3

4

5

6

1990 2000 2010 2020 2030 2040 2050

2.1%

2.5%

CPI inflation

percent

10-year Treasury yield

percent

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Inflation remains moderate throughout the projection and bond yields 

gradually rise from historic lows

Source: AEO2021 Preliminary run

14

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
2.1%

-5.1%

2.4%

-0.7%

1.1%

2.1%

2.3%

0.4%

-3.7%

0.8%

1.0%

-0.3%

0.5%

2.3%

-6 -5 -4 -3 -2 -1 0 1 2 3

Consumption

Government

Nonresidential Investment

Residential Investment

Inventories

Import

Export

AEO2021 (2020-50)

AEO2020 (2019-50)

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Consumption, nonresidential investment and imports increase in 

share of demand mix while government fades

Source: AEO2021 Preliminary run

change in GDP share over projection period

percentage points

15

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
annual average growth in real GDP

AEO2021 Macro - Industrial Working Group 

September 17, 2020

Preliminary AEO2021 real GDP growth is similar to other projections

Sources: as listed

16

Projection 2020-50

AEO 2021 1.9

AEO 2020 1.9

IHSM (Aug 2020) 1.9

CBO (Jan 2020) 1.7

OASDI (2020) 2.0

Oxford (Sept 2020) 1.6

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

201520162017201820192020202120222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050

AEO2021 AEO2020 IHSM CBO OASDI Oxford

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
AEO2021 major updates for industrial

• Implementation of MECS benchmarking to process flow industries

• Update in Relative Energy Intensities for equipment in food, metalbased durables, and chemicals industries

• Implementation of Technology Possibility Curves for process flow 

industry technologies

• Better alignment of petroleum coke consumption with refinery 

industry

AEO2021 Macro - Industrial Working Group 

September 17, 2020 17

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
0

1000

2000

3000

4000

5000

6000

7000

2015 2020 2025 2030 2035 2040 2045 2050

Value of shipments

Industrial and Macroeconomic Working Group, 

Washington, DC, September 17, 2020 18

Sources: AEO2020, AEO20201 preliminary run

History Projection

AEO2021 preliminary

AEO2020

billion 2012 dollars

Energy-intensive industries

0

1000

2000

3000

4000

5000

6000

7000

2015 2020 2025 2030 2035 2040 2045 2050

AEO2020

billion 2012 dollars

Non-energy-intensive industries

AEO2021 preliminary

History Projection

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Total industrial delivered energy

Industrial and Macroeconomic Working Group, 

Washington, DC, September 17, 2020

Sources: AEO2020, AEO20201 preliminary run

19

0

5

10

15

20

25

30

35

40

2015 2020 2025 2030 2035 2040 2045 2050

AEO2021 preliminary

AEO2020

History Projection

quadrillion British thermal units

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
0

50

100

150

200

250

2015 2020 2025 2030 2035 2040 2045 2050

Combined heat and power electricity generation

Industrial and Macroeconomic Working Group, 

Washington, DC, September 17, 2020 20

Sources: AEO2020, AEO20201 preliminary run

billion kilowatthours

History Projection

AEO2021 preliminary

AEO2020
Longer-term modeling and data enhancements

• Integrate more effective fuel price sensitivity in process flow models

• Enhance sensitivity of industrial energy intensity to changes in capacity 

utilization

• MECS 2018 to be published early next year and will be incorporated into 

AEO2022

• Benchmark non-manufacturing industries to 2017 Economic Census

• Investigate the source of the “extra” natural gas left for the nonmanufacturing sectors

• Proposal for 3-year MECS cycle later this year 

AEO2021 Macro - Industrial Working Group 

September 17, 2020 21

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
Questions/Comments?

AEO2021 Macro - Industrial Working Group 

September 17, 2020 22
23

Contact info: EIA Macroeconomic Analysis Team

• Nicholas Chase (team lead) Nicholas.Chase@eia.gov (202) 586-1879

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

• Elizabeth Sendich Elizabeth.Sendich@eia.gov (202) 586-7145

• Aaron Bergman Aaron.Bergmam@eia.gov (202) 586-5843

AEO2021 Macro - Industrial Working Group 

September 17, 2020

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE
24

Contact info: EIA Industrial Team

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

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

• Farah Naz Farah.Naz@eia.gov (202) 287-6329

• Daniel Agee Daniel.Agee@eia.gov

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

• Kelly Perl (senior analyst) Kelly.Perl@eia.gov (202) 586-7908

AEO2021 Macro - Industrial Working Group 

September 17, 2020

WORKING GROUP PRESENTATION FOR 

DISCUSSION PURPOSES. DO NOT QUOTE OR 

CITE AS RESULTS ARE SUBJECT TO CHANGE