Market Trends — U.S. energy demand

In the United States, average energy use per person declines from 2010 to 2035

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Growth in energy use is linked to population growth through increases in housing, commercial floorspace, transportation, and goods and services. These changes affect not only the level of energy use but also the mix of fuels consumed.

Changes in the structure of the economy and in the efficiency of the equipment deployed throughout the economy also have an impact on energy use per capita. The shift in the industrial sector away from energy-intensive manufacturing toward services is one reason for the projected decline in industrial energy intensity (energy use per dollar of GDP), but its impact on energy consumption per capita is less direct (Figure 71). From 1990 to 2007, the service sectors increased from a 69-percent share of total industrial output to a 75-percent share, but energy use per capita remained fairly constant, between 330 and 350 million British thermal units (Btu) per person, while energy use per dollar of GDP dropped from about 10,500 to 7,700 Btu. Increases in the efficiency of freight vehicles and the shift toward output from the service sectors are projected to continue through 2035, lowering energy use in relation to GDP. Energy use per dollar of GDP is projected to be about 4,400 Btu in 2035, or about one-third of the 1980 level.

Efficiency gains in household appliances and personal vehicles have a direct, downward impact on energy use per capita, as do efficiency gains in the electric power sector, as older, inefficient coal and other fossil steam electricity generating plants are retired in anticipation of lower electricity demand growth, changes in fuel prices, and new environmental regulations. As a result, U.S. energy use per capita declines to 274 million Btu in 2035.

Industrial and commercial sectors lead U.S. growth in primary energy use

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Total primary energy consumption, including fuels used for electricity generation, grows by 0.3 percent per year from 2010 to 2035, to 106.9 quadrillion Btu in 2035 in the AEO2012 Reference case (Figure 72). The largest growth, 3.3 quadrillion Btu from 2010 to 2035, is in the commercial sector, which currently accounts for the smallest share of end-use energy demand. Even as standards for building shells and energy efficiency are being tightened in the commercial sector, the growth rate for commercial energy use, at 0.7 percent per year, is the highest among the end-use sectors, propelled by 1.0 percent average annual growth in commercial floorspace.

The industrial sector, which was more severely affected than the other end-use sectors by the 2008-2009 economic downturn, shows the second-largest increase in total primary energy use, at 3.1 quadrillion Btu from 2010 to 2035. The total increase in industrial energy consumption is 2.1 quadrillion Btu from 2008 to 2035, attributable to increased production of biofuels to meet the Energy Independence and Security Act of 2007 (EISA2007) renewable fuels standard (RFS) as well as increased use of natural gas in some industries, such as food and paper, to generate their own electricity.

Primary energy use in both the residential and transportation sectors grows by 0.2 percent per year, or by just over 1 quadrillion Btu each from 2010 to 2035. In the residential sector, increased efficiency reduces energy use for space heating, lighting, and clothes washers and dryers. In the transportation sector, light-duty vehicle (LDV) energy consumption declines after 2012 to 14.7 quadrillion Btu in 2023 (the lowest point since 1998) before increasing through 2035, when it is still 4 percent below the 2010 level.

Renewable energy sources lead rise in primary energy consumption

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With the exception of petroleum and other liquids, which falls through 2032 before increasing slightly in the last 3 years of the projection, consumption of all fuels increases in the AEO2012 Reference case. In addition, coal consumption increases at a relatively weak average rate of less than 0.1 percent per year from 2010 to 2035, remaining below 2010 levels until after 2031. As a result, the aggregate fossil fuel share of total energy use falls from 83 percent in 2010 to 77 percent in 2035, while renewable fuel use grows rapidly (Figure 73). The renewable share of total energy use (including biofuels) increases from 8 percent in 2010 to 14 percent in 2035 in response to the Federal RFS, availability of Federal tax credits for renewable electricity generation and capacity, and State renewable portfolio standard (RPS) programs.

The petroleum and other liquids share of fuel use declines as consumption of other liquids increases. Almost all consumption of liquid biofuels is in the transportation sector. Biofuels, including biodiesel blended into diesel, E85, and ethanol blended into motor gasoline (up to 15 percent), account for 10 percent of all petroleum and other liquids consumption in 2035.

Natural gas consumption grows by about 0.4 percent per year from 2010 to 2035, led by the use of natural gas in electricity generation. Growing production from tight shale keeps natural gas prices below their 2005-2008 levels through 2035. By the end of 2012, a total of 9.3 gigawatts of coal-fired power plant capacity currently under construction is expected to come online, and another 1.7 gigawatts is added after 2017 in the Reference case, including 0.9 gigawatts with carbon sequestration capability. Additional coal is consumed in the coal-toliquids (CTL) process to produce heat and power, including electricity generation at CTL plants.