What Doesn’t Add up in the DOE’s Energy Consumption Estimates?

On April 26, 2012, the acting administrator of the DOE’s Energy Information Administration, Howard Gruenspecht, gave a presentation to the Institute of Clean Air Companies.

Working from reference case for the U.S. Annual Energy Outlook for 2012, Mr. Gruenspecht highlighted some of the very issues that have me asking questions about the feasibility of achieving the Reference Case’s forecasts, which show American energy consumption rising at a very low rate of 0.3% CAGR through 2035–from 98 quads last year to 107 quads in 2035.

Both the slides from his presentation and the AEO2012 report rely heavily on increases in energy efficiency to overcome other trends that would seem to drive energy consumption higher.

In particular, as I noted previously, the DOE forecasts growth in residential consumption of electricity at 0.2% annually, despite steady growth in population, the number of households and income. Specifically,

• The EIA expects the number of households to grow at 1% annually, from 117 million households today to 145.6 million households in 2035 (and each of those households will have a refrigerator, TV, washing machine…)
• The average square footage of these households will rise by 100 square feet, from 1660 to 1760 (with all the air in those larger houses to heat and cool each winter and summer…)
• In the AEO2012 Reference case, residential sector energy intensity, defined as average energy use per household per year, declines by 19.8 percent, to 81.9 million Btu per year in 2035 (in 2011, elivered energy consumption was 101 million Btu’s per household)

In regards to the last bullet point, U.S. residential energy intensity declined only 9% from 1980 to 2005–and the easy wins for energy efficiency come first. It gets tougher after the low hanging fruit have been picked.

What drives their calculation of more efficient energy usage is first,  space heating, the largest factor in residential energy consumption, which they postulate will decline by 0.4% annually and second, higher prices–they forecast a 1% annual increase in real prices for energy…

Aside from energy efficiency, they cite one other factor contributing to lower use of energy in the residential sector: “Population shifts to warmer and drier climates also contribute to a reduction in demand for space heating.” (What will they do if global warming means more air conditioning… and everybody makes enough money to be able to afford it?)

From their report: “Real GDP grows by an average of 2.6 percent per year from 2010 to 2035 in the AEO2012 Reference case, 0.1 percent per year lower than in the AEO2011 Reference case. The nation’s population, labor force, and productivity grow at annual rates of 0.9 percent, 0.7 percent, and 1.9 percent, respectively, from 2010 to 2035.”

The population will grow by 25% over the period covered by this report, from 311 million to 389 million. The country’s GDP will almost double, to $24 trillion in 2005 dollars.

More houses. More people. Larger houses. More income to spend on energy bills. It’s going to take a heckuvalot of energy efficiency to counter that.

I don’t see it. Next we’ll look at transportation.