Annual Energy Outlook 2006 with Projections to 2030 - Usinfo.org

NEMS Overview and Brief Description of CasesThe AEO2006 projections for 2005 and 2006 incorporateshort-term projections from EIA’s September2005 Short-Term Energy Outlook (STEO). For shorttermenergy projections, readers are referred tomonthly updates of the STEO [6].Component ModulesThe component modules of NEMS represent the individualsupply, demand, and conversion sectors ofdomestic energy markets and also include internationaland macroeconomic modules. In general, themodules interact through values representing theprices or expenditures of energy delivered to the consumingsectors and the quantities of end-use energyconsumption.Macroeconomic Activity ModuleThe Macroeconomic Activity Module provides a set ofessential macroeconomic drivers to the energy modulesand a macroeconomic feedback mechanismwithin NEMS. Key macroeconomic variables includegross domestic product (GDP), industrial output,interest rates, disposable income, prices, new housingstarts, new light-duty vehicle sales, and employment.The module uses the following models from GlobalInsight, Inc. (GII): Macroeconomic Model of the U.S.Economy, national Industry Model, and nationalEmployment Model. In addition, EIA has constructeda Regional Economic and Industry Model to projectregional economic drivers and a CommercialFloorspace Model to project 13 floorspace types in 9Census divisions. The accounting framework forindustrial output uses the North American IndustryClassification System (NAICS).International ModuleThe International Module represents world oil markets,calculating the average world oil price and computingsupply curves for 5 categories of importedcrude oil for the Petroleum Market Module (PMM) ofNEMS. The module allows changes in U.S. importrequirements. In addition, 17 international petroleumproduct supply curves, including supply curvesfor oxygenates and unfinished oils, are also calculatedand provided to the PMM. A world oil supply/demandbalance is created, including estimates for 16 oil consumptionregions and 19 oil production regions. Theoil production estimates include both conventionaland nonconventional supply recovery technologies.Residential and Commercial Demand ModulesThe Residential Demand Module projects energy consumptionin the residential sector by housing typeand end use, based on delivered energy prices, themenu of equipment available, the availability ofrenewable sources of energy, and housing starts. TheCommercial Demand Module projects energy consumptionin the commercial sector by building typeand nonbuilding uses of energy and by category of enduse, based on delivered prices of energy, availability ofrenewable sources of energy, and macroeconomicvariables representing interest rates and floorspaceconstruction.Both modules estimate the equipment stock for themajor end-use services, incorporating assessments ofadvanced technologies, including representations ofrenewable energy technologies and effects of bothbuilding shell and appliance standards. The CommercialDemand Module incorporates combined heat andpower (CHP) technology. The modules also includeprojections of distributed generation. Both modulesincorporate changes to “normal” heating and coolingdegree-days by Census division, based on State-levelpopulation projections. The Residential DemandModule projects that the average square footage ofboth new construction and existing structures isincreasing based on trends in the size of new constructionand the remodeling of existing homes.Industrial Demand ModuleThe Industrial Demand Module projects the consumptionof energy for heat and power and forfeedstocks and raw materials in each of 16 industrygroups, subject to the delivered prices of energy andmacroeconomic variables representing employmentand the value of shipments for each industry. Asnoted in the description of the Macroeconomic Module,the value of shipments is based on NAICS. Theindustries are classified into three groups—energyintensivemanufacturing, non-energy-intensive manufacturing,and nonmanufacturing. Of the 8 energyintensiveindustries, 7 are modeled in the IndustrialDemand Module, with components for boiler/steam/cogeneration, buildings, and process/assembly use ofenergy. Bulk chemicals are further disaggregated toorganic, inorganic, resins, and agricultural chemicals.A representation of cogeneration and a recycling componentare also included. The use of energy for petroleumrefining is modeled in the Petroleum Market200 Energy Information Administration / Annual Energy Outlook 2006