U.S. Energy Use May Not Return to 2019 Levels For Years

U.S. energy consumption may not return to pre-pandemic levels for as long as 30 years, the Energy Information Administration said last week in its annual energy outlook.

The annual report provides projections on different segments of energy consumption using three economic scenarios, reflecting high, low, and usual (or reference) economic growth.

The report, which reflects much uncertainty due to the continuing pandemic, technological advances, and policy shifts, projects that using the reference case, U.S. energy demand returns to 2019 levels by 2029.

“Demand for energy delivered to the four U.S. end-use sectors (residential, commercial, transportation, and industrial) decreased to 90% of its 2019 level in 2020, a steeper decline than seen in real GDP,” the report states. “Compared with the financial crisis of 2008, the COVID-19 related decline in the total demand for delivered energy is about 70% larger.”

However, the report continues, if there is high economic growth, energy consumption could return to 2019 levels in three years, and if there is low growth it could take until 2050 to reach pre-pandemic levels. The drop in demand was due to pandemic lockdowns, more people working from home and restrictions on non-essential travel that greatly reduced energy needs.

The report indicates that renewable energy will be the fastest growing energy source, as government policies have encouraged investment and new technologies have driven down the cost. However, “EIA projects that consumption of natural gas will keep growing as well, driven by expectations that natural gas prices will remain low compared with historical levels,” the report states. The industrial sector will become the largest consumer of natural gas starting in the early 2020s.

“This sector will expand the use of natural gas as feedstock in the chemical industries, as well as for industrial heat and power,” it continues.

Coal use will continue to decline, and as coal and nuclear generating units are retired, new power plants are expected to largely use renewable energy and natural gas.

The report also found that the shift in the fuel consumption mix will result in CO2 emissions decreasing from 2023 to 2035 due to the rise of natural gas and renewables, but then trend upward due to an overall increase in use of energy due to population and economic growth.

This year’s energy outlook is the first to look at the impact the pandemic has had on the nation’s energy use, and it will be interesting to see if the projections play out as the country begins to recover from the economic devastation that resulted.