Industry Market Trends

Why American Energy Use Declined in 2011

Nov 08, 2012

New research underscores a multitude of factors behind a decline in U.S. energy consumption in 2011. Natural gas, wind energy and high-efficiency energy technologies were key contributors to the dip.

Flow charts released by the Lawrence Livermore National Laboratory (LLNL) this month show that American energy use declined in the transportation, commercial and residential sectors, while industrial energy consumption increased slightly. The LLNL, in Livermore, Calif., is part of the U.S. Department of Energy's National Nuclear Security Administration. Overall, American energy use fell in 2011, from 98 quads in 2010 to 97.3 quads.

With a surge of new wind farms, wind energy consumption jumped most significantly last year, to 1.17 quads compared with 0.92 quads in 2010. The increase reflects sustained investments in wind power, according to A.J. Simon, an LLNL analyst, who used data from the DOE's Energy Information Administration (EIA).

Earlier this month, Bloomberg New Energy Finance (BNEF) issued a promising report for wind farm investments, revealing that wind farm operating costs fell 38 percent in the last four years.

"Wind power has done much to improve its competitiveness against gas-fired and coal-fired generation in recent years via lower-cost, more technically advanced turbines and more sophisticated siting and management," said Michael Liebreich, CEO of London-based BNEF, in a statement of the findings.

Hydroelectricity use spiked in 2011, to 3.17 quads from 2.5 quads in the previous year. The LLNL credits this boost to weather; according to its findings, the surge occurred because of heavy precipitation in the western U.S., which powered hydroelectric dams at maximum levels.

The U.S. government reports that continued investments in wind farms aided a significant hike in wind energy consumption in 2011.

Coal use, meanwhile, fell significantly, while oil use declined slightly. Natural gas, the DOE export requests of which have reportedly picked up in recent years, increased from 24.65 quads in 2010 to 24.9 last year. The shift away from coal use is being fueled by both low natural gas prices (due to a boom in shale gas capacity) and high oil prices.

Shifts to alternative energy use are reflected in a drop in carbon dioxide emissions. This summer, the EIA indicated that energy-related carbon dioxide emissions in the country were down by 2.4 percent compared with the previous year. In early 2012, U.S. energy-related CO2 emissions were at their lowest levels since 1992, the EIA found, due to a combination of three factors, including lower gasoline demand and a decline in coal-fired electricity generation, which, in turn, was due to low natural gas costs and a mild winter.