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In the United States, the building sector (residential and commercial) uses more energy
than the transportation sector, and almost as much as the industrial sector (Figure 1). Moreover, the
building sector emits more carbon than either the industrial or the transportation
sectors. In 1998, the building sector used 36 percent (33.7 quadrillion Btu) of the
primary energy and emitted 35 percent (523 million metric tons) of the carbon.
This paper begins by looking at the trends in energy use and prices in the building
sector. Following is a section on contributing factors underlying these trends such as:
efficiency changes, fuel and building mix, income and wealth effects, and demographics.
Since the main drivers of energy use are also the main drivers of carbon emissions, our
next discussion shows how building energy use trends are related to changes in carbon
emissions.
Finally, two types of scenarios are presented. The first scenarios show the trends in
energy and carbon emissions holding the fuel mix constant. The second set of scenarios
deal with the energy and carbon savings that could be realized if existing household
appliances were replaced by new energy-efficient appliances, or if older commercial
buildings had the energy intensities of the newer commercial building stock.
Initially, overall energy and carbon trends in the building sector are presented using
data from Energy Information Administration's (EIA) Annual Energy Review 1998 and
the State Energy Data Report 1997. More in-depth analysis of the contributing
factors underlying these trends relies on data obtained from the actual users of energy.
The detailed energy-use statistics used in this analysis are from two of EIA's energy-use
surveys, the Residential Energy Consumption Survey (RECS) and the Commercial Building
Energy Survey (CBECS).
Until 1980, the growth of primary energy2
use outpaced the growth of economic activity as measured by Gross Domestic Product (GDP) (EIA 1999a). The pattern changed after 1980, as GDP growth quickly
outpaced growth in primary energy (Figure 2). For the most part, the main factor responsible
for this turnaround was the oil shock of 1973, the Arab OPEC embargo. Petroleum prices
shot up by 400 percent. However, when petroleum prices collapsed in 1986, long-term
changes prevented a return to the energy-GDP relationship that had been present before the
price spikes.
The building sector experienced long-term changes, such as the installation of
energy-efficient appliances, lighting, and HVAC systems, that prevented a return to the
previous energy/GDP relationship. During the 1980's, energy intensities (Btu per sq. ft.)
were falling while total primary energy increased (EIA 1995).
In the building sector, primary energy use was 34 percent higher in 1998 than in
1980—26.5 quadrillion Btu in 1980 versus 33.7 quadrillion Btu in 1998. Change in
energy use reflected only partially the law of supply and demand. From 1973 into the early
1980's, energy prices did climb—especially for those fuels that were petroleum
based—leading to many short-term adjustments in primary energy use (Figure 3). The use of
petroleum in buildings declined and continued to decline. Although real prices for
distillate fuel oil fell 31 percent between 1984 and 1988, the rapid decline in price did
little to reverse the decline of use. With the exception of a rise in petroleum prices in
1990, petroleum prices continued to decline while petroleum use in the building sector
continued to fall and then level off (Figure 4). Switching to natural gas may explain some of
this behavior. Natural gas is a cleaner energy source, less subject to supply uncertainty
than petroleum.
From 1973 to 1986, the building sector experienced only an 11 percent decline in
natural gas use while real prices more than doubled—from $1.64 per million Btu in
1973 to $3.71 per million Btu in 1986. However, the peak in natural gas prices occurred in
1984, at $4.57 per million Btu, after which prices fell to $2.77 per million Btu in 1992.
Although prices were falling during this period, natural gas use in the building sector
was also declining. When prices started to rise slowly, natural gas use in the building
sector showed small increases.
With little exception, primary electricity use has historically shown a continuous
growth in the building sector, growing by 79 percent from 11.88 quadrillion Btu in 1973 to
21.24 in 1995. During this period, end-use prices for electricity remained relatively
flat—$13.20 per million Btu in 1973 to $13.32 in 1995.
Clearly, factors other than trends in prices are contributing to the trends in energy
use.
Energy use in the building sector are affected by a multitude of factors, such as
location, physical characteristics, age, efficiency of the equipment, occupants'
energy-related behavior, income, and fuel mix, to name just a few. Since 1980, two main
trends have been apparent in building energy use. The first is an increasing energy
efficiency of building and equipment for traditional end uses such as HVAC, water heating,
refrigeration, and lighting. Secondly, there has been a fuel-mix shift, especially in the
electrification of energy use.
This section discusses the contributing factors underlying these two main trends along
with discussions of two other major contributing factors—an income and wealth effect,
and demographic effects. Much of the discussion focuses on the household sector. The
structure and behavior of the household sector drive demand for goods and services.
Energy efficiency. Several factors contributed to reductions in the use of
energy. One main factor was the passage of state and federal legislation that led to
appliance and building efficiency standards (EIA 1995). The
National Appliance Energy Conservation Act of 1987 mandated minimum energy efficiency
standards for several types of household appliances and equipment such as refrigerators,
freezers, room air conditioners, television sets, furnaces, water heaters, and heat pumps.
This followed the earlier voluntary appliance efficiency targets of the Energy Policy and
Conservation Act of 1975 and various State appliance-efficiency standards. Manufacturers
responded by improving the energy efficiency of household appliances and equipment over
the past 20 years. Estimates from the Department of Energy's Office of Codes and Standards
indicate that "current appliance standards have already saved consumers $1.9
billion".
The Energy Policy Act of 1992 expanded coverage to include commercial building heating
and air conditioning equipment, certain incandescent and fluorescent lamps, distribution
transformers, and electric motors. In 1993, the RECS survey asked about a number of
purchase considerations such as price, availability, and energy efficiency. Most
households did consider energy efficiency an important consideration in making their
selection. However, not all households did, especially for refrigerators—a large user
of electricity.3 Households thought
that price and size were more important than energy efficiency (EIA
1999c).
Another factor was the rise in demand-side-management programs. From the early 1990's
until recently, electric utilities have been offering demand-side management (DSM)
programs. From 1989 through 1993, utility DSM programs exhibited steady or accelerating
growth in energy savings and utility expenditures. The largest share of utility
expenditures and energy savings was associated with energy-efficiency programs (EIA 1997).
Fuel and building mix. Over the last 30 or more years, electricity use in both
the commercial building and household sector has grown continuously. In the mid-1980's,
site electricity overtook natural gas to become the largest source of site energy in
commercial buildings. The share of site electricity in the commercial building sector rose
from 38 percent in 1979 to 49 percent in 1995.
Site electricity also increased its share of household energy, from about a quarter in
1980 to over a third in 1997. Two major structural changes have fostered the growing
electrification in the United States—the rise of the service sector and population
shifts from the Northeast and Midwest to the South and West increasing the use of air
conditioning.
In 1997, the service sector, as a percent of real GDP,4 was 47 percent higher than in 1984 (USDOC
2000). With the growth of the service sector, the commercial building stock increased.
The number of commercial buildings increased by around 25 percent between 1979 and 1995,
with the number of office and mercantile and service buildings increasing by almost 72
percent. Office and mercantile and service buildings used 45 percent of all the
electricity used in the commercial building sector in 1995.
As the commercial building sector was adding more offices and mercantile and service
buildings, the housing stock was also undergoing changes. In 1997, there were almost 25
million more homes than in 1978—a 33 percent increase in the stock from 20 years
earlier.5 Although some of the
housing growth was in townhouses and large apartment houses, which use relatively less
energy per household, the overall use of electricity was climbing. Residential sector
total energy use fell by 3 percent between 1978 and 1997 and so did energy use per housing
unit (138 million Btu per housing unit in 1978 to 101 million Btu in 1997). However,
electricity use demonstrated a 43 percent increase during this period. The average size of
homes increased and the number of homes increased as household size decreased—fueling
demand for electrical appliances. The appliance and lighting share increased from 17
percent of total energy in 1978 to 27 percent in 1997.
Income and wealth effects. Since 1980, for the most part, the United States has
experienced economic growth. During that time, only three official recessions took place:
(1) January 1980 to July 1980, (2) July 1981 to November 1982, and (3) July 1990 to March
1991. Real GDP was 75 percent higher in 1998 than it was in 1980—4.6 trillion real
dollars in 1980 versus 8.1 trillion real dollars in 1998 (USDOC 2000,
459). Personal consumption expenditures, a component of GDP, was growing by 82
percent, from 3.0 trillion real dollars in 1980 compared to 5.5 trillion real dollars in
1997. Two economic factors fueled this growth in expenditures: (1) the increase in
disposable personal income (DPI) and (2) the decline in the annual savings rate as a
percentage of DPI—from 10.2 percent in 1980 to 3.7 percent in 1998.
Additionally, since 1970, the generation of new wealth has increased—more than
$700 billion per year on average.6
As this wealth was being created, more of the middle class was becoming involved. Business
writer Nocera describes, in his book, A Piece of the Action: How the Middle Class
Joined the Money Class, the shift from savers to investors (U.S.
News). Together with additional factors, such as the increase in two-wage earning
households and the time constraints on these households, income and wealth effects have
been strong generators of demand for durable and nondurable goods and services. In turn,
the demand for inputs, including energy, to produce these goods and services has also
risen strongly.
Demographics. Demographics have been used to identify movements in consumer
markets. The energy market is no exception. Changes in the population size, the number of
housing units, the size of households, labor-force participation rates, and the age
structure of the population are just a few of the important demographics. These
demographics affect the amount and type of energy that is used, not only in the home, but
also by the providers of services and goods for the households.
Historically, household formation has grown faster than population growth. This trend
continues today. A smaller household uses less energy per household but more energy on a
per capita basis, because each small household uses many of the same appliances
(refrigerator, stove, television, etc.) that a large household would use. Therefore, as
population growth continues, the number of smaller households demanding more goods and
services also increases.
From 1980 to present, more married women entered the labor force, thereby raising
household income. Increased household income is a contributing factor leading to increases
in energy use (and decreases in energy use when not at home). The labor force
participation rate for married women rose from 49.9 percent in 1980 to 61.2 percent in
1996 (USDOC 2000, 416). The accompanying time constraints now
placed on the household increased the demand for more energy-using, but timesaving,
appliances such as dishwashers and clothes dryers (Figure 5). The time constraints also increased the demand
for food prepared outside of the home. In food-service buildings, between 1986 and 1995,
energy use climbed by 28 percent. Inside the home, microwave ovens penetrated
quickly—reducing the use of conventional methods. Almost 25 percent of food cooked
inside the home is prepared in microwaves (EIA 1999c). Much of the
energy that was previously used within the household for specific purposes is now
displaced into the other sectors, in restaurants, prepared food providers, and beauty
shops, to name just a few, increasing their energy use.
Between 1980 and 1996, the U.S. experienced a 23 percent growth in the number of senior
citizens7—most still living in
the household. Although there does not seem to be an appreciable difference in the amount
of energy senior citizens use, there are differences in the way they use energy. In 1997,
senior citizens used 99 million Btu per household compared to 101 million Btu per
household for the U.S—a very small difference. However, per household, senior
citizens used less energy for air conditioning, water heating, and appliances, but more
energy for space heat, than the U.S. average. In 1997, this group accounted for 28 percent
of all households and used 28 percent of the total energy while using 32 percent of space
heating energy. Additionally, many senior citizens tend to live in older, less insulated
homes—increasing energy use (EIA 1999c).
Also, during these years, construction of medical facilities more than doubled. Some of
this demand was driven by an increasing number of our older population (USDOC 2000, 15). Although energy use in commercial buildings was
flat when comparing 1983 to 1995, energy use in health care buildings grew by 21 percent.
The number of health care buildings grew by 72 percent, while floorspace grew by only 2
percent, indicating an increase in the number of smaller outpatient health-care buildings.
By 1998, the residential and commercial sectors accounted for 35 percent of all U.S.
energy-related carbon emissions, more than either the industrial or the transportation
sectors. Most of these carbon emissions were due to energy use in buildings.
From 1979 to the late 1990's, a similar pattern held for both residential and
commercial buildings. Demand for energy services, as measured in terms of the number of
households or the amount of commercial floorspace, increased at a faster pace than either
energy consumption or energy-related carbon emissions (Table 1).
Carbon emissions closely tracked energy consumption in both residential and commercial
buildings. Carbon emissions are a product of service demand, energy intensity, and carbon
intensity.8 In the 1980's and
1990's, service demand increased while energy intensity declined, although not enough to
offset the increasing demand. Carbon intensity remained relatively flat, up 5 percent for
household energy use and 2 percent for commercial buildings' energy use.
The 1980's and 1990's have seen an increasing fuel share for electricity, a relatively
carbon-intensive energy source when off-site emissions from generation are considered. The
increasing electricity share might have been expected to increase energy-related carbon
emissions at a rate exceeding that of energy consumption. Instead, electricity's share of
household carbon emissions only increased from 57 percent in 1980 to 63 percent in 1997.
Electricity's share of commercial carbon emissions barely budged, from 68 percent in 1979
to 70 percent in 1995.
To understand how electricity's fuel share could increase without a larger increase in
carbon emissions, we need to examine more closely electricity consumption in buildings and
the associated electricity-related carbon emissions that occur at the point of electricity
generation. Both households and commercial buildings showed an increasing gap between
electricity consumption and the associated carbon emissions (Table 2).
From 1980 to 1997, residential and commercial electricity consumption increased by over
60 percent, increasing electricity's share of site energy use to 35 percent in households
and 49 percent in commercial buildings. At the same time, the carbon intensity of
electricity decreased by 15 percent. The decrease in the carbon intensity of the fuel mix
used in electricity generation was almost enough to counteract the shift towards a greater
fuel share for electricity within buildings. The decline in the carbon intensity of
electricity was due in large part to nuclear plants coming into service during the 1980's.
As older nuclear plants are starting to be decommissioned, there has been a slight rise in
the carbon intensity of electricity since 1995.
In the future, service demand is likely to continue to increase in residential and
commercial buildings, and electricity seems likely to maintain or increase its fuel share.
Energy-related carbon emissions will also increase, unless either the energy intensity in
buildings declines more rapidly, or a less carbon-intensive fuel mix is used in
electricity generation.
Change in energy use and carbon emissions over time is driven by a combination of
effects, and may differ among energy services. Deciding which effects, such as weather,
behavioral, and structural changes, should be considered as inherent in any energy
efficiency (or carbon emissions) measurements is a daunting task. However, even if it is
difficult to remove these effects, it is important to recognize that they exist. This
section of the paper uses two scenarios to investigate the components of change in energy
use and carbon emissions. In these scenarios, the use of an energy source, f, at
time, t, is treated as
energy use(f, t) = service demand(t) * fuel share(f, t) * energy
intensity(f, t),
and
carbon emissions(f, t) = energy use(f, t) * carbon intensity(f, t).
The first set of scenarios investigate the fuel share component of energy use and carbon
emissions by applying their 1979 (commercial) or 1980 (residential) values to the most
recent survey year, as if the changes had not happened. The second set of scenarios
attempts to investigate the energy intensity component. For households, the actual 1997
appliance intensities are replaced with those of the most efficient appliances on the
market. For commercial buildings, the intensities of buildings constructed during the
1990's—representing current (not necessarily best) practice—are applied to the
entire building stock.
Fuel mix. During the 1980's and 1990's electricity use in the building sector
experienced a rapid growth. However, the related carbon emissions experienced a decline,
due in large part to nuclear plants coming into service during the 1980's. Holding the
fuel mix to an earlier year demonstrates what would happen if there had not been an
electrification, but more importantly, if there had not been a change in the energy used
to generate the electricity. For both the household and commercial building sector, the
share of natural gas would have been higher. Also, the share of petroleum-based energy
would have been higher while electricity's share fell (Figures 6 and 7).
What is interesting in both the household and the commercial building sector is that
the lower percent of the electricity used—holding the fuel mix constant—does not
relate to the same percentage fall in carbon emissions (Figures 8 and 9). In the residential sector, holding
the 1997 fuel mix to 1980 levels lowers electricity use by 24 percent. However, it only
lowers carbon emissions by 10 percent, reflecting the higher carbon content of the energy
used to generate the electricity in 1980. In commercial buildings, holding the 1995 fuel
mix to 1979 levels lowers electricity use by 22 percent, but the carbon emissions only 5
percent, again reflecting the higher carbon content of the energy used to generate the
electricity in 1979.
Appliances. Although the energy efficiency of new appliances has improved since
the enactment of various state and federal appliance efficiency standards, it is not
readily apparent in the data since the stock includes a large number of older appliances.
In this paper, two hypothetical possibilities are considered: (1) replacing all the 1997
stock with new appliances—the upper limit, and (2) more realistically, replacing only
the appliances that were 10 years or older.9
If the entire 1997 residential appliance stock were replaced by new appliances listed
in Table 3, 923 trillion Btu per year would be saved, along with 23 MMTC in carbon
emissions. Refrigerators and freezers demonstrated the highest efficiency gains and along
with natural gas space-heating systems, showed the most gain in energy savings.
If all of the 96.3 million most-used refrigerators were replaced by the most efficient,
the energy savings is 159 trillion Btu—116 trillion Btu if only the 31 million older
refrigerators are replaced. The energy savings from replacing older refrigerators is only
27 percent less than the savings from replacing all—showing the effects of energy
standards on newer refrigerators.
The 1997 freezer stock (33 million) was 14 percent more efficient than a freezer
purchased in 1992. However, if all the freezers were replaced in 1997 with new freezers,
the stock then would be 76 percent more efficient than in 1992—an energy savings of
68 trillion Btu. If only the 19 million older freezers were replaced with new freezers,
than the 1997 stock efficiency would be 67 percent more efficient than 1992—an energy
savings of 58 trillion Btu. The more plausible scenario—replacing the older
freezers—is only 15 percent less in energy savings than if all freezers were replaced
in 1997, again showing the effects of energy standards on appliance energy use.
The 1997 stock of natural gas space-heating systems (50 million systems), although
experiencing lower efficiency gains, realized the most energy savings, just by the sheer
number of units in the stock and total amount of energy used—35 percent of all the
energy used in the residential sector in 1997. Natural gas space-heating systems
demonstrated energy saving of 579 trillion Btu when the entire stock was replaced and 451
trillion Btu energy savings when 29 million older natural gas heating systems were
replaced.
In terms of carbon emissions, replacing older appliances with new ones does produce
carbon savings (Table 3).
However, when the energy saved is natural gas, a higher amount of energy savings is needed
to produce a MMTC of carbon savings, reflecting the carbon content of natural gas versus
the carbon content of the energy sources used to produce electricity. As an example, it
takes 70 trillion Btu of energy savings to produce a MMTC of carbon savings for natural
gas space-heating systems, whereas it takes only 20 trillion Btu savings to produce a MMTC
of carbon savings for refrigerators.
Commercial building energy intensity. Energy intensity is often used as a
measurement indicator of energy efficiency; and in fact, the concepts of intensity and
efficiency are sometimes used interchangeably. However, trends in energy intensity can be
influenced by factors other than energy efficiency. Nevertheless, trends in
energy-intensity indicators are generally suggestive of trends in energy efficiency. In
this section, the related carbon emissions are measured using new building (1990-1995)
energy intensities for the major energy sources.
The main result is that if all buildings used energy like newer commercial buildings,
electricity consumption and the related carbon emissions would have been 34 percent higher
in 1995 (Figures 10
and 11). New building growth has primarily been in the South and these buildings use
more electricity with a higher intensity—especially electricity for cooling. In 1995,
new commercial buildings in the Northeast had an intensity of 16.6 kWh per sq. ft., versus
21.5 kWh per sq. ft. for the South and 20 kWh per sq. ft. for the West. If this building
trend continues, the share of electricity in total consumption may rise leading to a rise
in carbon emissions.
In the U.S., 82 percent of all greenhouse gas emissions due to human activity is
energy-related carbon dioxide. The buildings sector (residential and commercial) emits 35
percent of energy-related carbon, more than either the industrial or the transportation
sectors. Since an understanding of energy use is so crucial to an understanding of carbon
emissions, this paper examines trends and underlying factors in building energy use and
associated carbon emissions since 1980.
After the oil shocks of the 1970's, growth in economic activity (as measured by GDP)
began to outpace growth in primary energy use. Even after the 1986 petroleum price
collapse, economic growth continued to exceed growth in energy use. Efficiency standards,
reinforced by demand-side management programs, continued the trend towards greater
efficiency in building energy use. At the same time, important changes in building fuel
mix were taking place, most notably a decline in the use of fuel oil, and an increase in
electricity use. Despite the increasing electrification, especially in commercial
buildings, the growth in carbon emissions was less than the growth in energy use. The gap
between carbon emissions and energy use is due to changes in the mix of fuels used to
generate electricity, outside the buildings sector. In particular, the 1980's saw an
increase in the proportion of electricity generated from nuclear energy, and a decline in
the carbon-emitting fossil fuel component of generation.
Several scenarios are explored in an attempt to further understand building energy
consumption and carbon emissions. One scenario examined how consumption and emission in
the late 1990's would have differed had fuel mixes, in buildings and generation, not
changed since 1980. Another scenario shows what commercial energy consumption would be
like if all buildings had the same consumption patterns as buildings constructed during
the 1990's. A third scenario examines the energy and carbon savings which would be
realized if more efficient appliances were used in households.
1. The opinions and conclusions expressed herein are solely that of
the authors and should not be construed as representing the opinions or policy of any
agency of the United States Government.
2. Primary energy is the amount of site or delivered energy plus
losses that occur in the generation, transmission, and distribution of the energy.
3. In 1994, average electricity use for refrigerators was 1,323
kWh--13 percent of household electricity.
4. Real GDP was calculated in 1992 dollars.
5. During this period, new homes were added while old homes were
being demolished. Vacant and seasonal homes were not included.
6. The Dow Jones Industrial Average stood at 832.92 in 1970-rising
to 9181.42 in 1998 (USDOC 2000, 883).
7. Senior citizen, as used in this paper, includes those 60 years
or older.
8. EIA (1999b) defines carbon intensity as
carbon emissions per unit of energy use. This definition corresponds to the Schipper et
al. (1997) carbon emissions coefficient.
9. The methodology (EIA 1993) assumes that
that age characteristics were the same, average size of appliance did not change, older
appliances work as well as the new appliance, and all replaced units were not used again.
Estimates were not used where the householders did not know the age of the appliances.
- [EIA] Energy Information Administration. 1980.
- Residential Energy Consumption Survey: Consumption and Expenditures: April 1978
through March 1979. DOE/EIA-0307/5. Energy Information Administration, Office of
Energy Markets and End Use.
- ___1993.
- Household Energy Consumption and Expenditures 1990. DOE/EIA-0321(90). Energy
Information Administration, Office of Energy Markets and End Use.
- ___1995.
- Measuring Energy Efficiency in the U.S. Economy. DOE/EIA-0555(95)/2. Energy
Information Administration, Office of Energy Markets and End Use.
- ___1997.
- U.S. Electric Utility Demand-Side Management 1996. DOE/EIA-0589(96). Energy
Information Administration, Office of Coal, Nuclear, Electric and Alternative Fuels.
- ___1999a.
- Annual Energy Review 1998. DOE/EIA- 0384(99). Washington, D.C.: Energy
Information Administration, Office of Energy Markets and End Use.
- ___1999b.
- Emissions of Greenhouse Gases in the United States 1998. DOE/EIA-573(98). Energy
Information Administration, Office of Integrated Analysis and Forecasting.
- ___1999c.
- A Look at the Residential Energy Consumption in 1997. DOE/EIA-0632(99).
Washington, D.C.: Energy Information Administration, Office of Energy Markets and End Use.
- Schipper, Lee, Michael Ting, Marta Krusch, and William Golove.
1997.
- "The Evolution of Carbon Dioxide Emissions From Energy Use in Industrialized
Nations: An End-Use Analysis." Energy Policy 25 (7-9): 651-672.
- [USDOC] U.S. Department of Commerce. 2000.
- Statistical Abstract of the United States 1999. Washington, D.C.: U.S. Department
of Commerce, Bureau of the Census.
- U.S. News Online. 2000.
- The State of Greed. "Culture & Ideas" http://www.usnews.com/
usnews/issue.greed.htm. (Web page no longer available.)
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International Association for Energy Economics Paper 
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