Deciding the Future: Energy Policy Scenarios to 2050

Deciding the Future: Energy Policy Scenarios to 2050 World Energy Council 2007 Introduction
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sector was used. This provided quantitative
baseline data to compare with the qualitative
regional output, and iterations were made with
the regional groups to identify potential
inconsistencies and disagreements. In many
cases, the model was altered to account for
these inconsistencies, and its results were thus
strengthened.
The model is a global simulation model for the
energy sector with a year-by-year recursive
simulation and partial equilibrium framework,
endogenous international energy prices, and
lagged adjustments of supply and demand by
region. It has a hierarchical structure of
interconnected regional and national sub-models
(e.g., individual countries and sub-regions).
In brief, economic (GDP) and population growth
rates are captured with assumptions about
annual rates of growth for each region and subregion.
Technology trends and energy prices at
the consumer level are the other two main
drivers of energy demand. Energy intensity is
calculated on the basis of energy demand and
GDP projections to capture energy efficiency
trends. Primary energy mix is derived either
directly through assumptions about public and
private investments, or through assumptions on
parameters reflecting the necessary market
conditions for these investments to be made by
private decision makers. Greenhouse gas
emissions result from projections for energy
demand, fuel mix, and carbon capture and
storage. Supply–demand tensions are
addressed through exogenous inputs related to
business development conditions. In the case of
oil and gas, supply–demand tensions reflect the
development of business conditions worldwide
that push international prices up or down.
Inconsistencies between model projections and
study group analyses fell into three general
categories: the need for more precision in the
qualitative storylines, the need to modify the
quantitative assumptions in the model based on
input from the regional study, and the need by
one study region to accommodate developments
in another region that affect global development
and prices.
It is important to note that (1) the model is topdown,
(2) this version of the model is aimed at
projections (likely outcomes), and (3) it is aimed
to a large extent at showing the need to reduce
carbon emissions from energy use. The study
group, on the other hand, was by definition
looking at plausible (realistic) storylines (bottomup)
with a number of drivers in play.
For example, study group members questioned
assumptions in the model about whether the
Middle East can or will supply oil at the projected
levels, whether China will decrease its coal use
to the levels assumed in the simulation, and
whether North America can produce oil at a level
high enough to become a net exporter. This is
not to imply that the model is wrong and the
study group right, only that they come from
different perspectives. Nevertheless, the results
from the model do show, after iterations with the
study group and modifications to identify key
indicators and scenario constraints, the
quantitative effect of different scenarios on the