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

Appendix ENEMS Overview and Brief Description of CasesThe National Energy Modeling SystemThe projections in the Annual Energy Outlook 2006(AEO2006) are generated from the National EnergyModeling System (NEMS) [1], developed and maintainedby the Office of Integrated Analysis andForecasting (OIAF) of the Energy Information Administration(EIA). In addition to its use in the developmentof the AEO projections, NEMS is also used inanalytical studies for the U.S. Congress, the WhiteHouse, and other offices within the Department ofEnergy. The AEO projections are also used by analystsand planners in other government agencies andoutside organizations.The projections in NEMS are developed with the useof a market-based approach to energy analysis. Foreach fuel and consuming sector, NEMS balancesenergy supply and demand, accounting for economiccompetition among the various energy fuels andsources. The time horizon of NEMS is the long-termperiod through 2030, approximately 25 years into thefuture. In order to represent regional differences inenergy markets, the component modules of NEMSfunction at the regional level: the nine Census divisionsfor the end-use demand modules; productionregions specific to oil, gas, and coal supply and distribution;the North American Electric ReliabilityCouncil (NERC) regions and subregions for electricity;and the Petroleum Administration for DefenseDistricts (PADDs) for refineries.NEMS is organized and implemented as a modularsystem. The modules represent each of the fuel supplymarkets, conversion sectors, and end-use consumptionsectors of the energy system. NEMS alsoincludes macroeconomic and international modules.The primary flows of information between each ofthese modules are the delivered prices of energy to theend user and the quantities consumed by product,region, and sector. The delivered fuel prices encompassall the activities necessary to produce, import,and transport fuels to the end user. The informationflows also include other data on such areas as economicactivity, domestic production, and internationalpetroleum supply.The integrating module controls the execution ofeach of the component modules. To facilitate modularity,the components do not pass information toeach other directly but communicate through acentral data file. This modular design provides thecapability to execute modules individually, thusallowing decentralized development of the systemand independent analysis and testing of individualmodules, and permits the use of the methodology andlevel of detail most appropriate for each energy sector.NEMS calls each supply, conversion, and end-usedemand module in sequence until the delivered pricesof energy and the quantities demanded have convergedwithin tolerance, thus achieving an economicequilibrium of supply and demand in the consumingsectors. Solution is reached annually through thelong-term horizon. Other variables are also evaluatedfor convergence, such as petroleum product imports,crude oil imports, and several macroeconomicindicators.Each NEMS component represents the impacts andcosts of legislation and environmental regulationsthat affect that sector and reports key emissions.NEMS represents current legislation and environmentalregulations as of October 31, 2005, such as theEnergy Policy Acts of 2005 [2] and 1992 [3], the CleanAir Act Amendments (CAAA), and the costs of compliancewith regulations, such as the Clean Air InterstateRule (CAIR) and Clean Air Mercury Rule(CAMR), both of which were finalized and publishedon the U.S. Environmental Protection Agency webpage in March 2005 and in the Federal Register inMay 2005.In general, the historical data used for the AEO2006projections were based on EIA’s Annual EnergyReview 2004, published in August 2005 [4]; however,data were taken from multiple sources. In some cases,only partial or preliminary data were available for2004. Carbon dioxide emissions were calculated byusing carbon dioxide coefficients from the EIA report,Emissions of Greenhouse Gases in the United States2004, published in December 2005 [5].Historical numbers are presented for comparisononly and may be estimates. Source documents shouldbe consulted for the official data values. Some definitionaladjustments were made to EIA data for the projections.For example, the transportation demandsector in AEO2006 includes electricity used by railroads,which is included in the commercial sector inEIA’s consumption data publications. Footnotes inthe appendix tables of this report indicate the definitionsand sources of historical data.Energy Information Administration / Annual Energy Outlook 2006 199