The National Energy Modeling System (1992) / Chapter Skim
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2. NEMS Requirements
2. NEMS Requirements
Pages 15-44
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From page 15... ...
the National Energy Strategy (NES) experience as it bears on NEMS requirements; and (5)
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High quality energy modeling can help bound these debates and move policy forward in two ways. First, modeling can provide insights to decision makers about the likely results of different policies.
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~ . ~ Long-term energy models projecting beyond 25 years are needed primarily for research and development (R&D)
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This however makes the transfer of the information to the client more difficult Given the need to build a national energy modeling system, it seems inevitable that significant elements of the comprehensive modeling strategy will have to be employed. Nonetheless the committee Is favorably disposed towards certain elements of the iterative problem-directed strategy, for instance the close involvement of analysts with clients, and the focus on decision problems of importance to chose clients.
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Thus, models may lead to a narrowing of the allalyst's perspective, rather than to the discerning of new insights. The aura of reality that attaches to mode} results often leads users to elect too much, and model builders to promise too much, from this kind of analysis.
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THE MISSION AND FUNCTIONS OF DOE AND EIA DOE was established in 1977 to manage U.S. energy programs more effectively than its predecessor organizations, and to coordinate national energy policy.
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~ , ~ , Data Collection and Information Dissemination The DOE, particularly the EIA, is charged with collecting and reporting information about the national energy system, including production, transport, consump~don, and pricing series of major energy forms, and descnp~cive stadshcs on ache energy production, transportation, and consumphon in~as~cture. These data supply the building blocks In construcffne enemy models.
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From page 22... ...
These past energy modeling and data collection efforts addressed to varying degrees the energy supply, demand and conversion sectors and associated economic measures of the U.S. economy; but continuity Of efforts at DOE was lost dunug most of the 1980s until attention to the first National Energy Strategy analysis exercise stimulated a renewed interest at the Department In policy models.
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NEMS IN THE: BROAD CONTEXI OF POLICY ANALYSIS The NEMS to be developed by DOE/EIA must operate in the broader context of a analytical system that for convenience we call the National Energy Analysis System As iDuseated In Figure 2-1, comprehensive models are only one of several tools important for national energy analysis and decision malting. Analytic results will derive not only Tom the models Incorporated In NEMS, but also from venous data sets, other extemal models and a wide vanes of independent judgments and assumptions.
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; ; ;.; ; ;. - Results -~_ J FIGURE 2-1 Scheme of the National Energy Analysis System and the ElA's scope within it.
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:-: -- Other Groups Federal State Regional Private Academic lpternational DOE Domain Policy MA Programs drabs Other FIGURE 2-2 Scheme of the interface between the NEMS and the National Energy Analysis System. and to take advantage of the specialized expertise and capabilities of other organizations, the NEMS design should allow outside models to interface with those developed by DOE/E While E[A's use of external models win depend on particular circumstances, it is important to recognize that models outside DOE/ElA constitute a valuable resource that should be considered ~ developing the NEMS.
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. O A small number of general-purpose energy modeling systems provide periodic forecasts that broadly consider the total energy market but also have a sectoral or geographic emphasis' for example: - The Gas Research Institute's annual baseline forecasts for energy, which strongly emphasizes natural gas, particularly new supply areas and technologies The California Energy Commission's biannual outlook for energy which emphasizes the environmental, market, and supply concerns of the state.
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THE NATIONAL ENERGY STRATEGY EXPERIENCE The previous sections noted two factors that must be considered in specifying the requirements for NEMS: the fundamental mission of DOE must be supported by the modeling capability, and NEMS must relate to external resources and capabilities. Another basis for specifying NEMS requirements is the very recent and extensive analytical experience of preparing the first National Energy Strategy (NES)
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For such reasons, the NEMS sometimes must be capable of very quick turnaround analysis. Committee View of the NES Analysis There is no comprehensive model or group of integrated models existing within DOE, or probably within the federal government, that has the analytical capability to address the mid and long time horizons required by the NES.
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These insights can be s~,mmanzed as follows: 0 The NEMS can provide useful policy guidance on a wide range of issues, many of which have not been addressed by national energy modeling In the past (e.g., venous types of end-use efficiency incentives)
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From page 30... ...
Effects of Taxes and Price Changes and Volatility Gasoline ($1 tax, phased in over 5 years) Price spike Effects of Investment on Production Incentives Investment tax credit Renewable energy production credit Ejects of Command/Contro} Regulation Corporate Average Fuel Economy (CAFE)
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O Focusing on particular policy issues can help to clarify where specific models need to be Unproved. DIRECTIONS IN ENERGY MODELING The science of mathematical modeling to assist in policy analysis and energy choices is very dynamic.
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There is greater recognition of the uncertainties associated with energy modeling, uncertainties that result from the long time horizon required to study many energy issues, and the many unlmown but important variables and behavioral parameters that affect energy trends. This recognition has led to the use of an array of analytical methods that range from wider use of scenario analysis to portray alternative futures, to the use of more formal techniques to represent the probability distributions of outcome variables of interest.
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. Thus, consideration of uncertainty in energy models implies the need to model contingent strategies.
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For example, many energy models assume a BLxedpuce track for the world of] market, that continues to guide future model decisions, even after intermediate results of the model run, such as those relating to oil demand, have become inconsistent with that track.
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a New applications of uncertainty analysis to advanced energy technologies and R&D planning also are emerging that may be of significance for mid-term and long-term energy modeling. Diewekar and Rubin (1991)
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Similarly, much of the energy infrastructure of 25 years from now already exists or will result from currently observed trends. Important new technologies that are not evident in some form today are unlikely to penetrate the marketplace significantly within 2S years; and structural changes in the makeup of the economy are less likely to diverge from current trends within that tune.
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~ ~ ronu~an~ ~oaa~ngs can oe calculated and compared to the env~ronment's assimilative capacity. To some extent, the longer-term impacts of proposed policy initiatives can be described.
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DOE and ETA have a rich assortment of activities to look out to in embarking on the development of a long-range modeling capability. While the committee believes that the highest priority must be given to the development of a NEMS mid-term modeling, ElA also should devote some resources now to studying activities on long-range modeling outside DOE/E Based on this review and the needs of the NES process, DOE/ElA should devote additional resources to the development or acquisition of appropriate long-range modeling capability, consistent with the discussion above.
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In addition, NEMS will have to be sensitive to international issues that influence U.S. energy modeling (e.g., world oil price)
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From page 40... ...
There are several methods for accommodating uncertainty in energy models, including scenario analysis, parameter vanations, alternative model structures, closed-form statistical approaches, and Monte Carlo methods. The committee recommends that NEMS be designed to accommodate the explicit treatment and estimation of uncertainty using a variety of methods.
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From page 41... ...
Although the NEMS is intended to cover ah time periods, the committee agrees that its initial focus should be on the medium term. However, because the impacts of many policy initiatives, aIld many of the R&D questions of concern to DOE, wall involve evaluations beyond a 25-year time hornon, DOE should ultimately develop adequate long-term modeling capability.
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FINDINGS AND RECOMMENDATIONS The pnmaIy committee findings that emerge Tom this chapter are the following: 0 The set of ELA moclels renewed by the committee at the beginning of this study constitutes a reasonable starting point for developing a National Energy Modeling System. However, considerable development watt be needed to attain a modeling sysem satisfying the requirements outlined in this report.
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From page 43... ...
NEMS R~r~ner~s 43 o The primal focus of NEMS development should be on capabilities that address the mid~tenn time horizon of up to about 25 years. O A problem-focused approach should guide the development of all NEMS capabilities, to the extent possible.
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