Model of European Natural Gas Production, Trade, and Consumption

NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

MODEL OF EUROPEAN NATURAL GAS PRODUCI'ION. TRADE, AND CONSUMPI'ION

N. Nakicenovic M. Strubegger

September 1984 WP-84-53

Working Papers a r e interim reports on work of the International Institute for Applied Systems Analysis and have received only limited review. Views or opinions expressed herein do not necessarily represent those of t h e Institute or of its National Member Organizations.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS 2361 Laxenburg, Austria

FWFACE

This working paper represents t h e first in t h e series to be published as a description of ongoing activities in t h e IIASA International Gas Study. Thus, t h e paper r e p r e s e n t s a report of one particular t a s k t h a t is nearing completion.

The working papers will be presented as individual research activities, although they form only o n e p a r t of t h e overail study.

This particular paper describes one approach of addressing n a t u r a l g a s production, t r a d e , a n d use in Europe. For t h i s purpose Europe was divided into five regions in o r d e r to distinguish between d i d e r e n t endowments with n a t u r a l gas resources, e n e r g y requirements, levels of economic development, and economic i n f r a s t r u c t u r e s .

The basic objective of t h e approach was to develop a simple model t h a t c a n describe f u t u r e n a t u r a l gas production, trade, a n d use on an i n t e r a c t i v e basis with t h e analyst. Thus, t h e model r e p r e s e n t s a flexible tool t h a t helps identify i m p o r t a n t issues a n d questions t h a t could be addressed by o t h e r activities within t h e International Gas Study.

H-H. Rogner Leader

International Gas Study

CONTENTS

INTRODTJCTION

CURRENT NATURAL GAS USE IN EUROPE REPRESENTATION OF END USE

REPRESENTATION OF NATURAL GAS TRADE THE ENVISAGED STRUCTURE OF THE

ENERGY SYSTEM

THE MULTI-OBJECTIVE APPROACH

CONCLUSION

MODEL OF EUROPEAN NATURAL GAS PRODUCTION, TRADE, AND CONSUMPTION

N.

Nakicenovic and

M.

Stmbegger

INTRODUCllON

Natural g a s is a promising f u t u r e source of energy in Europe. Unlike o t h e r fossil energy forms, n a t u r a l gas produces limited particulate and sulfur emis- sions and even t h e s e could be reduced substantially by use of relatively simple measures. Unfortunately, n a t u r a l gas is not as easy t o transport over long dis- tances and distribute t o t h e final u s e r as crude oil a n d i t s products due t o its gaseous form a t ambient t e m p e r a t u r e s . Natural gas u s e is therefore invariably associated with t h e n e e d for elaborate infrastructures for long distance trans- port, storage, a n d distribution for various uses. In addition, in its gaseous form n a t u r a l gas c a n n o t be s t o r e d in compact reservoirs s o t h a t i t s use is limited t o stationary devices with a direct connection with the distribution grid. Similar limitations a r e also p r e s e n t on t h e supply side of t h e energy system. Natural gas is t r a n s p o r t e d by two technologies-pipelines, usually for continental links, a n d LNG, usually for i n t e r c o n t i n e n t a l links. Natural g a s pipelines a n d LNG vessels and facilities a r e capital-intensive and, once installed, they r e p r e s e n t a c o m m i t m e n t for t h e lifetime of t h e facilities on t h e o r d e r of 15 t o 20 years.

These potential opportunities a n d limitations i n t h e widespread use of n a t u r a l g a s in Europe point t o t h e n e e d for prudent planning on t h e side of both t h e consumer a n d t h e supplier. Investments in inappropriate systems could n o t only b e devastating for t h e utilities and n a t u r a l gas suppliers, b u t they could also have a major i m p a c t on general energy availability and use in Europe. In order t o u n d e r s t a n d t h e requirements t h a t will be imposed on f u t u r e n a t u r a l gas u s e a n d supply a n d on the whole energy system in Europe, i t is necessary t o investigate not only one but a n u m b e r of different f u t u r e s t h a t look plausible given t h e past a n d c u r r e n t developments.

I t

is proposed h e r e t o invent s u c h plausible f u t u r e s in form of scenarios b e c a u s e the actual f u t u r e is not known. Scenarios offer an attractive alternative t o a t t e m p t s t o predict t h e unknown future, s i n c e they p e r m i t t h e comparison of different assumptions about t h e s t r u c t u r e a n d form of t h e f u t u r e energy s y s t e m in Europe. In fact, it is probably advisable t o investigate a whole range of e x t r e m e and even conflicting f u t u r e developments in order t o analyze many of t h e critical characteristics of possible f u t u r e energy systems a n d t h e role of natural gas.

In o t h e r words, i t is suggested t h a t a number of different scenarios should be developed a n d t h a t t h e comparisons of various s t r a t e g i e s should be evaluated within a n d among t h e m .

In order t o facilitate t h e scenario writing and a c t u a l quantitative evalua- tions, a system of models have been designed representing what a r e , in t h e view of t h e authors, t h e m o s t crucial features of the European energy system relevant for n a t u r a l gas supply a n d use. Europe was divided into Ave regions in

order t o distinguish between different endowments with natural gas resources, energy requirements, levels of economic development, and economic systems.

The regional division of Europe consists of North, Central, South, and East Europe and also encompasses t h e USSR as the fifth region. For these regions a model of the energy system was developed which includes all important phases of natural gas extraction, trade, transport, conversion, distribution, and e n d use a n d t h a t also includes o t h e r competing fuels and facilities. The models of North, Central, South and East Europe a r e completed and the work on the USSR model is in progress.

Together these models comprise the skeleton of this basic approach. They provide an easy-to-use tool for guaranteeing consistency of assumptions and changes foreseen by the analyst for the future. Thus, it is possible to introduce modifications of both t h e s t r u c t u r e of the envisaged energy system and t h e specifications of energy availability and demand, or t h e specifications of various technologies and processes. Because complex systems such as t h e European energy system do not o p e r a t e u n d e r a single goal or objective, the possibility t o optimize t h e f u t u r e s t r u c t u r e of t h e system under different and perhaps even conflicting objectives has been incorporated in this approach. Thus, this model s e t offers an interactive tool for investigating many possible strategies for n a t u r a l gas supply and use.

The model was primarily developed in order to provide a deeper under- standing of the opportunities of -wider substitution of other fuels by natural gas in e n d use a n d electricity generation, while a t t h e s a m e t i m e permitting analysis of changing patterns in natural gas trade a n d extraction. Because t h e specification of multiple objectives a r e allowed to be imposed on t h e s t r u c t u r e of t h e system i n addition to constraints and s t r i c t bounds, it i s possible t o address such seemingly different questions simultaneously. Thus. a typical strategy of an exporting region may be to maximize revenues, while a t t h e same time i t could be also preferred to minimize t h e actual volume of exports.

Consuming regions may, on t h e o t h e r hand, wish to maximize t h e energy use in certain sectors of t h e economy while they may a t t h e same time desire t o avoid t h e adverse effects of i n c r e a s e d energy consumption such a s sulfur emissions.

They could also be i n t e r e s t e d in avoiding excessive expenditures by minimizing t h e cost of energy supply a n d use, and so on. Many such different objectives could easily be generated. This approach offers a tool t h a t transforms s u c h objectives into c r i t e r i a for determining consistent energy system s t r u c t u r e and energy flows within and among t h e five regions of Europe and major natural gas exporting areas.

CURRENT NATURAL

GAS USE IN

EUROPE

Historically speaking n a t u r a l gas has achieved some of the fastest growth r a t e s of any primary energy form in Europe. This rapid introduction of natural gas as an important source of energy is in part due to its premium qualities a s a fuel and still relatively low prices compared with crude oil.

I t

was, however, also due to t h e gas distribution inrrastructure already available in many metro- politan areas of Europe "left over" from the days of city gas manufacture from coal and heavy oil products. Thus, at the beginning of i t s widespread m a r k e t introduction, n a t u r a l gas benefited from existing distribution infrastructure so t h a t its initial penetration r a t e s were indeed very impressive, ranging up t o two-digit growth r a t e s over a n extended number of years in many cases. This phase of n a t u r a l gas expansion within t h e energy system is now almost com-

pleted in Europe, s o t h a t additional growth in its use c a n only be achieved by addition and expansion of existing supply and distribution systems.

Table 1 shows t h a t in

1980

n a t u r a l gas contributed almost

15

percent to primary energy use in Europe. The natural gas share was highest in Central Europe, reaching almost

18

percent. Considering t h a t n a t u r a l g a s reached only a two percent share in total primary energy twenty y e a r s earlier (i.e.,

1960),

the market penetration r a t e was indeed rapid during this early introduction phase.

Table 1. Primary Energy Consumption,

1980

(GWyr/yr).

Crude Natural ~ l e c - ~

Europe Solids Oil Gas ~ u c l e a r ~ ~ ~ d rtricity- o ~ Total

North

21.0 64.7 2.4 11.4 40.9 0.2 140.6

Central

311.1 593.7 216.0 57.8 53.3 -0.6 1231.3

South

65.2 251.2 39.4 2.4 33.6 0.9 392.7

East

323.5 144.1 89.2 7.8 9.1 5.4 579.1

Total

720.8 1053.7 347.0 79.4 136.9 5.9 2343.7 1

' ~ i v e n as primary energy equivalent.

This extensive use of n a t u r a l gas as an important source of energy is possi- ble in most of t h e European countries primarily through exploitation of Western European resources in t h e North Sea and t h e Netherlands, and through imports from overseas. The Soviet Union is t h e most important exporter of n a t u r a l gas to the four natural gas importing regions of Europe, and if most of the c u r r e n t plans materialize i t will maintain this role a t least during t h e next decades. A m u c h less important overseas source of natural gas in Europe is North Africa.

Most of t h e Algerian and Libyan n a t u r a l gas is supplied in liquefied form (LNG) by sea routes in LNG tankers, b u t t h e r e is also a direct pipeline from North Africa to Italy in operation.

Table

2

illustrates how m u c h natural gas was imported by t h e four Euro- pean regions in

1980

from t h e USSR, the North Sea. Central Europe (Nether- lands) and North Africa. In

1980,

Finland imported about

1.2

GWyr/yr* of natural gas from t h e Soviet Union by a pipeline and t h e other two North Euro- pean countries, Norway and Sweden, consumed only small amounts of dornesti- cally produced gas. It should be observed t h a t , although Norway exploits some of the richest n a t u r a l gas sites in the North Sea, most of this gas is piped to Central Europe (i-e., to t h e UK a n d to the European gas grid). In t h e regional partition of Europe, i t was assumed t h a t the Norwegian North Sea is an external source of natural gas for North Europe and other regions. This, however, is an abstraction in t h e model t h a t helps simplify t h e t r e a t m e n t of regional gas trade and was not intended to r e p r e s e n t anything but a model-specific measure.

An additional pipeline is d u e t o become operational during

1985

from Den- m a r k to Sweden with a capacity of about

0.5

GW. Currently, t h e Finnish pipeline from the Soviet Union is u s e d only a t about one half capacity, so t h a t total

*One GWyr/yr of natural gas corresponds t o about 850 nullion cubic meters or about 30 billion cukic f e e t

- 4 -

Table 2. Natural Gas Imports, 1980 (GWyr/yr).

North Central North

Europe Sea Europe USSR Africa Total

North 1.2 1.2

Central 32.3

5

3 22.2 2.3 109.8

South 7 10.4 3.8 21.2

East 33.3 33.3

Total 32.3 6 0 67.1 6.1 165.5

natural gas imports by North Europe could amount t o almost 3 GWyr/yr by t h e e n d of 1985 without t h e need for additional transport infrastructure.

The largest s o u r c e of natural gas imported to Central Europe is the North Sea (i.e., t h e Norwegian part of the North Sea, since t h e UK production is used domestically) with a total volume of more than 32 GWyr/yr in 1900. The Neth- erlands exported even more natural gas in 1980, amounting to almost 60 GWyr/yr, but most of t h e s e exports (53 GWyr/yr) went to other Central Euro- pean countries (Belgium, France, FRG, Luxembourg, and Switzerland). Only about 7 GWyr/yr of Dutch natural gas exports t o Italy a r e treated as effective exports t o South Europe.

The Soviet Union exported about 22 GWyr/yr of natural gas to Central Europe in 1900 and a n o t h e r 10 GWyr/yr to South Europe (Italy and Yugoslavia).

Most of these exports were transported via a pipeline across t h e border between Czechoslovakia and Austria. These exports could be expanded substantially in t h e n e a r Future, because t h e new Soviet pipeline, with a maximal capacity of about 40 GW, is completed, and another four pipelines could be built before the t u r n of t h e century, which could bring t h e total export capacity of t h e Soviet Union to more t h a n 120 GW.

East Europe imports natural gas exclusively from t h e Soviet Union and, a t a level of about 33 GWyr/yr, accounts for more t h a n one half of all Soviet natural gas exports. This is even slightly higher t h a n the Central European imports from t h e North Sea and constitutes t h e highest natural gas trade between any two regions of Europe.

Natural gas imports from North Africa (today mainly from Libya and Algeria) amount to less t h a n 4 GWyr/yr to South Europe (Spain and Italy) and to less than 2.5 GWyr/yr t o Central Europe (UK and France in LNG form). Thus, North Africa represents only a marginal source of natural gas when compared with other exporting regions such as t h e North Sea and the USSR. In t h e future scenarios, North African n a t u r a l gas exports would include other potential natural gas imports t o Western Europe. For example,

LNG

imports from t h e Pacific Basin o r a pipeline from t h e Gulf Area are such alternative sources of additional natural gas imports t o Western Europe.

Table 3 summarizes t h e 1900 natural gas balances in t h e four importing regions of Europe by listing t h e domestic production, imports, and exports. The exports by the t h r e e West European regions are relatively sniall and consist of 7 GWyr/yr exported from t h e Central (Netherlands) t o t h e Southern (Italy) region. In addition, t h e North Sea exports more t h a n 32 GWyr/yr to Central Europe, as was shown in Table 2, but due to t h e fact t h a t t h e Norwegian part of t h e North Sea is t r e a t e d a s a separate supply source, it is not included in

Table

3.

Domestic production is t h e lowest in South Europe when compared with total consumption, and is t h e highest in Central Europe. In other words, although Central Europe i s t h e largest natural gas importing region, i t is the least import-dependent on n a t u r a l gas due t o its relatively large domestic pro- duction (mostly concentrated in t h e Netherlands a n d t h e UK part of the North Sea).*

Table

3.

Natural Gas Balance,

1980

(8 GWyr/yr).

Europe Production Import Export Consumption

North

1.

_2a

1.2 2.4

Central

166.2 56.8 7.0 216.0

South

18.2 21.2 39.4

East

55.9 33.3 89.2

I

^Total

^{241.5 112.5 7.0 347.0} I

nothe her 32.3 GWyr/yr of n e t w d gas is produced in the Norwegian part of the North Sea and export- ed directiy t o Central Emope, see Table 2.

The n e t import dependence on natural gas is actually lower than on oil imports and its products. Table

4

indicates t h a t t h e overall import dependence for crude oil reaches almost

90

percent in Central a n d East Europe and actually exceeds

99

percent in t h e South. Only North Europe shows an apparent self- sufficiency with respect to c r u d e oil imports due t o relatively large production in the Norwegian North Sea fields. In comparison, t h e natural gas import dependence is still below

30

percent and is only slightly higher than the depen- dence on imports of solid fuels (mainly coal). In fact, if t h e Norwegian natural gas production in t h e North Sea were t o be included as a domestic source, the natural gas import dependence in North Europe would appear t o be even lower t h a n t h a t shown in Table

4.

Table

4.

Primary Energy Net Import Dependence,

1980

(percent)a.

Crude Natural

Europe Solids 0 il Gas ~ o t a l ~

North

42.1 57.3 50.0' 33.6

Central

18.3 85.9 23.1 50.0

South

40.9 99.7 53.7 76.1

East

86.9 37.3 27.9

I

^Total

^23.3

^174.5

^{65.3 82.4}

'Only net imports are slhown (i.e., importsexports).

b~uc!ear energy and hydro are imported only t o the extent that electricity is traded.

C~orwegian North See natural gas is not considered in this case.

*The gm flom between the member countries of the Commission of European Communities will be analyzed in collabora:ion w i t h the GD XU of the EEC and Y. Smeers of the Center for Operations Research m d Economics, University of Louvain.

Until now only t h e n a t u r a l gas supply t o Europe h a s been considered; in t h e following t h e a c t u a l use of t h e domestically available a n d imported natural gas will be considered. Table 5 shows t h e p r i m a r y e n e r g y inputs t o electricity generation in t h e four regions of Europe. In t h e t h r e e regions of Western Europe n a t u r a l gas was by far t h e least used primary e n e r g y source in electric- ity generation, except in South Europe, where slightly m o r e n a t u r a l gas was used t h a n nuclear energy. In East Europe, on t h e o t h e r hand, n a t u r a l gas was t h e second most i m p o r t a n t source of electricity, preceded only by coal.

Table 5. P r i m a r y Energy Inputs t o Electricity Generation, 1980 (GWyr/yr).

P e t r o l e u m Natural

Europe Solids Products Gas ~ u c l e a r ~ fIydroa Total

North 5.1 5.8 0.5 11.4 40.9 63.7

Central 198.5 51.2 29.7 57.8 53.3 390.5

South 24.4 59.0 3.4 2.4 38.5 127.7

East 106.7 0.5 14.3 7.0 9.1 146.4

1

^{Total 334.7 124.5 47.9 79.4 141.8 728.3}

1

' ~ i v e n a s primary energy equivalent, calculated on t h e basis of t h e amount of fossil energy t h a t would be needed t o generate t h e same amount of electricity.

On t h e aggregate level of t h e whole of Western Europe only about 13 per- c e n t of consumed n a t u r a l gas was used for e l e c t r i c i t y generation. In East Europe i t was slightly higher a t about 16 p e r c e n t . The s h a r e of n a t u r a l gas con- sumption used for electricity generation for whole Europe is comparable t o t h e s h a r e of crude oil consumption u s e d for electricity generation (primarily in t h e f o r m of heavy fuel oils) although t h e absolute a m o u n t of oil used in electricity generation exceeds t h e n a t u r a l gas use by two a n d a half times. This indicates t h a t n a t u r a l gas is used a s a p r e m i u m fuel a n d is reserved t o supply t h e r m a l uses in industry, households and services. Table 5 indicates t h a t t h e opposite is t r u e for coal--almost 60 p e r c e n t of coal consumption was due to electricity gen- eration. Nuclear energy a n d hydropower, naturally, were used exclusively for electricity generation.

Table 6 gives t h e installed capacity of electric power p l a n t s in Europe a n d Tables 7a a n d 7b t h e actual a m o u n t s of electricity g e n e r a t e d by various pri- m a r y e n e r g y sources. Therefore, Table 4 indicates t h e t o t a l energy inputs to electricity generation a n d Table 6 t h e achieved average o u t p u t of electricity, so t h a t t h e implicit efficiencies of electricity generation c a n be determined. Sim- ple calculations indicate t h a t n a t u r a l gas was by far t h e most efficient source of electricity i n t h e t h r e e regions of Western Europe, with a n average conversion efficiency of 41 percent, followed by p e t r o l e u m products with an efficiency of a little l e s s t h a n 37 p e r c e n t a n d coal with 31 p e r c e n t .

After primary e n e r g y is converted t o secondary e n e r g y forms such as elec- tricity a n d district h e a t , t h e secondary e n e r g y f o r m s a r e transported to t h e vicinity of consumption c e n t e r s a n d t h e n distributed for final use. Energy t r a n s p o r t a n d distribution c a u s e losses s o t h a t t h e h a 1 energy actually avail- able t o the c o n s u m e r r e p r e s e n t s a fraction of t h e original primary energy i n p u t s t o t h e system. Table 8 shows final energy consumption in the four regions of Europe. I t indicates t h a t a b o u t 27 p e r c e n t of t h e original primary i n p u t s were used in conversion, t r a n s p o r t , a n d distribution steps throughout

Table

6.

Maximum Net Installed Capacity of Electric Power Plants,

1980

(GW(e) installed).

Europe Thermal Nuclear Hydro Total

North

14.6 6.8 36.6 58.0

Central

202.1 33.6 50.7 286.4

South

58.1 2.8 39.0 99.9

East

65.6 3.9 10.4 79.9

Total

340.4 47.1 136.7 524.2

Table ?a. Electricity Generation Output by Primary Energy Source,

1980

(GWyr/yr of electricity).

Petroleum Natural

Europe Solids Products Gas Nuclear Hydro Total

North

2.0 1.7 0.2 3.9 17.4 25.2

Central

62.5 19.7 12.2 19.8 18.2 132.4.

South

7.2 21.5 1.5 0.8 13.8 44.8

Total

71.7 42.5 13.9 24.5 49.4 202.4

Table

7b.

Electricity Generation Output,

1980

(GWyr/yr of electricity)

Europe Thermal Nuclear Hydro Total

East

48 2.6 3.0 53.6

Table

8.

Anal Energy Consumption,

1980

(GWyr/yr).

Petroleum Natural

Europe Solids Products Gas Electricity Total

North

15.2 56.1 0.7 24.2 96.2

Central

93.3 498.3 179.5 118.1 889.2

South

32.3 178.1 35.1 39.8 285.3

East 2

16.8 124.1 69.8 41.9 452.6

Total

357.6 856.6 285.1 224.0 1723.3

t h e energy system. In t e r m s of total final energy consumption, natural gas h a s t h e third largest share after petroleum products and coal. In Western Europe it is the second most important final energy form after petroleum products. Such high shares of natural gas in final energy, compared with its low share in total primary energy, a r e due to t h e fact t h a t it is not used heavily for electricity generation and because pipelines are a relatively efacient means of energy

transport. More than 82 percent of original primary n a t u r a l gas is actually delivered to final use as natural gas and the r e s t is used for transport, dissi- pated as losses, or converted to electricity. In case of petroleum products more than 81 percent of consumed crude oil reaches t h e final consumer as a refined product. Only about 50 percent of solid fuels are directly consumed, most of the other 50 percent is used for electricity generation. In Western Europe almost 70 percent of primary solids are used to generate electricity.

Final energy is itself also not used directly, i t has to be converted a t the site of the user into useful forms such as heat or light. Table 9 reproduces the final energy consumption in Europe disaggregated by t h e type of e n d use. All of the specific electricity uses a r e grouped together. They include all uses of elec- tricity t h a t cannot be provided economically by other energy forms in t h e fore- seeable future. Examples a r e t h e electricity uses for lighting or electrical appliances in t h e households. Also grouped together are all uses of light petroleum products in t h e transportation sector t h a t cannot be replaced easily by nonliquid energy forms. Examples a r e diesel a n d gasoline fuels for automo- biles, airplane fuel a n d so on. All o t h e r nonspecific final energy needs are shown in Table 9 under t h e two broad sectors of t h e economy--the household/commercial and industrial sectors. These energy uses basically include thermal energy needs such as low- and high-temperature h e a t in indus- try or air conditioning in private households or ofices. The final energy con- sumption for thermal purposes is also given in t h e form of useful energy. Use- ful energy represents t h e actual h e a t needed t o provide the service t h a t results after the final energy is used in a n end-use device such as a heating stove or a steel furnace. Thermal energy could be, a t least in principle, provided by any final energy form: electricity, n a t u r a l gas, crude oil products and solid fuels.

Therefore, the useful energy requirements offer t h e largest potential market for additional uses of natural gas in t h e future in addition t o more intensive electricity generation. The substitution process between natural gas and other final energy forms in t h e r m a l energy supply is usually called "burner tip com- petition". In the approach taken h e r e of analyzing t h e future role of natural gas in Europe both with respect t o n a t u r a l gas trade a t t h e primary side of the energy system and a t the level of final use, s t r u c t u r a l changes throughout the energy system will be allowed t h a t could lead t o different trade and end use pat- terns.

Table 9. Final Energy Use, 1980 (GWyr/yr).

Thermal usesa Light

Household/ Specific Petroleum

Europe Commercial Industrial Electricity Products Total

North 25.4 (17.3) 27.0 (19.2) 17.2 26.6

.

^96.2

Central 300.4 (201.3) 214.7 (154.4) 83.9 290.2 889.2

South 63.6 (42.4) 95.3 (68.4) 29.1 97.2 285.3

East 150.1 (88.3) 217.9 (150.6) 31.6 53.0 452.6

I

^Total 539.5 (349.3) 554.9 (392.6) 161.8 467.0 1723.3

1

umbers in brackets refer t o useful energy.

REPRJEXNTATION OF END

USE

In order t o be able to analyze the possible changes in n a t u r a l gas trade and e n d use p a t t e r n s under different assumptions about the plausible futures, most of the relevant parts of the energy system of each region have been modeled by including all important natural gas conversion, transport and b s t r i b u t i o n stages a s well a s the equivalent transformation of o t h e r energy sources t h a t compete with n a t u r a l gas. On t h e other hand, not included with any degree of detail were final energy uses which a r e not likely t o be supplied by natural gas.

For example, i t was assumed t h a t n a t u r a l gas will not compete with light petroleum products in providing motive power for automobiles, utility vehicles, and aircraft a t least until t h e t u r n of t h e century. I t was also assumed t h a t natural gas will not compete directly in e n d use with specific uses of electricity such as light a n d power for appliances in households. However, it is possible t h a t n a t u r a l gas could be used more extensively to generate electricity.

As t h e two above examples about the simplification of end use of specific electricity and light petroleum products indicate, significant abstractions from t h e actual s t r u c t u r e of the end use were assumed in order to emphasize t h e areas where n a t u r a l gas has a substantial potential t o increase its contribution t o total energy consumption. Before proceeding with a more detailed descrip- tion of t h i s simplified and schematic representation of t h e regiona! energy sys- t e m s as they a r e defined in our modeling approach, l e t us r e t u r n briefly to t h e

"front e n d of t h e energy system a n d outline t h e representation of possible natural gas trade patterns in Europe.

REPRESENTATION OF NATURAL GAS TRADE

Table 10 gives t h e list of n a t u r a l gas pipelines t h a t M-ere taken into service u p to 1982 in Europe. Only the major pipelines t h a t connect t h e regions a r e included. Table 10 indicates t h a t a r a t h e r sophisticated grid for natural gas trade is already in place in Europe, allowing, a t least in principle, a connection between any two regions (although not always in a direct way, but via some o t h e r regions). The Soviet Union can export to all four regions of Europe: it exports t o Finland in the North a n d directly t o East Europe, and through Czechoslovakia and Austria to both Central and South Europe. The Norwegian part of t h e North Sea is connected to t h e Central grid and therefore also to t h e South via Central Europe. North Africa is connected to Italy in South Europe with a pipeline and t o Central a n d also South Europe by LNG routes.

Figure 1 illustrates all pipeline connections t h a t have been considered between t h e five regions of Europe and the n a t u r a l gas exporting areas. In addi- tion t o t h e Links already in place described above, i t is envisaged t h a t during t h e n e x t t h i r t y years additional links could be established. A pipeline between Central and North Europe is already planned (from Denmark to Sweden). It is assumed t h a t North Sea gas could be exported also t o North and South Europe (perhaps both through Central Europe). Figure 1 also shows that the direct connections between any two regions a r e assumed t o be only one-way with t h e exception of the possibility of a two-way flow between Central and South Europe.

This is due to t h e fact t h a t n a t u r a l gas from t h e Soviet Union and t h e North Sea can be transported to the South through Central Europe. In addition, Central Europe already exports domestic gas to t h e South ( t h e Netherlands to Italy).

North Sea gas could reach t h e South also by an alternative direct link. In t h e opposite direction double p a t h s a r e also possible: a direct path from North Africa to Central Europe and one via South Europe. Natural gas imports to East

Table 10. List of Interregional Pipelines in Europe.

Length Diameter capacitya

Origin a n d Destination

(km)

(inch)

(GW)

USSR to East

Orenburg (SU)

-

Oujgorod (SU/CS) Medvezhe (SU) - Minsk (SU/CS) USSR to North (SU-SF)

USSR t o Central

Baumgarten (CS/A)

-

Oberkappel (A) Oberkappel (A)

-

Ersching (D/F) Ersching (D/F)

-

Voisines (F) USSR t o South

Baurngarten (CS/A)

-

Tarvisio (I) North Sea t o Central

Ekofisk

-

Ernden (D) Frigg

-

St-Fergus (UK) Brent

-

St-Fergus (UK) Central to South

Bocholtz (NL)

-

Mortara (I)

a ~ u r n b e r s in brackets represent maximal capacity.

NORTH EUROPE

- 4

USSR

CENTRAL EUROPE

SOUTH EUROPE NORTH AFRICA

Figure 1. Possible Gas Flows.

Europe a r e a s s u m e d t o c o m e only from USSR a n d no o t h e r exporting area.

Finally, i n t h e c u r r e n t version of t h e model i t is not envisaged t h a t North Sea or Soviet gas could r e a c h Central Europe through North Europe. The Project Gas Transit (PGT)* considers t h e possibility of transporting t h e North Sea gas t h r o u g h Sweden t o Central Europe. Such additional connections between vari- ous p a r t s of Europe m a y be incorporated a t some l a t e r s t a g e of t h e analysis.

The actual n a t u r a l gas exchange t h a t can t a k e place through t h e links installed by a particular point i n t i m e is assumed t o depend on t h e demand a n d t h e level of export prices which a r e intended t o be s i m i l a r t o t h e c u r r e n t prac- tice of FOB pricing. Natural gas is assumed t o be sold t o importing regions in Western Europe a t m a r k e t a n d n o t c o s t prices. E s t i m a t e d "export earnings" a r e added t o t h e extraction a n d transport costs i n c u r r e d by t h e t i m e n a t u r a l gas r e a c h e s t h e border of an importing region. Thus, t h e a c t u a l difference between t h e costs of delivered n a t u r a l gas a n d t h e price a t which it is exchanged in t h e model (i.e., t h e export earnings) is exogenous. Here, i t should also be men- tioned t h a t t h e c r u d e oil price levels a r e assumed t o r e p r e s e n t "world m a r k e t prices", a n d t h e y a r e also specified exogenously. These price levels constitute two of t h e most i m p o r t a n t scenario specifications in o u r approach. As already mentioned in t h e introduction, a central point of t h e analysis involves t h e pos- sibility of s t r u c t u r i n g the f u t u r e energy system in Europe i n compliance with m o r e t h a n one objective, t h u s t h e importance of costs a n d prices for t h e model r e s u l t s should n o t be overstressed. Nevertheless, they do play a n i m p o r t a n t role in overall allocations a n d in t h e case where only a single objective of cost minimization is used, t h e relative prices especially of n a t u r a l gas a n d crude oil would play a crucial role as well. Thus, t h e determination of t h e FOB n a t u r a l gas prices over t h e level of a c t u a l natural gas delivery costs to t h e border of an importing region a n d t h e level of world crude oil p r i c e s constitute i m p o r t a n t exogenous p a r a m e t e r s , b u t t h e r e s t of t h e price-formation process throughout t h e energy s y s t e m is endogenous all the way to t h e level of end use.

After this brief description of t h e envisaged n a t u r a l gas t r a d e between t h e five regions of Europe a n d t h e n a t u r a l gas exporting a r e a s , let u s r e t u r n to t h e description of t h e energy s y s t e m s internal t o t h e regions. As mentioned, crude oil is a s s u m e d t o be available in desired quantities on t h e international m a r k e t s nt a given price level. Natural gas availability is a m o r e dynamic process t h a t is dependent both on t h e a c t u a l extraction and t r a n s p o r t costs a n d t h e "mark-up"

of t h e c o s t s t o m a t c h FOB prices in North and South Europe. Coal imports a r e handled in a similar fashion as c r u d e oil imports. It i s a s s u m e d t h a t coal is available in desired q u a n t i t i e s on international m a r k e t s a t a uniform price. In Central a n d East Europe, on t h e o t h e r hand, t h e domestic coal extraction is considered explicitly in addition to coal imports. These t h r e e p r i m a r y energy sources c o n s t i t u t e t h e m e n u of envisaged imports by t h e regions.

THE

ENVISAGED

Sl'RUCTURE

OF THE

ENERGY S Y S E M

Figure 2 i l l u s t r a t e s schematically the possible configurations of t h e energy s y s t e m s of North, Central, South a n d East Europe. In t h e Appendix t h e flow c h a r t s a r e reproduced in t h e same style for e a c h region separately, b u t because they differ from e a c h o t h e r only with r e s p e c t t o a few details, in Figure 2 we p r e s e n t a generalized form of t h e regional energy s y s t e m t h a t

*The Roject Gas Transit (PCT) provides the basic decision data about a proposed route of e pssible transit pipeline from northern Norway through Sweden.

Import Llnka

Gas Exports Industry

Gas Imports Thtrmd

Households

Gas Thermal

T rrnsrnisslon Electrlcl~

I I t 7 - y Gas Dlstrlbutlon ^{I Speclfic}

I

I ^{I 1 I .}

^{4 1}

4 1

Electricitv Electrlcky I I

Expenslw Offshorm Gas G~~ pmer plant Tr~nsmlsslon Dlstrlbutlon

^*. , L

I ' I I

^b

Hydro Power Plant

I l l l h t 011

llmht 011 Peak Power Plant

Consewatlon I .--( I

^{4 b}

C -

Consewatlon II

^{-4 1}

I ⁴

I ^a

Products

figure

2.

The K r p i o o e ~ Energy Systerrl.

includes all features p r e s e n t in t h e four regions of Europe. The possible n a t u r a l gas import links f r o m Figure 1 a r e given in t h e left upper c o r n e r of t h e flow c h a r t . In general t h e l e f t side of t h e flow c h a r t r e p r e s e n t s t h e primary energy inputs a n d conversion. Toward t h e right h a n d side of t h e c h a r t , t h e flows r e p r e s e n t energy transportation a n d distribution a n d t h e conversion of t h e resulting final energy t o fulfill t h e useful energy requirements.

In addition t o energy i m p o r t s on t h e left side of t h e c h a r t , t h e extraction of domestic energy resources is also given. Due t o t h e fact t h a t Central Europe includes both t h e

UK

a n d t h e Ketherlands, it is provided with sophisticated pos- sibilities for n a t u r a l gas extraction both for offshore a n d onshore resources. In addition, t h e onshore a n d offshore g a s extraction technologies a r e divided into a n expensive a n d a less expensive class in order t o r e p r e s e n t t h e "easy" a n d t h e

" d i f i u l t " extraction regimes. South Europe is a s s u m e d to be endowed only with onshore domestic extraction consisting of r a t h e r limited q u a n t i t i e s of c h e a p g a s and slightly m o r e a b u n d a n t amounts of expensive resources. E a s t Europe i s assumed t o be able t o continue domestic n a t u r a l gas extraction a n d is a s s u m e d t o have by additional reserves of more expensive resources. In t h e c a s e of North Europe i t is s t r e s s e d again t h a t t h e Norwegian North Sea g a s is n o t included, neither in domestic g a s extraction n o r as a domestic resource.

Thus, t h e only significant domestic n a t u r a l gas extraction possible is t h e deep gas t h a t could be discovered in t h e future. A point in case is t h e speculation about a deep gas find in t h e vicinity of t h e Siljan C r a t e r northwest of Stock- holm. South, East, a n d Central Europe a r e also a s s u m e d t o have a potential of utilizing some "deep" (in t h e c u r r e n t version of t h e model very expensive) domestic gas resources.

In addition t o coal imports, also domestic coal extraction in Central, South, a n d East Europe is envisaged. North Europe has only insignificant a m o u n t s of coal, so t h a t for t h e purposes of t h i s study it was not necessary t o a s s u m e domestic extraction, although t h e r e a r e large efforts in North Europe t o inten- sify wood a n d peat u s e both for generation of electricity a n d heat.

Coal is used in all four regions t o g e n e r a t e electricity a n d heat. The t h e r - m a l uses of coal a r e allocated endogenously between t h e r m a l uses in industry, a n d households and commercial s e c t o r .

Nuclear energy a n d hydropower a r e used exclusively for electricity g e n e r a - tion today and, in t h e model, n o o t h e r significant u s e s during t h e next t h r e e decades a r e envisaged with t h e exception perhaps of some applications of nuclear energy t o low a n d high t e m p e r a t u r e heat. Accordingly t h e t r e a t m e n t of n u c l e a r and hydropower is relatively simple. Each technology is r e p r e s e n t e d by one homogeneous process in t h e flow charts.

Crude oil is a s s u m e d t o be i m p o r t e d in all four regions. In fact t h e domes- t i c extraction of oil is significant in Europe, but, nevertheless, because a l m o s t 90 p e r c e n t of consumed oil is i m p o r t e d (see Table 4), the r e p r e s e n t a t i o n of domestic production a n d oil i m p o r t s as one activity in t h e model is n o t a very unrealistic assumption for t h e purposes of this study. As already mentioned, c r u d e oil is available t o all regions at two uniform price levels. Total c r u d e oil i n p u t s a r e refined t o produce two products in variable proportions--the light derivatives (such as gasoline) and heavy fuel oils.

The d e m a n d for light fuel p r o d u c t s in the transportation s e c t o r is exo- genously specifled, b u t t h e y c a n be u s e d also to m e e t some of t h e t h e r m a l needs in households a n d t h e c o m m e r c i a l sector. There is an additional possibil- i t y of employing light oil products in a n electric peak power plant.

Heavy fuel oil is u s e d both in electricity g e n e r a t i o n a n d t o m e e t thermal energy needs in industry. In Central Europe it i s also available for t h e r m a l uses t o t h e household a n d c o m m e r c i a l sector.

After conversion of p r i m a r y energy, all resulting secondary energy forms are transported a n d distributed t o final uses. As was explained above t h e s e uses consist of useful t h e r m a l e n e r g y needs in i n d u s t r y a n d i n t h e household a n d commercial sector. Various final energy forms (i.e., electricity, natural gas, etc.) compete in m e e t i n g useful energy demands, e a c h t h r o u g h its specific final conversion device s u c h a s electric a i r conditioning or n a t u r a l gas heaters. An additional feature a t t h e final energy level a r e t h e two "conservation technolo- gies" which a r e associated with costs a n d r e p r e s e n t e n e r g y savings achievable by two levels of b e t t e r insulation of buildings a n d o t h e r similar conservation measures.

The specific electricity a n d light oil product d e m a n d s a r e specified explic- itly a t t h e final e n e r g y level. Thus, this approach allows dynamic changes a t the level of useful e n e r g y which t h e n result in different allocations of various primary energy i n p u t s t o m e e t t h e demands after t h e necessary conversion, transport, a n d distribution stages. Different e n e r g y allocations also cause a restructuring of t h e e n e r g y s y s t e m as such, because t h e y usually necessitate investments in i n f r a s t r u c t u r e a n d equipment. Because t h e whole system is interdependent, t h e c a u s e of changes made t h r o u g h o u t t h e energy system could also originate a t t h e level of energy imports, for example, a f t e r a change in relative prices of c r u d e oil a n d n a t u r a l g a s imports. However, in this approach prices n e e d n o t be t h e (only) criterion for allocation because allowance is made for specification of multiple objectives with or without explicit cost minimization.

A last component of t h e energy system in e a c h region c o n s t i t u t e s t h e sul- fur oxide emissions t h a t r e s u l t from the u s e of fossil energy forms. The schematic r e p r e s e n t a t i o n of e n e r g y flows (see F'igure 2) from primary t o useful energy does not i l l u s t r a t e t h i s accounting of emissions. Here again, a simplified approach is adopted by treating each energy form as a homogeneous source of sulfur emissions, b u t i t accounts for different emission levels due to different technological possibilities a t all s t a g e s of energy conversion. For example, t h e possibility of employing s c r u b b e r s t o r e d u c e emissions of coal power plants is provided for.

In t h e next section a brief description is given of t h e principle method t o derive a multiobjective c r i t e r i a t o determine t h e optimal s t r u c t u r e of natural gas trade a n d energy s y s t e m configuration in t h e five regions of Europe.

THE

MULTI-OBCECI?YE APPROACH

Like most o t h e r models t h a t a r e used t o describe complex systems, t h e model s e t r e p r e s e n t s a flexible tool for analysis. Consequently, t h e u s e r has a multitude of control m e c h a n i s m s available for t h e description of general scenarios about t h e f u t u r e a n d his objectives. In t h e e x t r e m e case, almost t h e whole s t r u c t u r e of t h e models could be changed. Such e x t r e m e possibilities could include, for example, t h e introduction of new technologies for energy conversion o r t r a d e not foreseen in t h e c u r r e n t s t r u c t u r e of t h e regional models. Another example would be t h e introduction of a new allocation cri- terion t h a t is n o t available in a particular realization of all theoretically possi- ble objectives. While all s u c h changes could be implemented, t h e y would neces- sitate new links t h r o u g h o u t t h e energy s y s t e m o r a new s e t of relations

specifying t h e new objective. Depending on particular details, t h e y may require additional modeling effort a n d would not constitute m e r e input changes.

A p r i m a r y goal of t h i s effort was t o simplify t h e introduction of changes t h a t do not require t h e r e s t r u c t u r i n g of potential links between regions a n d technologies or introduction of completely new objectives. Such changes c a n be implemented instantaneously a n d should require only a few m i n u t e s of r u n - t i m e before a new solution is obtained. The available potential s t r u c t u r e of t h e energy s y s t e m t h a t c a n be used without t h e need for major changes is described in t h e previous section. All components of the described systems could be included by t h e u s e r in an interactive mode with t h e model.

All of t h e objectives t h a t a r e available t o t h e u s e r as c r i t e r i a for t h e alloca- tion of energy systems modeled in o u r approach a r e "built-in" options just as t h e described potential s t r u c t u r e of t h e e n e r g y systems. As was mentioned above, t h e introduction of new objectives would necessitate additional model changes t h a t c a n n o t be i m p l e m e n t e d in a n interactive mode.

First a description is given of t h e possible objectives and t h e n a n illustra- tion on how t h e y c a n be combined t o g e n e r a t e a n optimal solution. The avail- able objectives could be grouped in two classes: the objectives t h a t a r e defined for single regions a n d those t h a t a r e defined for all regions. In fact all of these objectives refer t o possible n a t u r a l gas export s t r a t e g i e s by t h e t h r e e exporting areas. I t is a s s u m e d t h a t t h e

USSR

would maximize i t s total revenues from n a t u r a l gas exports (i.e., t o t a l export volume t i m e s average price). This objec- tive would be c o n s i s t e n t with a n a t t e m p t t o maximize t h e foreign c u r r e n c y r e t u r n s through n a t u r a l g a s exports, b u t it n e e d not be consistent with profit maxirnization. On t h e o t h e r hand, i t is a s s u m e d t h a t North Sea a n d North Afri- c a n exports would be guided by t h e profit maximization principle (i.e.. total revenue minus t o t a l costs). The logic behind s u c h diverse export c r i t e r i a is r a t h e r simple. The USSR h a s vast n a t u r a l gas r e s o u r c e s when compared with t h e maximal potential consumption of whole Europe a c c u m u l a t e d over t h e time horizon of t h r e e decades. Thus, h e r e it would make little sense t o maximize production, since t h e realization of s u c h a s t r a t e g y in t h e model would flood t h e European n a t u r a l g a s "market". In t h e case of North Africa a n d t h e North Sea, t h e potential export volumes a r e less impressive (due to limited potential t r a n s p o r t possibilities t o Europe in t h e case of North Africa a n d limited resources of moderately priced gas in case of t h e North Sea). Therefore, in t h e c a s e of t h e s e two e x p o r t e r s it makes sense t o maximize profits or to follow a given n a t u r a l gas r e v e n u e trajectory.

The second s e t of objectives refers t o o t h e r p a r t s of t h e energy s y s t e m a n d c o n c e r n s all regions in t h e s a m e way. of all, t h e possibility of cost minimization of t h e whole regional energy s y s t e m has been i n c l u d e d This is t h e classical objective of m o s t modeling efforts. A t t h e same time, t h e objec- tive of minimizing sulfur emissions resulting from t h e use of Fossil energy sources has been i n c l u d e d If enforced, this objective would tend to enforce t h e proliferation of n a t u r a l g a s u s e because of i t s advantageous environmental qualities (in this c a s e low s u l f u r content).

The l a s t objective on t h e list is perhaps controversial. It specifies the maximization of useful e n e r g y consumption of t h e household a n d commercial sector. A t face value t h i s objective m a y appear t o be c o n t r a r y t o t h e efforts t o reduce energy consumption. This is not necessarily so, because conservation is included in t h e energy s y s t e m a s one of t h e ways of providing useful energy in t h e household a n d commercial sector. In addition, t h e maximization of useful

energy leads to t h e evaluation of the upper limit on future energy availability a s specified in t h e models.

The actual specification of t h e criteria is preceded by t h e determination of the important scenario characteristics. The most important of t h e m specify the relative cost s t r u c t u r e of various technologies and their market penetra- tion constraints, t h e future development of energy demand, and t h e resource availability. All of these specifications a r e , of course, provided in t h e "refer- ence" scenario and they need not be changed, but t h e model provides the possi- bility t o specify these scenario characteristics in an interactive mode. In par- ticular, t h e relative prices of crude oil and natural gas represent some of the most important specifications as far a s t h e structure of t h e resulting energy system and natural gas trade is concerned. The specification of future energy demand involves t h e definition of useful energy needs in industry and household/commercial sectors and t h e definition of t h e final energy require- ments for specific uses of electricity and light oil products. These demand tra- jectories over t h e time horizon of three decades are also given in the reference scenario. They are based on t h e IIASA'83 Global Scenario of Energy Develop- ment (see, Rogner 1983), but if changed they would tend t o have a substantial influence on the structure of energy end use and natural gas trade.

Once these scenario characteristics a r e specified, t h e model can provide a set of indicators for t h e "achievability" of various objectives t h a t were specified above. By this i t is meant, for example, t h a t the model can determine t h e cost minimal energy system still compatible with t h e scenario specifications, t h e minimal sulfur emissions achievable under the given constraints, or t h e maxi- mal revenues t o be reached from natural gas sales, and so on. At t h e same time, t h e model can also provide t h e "worst case" values for these objectives, i.e., the worst imaginable result in the direction of each particular objective within t h e given constraints. Thus, the user can be provided with a s e t of maxi- mal and minimal values for each objective over the time horizon of thirty years. Using these extreme values a s bounds, t h e user can specify a trajectory for each of t h e objectives t h a t should be followed by the model as close as possi- ble.

This multiobjective optimization approach is described in detail in Wierzbicki (1983) and Grauer (1983). Here only an indication is given on how i t works. A linear modeling approach is used to represent the energy system structure of the four regions of Europe and also t h e same technique for model- ing t h e natural gas trade between t h e regions and exporting areas. Once all characteristics of the linear modeling structure and possible objectives are defined, the model determines t h e solution t h a t would correspond t o the achievement of all objectives. Due t o various constraints and limitations imposed on various activities, such a point is usually not feasible but it represents a hypothetical case where all aspirations materialize. Appropriately it is called the utopia point.

The other extreme situation, called nadir point, represents t h e worst value of each objective obtained by optimizing the values of all other objectives one after the other. This situation is definitely least desirable, but it is interesting to note t h a t it could also be infeasible because t h e r e may be a confiict with bounds s e t on some activities. The model generates t h e utopia and nadir points for all time steps and t h e user has t h e option to specify t h e trajectories for each of t h e objectives t h a t stay within t h e bounds provided b y the utopia and nadir points. The model then determines the solution t h a t is the "closest" to t h e specified objectives but still consistent with constraints and limitations set on t h e activities. A more technical reader is referred to an

illustrative introduction t o t h e topic of multiobjective analysis by Grauer.

Lewandowski, and S c h r a t t e n h o l z e r (1982). Grauer (1983), a n d Wierzbicki (1983).

CONCLUSION

The model of n a t u r a l g a s production, trade, and use t h a t was described in t h i s paper was developed t o be used interactively for t h e analysis of different scenarios of natural gas projects in Europe during t h e next t h i r t y years. The intention was not t o develop a single s e t of model results. Instead, a modeling tool has been developed t h a t c a n assist t h e user t o define his images of t h e f u t u r e interactively using t h e model. The model presented in this paper offers t h e s t r u c t u r e for t h e analysis in a similar way a s t h e computer is used by a pro- grammer. The main advantage of such an approach is t h a t it is possible t o gen- e r a t e many different scenarios with basically t h e s a m e consistency criteria and similar basic philosophy. Thus, i t is possible t o investigate t h e effects of chang- ing various assumptions about t h e n a t u r a l gas production, trade, a n d use in Europe. The comparison of s u c h different scenarios c a n help t o identify sensi- tive issues and critical aspects of m o r e extensive use of n a t u r a l gas in t h e future.

The basic s t r u c t u r e t h a t is invariant from one scenario t o a n o t h e r is t h e base year description, t h e choice of possible objectives to use in a given scenario, t h e type a n d g e n e r a l characteristics of technologies included in t h e energy system, and so on. The u s e r c a n specify according t o his preferences the trajectories of various objectives t o be achieved (to t h e e x t e n t possible) by t h e optimization, h e c a n specify t h e s t r u c t u r e of energy costs and prices, espe- cially t h e international price of c r u d e oil and t h e FOB price of n a t u r a l gas, natural gas reserves available t o various regions in Europe and gas exporting ares, etc. Like any o t h e r tool, t h e model needs external analysis for appropri- a t e application, and it is envisaged t h a t this information would be provided by t h e user. In t h e next Working Paper, we will present s o m e interesting scenarios of t h e n a t u r a l gas f u t u r e in Europe t h a t were developed with t h e help of t h e model. I t will probably b e n e c e s s a r y with t i m e t o introduce some modifications in t h e whole approach in o r d e r t o offer new possibilities t h a t will be discovered by t h e u s e of t h e c u r r e n t version of t h e model. From t h i s point of view, t h e use of the model is envisaged a s a n ongoing activity t h a t would serve t o identify f u r t h e r topics of r e s e a r c h t h a t c a n n o t be adequately addressed a t t h e p r e s e n t time.

References

Grauer, M. (1983) A D y n a m i c Interactive Decision A n a l y s i s a n d Support % s t e m . WP-83-060. Laxenburg, Austria: International I n s t i t u t e for Applied Systems Analysis.

Grauer, M., k Lewandowski, and L. Schrattenholzer (1982) L'se of t h e R e f e r e n c e Level App?ouch f o r t h e Generation of E f l c i e n t E n e r g y 3 u p p l y S t r a t e g i e s . WP-82-019. Laxenburg, Austria: International I n s t i t u t e for Applied Systems Analysis.

Organisation for Economic Cooperation a n d Development (OECD)(1982) 5 e r g y B a l a n c e s of t h e OECD C o u n t r i e s . Arris, f i a n c e .

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I n t e r n a t i o n a l Institute for Applied Systems Analysis.

Appendix

CENTRAL EUROPE Gas Imports Import Links

South Europe

Gas Exports

Industry Thermal

I

Housel~olds

I North Africa

⁴ b

South Europe Thermal

Electricity

North

Sea

H3lJ- Specific

- Gas

USSR - 32

I

transmission ₁

^{4 1}

-156) = 1 5 9 1

1 \ 4 1

4 b

Electricity Electricity I

_u

⁶⁶ 1

Expensive Offshore Gas Transmission Distribution .

^#.

1 ⁼

^{1 5 4 1}

^{I 1 60 1 ,.}

^{4 I}

Coal Power Plant Domestic

Co Coal

LWR Power Plant

43

1

Light Oil Peak Power a

^{4 1}

•

4 6

^{4 1}

Fuel Oil Power Plant -

63'

5 7 1 ,-.

^t

Conservation 1 c ( 61 1

^I

^..

^{4 1}

Conservation II

T--t--l

Expensive

Imports

1 1

Liaht

Oil Imports 4 5 51/52

products 1

Light Oil

Products

EAST EUROPE

- - - - -. .- -- -

Gas lmports Import Links Industry

Thermal

Hot~sel~oltls

I ^{I Ther~l~al} Electricity Gas

USSR Transmission

1 5 5 1 ⁴

Gas Distril~ution

- - - p q

Cheap Gas m - - - - - ⁽⁵⁹⁾

^t

Expensive Gas +

39

-

"Deep" Gas c -- Electricity I E l e c t r d Mi 1

⁴

Gas Power Plant

- &- Transmission Distribution I 1

Coal Power Plant Domestic Coal Extraction

Hydro Power Plant LWR Power Plant

43

1

Light Oil Peak Power P *

1

x

1

I

Oil lmports Oil Refinery Expensive Oil Imports

Specific

Conservation I w

I

Conservation II

I

Fuel Oil

I

1

- _Liuht ^- ₁

⁵⁸

1

Light Oil

SOUTH EUROPE

Gas Imports Import Pipeline Gas Exports

Industry

Central Europ Thermal

Gas Transmission

99

1

4

93 1

North Africa

Electricity Electricity

(100- -

⁴

Transmission Distribution

94

/.

Coal Power Plant Coal lmports

Light Oil Products Light Fuel Oil Peak Power Plant u

I

⁸¹

1

^{t 1} Conservation

Il

e-- 96 t t

Fuel Oil Power Plant

It---.

82

I

^a

Oil Refinery Fuel Oil

Oil Imports

o-- - -

72 -

-

98

Expensive Oil Imports- 73 92

.

⁶

4

Hot~seholds Tl~er~nal

1

.

4 1

I,

4

Electricity Specific

I %

b