MEDEE 2: A MODEL FOR LONG-TERM ENERGY DEMAND EVALUATION
Bruno Lapillonne
RR-78-17 November 1978
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FOREWORD
The host of factors affecting the rate, level, and profile of energy consump- tion make the study of that dimension of energy systems exceedingly com- plex. Such complexity challenges energy systems analysts to develop tools for defining, clarifying, and quantifying the relevant factors. In recognition of this fact of energy-analysis life, the MEDEE approach, developed at the Institut Economique et Juridique de 1'Energie (IEJE) in Grenoble, France, by B. Chateau and B. Lapillonne, was brought to the Energy Systems Program at IIASA, and subsequently revised and focused to match the Program's special purposes.
The IIASA Energy Systems Program concentrates on global aspects of the long-term (50 years from now) transition from the present energy system based on cheap fossil fuels to one which may be more sustainable. In this context, energy demand-region by region-must be understood in terms of economic, technical, and lifestyle factors. It was in order to gain this under- standing that MEDEE 2 was implemented at IIASA. This study is part of the project "Comparison of Energy Options, A Methodological Study", sponsored jointly by the United Nations Environment Programme (UNEP) and IIASA.
Presently the MEDEE 2 model is part of the IIASA modeling of energy systems. This modeling exercise makes use of several separate but inter- connected models which treat different aspects of energy systems. MEDEE 2 is one of the energy demand models in use, providing inputs t o an energy supply and conversion model called MESSAGE. A macroeconomic model, MACRO, provides time trends of GNP and its components for MEDEE 2.
The overall objective of the set of models (about 6 or 7 models in total) is t o study the dynamics of national, regional, and global energy systems in some detail, and to examine the impact of energy systems on economics during a possible future period of energy transition. The full set of energy models is described in a Research Report by W. Hafele and P. Basile that is in preparation.
This report describes MEDEE 2 as it exists at IIASA. The report is intended to substantiate the philosophy supporting the MEDEE approach, and t o illustrate the structure that is thought to represent economy-wide energy demand. The ability to deal with specific policy questions, and energy conservation possibilities, is made clear. The wide applicability of MEDEE 2 to energy demand studies, and t o the evaluation of proposed "technical fixes"
or policies, is also described.
Paul Basile
Assistant Leader
Energy Systems Program
SUMMARY
This paper describes a simulation model, MEDEE 2, designed t o evaluate the long-term energy demand of a country, in combination with a scenario description of the main aspects of the country's social, economic, and techno- logical evolution. This approach considers in a detailed way a national energy demand pattern and breaks down the total demand in a multitude of end-use categories (eg., residential space heating, service sector cooling, gasoline for intercity cars). By means of this detailed investigation of energy demand we are better able to take into account the influence on energy demand of changes in social needs, economic growth, government policies, or technolo- gies, especially in the present context of high energy prices. In addition, it makes possible the identification of the potential market (i.e. maximum de- mand that can be technically met) of each final energy form (e.g., electricity, coal, gas, solar, oil products, and district heat).
The model calculates useful energy demand in each end-use category for which several energy forms can be used, thus determining the substitution possibilities in energy use. This useful energy matches the energy service needed by the consumer (eg., heat, mechanical energy). Useful energy differs from final energy, purchased by the consumer, by the efficiency of the end- use appliances. Each useful energy demand is then converted into a demand for final energy, taking into account the fuel mix (i.e., the fraction of the de- mand supplied by each fuel) and the end-use efficiencies of each fuel. This approach-estimating useful energy-is necessary if one wants to account for the differences in fuel efficiencies: for the same service (let us say 1 kwh of heat) the final demand will vary according t o the fuel type because of these different efficiencies (eg., 1 kwh of electricity, 1.35 k w h of gas, 1.50 kwh of oil, and 2 kwh of coal).
The total final demand is projected in MEDEE 2 for the following types of final energy forms: fossil fuel '(substitutable use of coal, oil, and gas), elec- tricity, motor fuel, coke, feedstock, solar, and district heat.
MEDEE 2 is driven by a set of scenario elements, the evolution of which is
defined in a scenario. The core of the scenario is a characterization through
these elements of the development pattern of the country under consideration
(life-styles, economic growth patterns, etc.). The scenario description is com-
plemented with technological parameters (e.g., insulation standards, efficien-
cies, fuel mix), the evolution of which is specified in a way consistent with the
macroeconomic assumptions.
CONTENTS
Introduction
Determination of Energy Demand
The MEDEE Approach MEDEE 2
Objectives
Scope of the Model Description
The Macroeconomic Module Energy Demand Modules
The Scenario General Comments Acknowledgments References
Appendix: Data Requirements of MEDEE 2
INTRODUCTION
S i n c e t h e o i l c r i s i s o f 1973-1974, t h e r e h a s been growing c o n c e r n a b o u t t h e l o n g - t e r m e v o l u t i o n o f e n e r g y demand. Many a r e now a s k i n g s u c h c r u c i a l q u e s t i o n s a s : W i l l e n e r g y demand l e v e l o f f i n i n d u s t r i a l i z e d c o u n t r i e s , and a t what l e v e l ? How i s e n e r g y demand r e l a t e d t o economic g r o w t h ? How can government p o l i c i e s i n f l u e n c e t h e e n e r g y demand p a t t e r n ( i . e . , t h e l e v e l of e n e r g y and t h e t y p e s o f f u e l s u s e d ) ? How d o e s e n e r g y demand r e s p o n d t o p r i c e i n c r e a s e s ?
F o r e c a s t i n g e n e r g y demand o v e r t h e l o n g t e r m i s d i f f i c u l t b e c a u s e of t h e u n c e r t a i n t y of t h e f u t u r e and t h e c o m p l e x i t y o f t h e e n e r g y demand p a t t e r n . T h i s r e p o r t d e a l s w i t h t h i s problem and p r e s e n t s a p o s s i b l e a p p r o a c h . B e f o r e l o o k i n g a t t h e f u t u r e , i t i s n e c e s s a r y t o u n d e r s t a n d t h e n a t u r e o f e n e r g y demand.
D e t e r m i n a t i o n o f Energy Demand
Energy demand i s i n d u c e d by s o c i o e c o n o m i c d e t e r m i n a n t s - - t h a t i s , by economic a c t i v i t i e s and by t h e s a t i s f a c t i o n o f s o c i a l n e e d s ( e - g . , m o b i l i t y o f p e r s o n s and t e m p e r a t u r e i n r o o m s ) . These d e t e r m i n a n t s l e a d t o a demand f o r usefuZ e n e r g y ( e . g . , p r o c e s s h e a t and m e c h a n i c a l e n e r g y ) whose i n t e n s i t y d e p e n d s on t h e t e c h - n o l o g i e s u s e d t o s a t i s f y s o c i a l n e e d s o r t o p e r f o r m t h e economic a c t i v i t i e s . The demand f o r e n e r g y commodities o r f i n a Z energy
( e . g . , c o a l , e l e c t r i c i t y , and g a s ) c a n be c a l c u l a t e d from t h e l e v e l o f u s e f u l e n e r g y demand which w i l l depend upon t h e e f f i - c i e n c y o f t h e equipment ( e - g . , f u r n a c e s , b o i l e r s , and e n g i n e s ) used t o c o n v e r t t h e f i n a l e n e r g y i n t o u s e f u l e n e r g y . Thus t h e f i n a Z e n e r g y demand o f a s o c i e t y i s d i r e c t l y r e l a t e d t o i t s s o c i a l , economic, and t e c h n o l o g i c a l p a t t e r n o f d e v e l o p m e n t . The d e t e r - m i n a n t s o f u s e f u l and f i n a l e n e r g y demand a r e shown i n F i g u r e 1.
T h r e e phenomena p l a y a d e t e r m i n i n g r o l e i n t h e l o n g - t e r m e v o l u t i o n of e n e r g y demand:
-
The development p a t t e r n o f t h e s o c i e t y b e i n g c o n s i d e r e d - - t h a t i s , t h e economic growth and l i f e - s t y l e which s h a p e t h e e v o l u t i o n of t h e s o c i o e c o n o m i c d e t e r m i n a n t s ;-
The t e c h n o l o g i c a l e v o l u t i o n , which m o d i f i e s o r i n c r e a s e s t h e s e t o f a v a i l a b l e t e c h n o l o g i e s ;-
The e n e r g y p r i c e e v o l u t i o n , which i n f l u e n c e s t h e t e c h - n o l o g i c a l c h o i c e s a s w e l l a s t h e c h o i c e s among competing f u e l s f o r s u b s t i t u t a b l e e n e r g y u s e .(e.g. space heating) DEMAND
TECHNOLOGICAL DETERMINANTS 1e.g. steel (e.g. steelmaking, production) dwelling insulation)
EFFICIENCY OF
SECONDARY APPLIANCE ENERGY M I X (e.g. boiler and 1e.g. % solar, % o i l )
Figure 1. Determinants of useful and final energy demand.
Through a n u n d e r s t a n d i n g o f t h e m a j o r f a c t o r s d e t e r m i n i n g e n e r g y demand, w e c a n b e t t e r g r a s p t h e d i f f i c u l t i e s o f f o r e c a s t i n g
i t s l o n g - t e r m e v o l u t i o n . F i r s t , t h i s e v o l u t i o n i s u n c e r t a i n a n d n o n d e t e r m i n i s t i c , s i n c e t h e f u t u r e o f a s o c i e t y i s a complex phe- nomenon e n c o m p a s s i n g c h a n g e s i n t h e s o c i a l n e e d s , i n t h e t e c h - n o l o g i e s , a n d more g e n e r a l l y i n t h e d e v e l o p m e n t p a t t e r n . I n a d d i t i o n , t h e r e c e n t f o u r f o l d i n c r e a s e i n o i l p r i c e s makes t h e t a s k e v e n more complex; t h e f u t u r e i n f l u e n c e o f h i g h e n e r g y p r i c e s o n t e c h n o l o g i c a l a n d s o c i o e c o n o m i c d e v e l o p m e n t a n d g o v e r n m e n t p o l - i c i e s i s d i f f i c u l t t o a s s e s s .
T r a d i t i o n a l l y a n e c o n o m i c a p p r o a c h h a s b e e n u s e d t o f o r e c a s t demand, which c o n s i d e r s e n e r g y demand a t a h i g h l y a g g r e g a t e d l e v e l , d e r i v i n g t o t a l o r s e c t o r a l e n e r g y demand p r o j e c t i o n s f r o m macro- e c o n o m i c i n d i c a t o r s ( e . g . , g r o s s n a t i o n a l p r o d u c t , i n d u s t r i a l a c - t i v i t i e s , and income) by means o f s o p h i s t i c a t e d s t a t i s t i c a l a d j u s t - m e n t s . T h i s a p p r o a c h l e a d s t o a s i m p l i f i e d p e r c e p t i o n o f e n e r g y demand which a c c o u n t s f o r t h e u n c e r t a i n t y o v e r t h e l o n g t e r m by c o n s i d e r i n g some o f t h e v a r i a b l e s a s p a r a m e t e r s . I n o u r o p i n i o n t h e s e e c o n o m e t r i c m e t h o d s a r e s e v e r e l y l i m i t e d when a p p l i e d o v e r t h e l o n g t e r m : t h e y r e s u l t p r i m a r i l y from t h e h i s t o r i c a l e v o l u - t i o n o f s o c i e t y a n d a r e t o o a g g r e g a t e d t o p e r m i t a f l e x i b l e i n t e - g r a t i o n o f s t r u c t u r a l a n d t e c h n o l o g i c a l c h a n g e s . T h e s e l i m i t a t i o n s a r e f u r t h e r d i s c u s s e d i n [ 11
.
Owing t o t h e s e l i m i t a t i o n s , new t e c h n i q u e s h a v e b e e n d e v e l o p e d which d i s a g g r e g a t e t o t a l e n e r g y demand i n t o e n d - u s e c a t e g o r i e s ( e . g . , r e s i d e n t i a l s p a c e h e a t i n g , s e r v i c e s e c t o r c o o l i n g , g a s o l i n e f o r i n t e r c i t y a u t o m o b i l e s ) , a n d u s e s i m u l a t i o n m o d e l s and s c e n a r i o s t o p r o j e c t t h e e n e r g y demand e v o l u t i o n .
At IIASA t h r e e s u c h t e c h n i q u e s a r e c u r r e n t l y b e i n g u s e d : MUSE ( M o d e l i n g U s e f u l E n e r g y ) [ 2 ] ; WISE ( W i s c o n s i n R e g i o n a l E n e r g y Model) [ 3 1 ; a n d MEDEE (Modele d l ~ v o l u t i o n d e l a Demande d l ~ n e r g i e ) . They d i f f e r m a i n l y i n t e r m s o f c h e l e v e l o f d i s a g g r e g a t i o n o f
t h e s o c i a l , e c o n o m i c , a n d . t e c h n o l o g i c a 1 s y s t e m s , i n t h e s e l e c t i o n o f e n d - u s e c a t e g o r i e s , and i n t h e s c e n a r i o w r i t i n g p r o c e s s .
T h i s r e p o r t o u t l i n e s t h e g e n e r a l MEDEE a p p r o a c h a s d e v e l o p e d a t I E J E . A d e t a i l e d d i s c u s s i o n i s t h e n g i v e n o f MEDEE 2 - - t h e s i m - p l i f i e d v e r s i o n o f MEDEE t h a t was d e v e l o p e d a t IIASA a s p a r t o f t h e e n e r g y m o d e l i n g work o f t h e E n e r g y S y s t e m s Program.
THE MEDEE APPROACH
MEDEE was d e v e l o p e d a few y e a r s a g o t o s p a n t h e e n e r g y demand i n F r a n c e t o t h e y e a r 2000. The main p u r p o s e o f MEDEE i s t o p r o - v i d e a f l e x i b l e framework f o r e x p l o r i n g t h e i n f l u e n c e o f s o c i a l , e c o n o m i c , t e c h n o l o g i c a l , a n d p o l i c y c h a n g e s o n t h e l o n g - t e r m e v o - l u t i o n o f e n e r g y demand.* The o b j e c t i v e s o f MEDEE were a s f o l l o w s :
-
To i d e n t i f y t h e m a j o r f a c t o r s d e t e r m i n i n g e n e r g y demand;-
To p r o v i d e a t o o l f o r e v a l u a t i n g t h e i n f l u e n c e on e n e r g y demand o f c h a n g e s i n t h e e v o l u t i o n o f t h e s e f a c t o r s ;-
TO u n d e r s t a n d how t h e r e c e n t f o u r f o l d i n c r e a s e i n c r u d e o i l p r i c e s c o u l d a f f e c t e n e r g y demand;-
To d e t e r m i n e , by means o f a s c e n a r i o , t h e e n e r g y demand g r o w t h f r o m t h e d e v e l o p m e n t of m u l t i p l e a s p e c t s o f s o c i e t y ;-
To make u s e , i n t h e s c e n a r i o w r i t i n g p r o c e s s , o f t h e work o f s o c i o l o g i s t s , e c o n o m i s t s , a n d p o l i c y a n a l y s t s o n t h e f u t u r e e v o l u t i o n o f s o c i e t y .The MEDEE a p p r o a c h i n v o l v e s t h e f o l l o w i n g s t e p s ( F i g u r e 2 ) :
-
A s y s t e m a t i c a n a l y s i s o f t h e s o c i a l , e c o n o m i c , a n d t e c h - n o l o g i c a l s y s t e m i n o r d e r t o i d e n t i f y t h e m a j o r f a c t o r s d e t e r m i n i n g t h e l o n g - t e r m e n e r g y demand e v o l u t i o n .-
D i s a g g r e g a t i o n o f t h e t o t a l e n e r g y demand i n t o a m u l t i - t u d e o f e n d - u s e c a t e g o r i e s . The s e l e c t i o n o f t h e c a t e - g o r i e s t o b e c o n s i d e r e d d e p e n d s upon t h e o b j e c t i v e s p u r s u e d by t h e m o d e l e r a n d on d a t a a v a i l a b i l i t y . O r g a n i z a t i o n o f a l l d e t e r m i n a n t s i n t o a h i e r a r c h i c a l s t r u c t u r e , from t h e macro t o t h e m i c r o l e v e l , s h o w i n g how t h e " m a c r o d e t e r m i n a n t s " a f f e c t e a c h e n d - u s e c a t e g o r y . C o n s t r u c t i o n o f a s i m u l a t i o n model by s i m p l i f y i n g t h e s y s t e m s t r u c t u r e a n d g r o u p i n g t h e d e t e r m i n a n t s i n t o e x o g e n o u s d e t e r m i n a n t s and s c e n a r i o e l e m e n t s . The d e - t e r m i n a n t s c h o s e n a s s c e n a r i o e l e m e n t s a r e t h o s e t h e e v o l u t i o n o f w h i c h c a n n o t b e e x t r a p o l a t e d f r o m p a s t t r e n d s b e c a u s e o f p o s s i b l e s t r u c t u r a l c h a n g e s i n t h e*The MEDEE a p p r o a c h i s e x t e n s i v e l y d e s c r i b e d i n F r e n c h i n [ 4 ] a n d i s summarized i n E n g l i s h i n [ I , 5 1
.
OF EXOGENOUS DETERMINANTS
I
SYSTEM ANALYSIS O F THE SOCIAL, ECONOMIC AND TECHNOLOGICAL SYSTEMI
M A I N DETERMINANTS O F ENERGY DEMAND HIERARCHICALLY
STRUCTURED
CONSTRUCTION SELECTION OF
OF A SIMULATION
I
IEXOGENOUS SIMULATION
,
FACTORS
USEFUL ENERGY FINAL ENERGY
DEMAND DEMAND PER
(SUBSTITUTABLE ENERGY COMMODITY
FUEL USE) (NONSUBSTITUTABLEI
Figure 2. Conceptual scheme of the MEDEE approach.
energy demand growth pattern, as for example, policy measures or energy prices. The evolution of these factors is specified in a scenario. The exogenous de- terminants encompass those factors the evolution of which is difficult to model (e.g., population growth, number of persons per household) but for which their long-term evolution can be adjusted suitably from past trends or from other studies (e.g., demographic studies).
The MEDEE approach was designed to be applicable to a broad range of countries, and has been applied to Mexico [ 6 ] and the USA [7] ; its application to the European Community (EC) countries is currently being studied at IEJE. The applicability of the MEDEE approach to developing countries is discussed in [ I ] . In each case the social, economic, and technological systems have been analyzed at different levels of disaggregation in order to take into account both the particular characteristics of the country and the data available.
From these case studies two computerized simulation models have been developed: MEDEE 2 and MEDEE 3. The latter is a more disaggregated model and is being implemented for the EC
[ a ] .
Objectives
In designing MEDEE 2 we had the following objectives in mind :
-
To reflect structural changes affecting long-term energy demand by disaggregating the social, economic, and technological system so as to be able to take these changes explicitly into account. These in- clude changes in: social needs (e.g., saturation);the international division of labor (e.g., the shift of heavy industries such as steel from industrialized countries to developing countries, resulting in lower costs for energy, raw materials, and labor; government policies (e.g., transportation and energy conservation policies); technology (e.g., substitution of current processes with less energy-intensive ones); energy prices.
-
To identify the potential market (i-e., the maximum demand that can be technically met) of each final energy form (e.g., electricity, coal, gas, solar, oil products, and district heat). Table 1 shows howTable 1. Potential market for final energy forms.
Final Energy
Forms Potential Market
Hot water Solar heat Space heat and
air conditioning Electricity,
Coolin Gas,
Space Heat Pumps
Electric heat District heat Coal
'9 heat
For use in private single family houses, low build- ings, industry
Space heat, hot water, and cooking
Industrial furnace (for use in primarily light industries)
i
For use in human settle- Space heat, hot waterIndustrial steam ments (e-g., megalopolises, medium-sized cities)
Industrial steam District heat Coke, feedstocks Motor fuels Liquid fuel All heat demand
Feedstocks
Gas All heat demand
Feedstocks
t h e d e t a i l e d a c c o u n t i n g o f t h e e n e r g y demand by e n d - u s e c a t e g o r i e s c o u l d be u s e d t o i d e n t i f y t h e p o t e n t i a l m a r k e t o f t h e m a j o r e n e r g y f o r m s .
-
To d e s i g n t h e model i n s u c h a way t h a t i t i s e a s i l y a p p l i c a b l e t o many c o u n t r i e s . Thus w i t h i n t h e model t h e r e a r e s w i t c h e s t h a t p e r m i t t h e u s e o f s u b m o d u l e s w i t h v a r i o u s d e g r e e s o f s o p h i s t i c a t i o n . Most o f t h e macroeconomic i n d i c a t o r s u s e d i n t h e model a r e com- p a t i b l e w i t h U n i t e d N a t i o n s s t a t i s t i c s .Scope o f t h e Model
I n o r d e r t o i n d i c a t e t h e s c o p e o f MEDEE 2 , w e l i s t some q u e s t i o n s t h a t t h e model c a n a d d r e s s :
-
How w i l l income g r o w t h a f f e c t e n e r g y demand t h r o u g h t h e i n c r e a s e i n t h e s o c i a l n e e d s ( e - g . , m o b i l i t y , s i z e o f d w e l l i n g , c o n s u m p t i o n o f g o o d s ) ?-
How a n d when i n i n d u s t r i a l i z e d c o u n t r i e s w i l l t h e s a t u r a t i o n o f s p e c i f i c s o c i a l n e e d s i n f l u e n c e e n e r g y demand?-
How c a n a m o d i f i c a t i o n i n t h e c o n s u m p t i o n p a t t e r n s o f t h e p o p u l a t i o n ( e . g . , t h e s h i f t t o t h e s e r v i c e s e c t o r ) a f f e c t e n e r g y demand?-
How c a n t h e e v o l u t i o n o f t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r b e t w e e n i n d u s t r i a l i z e d a n d d e v e l o p i n g coun- t r i e s m o d i f y t h e i n d u s t r i a l e n e r g y demand p a t t e r n i n t h e s e c o u n t r i e s ? F o r e x a m p l e , w h a t w i l l b e t h e e f f e c t s o f t h e s h i f t i n i n d u s t r i a l i z e d c o u n t r i e s t o i n d u s t r i a l p r o d u c t i o n w i t h a h i g h e r v a l u e added a n d low e n e r g y c o n t e n t , a n d t h e c o n c e n t r a t i o n i n d e v e l o p - i n g c o u n t r i e s o f t h e p r o d u c t i o n o f b a s i c m a t e r i a l s s u c h a s s t e e l o r p l a s t i c s ?-
How c o u l d a s h i f t f r o m t h e u s e o f a u t o m o b i l e s t o t h a t o f p u b l i c t r a n s p o r t a t i o n f o r i n t e r c i t y a n d u r b a n t r a n s p o r t a t i o n a f f e c t e n e r g y demand?-
What p o t e n t i a l f o r e n e r g y c o n s e r v a t i o n c o u l d r e s u l t f r o m t h e r e t r o f i t t i n g o f e x i s t i n g b u i l d i n g s w i t h b e t t e r i n s u l a t i o n a n d / o r from t h e c o n s t r u c t i o n o f b e t t e r i n s u l a t e d b u i l d i n g s ?-
What i s t h e p o t e n t i a l m a r k e t f o r s o l a r h e a t i n g , h e a t pumps, d i s t r i c t h e a t i n g , e t c . ?MEDEE 2 d o e s n o t d e a l e x p l i c i t l y w i t h t h e p r o b l e m o f i n t e r - f u e l s u b s t i t u t i o n , a l t h o u g h some g e n e r a l g u i d e l i n e s a s t o t h e f u e l mix c a n b e r o u g h l y d e r i v e d . T h i s i s b e c a u s e s u c h a p r o b l e m s h o u l d be t r e a t e d by a n e n e r g y s u p p l y model a n d n o t by a n e n e r g y demand model s i n c e i n t e r f u e l s u b s t i t u t i o n d e p e n d s o n t h e r e l a t i v e p r i c e o f f i n a l e n e r g y f o r m s , which a r e c a l c u l a t e d e n d o g e n o u s l y i n a s u p p l y model.
I n MEDEE 2 e n e r g y demand i s n o t d i r e c t l y r e l a t e d t o e n e r g y p r i c e s by means o f e l a s t i c i t y c o e f f i c i e n t s . The i n t e r d e p e n d e n c e b e t w e e n p r i c e a n d demand may b e o b s e r v e d by a n a l y z i n g t h e
t e c h n o l o g i c a l p o s s i b i l i t i e s f o r r e d u c i n g e n e r g y demand a s e n e r g y p r i c e i n c r e a s e s a n d by c o n s i d e r i n g t h e i n v e s t m e n t c o s t s a n d t h e e n e r g y s a v i n g s o f c o n s e r v a t i o n . W e r e l i e d c o n s i d e r a b l y on t h e many s t u d i e s c a r r i e d o u t s i n c e t h e 1973-1974 o i l c r i s i s t o i d e n t i f y t h e s o c i a l , e c o n o m i c , a n d t e c h n o l o g i c a l r e s p o n s e s t h a t c a n b e e x - p e c t e d f o r a g i v e n r a n g e o f e n e r g y p r i c e s . ( S e e [ 4 ] f o r a l i s t o f t h e s e s t u d i e s . ) F o r i n s t a n c e , t h e model d o e s n o t d e d u c e t h e g a s o l i n e demand f r o m t h e assumed p r i c e o f g a s o l i n e . T h i s p r i c e i s u s e d i n t h e s c e n a r i o w r i t i n g p r o c e s s a s b a c k g r o u n d i n f o r m a t i o n f o r m o d i f y i n g p a s t t r e n d s a s t o t h e a u t o m o b i l e o w n e r s h i p r a t i o o r t h e a n n u a l a u t o m o b i l e m i l e a g e ; t h e model d e r i v e s t h e g a s o l i n e d e - mand f r o m t h e assumed number o f a u t o m o b i l e s a n d t h e d i s t a n c e d r i v e n by them.
T h i s c o u l d b e c o n s i d e r e d a w e a k n e s s i n t h e m o d e l ' s a p p r o a c h . However, we h a v e t o b e a w a r e t h a t i n t h e new e n e r g y c o n t e x t c h a r a c t e r i z e d by h i g h e r e n e r g y p r i c e s e c o n o m i s t s a r e l a c k i n g t h e t e c h n i q u e s a n d e m p i r i c a l d a t a t o u n d e r s t a n d how demand r e s p o n d s t o h i g h a n d i n c r e a s i n g e n e r g y p r i c e s . A s t h e c o n s i d e r a b l e d i s - a g r e e m e n t b e t w e e n t h e r e s u l t s o f numerous p r i c e s e l a s t i c i t y s t u d i e s i n d i c a t e s , t h e t r a d i t i o n a l a p p r o a c h i n terms o f e l a s t i c i t y i s n o l o n g e r s a t i s f a c t o r y ; t h e s e e l a s t i c i t i e s h a v e b e e n c a l c u l a t e d f r o m t h e p a s t , t h a t i s t o s a y , o v e r a p e r i o d when e n e r g y p r i c e s w e r e s t a b l e o r e v e n d e c l i n i n g , a n d a r e t h e r e f o r e n o t a p p l i c a b l e t o t h e p r e s e n t e n e r g y s i t u a t i o n . T h i s i s s u e i s a n a l y z e d i n d e t a i l i n
111.
D e s c r i p t i o n
The g e n e r a l s t r u c t u r e o f MEDEE 2 i s shown i n F i g u r e 3. The model i s d r i v e n by a s c e n a r i o w h i c h i s b r o k e n down i n t o : 1 ) a s o c i o e c o n o m i c s u b s c e n a r i o c h a r a c t e r i z i n g t h e b a s i c f e a t u r e s o f t h e s o c i a l a n d economic d e v e l o p m e n t o f t h e c o u n t r y b e i n g con- s i d e r e d * ; a n d 2 ) a n e n e r g y s u b s c e n a r i o s p e c i f y i n g e n e r g y - r e l a t e d
* F o r some IIASA a p p l i c a t i o n s o f MEDEE 2 , a GDP model--MACRO-- was u s e d t o d e t e r m i n e t h e GDP e v o l u t i o n (Y), c a p i t a l f o r m a t i o n
( I ) - - t h a t i s , t h e GDP e x p e n d i t u r e s i n p u b l i c a n d p r i v a t e i n v e s t - m e n t - - p r i v a t e c o n s u m p t i o n ( C ) [!I].
SCENARIO
- SOCIOECONOMIC SUBSCENARIO
-
ENERGY SUBSCENARIO---
I
HOUSEHOLD1I
I SERVICE I MOTOR FUELS
Figure 3. General structure of MEDEE 2.
I MODULE
-p
INDUSTRIAL 4
1
f a c t o r s ( e . g .
,
e n d - u s e e f f i c i e n c i e s and m a r k e t p e n e t r a t i o n ).
Am a c r o e c o n o m i c module c a l c u l a t e s t h e a c t i v i t y l e v e l o f t h e p r o - d u c t i v e s e c t o r s c o n s i d e r e d i n MEDEE 2 . E n e r g y demand i s t h e n c a l c u l a t e d f o r e a c h e n d - u s e c a t e g o r y i n t h r e e o t h e r m o d q l e s : h o u s e h o l d / s e r v i c e , i n d u s t r i a l , a n d t r a n s p o r t a t i o n , u s i n g t h e v a l u e o f t h e s o c i a l n e e d s a n d t h e s e c t o r a l a c t i v i t y l e v e l s a s g i v e n by t h e s c e n a r i o a n d t h e m a c r o e c o n o m i c m o d u l e .
USEFUL ENERGY DEMAND
MEDEE 2 i s t h e r e f o r e a model f o r e v a l u a t i n g t h e e n e r g y d e - mand i m p l i c a t i o n s o f t h e e c o n o m i c a n d l i f e - s t y l e s c e n a r i o s d e -
s c r i b i n g t h e l o n g - t e r m e v o l u t i o n o f a c o u n t r y . The model i s o n l y a v e r y s i m p l e framework f o r d e r i v i n g t h e e n e r g y demand a s - s o c i a t e d w i t h t h e s c e n a r i o s . B e c a u s e o f i t s h i g h l e v e l o f d i s - a g g r e g a t i o n , t h e model p r o v i d e s i n a d d i t i o n a framework f o r a c c o u n t i n g f o r t h e e n e r g y u s e s i n a c o u n t r y .
MODULE TRANSPOR-
TATION MODULE
When v a r i o u s e n e r g y f o r m s ( e . g . , s o l a r , e l e c t r i c i t y , a n d f o s s i l f u e l s ) c a n b e s u b s t i t u t e d f o r a g i v e n e n d - u s e c a t e g o r y , t h e e n e r g y demand i s f i r s t c a l c u l a t e d i n u s e f u l e n e r g y t e r m s , a n d t h e n c o n v e r t e d i n t o f i n a l e n e r g y , t a k i n g i n t o a c c o u n t t h e p e n e t r a t i o n o f t h e v a r i o u s e n e r g y f o r m s i n c o m p e t i t i o n a n d t h e i r e n d - u s e e f f i c i e n c i e s . F o r t h e s e s u b s t i t u t a b Z e f u e l u s e s ( e . g . , s p a c e h e a t i n g , h o t w a t e r , p r o c e s s h e a t ) t h e f i n a l e n e r g y demand i s e v e n t u a l l y d i s t r i b u t e d among e l e c t r i c i t y , s o l a r , d i s t r i c t h e a t , a n d f o s s i l f u e l s . The f o s s i l f u e l mix among c o a l , g a s , a n d o i l i s n o t a c c o u n t e d f o r h e r e s i n c e t h e mix d e p e n d s g r e a t l y o n t h e c o n d i t i o n o f s u p p l y a n d t h e r e l a t i v e p r i c e o f t h e s e f u e l s - - i s s u e s t h a t a r e o u t s i d e t h e s c o p e o f t h e m o d e l . The r e p l a c e m e n t o f f o s s i l f u e l s w i t h new e n e r g y f o r m s ( e . g . , s o l a r , d i s t r i c t h e a t , and e l e c t r i c i t y ) i s n e v e r t h e l e s s c o n s i d e r e d s i n c e t o o u r mind p o l i c y f a c t o r s w i l l p l a y a d e t e r m i n i n g r o l e i n t h e f u t u r e i n t h e s u b s t i t u t i o n p r o c e s s . F o r t h a t r e a s o n , w e t h i n k t h a t t h i s i s s u e
c a n b e d e a l t w i t h o n l y by means o f s c e n a r i o a s s u m p t i o n s a b o u t t h e s e s u b s t i t u t i o n s . Thus t h e m a r k e t p e n e t r a t i o n s o f s o l a r , d i s t r i c t h e a t and e l e c t r i c i t y a r e d e f i n e d by means o f s c e n a r i o s .
F o r n o n s u b s t i t u t a b l e f u e l u s e s ( e . g . , m o t o r f u e l f o r a u t o - m o b i l e s , a n d e l e c t r i c i t y f o r e l e c t r o l y s i s , l i g h t i n g , a n d s m a l l e n g i n e s ) o n l y f i n a l e n e r g y i s c o n s i d e r e d .
F o r e a c h e n d - u s e c a t e g o r y , t h e u s e f u l / f i n a l e n e r g y demand i s r e l a t e d t o t h e s o c i a l , e c o n o m i c , a n d t e c h n o l o g i c a l d e t e r m i - n a n t s . The e n e r g y demand p r o j e c t i o n s r e s u l t s f r o m t h e e v o l u t i o n a s s i g n e d t o t h e s e d e t e r m i n a n t s e i t h e r i n t h e s c e n a r i o o r i n t h e model. ( S e e F i g u r e 4 . )
The Macroeconomic Module
The m a c r o e c o n o m i c module o f MEDEE 2 i s i l l u s t r a t e d i n F i g - u r e 5 . The r o l e o f t h i s module i s t o d e f i n e t h e g e n e r a l s t r u c - t u r e o f t h e economy, o r , i n o t h e r w o r d s , t o e x p r e s s t h e e c o n o m i c g r o w t h , a s c h a r a c t e r i z e d b y t h e s c e n a r i o , i n t e r m s o f g r o w t h o f t h e a c t i v i t y o f e a c h o f t h e e c o n o m i c s e c t o r s i n MEDEE 2 .
I 1 SCENARIO
1
Socioeconomic Subscenario
Economic Technological Energy Subscenario
.~ ~- ~
(e.g. economic growth, lifestyle)
1
Useful Energy Demand (e.g. highflow temperature steam, furnace heat, space heat, hot water, heat for cooking, energy for cooling)(e.g. technical factors, market production)
Energy Sources (e.g. district heat,
solar systems)
I
/ \
Efficiency o f Appliances (e.g. furnaces, boilers)
Nonsubstitutable Final Energy Demand
- electricity
- motor fuel
- coal for steam trains
- metall. coke
- feedstocks
Substitutable Final Energy Demand
- fossil fuels
- district heat
- electricity
- "soft" solar eystems
Figurc: 4. Sch(:rnc: f o r projecting usrful and final energy dcmand in MEDEF; 2.
1-
INVESTMENT IN BUILDINGS - - W V A- - -
-- - -
+VA AGRICULTURE CONSTRUCTION--, .I -
INVESTMENT IN EQUIPMENT
'
E UIPMENT N v ~ G 8 0 D S INDUSTRIES]CONSUMPTION OF DURABLE
'
I'4 SERVICE
SECTOR VA
,
SERVICE
/'-SECTOR EMPLOYMENT
Y = GDP C = Private Consumption I = Public and Private Investments VA =Value Added Figure 5 . Macroeconomic module of MEDEE 2*.
*Only a selected group of sectors and subsectors has been shown for the sake of simplicity.
S i x e c o n o m i c s e c t o r s a r e c o n s i d e r e d i n MEDEE 2 : a g r i c u l t u r e ; m i n i n g ; e n e r g y ; m a n u f a c t u r i n g ; s e r v i c e ( i n c l u d i n g b a n k i n g , com- m e r c e , s c h o o l s , h o s p i t a l s , a n d p u b l i c a d m i n i s t r a t i o n ) ; a n d con- s t r u c t i o n . The m a n u f a c t u r i n g s e c t o r i s d i v i d e d i n t o f o u r s u b - s e c t o r s : t h e e q u i p m e n t g o o d s i n d u s t r i e s ( i . e . , i n d u s t r i e s p r o - d u c i n g p r e d o m i n a n t l y c a p i t a l g o o d s a n d d u r a b l e g o o d s s u c h a s t r a n s p o r t a t i o n e q u i p m e n t o r e l e c t r i c a l m a c h i n e r y i n d u s t r i e s ) ; t h e f o o d a n d t e x t i l e i n d u s t r i e s ; t h e b a s i c m a t e r i a l s i n d u s t r i e s
( s u c h a s s t e e l , b u i l d i n g m a t e r i a l s , a n d c h e m i c a l s ) ; m i s c e l l a - n e o u s i n d u s t r i e s .
The macroeconomic module d e r i v e s t h e r e q u i r e d l e v e l o f a c t i v - i t y o f e a c h s e c t o r from i n v e s t m e n t i n c o n s t r u c t i o n a n d e q u i p m e n t a n d f r o m p r i v a t e c o n s u m p t i o n o f d u r a b l e g o o d s , n o n d u r a b l e g o o d s , a n d s e r v i c e s . T h i s a p p r o a c h i m p l i c i t l y a s s u m e s f o r t h e f u t u r e s i m i l a r t r e n d s i n f o r e i g n t r a d e a s h a v e b e e n o b s e r v e d i n t h e p a s t . The c a l c u l a t e d a c t i v i t y l e v e l s c a n t h e n b e m o d i f i e d i n t e r a c t i v e l y
( b y means o f a s c e n a r i o ) t o a c c o u n t f o r c h a n g e s compared t o p a s t t r e n d s , a s f o r e x a m p l e , i n t h e f o r e i g n t r a d e o f b a s i c m a t e r i a l s . A s i s e n v i s i o n e d , a "new e c o n o m i c o r d e r " would l e a d t o e x p o r t s o f b a s i c m a t e r i a l s f r o m d e v e l o p i n g c o u n t r i e s t o i n d u s t r i a l i z e d c o u n t r i e s . T h e s e i m p o r t s c a n n o t b e d e d u c e d f r o m t h e macroeconomic module a n d t h e r e f o r e h a v e t o b e assumed e x o g e n o u s l y ( b y means o f a s c e n a r i o ) .
Most o f t h e e q u a t i o n s o f t h e module a r e s t a t i s t i c a l e x p r e s - s i o n s of t h e b a l a n c e between t h e a c t i v i t y o f a s e c t o r ( e . g . , v a l u e added o f e q u i p m e n t goods i n d u s t r i e s ) and t h e u s e o f i t s o u t p u t
( e . g . , i n v e s t m e n t i n equipment and consumption o f d u r a b l e g o o d s ) . Because o f t h i s f e a t u r e , t h e a d j u s t e d r e l a t i o n s h o u l d n o r m a l l y have a h i g h c o r r e l a t i o n c o e f f i c i e n t .
Although t h e macroeconomic module i s s i m p l e , i t p r o v i d e s a c o n s i s t e n t economic framework f o r e v a l u a t i n g a l t e r n a t i v e s o c i o - economic s c e n a r i o s . An a l t e r n a t i v e would be t o u s e an i n p u t / o u t p u t model, b u t i t s c o m p l e x i t y i s n o t w o r t h w h i l e o v e r t h e l o n g t e r m , compared t o t h e u n c e r t a i n t y i n t h e e v o l u t i o n o f t h e t e c h - n i c a l c o e f f i c i e n t s . S p e c i f i c a l l y , t h i s module p e r m i t s t h e a s s e s s - ment o f t h e i m p a c t on e n e r g y demand o f c h a n g e s i n t h e r a t e o f c a p i t a l f o r m a t i o n ( e - g . , t h e f r a c t i o n o f GDP t h a t g o e s i n t o i n - v e s t m e n t ) o r i n t h e p r i v a t e consumption p a t t e r n s ( e . g . , d u r a b l e goods v e r s u s n o n d u r a b l e goods v e r s u s s e r v i c e s ) .
Enerav Demand Modules
The t h r e e e n e r g y demand modules i n MEDEE 2 a r e : h o u s e h o l d / s e r v i c e , i n d u s t r i a l , and t r a n s p o r t a t i o n . Energy demand i s c a l - c u l a t e d f o r e a c h end-use c a t e g o r i e s i n e a c h o f t h e s e modules.
Each module h a s been d e v e l o p e d i n a s i m i l a r way: End-use c a t e - g o r i e s h a v e been i d e n t i f i e d by t a k i n g e x p l i c i t l y i n t o a c c o u n t t h e m a j o r s o c i a l , economic, t e c h n o l o g i c a l , and p o l i c y c h a n g e s t h a t c a n a p p e a r o v e r a l o n g t e r m and d r a m a t i c a l l y a f f e c t e n e r g y demand. The end-use c a t e g o r i e s i n MEDEE 2 a r e g i v e n i n T a b l e 2 .
F o r e a c h c a t e g o r y t h e s o c i o e c o n o m i c d e t e r m i n a n t s t h a t c r e a t e t h e f i n a l and u s e f u l e n e r g y demand have been i d e n t i f i e d a s w e l l a s t h e m a j o r f a c t o r s t h a t i n f l u e n c e t h e e v a l u a t i o n o f t h e s e d e t e r - m i n a n t s .
The H o u s e h o l d / S e r v i c e Module
The breakdown o f t h e h o u s e h o l d / s e r v i c e module i s shown i n T a b l e 3 .
Our o b j e c t i v e s i n d i s a g g r e g a t i n g t h e module a r e a s f o l l o w s :
-
To i d e n t i f y homogeneous end-use c a t e g o r i e s from t h e p o i n t o f view o f f u t u r e t y p e s o f e n e r g y s u p p l y com- m o d i t i e s - - t h a t i s ,-
s p a c e h e a t i n g and h o t w a t e r i n low d e n s i t y pop- u l a t i o n a r e a s : e l e c t r i c i t y , o i l , g a s , and s o l a r ;Table 2. Categories of energy use considered in ICEDEE 2.
P e r s o n a l t r a n s p o r t a t i o n Urban
I n t e r c i t y
F r e i g h t t r a n s p o r t a t i o n Long d i s t a n c e Local
M i s c e l l a n e o u s M i l i t a r y
I n t e r n a t i o n a l
Household Space h e a t i n g ? Water h e a t i n g ? Cooking?
Cooling?
E l e c t r i c a l a p p l i a n c e s * S e r v i c e
Thermal uses?
Cooling?
E l e c t r i c a l a p p l i a n c e s *
SECTORS A g r i c u l t u r e C o n s t r u c t i o n Mining
Manufacturing:
B a s i c m a t e r i a l s Equipment
Food and t e x t i l e s M i s c e l l a n e o u s
~ n e r g y 5
TRANSPORTATION MODULE*
Automobile (motor f u e l , e l e c t r i c ) Mass t r a n s i t (motor f u e l , e l e c t r i c )
I
Automobile (motor f u e l ) A i r p l a n e (motor f u e l ) Bus (motor f u e l )T r a i n ( s t e a m , d i e s e l , e l e c t r i c ) T r a i n ( s t e a m , d i e s e l , e l e c t r i c )
f
Barge (motor f u e l ,\ T r u c k (motor f u e l ) Truck (motor f u e l )
(Motor f u e l )
( F r e i g h t and p a s s e n g e r , a i r and maritime t r a f f i c )
Pre-/post-1975 d w e l l i n g s
M u l t i f a m i l y / s i n g l e f a m i l y d w e l l i n g s
(Pre-/post-1975 d w e l l i n g s )
INDUSTRIAL MODULE
PROCESSES Motor f u e l u s e *
S p e c i f i c e l e c t r i c i t y uses*+
Thermal u s e s : Steam g e n e r a t i o n Furnace o p e r a t i o n Space and w a t e r h e a t i n g Coke use f o r i r o n o r e r e d u c t i o n * Use of f e e d s t o c k s *
* F i n a l e n e r g y
? U s e f u l e n e r g y (energy s o u r c e s competing: f o s s i l f u e l s , d i s t r i c t h e a t , e l e c t r i c i t y , s o l a r s y s t e m s )
:BY d e f i n i t i o n i n t h e model, a l l p r e s e n t u s e s of e l e c t r i c i t y ( l i g h t i n g , motive power, e l e c t r o l y s i s , e l e c t r i c f u r n a c e s ) a r e i n c l u d e d h e r e .
§The e n e r g y s e c t o r i s c o n s i d e r e d s e p a r a t e l y o n l y i f s t a t i s t i c s a r e a v a i l a b l e . I t s e n e r g y consumption i s n o t c o n s i d e r e d h e r e s i n c e i t s h o u l d be accounted f o r i n t h e c o n v e r s i o n from f i n a l t o primary e n e r g y .
T a b l e 3 . H o u s e h o l d / s e r v i c e m o d u l e .
HOUSEHOLD SECTOR
Space h e a t i n g f o r f o u r human s e t t l e m e n t s c a t e g o r i e s . ( I n t h i s i n s t a n c e , t h e f o l l o w i n g c a t e g o r i e s have been c o n s i d e r e d : c i t i e s o f more t h a n 1 m i l l i o n i n - h a b i t a n t s ; c i t i e s of more t h a n 250,000 and l e s s t h a n 1 m i l l i o n ; c i t i e s o f be- tween 50,000 and 250,000; and r u r a l a r e a s and c i t i e s o f l e s s t h a n 5 0 , 0 0 0 . ) For i n d u s t r i a l i z e d c o u n t r i e s t h e f o l l o w i n g d w e l l i n g c a t e g o r i e s a r e d i s t i n g u i s h e d :
--
Pre-1975 and post-1975 d w e l l i n g s- -
M u l t i f a m i l y and s i n g l e f a m i l y- -
Dwellings w i t h c e n t r a l h e a t i n g o r i n d i v i d u a l h e a t i n g Hot w a t e r f o r t h e above f o u r human s e t t l e m e n t c a t e g o r i e s A i r c o n d i t i o n i n gCooking
E l e c t r i c a l a p p l i a n c e s
SERVICE SECTOR
Heat ( h o t w a t e r and mainly space h e a t i n g ) f o r t h e above f o u r human s e t t l e - ments c a t e g o r i e s . F o r c o u n t r i e s w i t h d a t a on t h e b u i l d i n g i n v e n t o r y , t h e h e a t demand e v o l u t i o n i s s i m u l a t e d f o r b u i l d i n g s b u i l t b e f o r e 1975 and f o r t h e new c o n s t r u c t i o n (post-1975 b u i l d i n g s ) .
A i r c o n d i t i o n i n g E l e c t r i c a l a p p l i a n c e s
-
s p a c e h e a t i n g a n d h o t w a t e r i n h i g h d e n s i t y pop- u l a t i o n a r e a s : e l e c t r i c i t y , o i l , g a s , a n d d i s - t r i c t h e a t i n g * ;-
c o o l i n g : e l e c t r i c i t y , a n d s o l a r ;*The t y p e o f d i s t r i c t h e a t i n g t h a t c a n b e d e v e l o p e d ( n u c l e a r , c o a l , o r g e o t h e r m a l ) d e p e n d s m a i n l y on t h e d e n s i t y o f t h e p o p u l a t i o n a n d t h e s i z e o f t h e p o t e n t i a l m a r k e t . F o r t h i s r e a s o n , t h e h e a t demand ( s p a c e h e a t i n g and h o t w a t e r ) i s c a l - c u l a t e d f o r d i f f e r e n t human s e t t l e m e n t s c a t e g o r i e s ( e . g . , d i f f e r e n t c i t y - s i z e c a t e g o r i e s ) .
-
e l e c t r i c a p p l i a n c e s ( h o u s e h o l d a p p l i a n c e s , com- p u t e r s , l i f t s , e t c ) : e l e c t r i c i t y ;-
c o o k i n g ( h o u s e h o l d ) : e l e c t r i c i t y , a n d g a s .-
To d e t e r m i n e b o t h h o u s e h o l d a n d s e r v i c e - s e c t o r e n e r g y demands s i n c e t h e i r r e s p e c t i v e d r i v i n g f o r c e s d o n o t grow a t t h e same r a t e : i n t h e c a s e o f h o u s e h o l d s t h e d r i v i n g f o r c e i s t h e demography ( e . g . , t h e p o p u l a t i o n a n d number o f h o u s e h o l d s ) ; i n t h e c a s e o f s e r v i c e s , i t i s t h e e c o n o m i c a c t i v i t y i n t h e s e r v i c e s e c t o r .-
TO c o n s i d e r b u i l d i n g t y p e s t h a t a r e homogeneous w i t h r e s p e c t t o h e a t r e q u i r e m e n t s ( e . g . , d w e l l i n g s and b u i l d i n g s b u i l t b e f o r e t h e o i l c r i s i s o r a f t e r w a r d s ; m u l t i f a m i l y a n d s i n g l e f a m i l y d w e l l i n g s ) . T h i s means t h a t t h e e v o l u t i o n o f t h e b u i l d i n g i n v e n t o r y m u s t b e s i m u l a t e d . F o r d e v e l o p i n g c o u n t r i e s t h e h e a t i n g d e - mand i s g e n e r a l l y n o t v e r y s i g n i f i c a n t , s i n c e t h e m a j o r i t y o f t h e s e c o u n t r i e s a r e l o c a t e d i n t r o p i c a l o r s u b t r o p i c a l a r e a s a n d few d a t a a r e a v a i l a b l e on t h e b u i l d i n g i n v e n t o r y . Thus t h e t y p e s o f b u i l d i n g s a n d d w e l l i n g s w i l l n o t b e a c c o u n t e d f o r .F o r t h e s u b s t i t u t a b l e u s e o f e n e r g y t h e e n e r g y demand was p r o j e c t e d i n terms o f u s e f u l e n e r g y r a t h e r t h a n f i n a l e n e r g y i n o r d e r t o a c c o u n t f o r t h e d i s c r e p a n c i e s i n t h e e n d - u s e e f f i c i e n - c i e s o f t h e v a r i o u s c o m p e t i n g f u e l s .
To g e t a n i d e a o f t h e a g g r e g a t e f i n a l e n e r g y demand o f t h i s module a n d o f i t s p o s s i b l e e n e r g y s u p p l y m i x , t h e c a l c u l a t e d u s e -
f u l e n e r g y demand i s c o n v e r t e d i n t o f i n a l e n e r g y by a s s u m i n g a c e r t a i n f u e l mix f o r t h e s u p p l y o f t h i s demand and t a k i n g i n t o a c c o u n t t h e e f f i c i e n c i e s o f e a c h f u e l . I n o r d e r t o s i m p l i f y t h e c a l c u l a t i o n s , o n l y two c a t e g o r i e s o f e n e r g y c o m m o d i t i e s h a v e b e e n i n c l u d e d i n t h e g r o u p c o r r e s p o n d i n g t o t h e i r e n d - u s e e f f i c i e n c i e s :
( 1 ) s o l a r , d i s t r i c t h e a t , and e l e c t r i c i t y , w i t h a n assumed e f f i - c i e n c y o f 1 0 0 % ( a t t h e c o n s u m e r l e v e l ) ; and ( 2 ) f o s s i l f u e l s ( c o a l , o i l , a n d g a s ) , t h e e f f i c i e n c i e s o f w h i c h v a r y a c c o r d i n g t o t h e s c e n a r i o [ 101
.
S i n c e t h e l o n g - t e r m e n e r g y s u p p l y w o r l d w i d e w i l l b e c h a r a c - t e r i z e d by a p r o g r e s s i v e s h i f t f r o m o i l and g a s t o o t h e r e n e r g y s o u r c e s s u c h a s s o l a r , c o a l , o r n u c l e a r , w e h a v e made t h e f o l l o w - i n g d i s t i n c t i o n s i n t h e model: f o s s i l f u e l s ( m a i n l y o i l a n d g a s ) , e l e c t r i c i t y ( c o a l o r n u c l e a r ) , and s o l a r a n d d i s t r i c t h e a t ( n u c l e a r o r c o a l ) .
The d e v e l o p m e n t o f e l e c t r i c i t y , s o l a r , a n d d i s t r i c t h e a t i s a s s u m e d i n t h e f o l l o w i n g way: f o r e a c h e n d - u s e c a t e g o r y t h e po- t e n t i a l m a r k e t s h a r e o f e l e c t r i c i t y , s o l a r , a n d d i s t r i c t h e a t i s s p e c i f i e d by means o f s c e n a r i o e l e m e n t s . F o r i n s t a n c e , f o r h o u s e - h o l d s p a c e h e a t i n g t h e p o t e n t i a l m a r k e t o f s o l a r e n e r g y i s d e f i n e d
a s t h e s p a c e h e a t i n g demand o f a l l s i n g l e f a m i l y h o u s e s b u i l t a f t e r 1975. I n t h e s c e n a r i o , a c o e f f i c i e n t s p e c i f i e d t h e m a r k e t s h a r e c a p t u r e d by s o l a r e a c h y e a r . Such a n a p p r o a c h a l l o w s u s t o e n v i - s i o n d i f f e r e n t e n e r g y p o l i c i e s f o r t h e d e v e l o p m e n t o f new e n e r g y s o u r c e s by v a r y i n g t h e m a r k e t p e n e t r a t i o n r a t e s w i t h t h e s c e n a r i o s . T h i s i s p a r t i c u l a r l y r e l e v a n t s i n c e t h e d e v e l o p m e n t o f new e n e r g y s o u r c e s w i l l b e m a i n l y d e t e r m i n e d by p o l i c y f a c t o r s . By d e f i n i t i o n , f o s s i l f u e l demand i s e q u a l t o t h a t demand w h i c h i s n o t m e t by t h e sum o f e l e c t r i c i t y , s o l a r , a n d d i s t r i c t h e a t . T h i s f o s s i l f u e l demand i s n o t b r o k e n down i n t o o i l , g a s , a n d c o a l b e c a u s e o f s u p p l y p r o b l e m s o f t h e s e i n d i v i d u a l f u e l s , w h i c h a r e n o t a c c o u n t e d f o r i n t h e model.
The s t r u c t u r e o f t h e h o u s e h o l d / s e r v i c e module a n d t h e e q u a - t i o n s o f i t s s i m u l a t i o n model a r e d e s c r i b e d i n d e t a i l i n 1101.
The I n d u s t r i a l Module
The i n d u s t r i a l module c o n s i s t s o f t h e f o l l o w i n g s e c t o r s : a g r i c u l t u r e ; c o n s t r u c t i o n ; m i n i n g ; m a n u f a c t u r i n g ; a n d e n e r g y . The m a n u f a c t u r i n g s e c t o r i s f u r t h e r d i v i d e d i n t o f o u r s u b s e c t o r s : b a s i c m a t e r i a l s i n d u s t r i e s ; e q u i p m e n t g o o d s i n d u s t r i e s ; f o o d and t e x t i l e i n d u s t r i e s ; and m i s c e l l a n e o u s i n d u s t r i e s . A c c o r d i n g t o t h e d a t a a v a i l a b l e t h e s e s u b s e c t o r s c a n be f u r t h e r d i s a g g r e g a t e d .
T h e s e s u b s e c t o r s a r e c o n s i d e r e d f o r s e v e r a l r e a s o n s a s d i s - c u s s e d b e l o w .
F i r s t , t h e i n d u s t r i e s h a v e homogeneous e n e r g y p a t t e r n s . The e n e r g y p a t t e r n o f t h e e q u i p m e n t g o o d s i n d u s t r i e s i s c h a r a c t e r i z e d by l a r g e r e q u i r e m e n t s o f e l e c t r i c i t y p e r u n i t o f o u t p u t a n d by a demand f o r h e a t i n g f u e l s a l m o s t e v e n l y d i s t r i b u t e d among s p a c e h e a t i n g , f u r n a c e s , and s t e a m p r o d u c t i o n . The b a s i c m a t e r i a l i n - d u s t r i e s a r e l a r g e e n e r g y c o n s u m e r s , and t h e i r c o n t r i b u t i o n t o t h e t o t a l e n e r g y demand o f t h e i n d u s t r i a l s e c t o r g e n e r a l l y e x c e e d 50% a n d , i n some d e v e l o p i n g c o u n t r i e s , c a n b e a s h i g h a s 8 0 % . I n a d d i t i o n , t h e h i g h s h a r e o f e n e r g y c o s t s i n t h e i r p r o d u c t i o n c o s t s makes t h e s e i n d u s t r i e s s e n s i t i v e t o e n e r g y p r i c e i n c r e a s e s . T h u s , d r a m a t i c r e d u c t i o n s o f t h e e n e r g y r e q u i r e m e n t s p e r u n i t o f o u t p u t c a n b e e x p e c t e d i n t h e f u t u r e , e s p e c i a l l y s i n c e s i g n i f i c a n t r e d u c - t i o n s i n t h e s e r e q u i r e m e n t s were a c h i e v e d i n t h e p a s t when t h e e n e r g y p r i c e s were s t a b l e . I n t h e f o o d a n d t e x t i l e i n d u s t r i e s t h e e n e r g y demand i s m a i n l y f o r s t e a m a n d warm w a t e r - - a b o u t 7 5 % o f t h e f u e l demand f o r t h e r m a l p u r p o s e s .
S e c o n d l y t h e s e s u b s e c t o r s a r e k e y s e c t o r s o f a n economy, t h e r e l a t i v e d e v e l o p m e n t o f which c h a r a c t e r i z e s t h e d e v e l o p m e n t p a t t e r n o f t h e economy. By b r e a k i n g down t h e module, t h e model c a n s i m u l a t e t h e i n f l u e n c e o n e n e r g y demand o f c h a n g e s i n t h e e c o n o m i c d e v e l o p m e n t p a t t e r n o f b o t h i n d u s t r i a l i z e d and d e v e l o p - i n g c o u n t r i e s . I n t h e c a s e o f d e v e l o p i n g e c o n o m i e s , d i f f e r e n t
i n d u s t r i a l growth p a t t e r n s c a n be e n v i s i o n e d a c c o r d i n g t o p r i o r - i t i e s g i v e n t o d o m e s t i c p r o d u c t i o n v e r s u s i m p o r t s / e x p o r t s f o r b a s i c m a t e r i a l s , equipment goods, o r consumer goods. The model c a n e x p r e s s t h e s e c h a n g e s i n t h e i n d u s t r i a l s t r u c t u r e ( i . e . , a s t h e s h a r e o f e a c h s e c t o r i n t h e i n d u s t r i a l v a l u e added) i n t e r m s o f b o t h t o t a l demand and s t r u c t u r e o f t h e demand ( e . g . , s t e a m f u r n a c e , and s p a c e h e a t i n g ) . A l s o , t h r o u g h t h i s breakdown, one c a n a c c o u n t f o r c h a n g e s i n t h e i n t e r n a t i o n a l d i v i s i o n o f l a b o r and t h e p o s s i b l e r e s h a p i n g o f a new economic o r d e r w i t h a l l t h e r e p e r c u s s i o n s on e n e r g y demand. For example, i n t h e i n d u s t r i - a l i z e d c o u n t r i e s such a change c o u l d i n d u c e b o t h a s l o w e r growth o f t h e b a s i c m a t e r i a l s i n d u s t r i e s - - s i n c e i n t h i s p e r s p e c t i v e some d e v e l o p i n g c o u n t r i e s would have a s i g n i f i c a n t e x p o r t c a p a c i t y o f s u c h goods--and a h i g h e r growth o f o t h e r a c t i v i t i e s s u c h a s e q u i p - ment p r o d u c t i o n , know-how, and e n g i n e e r i n g s e r v i c e s . The e n e r g y demand p a t t e r n o f t h e i n d u s t r i a l s e c t o r o f t h e s e c o u n t r i e s c o u l d t h e r e f o r e b e d r a m a t i c a l l y a f f e c t e d .
T h i r d l y , any change i n t h e c a p i t a l f o r m a t i o n r a t i o w i l l i n - f l u e n c e t h e growth o f t h e s e s u b s e c t o r s d i r e c t l y f o r t h e e q u i p - ment goods i n d u s t r i e s ; i n d i r e c t l y f o r t h e f o o d and t e x t i l e i n - d u s t r i e s , s i n c e a m o d i f i c a t i o n i n c a p i t a l f o r m a t i o n a f f e c t s p r i v a t e consumption; and i n d i r e c t l y f o r t h e b a s i c m a t e r i a l s i n d u s t r i e s , s i n c e t h e l a t t e r ' s growth depends m a i n l y on t h e growth o f t h e o t h e r two i n d u s t r i e s . T h i s a p p r o a c h t o modeling t h e m a n u f a c t u r i n g s e c t o r makes i t p o s s i b l e t o e v a l u a t e t h e e f - f e c t s on e n e r g y demand o f c h a n g e s i n t h e c a p i t a l f o r m a t i o n r a t i o , a s f o r example, t h e s h i f t i n t h e e n e r g y s u p p l y from f o s s i l f u e l s t o n u c l e a r and s o l a r e n e r g y .
And f i n a l l y , l i f e - s t y l e c a n b e c h a r a c t e r i z e d by t h e way p e o p l e s p e n d t h e i r incomes, and more p r e c i s e l y by t h e t y p e o f goods t h e y p u r c h a s e . I n MEDEE 2 , t h e s t r u c t u r e o f t h e i n d i v i - d u a l p r i v a t e consumption i s an i n d i c a t o r o f l i f e - s t y l e . A l i f e - s t y l e i s d e f i n e d by t h e d i s t r i b u t i o n o f p r i v a t e consumption among e n e r g y , d u r a b l e goods, n o n d u r a b l e goods, and s e r v i c e s . Most o f t e n s t a t i s t i c s a r e n o t d e t a i l e d enough t o p e r m i t i s o l a t i o n o f
" e n e r g y " i n which c a s e e n e r g y w i l l be a c c o u n t e d f o r i n t h e o t h e r c a t e g o r i e s o f goods o r s e r v i c e s . I t i s t h e n p o s s i b l e t o e v a l u a t e t h e i n f l u e n c e o f l i f e - s t y l e c h a n g e s on t h e i n d u s t r i a l s t r u c t u r e
( t h i s i s t h e r o l e o f t h e macroeconomic module) and upon t h e e n e r g y demand o f t h e i n d u s t r i a l s u b s e c t o r s . I n a d d i t i o n , we c a n a s s e s s t h e e f f e c t on e n e r g y demand o f i n c r e a s i n g t h e d u r a b i l i t y o f goods.
I f MEDEE 2 i s c o u p l e d t o an i n p u t / o u t p u t model it i s worth- w h i l e t o b r e a k down t h e s e s u b s e c t o r s f u r t h e r . The g a i n i n t e r m s
o f b e t t e r knowledge o f t h e i n d u s t r i a l p r o c e s s e s and e n e r g y u s e s i s o f f s e t by g r e a t e r u n c e r t a i n t y a s t o t h e growth o f t h e d e t a i l e d i n d u s t r i a l s u b s e c t o r s . We w i l l t h e r e f o r e d i s t i n g u i s h two v e r s i o n s o f t h e i n d u s t r i a l module; o n e w i t h an i n p u t / o u t p u t model and one w i t h o u t ( s e e T a b l e 4 ) .
T a b l e 4 . I n d u s t r i a l m o d u l e .
Agriculture Construction Mining Manufacturing
Basic materials industries Steel
Nonferrous and metal products
Building materials and mineral products Chemical and chemical products
Pulp and paper
Equipment goods industries
Machinery (mechanical industries) Transportation equipment
Food and textile industries Miscellaneous industries Energy
Agriculture Construction Mining
Manufacturing
Basic materials industries*
Equipment goods industries Food and textile industries Miscellaneous industries Energy
*According to the characteristics of each country, some large energy consum- ing industries such as steel, cement, or fertilizer can be taken out from this group of industries and treated separately.
T h e i n d u s t r i a l m o d u l e , a s w e l l a s t h e m a c r o e c o n o m i c m o d u l e w h i c h g e n e r a t e s t h e i n p u t s t o t h e i n d u s t r i a l m o d u l e , a r e f u r t h e r d e s c r i b e d i n [ l o ] .
F o r e a c h o f t h e s e c t o r s , t h e e n e r g y demand i s c a l c u l a t e d i n terms o f f i n a l e n e r g y f o r t h e n o n s u b s t i t u t a b l e u s e o f e n e r g y
( s p e c i f i c u s e o f e l e c t r i c i t y , c o k e , f e e d s t o c k s , a n d o t h e r miscel- l a n e o u s u s e s o f f o s s i l f u e l s ) , a n d i n terms o f u s e f u l e n e r g y f o r t h e s u b s t i t u t a b l e u s e o f e n e r g y ( s t e a m , f u r n a c e , s p a c e h e a t i n g a n d h o t w a t e r ) . T h e e n e r g y demand i s d e r i v e d f r o m t h e a c t i v i t y o f e a c h s e c t o r , m e a s u r e d b y t h e v a l u e a d d e d f o r t h e m a j o r s e c t o r s . I t may a l s o b e m e a s u r e d b y t h e p h y s i c a l o u t p u t f o r s p e c i f i c b a s i c
