Appendix J. Models Used To Generate the IEO2008 Projections 

World Energy Projections Plus (WEPS+) 

The IEO2008 projections of world energy consumption and supply were generated from EIA’s World Energy Projections Plus (WEPS+) model. WEPS+ is a system of sectoral energy models that provide a loosely linked, integrated equilibrium modeling system. It is used primarily to provide alternative energy projections based on different assumptions for GDP growth and fossil fuel prices. The WEPS+ common platform allows the models to communicate with each other and provides a comprehensive, central series of output reports for analysis. For IEO2008, WEPS+ incorporates a separate transportation sector model with an extensive level of detail for modes and vehicle types. WEPS+ also incorporates some additional detail on industrial energy use in China and India, additional detail on end-use electricity consumption, and an interface to the System for the Analysis of Global Energy Markets/Global Electricity Module (see below) for generation, capacity, and fuel consumption in the electricity sector. 

WEPS+ produces projections for 16 regions or countries of the world, including North America (United States, Canada, and Mexico), OECD Europe, OECD Asia (Japan, South Korea, and Australia/New Zealand), Russia, other non-OECD Europe and Eurasia, China, India, other non-OECD Asia, Brazil, and other Central and South America. Currently, the projections extend to 2030. 

In some individual models, the detail also extends to the subsector level. For each end-use sector, WEPS+ projects consumption of the key primary energy sources: liquid fuels and other petroleum, natural gas, coal, nuclear power, and hydroelectricity and other renewables. The model also provides intermediate consumption projections for electricity in the end-use demand sectors. The model projections generally are dependent on aggregate supply prices, GDP levels, and population. Supply projections are also made for the key supply sources corresponding to the primary consumption sources. The modeling system accounts for projections of economic activity represented by GDP, population, and world energy prices. Carbon dioxide emissions from the combustion of fossil fuels are also calculated by region. 

WEPS+ includes a detailed model of the world’s transportation sector, which provides projections by four transport modes: road, rail, water, and air. A variety of services are represented for each mode, such as light-duty vehicles, two/three-wheel vehicles, heavy trucks, passenger rail, and freight rail. WEPS+ separates service demand (e.g., road travel by cars, commercial trucks, and heavy trucks) from vehicle efficiency and bases the projections on economic growth (as measured by GDP) and fuel prices. 

A more detailed representation of the industrial sectors in China and India is incorporated into WEPS+. These projections are based on an econometric estimation of historical consumption patterns at a nine-industry level of detail. End-use electricity consumption was analyzed in detail across several sectors and for the major electricity-consuming regions, and a module incorporating the analysis was included in WEPS+. 

Although the modeling was extended in several areas of WEPS+, in the remaining core sections WEPS+ is a microeconomic model, used primarily to provide alternative energy projections under different assumptions about GDP growth and fossil fuel prices. It serves as a repository for reference case output generated from complex models that focus on specific supply or demand series. The reference case reflects output from those models and incorporates analysts’ judgment on the potential for demand by end-use sector and fuel type on a regional basis. After the reference case is established, WEPS+ is used to calculate coefficients for the response surface, which are saved in a database. The reference case output tables reflect the same information that is embedded in the input tables. Alternative cases reflect different assumptions about future economic growth and energy prices. When an alternative case is run, the model uses the previously calculated coefficients to produce new projections relative to changes in GDP and energy prices and produces output tables that reflect the changes. 

System for the Analysis of Global Energy Markets/Global Electricity Module (SAGE/GEM) 

SAGE/GEM is a regional model that provides a technology-rich basis for estimating regional electricity consumption. For each region, SAGE/GEM inputs reference case estimates of electricity demand (e.g., commercial, industrial, residential, and transportation) that were developed on the basis of economic and demographic projections in WEPS+. Projections of electricity generation in SAGE/GEM to meet the electricity demands are estimated on the basis of each region’s existing electricity use patterns (load shape), the existing stock of electricity generation equipment, the characteristics of available new electricity generation technologies, and fuel supply (prices and production). 

Period-by-period market simulations aim to provide each region’s electricity generation services at minimum cost. Nine load slices are modeled (summer, winter, and intermediate seasons for base, intermediate, and peak loads). SAGE/GEM also allows energy commodities to be traded between regions. Inventories of existing generation technologies by plant type and region are derived from Platts’ UDI World Electric Power Plants Database.²⁴ Generation and consumption for historical years are calibrated with historical data from EIA and the International Energy Agency. Resource availability for fossil fuels is provided by WEPS+ and translated into supply curves for use in SAGE/GEM, taking into consideration fuel consumed in non-electricity sectors. Renewable resource availability is derived from analyst reviews of regional data. 

SAGE/GEM is a simplified subset of the SAGE modeling system. A full description of the SAGE model is available in a two-volume set. The first volume provides a general understanding of the model’s design, theoretical basis, necessary user-defined assumptions, and output. It also lists the software necessary to develop and analyze the results of SAGE-based policy and energy market scenarios. In addition, Volume I includes a Reference Guide, which explains each equation in detail. The second volume serves as a User’s Guide for those actively developing SAGE-based scenario analyses. The documentation is available on EIA’s web site in the model documentation section of “Current Publications” (www.eia.doe.gov/bookshelf/docs.html). SAGE documentation is also available as part of the documentation for the MARKAL family of models (www.etsap.org/ MRKLDOC-III_SAGE.pdf). 

Generate World Oil Balance Model (GWOB) 

The projections for world liquids production in IEO2008 reflect an assessment of world oil supply—based on current production capacity, planned future additions to capacity, resource data, geopolitical constraints, and prices—that is used to generate conventional crude oil production cases. The scenarios (price cases) are developed through an iterative process of examining demand levels at given prices and considering the price and income sensitivity on both the demand and supply sides of the equation. Projections of conventional liquids production for 2008 through 2015 are based on analysis of investment and development trends around the globe. Data from EIA’s Short-Term Energy Outlook are integrated to ensure consistency between short- and long-term modeling efforts. Projections of unconventional liquids production are based on exogenous analysis. 

Nine major streams of liquids production are tracked on a volume basis: (1) crude oil and lease condensate, (2) natural gas plant liquids, (3) refinery gains, (4) Canadian oil sands, (5) extra-heavy oils, (6) coal-to-liquids, (7) gas-to-liquids, (8) shale oils, and (9) biofuels (tracked on both a volume basis and an oil equivalent basis). Biofuels are reported in terms of barrels of oil equivalent, unless otherwise stated. 

Notes and Sources