OTA developed a simple energy accounting model to estimate the effectiveness of various technical options for lowering CO2 emissions. The model is based on a larger system of energy and economic models used by the Gas Research Institute (GRI) to forecast energy use through 2010 (23)(1). Of all the integrated energy/economic forecasting models available, the GRI approach includes the greatest detail on the demand side for specific technologies. (Other models may contain, for example, estimates of total residential electricity demand, but do not include breakdowns of heating, cooling, refrigerators, freezers, clothes dryers, etc.) With such information, changes in CO2 emissions can be simulated in detail based on changes in technology.
GRI provided OTA with detailed output from its model simulations of energy use through 2010. We, in turn, built a very much simplified set of models by "modeling" GRI's detailed output. For example, to estimate the energy demand for heating homes, GRI's residential sector model starts with the number of existing furnaces, heat pumps, and electric heaters. It then forecasts the number that must be replaced through time (with more efficient technology) based on typical equipment lifetimes. The number of new homes (which, of course, must also be heated) is forecast based on economic conditions. Whether consumers buy gas, oil, or electric heaters is forecast in part based on economics and in part on historical buying habits.
OTA took the GRI forecasts of energy use by each technology category (e.g., gas furnaces) and built a series of simple models that simulate the number and energy efficiency of each technology type through time, based only on the GRI detailed output data, rather than the economic decisions that influence the forecast. Note that for two categories--highway vehicles and electric utilities--we felt that the GRI model did not have adequate detail for our needs. For highway vehicles, we used Oak Ridge National Laboratory's "Alternative Motor Fuel Use Model" (but used GRI's oil price assumptions for consistency). For electric utilities, we built our own model using detailed data from the U.S. Department of Energy's Energy Information Administration.
We total all the energy use and CO2 emissions from each technology and sector. This forms the basis for our Base case forecast that emissions will be approximately 50 percent above today's level by 2015. In the Base case (business as usual), OTA implicitly assumes GRI's economic forecast of GNP growth averaging 2.3 percent per year and energy price increases averaging 1.7 percent per year for coal, 3.7 percent per year for oil, and 4.8 percent per year for natural gas over the next two decades. This represents a reasonable future picture barring major changes in energy supply, economic, or regulatory conditions.
Then we estimate the effect of changes in technology (e.g., more efficient gas furnaces than included in the GRI forecast) or policy (e.g., forcing coal-fired plants to retire after 40 years of operation) in two alternative scenarios: "Moderate" and "Tough." Our model, for the most part, assumes the same level of "services" as the GRI base case. In the alternative scenarios, CO2 emissions are reduced, for example, by using more efficient furnaces, switching fuel, or insulating houses, but not by assuming people keep their homes at lower temperatures in the winter or warmer in the summer like they currently do. In a few cases, most notably the transportation options, all "services" are not identical. For example, one of the measures that we include is to reinstate a 55 mph speed limit. Under our most aggressive scenario, we assume that cars will be somewhat smaller than they are today (for either economic or regulator reasons). Both of these include some loss of convenience to consumers.
1 The GRI modeling system has as its core the U.S. Energy Model, developed by Data Resources, Inc. (DRI). The model includes four submodels: the industrial sector, residential sector commercial sector and electric utilities. Economic projections, which drive the Energy Model, come from the DRI Macroeconomic Model of the U.S. economy. Additional inputs are generated from the Industrial Sector Technology Use Model, developed by Energy and Environmental Analysis, Inc.; the GRI Hydrocarbon Supply Model; and the RDI Coal Model, developed by Resource Data International.