Models of Energy Policy Analysis Energy PricingMarket Analysis Complex Systems Dynamics Adaptive Pol

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Models of Energy Policy Analysis Energy
Pricing/Market Analysis Complex Systems
Dynamics Adaptive Policy Designs

• Asim Zia
• Environmental Studies 130
• Energy Policy Analysis
• San Jose State University
• Summer 2007

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Energy Pricing/Market Analysis

• Computable General Equilibrium (CGE) Models
• National Energy Modeling System
• Energy Futures Trading

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National Energy Modeling System (NEMS)

• National Academy of Science 1992 book on NEMS
  available for free at http//books.nap.edu/catalog
  .php?record_id1997toc
• EIA/DOE website on NEMS a good resource
  http//www.eia.doe.gov/oiaf/aeo/overview/index.htm
  l

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National Energy Modeling Systemhttp//www.eia.doe
.gov/oiaf/aeo/overview/index.html

• Overall, NEMS represents the behavior of energy
  markets and their interactions with the U.S.
  economy.
• The system reflects market economics, industry
  structure, and existing energy policies and
  regulations that influence market behavior.

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National Energy Modeling System (NEMS) The
Modular Structure
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NEMS objective
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NEMS Methodology
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NEMS Methodology FORTRAN Program variables and
blocks
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NEMS Methodology FORTRAN Program variables and
blocks
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NEMS Methodology FORTRAN Program variables and
blocks
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NEMS Methodology Quantity Vectors
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NEMS Methodology Price Vectors
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NEMS Methodology Integrating Module Solution
Methodology
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NEMS Methodology Integrating Module Solution
Variables
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NEMS Methodology Integrating Module Solution
Variables
CONVERGENCE TESTS
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NEMS Methodology Expected Value Foresight

• Three approaches to construct foresight variables
• Myopic
• Adaptive
• Perfect Foresight

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NEMS Methodology CO2 Emission calculations
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NEMS Methodology CO2 (Mercury, SO2) Emissions
Policy Analysis

• CO2 Tax
• Auction of Permits
• Market for Permits
• Market for Permits with Emission Offsets

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NEMS Methodology Calculating Cumulative CO2
(Mercury, SO2) Emissions
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NEMS Methodology Calculating Revenue from Carbon
Taxes
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Sustainability Amidst Complexity Complex Systems
Dynamics (CSD)
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Some landmark books on CSD

• Complex Systems Dynamics (Santa Fe Institute
  Studies in the Sciences of Complexity)
  (Paperback) by Gerard Weisbuch
• Business Dynamics Systems Thinking and Modeling
  for a Complex World with CD-ROM by John Sterman
  and John D. Sterman

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Dynamics of Complex Systems (Studies in
Nonlinearity) by Yaneer Bar-Yam

• A central goal of this book is to develop models
  and modeling techniques that are useful when
  applied to all complex systems. This is done by
  adopting both analytic tools, including
  statistical mechanics and stochastic dynamics,
  and computer simulation techniques, such as
  cellular automata and Monte Carlo. In four sets
  of paired, self-contained chapters, Yaneer
  Bar-Yam discusses complex systems in the context
  of neural networks, protein folding, living
  organisms, and finally, human civilization
  itself. He explores fundamental questions about
  the structure, dynamics, evolution, development
  and quantitative complexity that apply to all
  complex systems.

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CSD Simulation Modeling Objectives

• Aim at mathematically representing the system
  being studied and simulating system operations
  over time or under varying conditions or
  scenarios
• Top-Down Models (Typically Systems Analysis
  Models)
• Bottom-Up Models (Typically Agent-Based Models)

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Examples of Complex Systems Dynamics (CSD) Models

• IIASA/WEC Models to forecast global and regional
  energy/environment interactions
• IPCC Models to forecast global climate change
  under various scenarios (including energy use)

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IIASA Energy Models

• General information http//www.iiasa.ac.at/Researc
  h/ECS/docs/policy.html
• IIASA 1998 Study available at http//www.iiasa.ac.
  at/cgi-bin/ecs/book_dyn/bookcnt.py

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IIASA Energy Policy Model
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IIASA Model Forecasts Global Energy Consumption
Scenarios
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IIASA Model Forecasts Global Carbon Emission
Scenarios
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Adaptive Policy Designs

• Generic Policy Mechanism Designs
• Voluntary Policy Mechanisms
• Regulatory Policy Mechanisms
• Market Policy Mechanisms
• Adaptive Policy Mechanisms

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Generic Policy Mechanism Designs
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Voluntary Mechanisms
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Regulatory Mechanisms
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Market Policy Mechanisms

• Traditional Market mechanisms (Taxes and
  Subsidies)
• Market Development (for renewables)
• Cap and Trade Policies (Markets for emissions
  trading)

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Adaptive Policy Mechanisms

• Tool Meta Decision Models (MDMs)
• Descriptive Level
• Normative Level
• Meta-level iterative integration of descriptive
  and normative levels
• Key Features
• Context Sensitive, Multi-Scalar
• Value Oriented, Participatory
• Integrated top down or bottom up
• Flexible/Adjustable, Experimental
• Policy Portfolios