Energy: Dominant Relations
Energy demand (ENDEM) is a function of GDP and the energy demand per unit of GDP (ENRGDP). Energy production (ENP) is a function of capital stock in each energy type and the capital/output ratio (QE) for that energy type. The capital/output ratio is, in turn, heavily shaped for fossil fuels by the level of reserves (RESER).
For diagrams see Energy Consumption Detail and Energy Production Detail.
For equations see Energy Equations Demand and Energy Equations Supply.
Key dynamics are directly linked to the dominant relations:
· Energy demand per unit of GDP depends on the GDP per capita and energy prices, computed endogenously. The user can control demand dynamics via an energy demand multiplier (endemm), a temporal trend in efficiency of energy use (enrgdpgr), the elasticity of demand with prices (elasde), and exogenous carbon taxes (carbtax).
· The model user can control energy production directly with enpm. Energy capital depends on endogenously determined, cost-responsive investment rates that the user can influence in the aggregate (via eninvm). The model can control the capital/output ratio directly (qem), and indirectly via assumptions about annual, technologically-driven changes in energy production cost (etechadv). Resources depend on discovery rates (exogenously influenced by rdm) and ultimate resource assumptions (exogenously specified initially as resor).
Energy: Selected Added Value
The larger energy model provides representation and control over energy trade and some ability to directly influence price levels, including the specification of a “cartel premium.”