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International Energy Outlook 2014

Release Date: September 9, 2014   |  Next Release Date: September 2015   |  Report Number: DOE/EIA-0484(2014)

Models used to generate the IEO2013 projections

The IEO2013 projections of world energy consumption and supply were generated from EIA's World Energy Projections Plus (WEPS+) model. WEPS+ consists of a system of individual sectoral energy models, using an integrated iterative solution process that allows for convergence of consumption and prices to an equilibrium solution. It is used to build the Reference case energy projections, as well as alternative energy projections based on different assumptions for GDP growth and fossil fuel prices. It can also be used to perform other analyses.

WEPS+ produces projections for 16 regions or countries of the world, including OECD Americas (United States, Canada, and Mexico/Chile), 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 2040.

The WEPS+ platform allows the various individual models to communicate through a common, shared database and provides a comprehensive, central series of output reports for analysis. In the individual models, the detail also extends to the subsector level. In WEPS+, the end-use demand models (residential, commercial, industrial, and transportation) project consumption of the key primary energy sources: several petroleum products, other liquids, natural gas, coal, nuclear power, hydropower, wind, geothermal, and other renewable sources. These models also provide intermediate consumption projections for electricity in the end-use demand sectors.

The end-use model projections generally depend on retail supply prices, economic activity as represented by GDP (or gross output in the industrial sector), and population. The transformation models (power generation and district heat) satisfy electricity and heat requirements and also project consumption of primary energy sources at resulting price levels. The supply models (petroleum, natural gas, and coal) generate supply and wholesale price projections for the key supply sources corresponding to the primary consumption sources. The refinery model makes retail price projections for a variety of petroleum products corresponding to the world oil price. The main model in the WEPS+ system monitors the convergence sequence for all the models and projects energyrelated carbon dioxide emissions from fossil fuels (including emissions from the use of petrochemical feedstocks but excluding flared natural gas) at the regional level.

Small improvements were made throughout the WEPS+ modeling system, and with the exception of the macroeconomics, the models themselves are essentially unchanged from those used for IEO2011. The model enhancements implemented in this year's version of the WEPS+ model include a new suite of macroeconomic models, improvements to the modeling platform and
improvements in the individual models. For the WEPS+ World Industrial Model, these improvements included:

  • A fuel switching algorithm was added which employs World Bank regional cross-price elasticities for the industrial sector.
  • A coal feedstock sub-module for China was added to accommodate new coal-based capacity growths in the Chinese chemical sector.
  • Adjusted near-term industrial electricity efficiency improvements in Japan were implemented to reflect recent post-Fukushima energy efficiency efforts.

In addition, the following minor changes were implemented:

  • The World Electricity Model has been recoded to Python from Fortran.
  • The benchmarking of historical data has been automated using Python and SQL.
  • Estonia and Israel have joined the OECD. For statistical purposes, they are reported with OECD Europe.

The Reference case reflects the underlying relationships incorporated in the complete set of models interacting with each other in supply/demand relationships communicated through macroeconomic variables, prices, and consumption. The system of models is run iteratively to a point at which prices and consumption have converged to a reasonable equilibrium. Accumulated knowledge from the results of other complex models that focus on specific supply or demand issues and analysts' expert judgments also are taken into account and incorporated into the final projections. After the Reference case has been established, WEPS+ is used to run alternative cases that reflect different assumptions about future economic growth and energy prices. WEPS+ also can be used for other analyses, such as the effects of carbon prices.

The Oxford Economics Global Economic Model (GEM) and Global Industry Model (GIM) are used to generate projections of gross domestic product (GDP) and gross output (GO) for the various IEO countries and regions and their respective industrial sectors. The theoretical structure of the GEM differentiates between the short and long-run for each country, with extensive coverage of the links between different economies. The GEM outputs GDP for use with WEPS+ and also provides drivers for the GIM. The structure of the GIM is based on input-output relationships, and this model outputs GO in the IEO sectors for each country or region in WEPS+.

The Generate World Oil Balance (GWOB) application is used to create a "bottom up" projection of world liquids supply—based on current production capacity, planned future additions to capacity, resource data, geopolitical constraints, and prices—and to generate conventional crude oil production cases. The scenarios (Oil Price cases) are developed through an iterative process of examining demand levels at given prices and considering price and income sensitivity on both the demand and supply sides of the equation. Projections of conventional liquids production for 2010 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.

Ten 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, (9) ethanol, and (10) biodiesel. Biofuels are tracked on both a volume basis and an oil equivalent basis. All liquid fuels are reported in physical volumes, unless otherwise stated.

The IEO2013 projections of global natural gas production and trade were generated from EIA's International Natural Gas Model (INGM), a tool that estimates natural gas production, demand, and international trade. It combines estimates of natural gas reserves, natural gas resources and resource extraction costs, energy demand, and transportation costs and capacity in order to estimate future production, consumption, and prices of natural gas.

INGM incorporates regional energy consumption projections by fuel from the WEPS+ model, as well as more detailed U.S. projections from NEMS, which is used to generate U.S.energy projections for the Annual Energy Outlook. An iterative process between INGM and WEPS+ is used to balance world natural gas markets, with INGM providing supply curves to WEPS+ and receiving demand estimates developed by WEPS+. INGM uses regional natural gas demand estimates from NEMS for the United States rather than those computed as part of the WEPS+ output, so that the final output for the United States is consistent with AEO projections.