Macroeconomic Activity Module - NEMS Documentation
July 2025
Introduction
The National Energy Modeling System (NEMS) is a comprehensive, mid-term energy projection and policy analysis tool. The NEMS projects energy supply, demand, prices, and environmental emissions by region, given assumptions about the economy, international markets, and energy policies. The Macroeconomic Activity Module (MAM) links the NEMS to the economy by providing projections of economic driver variables for the supply, demand, and conversion modules of the NEMS. The MAM’s baseline economic projection contains the initial economic assumptions used in the NEMS to help determine energy demand and supply. The MAM can also provide the NEMS with alternative economic assumptions representing a range of uncertainty about economic growth. Different assumptions regarding the path of world oil prices or the penetration of new technologies can also be modeled in the MAM. The resulting economic impacts of such assumptions are inputs to the remaining supply and demand modules of the NEMS (Table B14 in Appendix B on page 127). Outside of the Annual Energy
Outlook (AEO) setting, the MAM represents a system of linked models that can assess the potential impacts of changes in energy events on the economy or of policy proposals as specified by a non-EIA requestor. These economic impacts are the result of assumptions about energy events prompted by policy proposals built into the NEMS. The linked modules of the NEMS then iterate to a solution.
This report documents the objectives and analytical approach of the MAM that is used to develop the Annual Energy Outlook 2025 (AEO2025). It serves as a reference document providing a description of the MAM used for the AEO2025 production runs for model analysts, users, and the public. It also facilitates continuity in model development by providing documentation from which energy analysts can undertake model enhancement and modifications. This documentation report is divided into two separate components.
Part A presents the structural models that make up the MAM, including:
- S&P Global Market Intelligence’s model of the U.S. economy
- EIA’s models of industrial output and of employment by industry
- EIA’s models of the regional economies
Part B focuses on the MAM’s interface with the NEMS. This section identifies the set of model levers and simulation rules used to operate the system. It also discusses three types of integrated simulations carried out with the NEMS. This section views the MAM from the perspective of a programmer, focusing on the ties that link the various models together to form the MAM and how the MAM communicates with the NEMS.
Appendices A and B provide detailed information on variable listings and sectoral definitions.
Appendix C provides a detailed listing of the equations for the regional models.