Economic Policy Models and Alternative Future Scenarios : Decided Room for Improvement. . . John A. “Skip” Laitner Senior Economist for Technology Policy EPA Office of Atmospheric Programs Environmental Change:
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Economic Policy Models and Alternative Future Scenarios
: Decided Room for Improvement. . .
John A. “Skip” Laitner
Senior Economist for Technology Policy
EPA Office of Atmospheric Programs
An Interactive Discussion about the Future
2004 NCSE Symposium
February 4, 2005
Especially in thinking about the future,
I suspect we can all agree that a small difference in assumptions can have a very big impact in the eventual outcome.
† See the bibliographic appendix for a complete citation of references used in this presentation.
†† See the glossary appendix for a brief description of key terms used throughout this presentation.
Reviewing the Long-Term Perspective
Although less than infinity, the evidence clearly suggests that opportunities for technological change and cost-effective energy efficiency investments are significantly greater than zero.
Just what that outcome will be very much depends on the choices we make.
Without New Efficiency Technology,** Energy Use Would Be Almost 3 Times 1970 Levels
Contrast 3 Energy Patterns
An increase to ~195 quads based on 1970 technology
Since 1970, energy efficiency has met 75% of new energy service demands in the U.S,
while new energy supplies have perhaps contributed only 25% of new energy service demands.
to ~160 quads
Actual use of ~98 quads in 2004
** Where “energy efficiency” is broadly defined as the difference between the 1970 and 2004 energy intensities.
Comparison of U.S. Energy Projections:A Difference in Technology Assumptions
Even if this is where we are now headed, is it really the only path?
AEO 2004 Forecast
Low-Energy Future Projection
Based Upon 1980 DOE Analysis
Sources: DOE (1980), EIA (2003), and EPA estimates.
Standard Forecasts and the Technology Gains from Efficiency and Structural Improvements
Where the economy might head with shifting preferences, and with the right mix of R&D and policies
Level of Innovation
Areas for insights from technology and scenario experts rather than modelers?
Where the economy
seems to be right now
Where most models
seem to focus
The Past is Consistent with Many Different Futures
The standard energy forecast
Yet the full set of possible futures are many and varied . . .
And it is likely that the “nano-bio-info economy” will make the possibility of energy futures even more varied.
The outcomes depend on choices we make.
Source: Author’s estimates adapted from Lempert et al. (2003) and DeCanio (2000).
Without New Efficiency Technology, Energy Consumption Will Increase Significantly
Contrast 3 Scenarios
Where each scenario assumes a 2.3 percent level of worldwide economic growth (in GDP) over a 100-year period, but employs a different mix of technologies and efficiency improvements (Laitner 2004†).
An increase of 9.7 times the year 2000 energy consumption
3.6 times year 2000
1.3 times year 2000
More Questions than Answers
Or perhaps paraphrasing John Maynard Keynes:
“The difficulty lies not with the new ideas, but in escaping the old ones.”
And Perhaps This Final Perspective . . . .
Nolan Ryan is a hall of fame pitcher who closed his career in 1993 with the President's former team, the Texas Rangers. But he would have won considerably fewer than his 324 games had he taken the field without his catcher, his infield, or even outfield.
In a similar way, the full mix of efficiency and environmental technologies should be among the modeling options as we map our future scenarios and evaluate the economic impacts of our alternative technology paths.
For more information on the material or ideas referenced in this presentation, contact:
John A. “Skip” Laitner
EPA Office of Atmospheric Programs
1200 Pennsylvania Avenue NW, MS-6207J
Washington, DC 20460
o: +1 (202) 343-9833
f: +1 (202) 343-2210
The ideas contained in this presentation to the Emerging Technologies Summit are believed to rely on credible and accurate sources of information. Any errors in the analysis are solely the responsibility of the author. The results described herein should not be construed as reflecting the official views of either the Environmental Protection Agency or the U.S. Government. A more complete analysis that underpins this presentation can be found in Laitner, John A. “Skip,” 2004. “How Far Energy Efficiency?” Proceedings of the 2004 ACEEE Summer Study on Energy Efficiency in Buildings, Asilomar, CA.†
Note: this slide is adapted from comments and insights provided by Bob Olson, drawing on information and resources from the Rocky Mountain Institute. See: http://www.rmi.org.
[Boulding 1995] Boulding, Elyse and Kenneth E. Boulding,. The Future: Images and Processes, Thousand Oaks, CA: Sage Publications, 1995.
[Craig et al. 2002] Craig, Paul P.; Gadgil, Ashok and Koomey, Jonathan G. “What Can History Teach Us? A Retrospective Examination of Long-Term Energy Forecasts for the United States.” Annual Review of Energy and the Environment, 2002, 27, pp. 83-118.
[DeCanio 2000] DeCanio, Stephen J.; Dibble, Catherine and Amir-Atefi, Keyvan. “The Importance of Organizational Structure for the Adoption of Innovations.” Management Science, 2000, 46(10), pp. 1285-99.
[DOE 1980] Office of Policy and Evaluation. Low Energy Futures for the United States, DOE/PE-0020, Washington, DC: U.S. Department of Energy, June 1980.
[EIA 2003] Energy Information Administration. Annual Energy Outlook 2004: With Projections to 2025, Washington, DC: U.S. Department of Energy, 2003.
[Feynman 1959] Feynman, Richard P. “Plenty of Room at the Bottom,” Pasadena, CA: California Institute of Technology, December 1959.
[Gillett 2002] Gillett, Stephen L. “Nanotechnology: Clean Energy and Resources for the Future,” Palo Alto, CA: Foresight Institute, 2002.
[Hanson et al 2004] Hanson, Donald A.; Mintzer, Irving; Laitner, John A. “Skip” and Leonard, J. Amber. “Engines of Growth: Energy Challenges, Opportunities, and Uncertainties in the 21st Century,” Argonne, IL: Argonne National Laboratory, 2004. For a shorter version of this report, see, Laitner, J.A. “Skip”; Hanson, Donald A.; Mintzer, Irving and Leonard, J. Amber. “Adapting in Uncertain Times: A Scenario Analysis of U.S. Energy and Technology Futures,” Proceedings of the 24th USAEE/IAEE North American Conference. Washington, DC: International Association of Energy Economics, 2004.
[Laitner 2004] Laitner, John A. “Skip”. “How Far Energy Efficiency?,” Proceedings of the 2004 ACEEE Summer Study on Energy Efficiency in Buildings. Washington, DC: American Council for an Energy Efficient Economy, 2004.
[Laitner et al 2003] Laitner, John A.; DeCanio, Stephen J.; Koomey, Jonathan G. and Sanstad, Alan H. “Room for Improvement: Increasing the Value of Energy Modeling for Policy Analysis.” Utilities Policy, 2003, 11, pp. 87-94.
[Lempert et al. 2003] Lempert, Robert J.; Popper Steven W. and Bankes, Steven C. Shaping the Next One Hundred Years: New Methods for Quantitative, Long-Term Policy Analysis, Santa Monica, CA: RAND, 2003.
[Luke 1998] Luke, Jeffrey S. Catalytic Leadership: Strategies for an Interconnected World, San Francisco, CA: Jossey-Bass Publishers, 1998.