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).
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."