World Energy Outlook - World Energy Model

Since 1993, the IEA has provided medium to long-term energy projections using a World Energy Model (WEM). The WEM – a large-scale mathematical construct designed to replicate how energy markets function – is the principal tool used to generate detailed sector-by-sector and region-by region projections for both the Reference and Alternative Policy Scenarios. The model, which has been developed over many years, is made up of six main modules: final energy demand; power generation; refinery and other transformation; fossil-fuel supply; CO₂ emissions and investment.

For WEO 2007 the World Energy Model updated with the co-operation of TERI in India (Tata Energy and Resources Institute) and ERI in China (Energy Research Institute).

The IEA is one of three organisations jointly co-ordinating the International Energy Workshop (IEW), an informal network of analysts concerned with international energy issues. The IEW 2007 was held in Stanford, California; and the 2008 workshop will be held at the IEA in Paris from 30 June to 2 July 2008.

EAD developed in collaboration with the CIRED, a General Equilibrium Model (called WEM-ECO) with a detailed representation of the energy sector, by coupling EAD's WEM model with CIRED’s IMACLIM-R model. Integrating a General Equilibrium Model with the IEA partial equilibrium WEM model makes it possible for IEA to provide more insights on the economic and trade issues associated with different energy policies and scenarios (prices, GDP, trade and investment, etc…). EAD used this new WEM-ECO model for the WEO 2007 study on the implications of energy developments in China and India on the rest of the world, particularly for the assessment of the impact of different economic and energy scenarios on other countries' GDP and trade movements, as well as the impact of increased pressure on international oil markets. The WEM-ECO model is also expected to provide key inputs for the economic implications of the Alternative Policy Scenario of WEO 2008.

The development and running of the WEM requires access to huge quantities of historical data on economic and energy variables. Most of the data are obtained from the IEA’s own databases of energy and economic statistics, available here. The IEA has gained recognition as one of the world’s most authoritative sources for energy statistics. Additional data from a wide range of external sources is also used. These sources are indicated in the relevant sections of the model description.

The current World Energy Model, which is comprised of nearly 16,000 equations, is the 11th version of the model. It covers 21 regions (Annex 1). The WEM is designed to analyse:

Global energy prospects: These include trends in demand, supply availability and constraints, international trade and energy balances by sector and by fuel to 2030.
Environmental impact of energy use: CO₂ emissions from fuel combustion are derived from the detailed projections of energy consumption.
Effects of policy actions or technological changes: Alternative policy scenarios analyse the impact of policy actions and technological developments on energy demand, supply, trade, investments and emissions.
Investment in the energy sector: The model evaluates investment requirements in the fuel supply chain needed to satisfy projected energy demand to 2030. It also evaluates demand-side investment requirements in the Alternative Policy Scenario.

New Features in World Energy Outlook 2007
The WEM was expanded for the WEO-2007 and now includes the following new features:

The WEM was integrated with a GEM, for more information see here.
High Growth Scenario
Chinese Coastal model
450 Stabilisation Case, for more information see explanation paper.
Expanded and improved global natural gas trade model.
SO2, NOx and PM local emissions model.
Improved electrification modelling and an energy development index to access the links between energy and poverty
Urban/rural modelling in India

The World Energy Outlook's Reference Scenario depicts the future outcome if governments maintain the policies that are currently in place. As government policies invariably do change the WEM also models an Alternative Policy Scenario. This analyses the impact on energy markets, fuel consumption and energy-related CO₂ emissions of policies and measures that are currently under consideration by governments throughout the world but are not yet in place. These include policies aimed at curbing CO₂ emissions, at addressing pollution and reducing energy-import dependence. A database with over 3 000 policies and measures in OECD and non-OECD countries is available here.