World Energy Model

Since 1993, the International Energy Agency (IEA) has provided medium to long-term energy projections using the World Energy Model (WEM). The model is a large-scale simulation model designed to replicate how energy markets function and is the principal tool used to generate detailed sector-by-sector and region-by-region projections for the World Energy Outlook (WEO) scenarios. Developed over many years, the model broadly consists of three main sections covering:

• final energy consumption including residential, services, agriculture, industry, transport and non-energy use;
• energy transformation including power generation and heat, refinery/petrochemicals and other transformation; and
• fossil-fuel and bioenergy supply.

Outputs from the model include energy flows by fuel, investment needs and costs, CO₂ emissions and end-user pricing and is calculated for each of the 25 regions modelled in the WEM (see Annex 2: regional definitions). An extensive effort is undertaken each year to incorporate energy and climate-related policies and measures into our modelling and analysis with details and sources provided under policy databases.

A detailed description of the World Energy Model and supporting documents covering topics such as energy efficiency, energy subsidies, climate change analysis and power sector analysis may be found in the documentation section.  The investment costs section outlines input assumptions to the WEM for the power generation sector and for passenger light duty vehicles (PLDVs).

New Features in World Energy Outlook 2012

The WEO-2012 continues past practice of using a scenario approach to examine future energy trends out to 2035. It presents four scenarios: the New Policies Scenario, the Current Policies Scenario, the 450 Scenario and a new scenario this year called the Efficient World Scenario with a focus on energy efficiency. Comprehensive historical data through to 2010 are presented and used in the modelling, although wherever possible preliminary 2011 data are also included.

Some of the changes made to the WEM for the purposes of the WEO-2012 are highlighted below:

• Modelling of road freight transport improved for trucks in excess of 3.5 tonnes gross vehicle weight by endogenising the investment decision for vehicle efficiency and introducing a new cost model.
• Incorporating In the industry module the most important energy-saving technologies in the iron & steel, cement, and pulp & paper industries and cross-cutting technologies in non-energy intensive industries for OECD and non-OECD countries with their specific energy savings and specific investment costs.
• Conversion to a stock model in the buildings module, which accounts for the retirements and replacement of physical buildings stock (using floor area as a proxy), and the addition and depletion of various new energy technologies over the Outlook period.
• Introduction of a wide range of existing and best available technologies for meeting energy service demand (heating, cooling, water heating, cooking, cooling, lighting and appliances) in buildings module, based on an extensive review of technology cost & efficiency.
• Development of electricity end-user prices module incorporating wholesale price, network costs, renewable subsidies, and retail costs.
• Transmission & distribution model is now fully integrated into the WEM model including updated T&D tariff calculations covering depreciation, cost of capital, and operational expenditures.
• Addition of Light Tight Oil as a separate category of oil, with corresponding estimates of resources and costs.
• A biomass supply model has been added to oil, gas and coal supply modules.

Full details may be found in the detailed description of WEM.