Model Comparison: Top-Down vs. Bottom-Up Models P.R. Shukla Classification of Energy Sector Models Energy Models Top-Down Bottom-Up Technology Assessment Macro- Optimisation & Simulation Equilibrium Single-Country Multi-Region Reference Energy System Resource Secondary Energy Technology End-Use Lighting Coal Gas Light Bulb Electricity Generation Cooking Car Transport Heater Heating Crude Oil Stove Drive Renewable Oil Refinery Motor Irrigation Nuclear Pump Water Supply Representative Bottom-up Model Flow Chart (MARKAL) ECONOMY TECHNOLOGY MINING IMPORT COLLECTION RENEWAB LE EXPORT COAL N. GAS OIL BIOMASS NUCLEAR RENEWABLE 45 CAPITAL AGRICULTURE ENDUSE DEVICES ELECTRICITY PRODUCTION PUMP TRACTOR COAL GAS HYDRO NUCLEAR SOLAR ENERGY FURNACE MOTOR 75 BUS TRAIN PETROLEUM REFINERY GAS PROCESSING STOVE FAN EMISSIONS 35 COMMERCIAL LIGHT BULB COOLER FUEL PROCESSING ENVIRONMENT INDUSTRY TRANSPORT 90 RESIDENTIAL Representative Top-down Model Flow Chart (SGM 2000) AGRICULTURE grains and oil seeds animal products forestry food processing other agricultural services PRIMARY FACTORS OF PRODUCTION land surface subsurface resources labor capital ENERGY oil production gas production petroleum refining gas distribution coke and coal products biomass production uranium production hydro and solar electric power electricity production EVERYTHING ELSE paper and pulp manufacture chemical manufacture cement manufacture primary iron and steel primary non-ferrous metals other manufacturing passenger transport freight stransport other services HOUSEHOLDS demographics labor supply land supply household savings final product demands GOVERNMENT general government national defense education Comparative Dimensions Paradigm Space Sector Time Top-Down (Integrated assessment) Global and Atmospheric Macroeconomy Long Term Top-Down (Economic equilibrium) Global, National, Regional Macroeconomy Long Term Bottom-Up (Optimization) National, Regional Energy Long Term/Medi um Term Sub-Sector Medium Term/Short Term Bottom-Up National, (Optimization / Accounting) Regional, Local Model Examples Paradigm Examples Issues Addressed Top-Down Integrated Assessment Model Impact of market measures (like carbon tax) on atmospheric chemistry and cost to economies Top-Down Economic Equilibrium models (SGM, CRTM, CETA) Impact of market measures on global emissions and cost to economies Bottom-Up Optimization MARKAL, EFOM, BEEAM Impact of market measures and other energy policies (like subsidies, technology regulations) on technology mix, fuel mix, emissions and cost to energy system. Bottom-Up Optimization/A ccounting End-use sector models (e.g. AIM/ END USE), Power sector, Coal sector models Impact of subsectoral policies on subsectoral technology mix and emissions; Planning for generation mix; Power plant scheduling; Logistics Relative Strengths Top-down Bottom-up Market equilibrium approach Optimization approach Higher sectoral aggregation Better engineering / technology description Energy flows and demands in Energy flows and demands in monetary units material units Endogenous representation of most macroeconomic parameters like prices and demand elasticities Better for policy analysis involving impact assessment of technology and fuel mix within a sector Soft Linked Integrated Modeling Framework TOP DOWN MODELS Productivity SGM ERB Model Global Energy Prices GDP Prices Energy Balance BOTTOM-UP MODELS MARKAL Scenarios Stochastic MARKAL Technology Details Power Sector LP Model End-use Demand Demand Projection Technology Share End-use Demand Technology Specifications AIM/ENDUSE Health Costs OTHER MODELS Inventory Estimation Model Emissions GIS based Energy & Emissions Model Health Impact Model Model Characteristics: Bottom-Up Models Model End-Use Demand Projection AIM/ENDUSE MARKAL StochasticMARKAL Objective Output Policy Analysis Demand Projections consistent with macroeconomic scenario End-use Sector Demand Trajectory Sectoral investment, technology and infrastructure policies Minimize discounted sectoral cost Sectoral energy, and technology mix, investments and emissions Sectoral technology, energy, investment and emissions control policies Minimize discounted Energy system cost National energy and technology mix, energy system investments, and emissions Energy sector policies like energy taxes and subsidies; energy efficiency; emissions taxes and targets Minimize expected value of discounted system cost Energy and technology mix under uncertain future, Value of information Hedging strategies for energy system investments; identify information needs Model Characteristics: Top-Down Models Model Objective Output Policy Analysis SGM Determine market clearing prices for economic sector outputs GDP and consumption trajectories;, prices of sectoral outputs and energy; sectoral investment patterns Macro-economic impacts of policy interventions such as energy tax / subsidies; emissions limitations ERB Determine Global / Regional Energy Prices and Energy Use Long-term global and regional energy prices, energy mix and emissions Implications of very long-term global energy resource, tech. expectations Model Characteristics: Other Models Model Objective Output Policy Analysis Inventory Estimation Model Estimate national emission inventory for various gases National emission inventory GIS Based Energy and Emission Model Determine regional spread of energy and emissions Regional maps Power Sector LP Model Minimize discounted Power sector cost Power plant capacity and generation mix, emissions profile, total costs Power sector technology, energy, investment, emissions control policies Health Impact Model Estimate local pollutant emission impacts on human health Impact of individual plants, per capita and total national human health impacts, sensitivity analysis Plant location and stack height policies, emission norm analysis, enforcement policy assessment Regional and sectoral emission variability, bench-marking, emission hot-spot assessment Linking energy and environment policies across time and space Some Top-down Model Results GDP loss over base case: Carbon Tax scenarios Tax Scenarios 0.00% -0.50% 25/ tC -1.00% 50/ tC -1.50% -2.00% $100/ tC -2.50% -3.00% -3.50% 1990 1995 2000 2005 2010 2015 2020 2025 2030 Energy Consumption: Carbon Tax cases Tax Scenarios 45 40 35 Exajoules 30 25 20 15 10 5 0 1990 1995 2000 Base 2005 $25 Tax 2010 2015 $50 Tax 2020 2025 $100 Tax 2030 Some Bottom-Up Model Results Technology Mix in Brick Production 140 120 100 80 High Draught VSBK Clamps (Biomass) Bull trend Kiln 2 Bull trend Kiln 1 60 40 20 0 1995 2000 2005 2010 2015 Year 2020 2025 2030 2035 Sectoral Energy consumption (EJ) From 1995-2035 25 Commercial Grows 9 times Agriculture Stagnates Transport Grows 5 times 20 15 Exa Joules Industry & Residential Grow 3.5 times Agriculture Commercial Transport Residential Industry 10 5 0 1995 2005 2015 Year 2025 2035