Energy scenarios: the value and limits of scenario analysis

Abstract

A need for low‐carbon world has added a new challenging dimension for the long‐term energy scenarios development. In addition to the traditional factors like technological progress, demographic, economic, political, and institutional considerations, there is another aspect of the modern energy forecasts related to the coverage, timing, and stringency of policies to mitigate the greenhouse gas emissions and air pollutants. Modern tools for the energy scenario development provide a good basis for the estimates of the required changes in the energy system to achieve certain climate and environmental targets. While the current scenarios show that a move to a low‐carbon energy future requires a drastic change in energy investment and the resulting mix in energy technologies, the exact technology mix, paths to the needed mix, price, and cost projections should be treated with a great degree of caution. The scenarios do not provide exact predictions, but they can be used as a qualitative analysis of decision‐making risks associated with different pathways. If history is any guide, energy scenarios overestimate the extent to which the future will look like the recent past. As future costs and the resulting technology mixes are uncertain, a wise government policy is to target emissions reductions from any source, rather than focus on boosting certain kinds of low‐carbon energy. WIREs Energy Environ 2017, 6:e242. doi: 10.1002/wene.242 This article is categorized under: Energy and Climate > Economics and Policy Energy and Climate > Systems and Infrastructure Energy Policy and Planning > Economics and Policy

Incorporating Power Transmission Bottlenecks into Aggregated Energy System Models

“…Optimizing energy system models (ESMs) are frequently applied tools that are used for the analysis and development of energy scenarios [1]. In the context of strategic and political decision making, these scenarios are often used for gaining orientations concerning future developments or to show pathways towards the achievement of targets, such as the reduction of greenhouse gases [2].…”

The complicated geopolitics of renewable energy

“…Such climate-friendly policies reduce demand for fossil fuels and lower the prices that coal, oil, and gas producers are paid for their products (Paltsev 2012). If fossil-fuel producers believe that such "tight" climate policies are a reality here to stay, and foresee that fossil-fuel resources may become a stranded asset, they may increase production today despite decreasing oil and gas prices (Paltsev 2016). For fossil-fuel producers, it is better to profit on the resource while it is still valuable, even if they are not getting prices as high as they once were.…”

Energy Outlooks Compared: Global and Regional Insights

“…However, their analysis only includes scenarios that meet the 2°C target. Krey (2014) features a broad comparison of famous energy scenarios in the context of climate change mitigation, and Paltsev (2017) investigates which value the different scenarios add to decision-making. However, both studies eventually focus more on modelling approaches and scenario categorisation than on the numbers.…”