Modeling framework - Final energy demand by sector

W.E.R.I's picture
---- The Asian Century scenario: energy consumption projections ---- Energy consumption forecasts derive from econometric analyses by country and sector. Demand equations are estimated using historical data of standard explanatory variables such as GDP, population, industrial production, and vehicle stocks. The econometric model incorporates changes in the structure of output and energy efficiency improvements. Future values of energy demand are then projected using the explanatory variables. The model thus takes into account the historical correlation between explanatory variables and energy consumption (box figure). Broadly speaking, the econometric strategy begins by deriving final energy demand projections, from which it derives primary energy demand projections. “Final energy demand” refers to the consumption of final energy goods such as electricity and gasoline, and “primary energy demand” to the implicit demand for energy sources such as oil and coal required to meet final energy demand. For all countries, data on key macroeconomic indicators such as GDP, population, and crude oil price are used as the bases for future projections of final energy demand. In addition, some countries have data on more detailed socioeconomic variables such as industrial production, vehicle stocks, number of households, and floor space, which provided additional inputs for these countries’ projections. Transformation analysis examines the transformation of primary energy into final energy. Examples of transformation include electricity generation, oil refining, gas processing, and coal transformation. Primary energy demand projections can be derived by energy type by combining final energy demand and transformation analysis. Net imports of final energy are also factored into primary energy demand projections, as are changes in energy policy.


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