Bridging macroeconomic and bottom up energy models – the case of efficiency in industry

Panel: 3. Matching policies and drivers: Policies and Directives to drive industrial efficiency

This is a peer-reviewed paper.

Authors:
Andrea Herbst
Felix Reitze, Fraunhofer Institute of Systems and Innovation Research – Fh-ISI, Germany
Felipe Toro, IREES GmbH, Germany
Eberhard Jochem, Fraunhofer Institute of Systems and Innovation Research – Fh-ISI, Germany

Abstract

Energy demand and supply projections for a country are generally based on two types of models: macroeconomic models and bottom-up models for several sectors. Both types of models are essential for future energy policy design and ex ante evaluation of energy and material efficiency strategies; however, both types have their strengths and limitations. The solution of this dilemma is to link both model types and run them iteratively in order to benefit from their strengths and advantages and avoid their limitations.

The paper focuses on one essential element of a hybrid energy model system: the data transformation from a macroeconomic model to sectoral bottom up models of an existing hybrid energy model system. With the “Transform module”, the information of the macro model is converted into physical units as input for the bottom-up models operating as a “hard-link” between the macroeconomic and sectoral bottom up models.

Additionally, the “Transform module” includes a separate module (“Mateff”=material efficiency) simulating technological and demand changes of energy-intensive basic products. The model handles the reduced demand for industrial basic products due to improved material efficiency, intensified recycling or substitution of basic materials by other materials. The technology-oriented, bottom-up tool “Mateff” takes on board the recently increased competitiveness in materials and basic industrial products.

The paper reports on energy-intensive industries such as metal production, pulp, paper, and printing, or non-metallic minerals. Trends of higher product quality, saturation, material efficiency, material substitution and stagnation in the per capita consumption of industrialized nations due to rationalization and competitive disadvantages of these basic products are also considered in this analysis between the two model types, contributing to the understanding of intra-industrial structural change not being handled by macroeconomic models.