3 - The role of modeling in energy policy analysis

Summary

Modeling has been an integral part of national energy planning since the mid 1970s when governments instituted such activities on a major scale after the first oil embargo. Large-scale computer models were a central part of the policy analysis and planning functions of the US Department of Energy (and its predecessor, the Energy Research and Development Administration) and were also used extensively from an early date in the major European Countries and by the EEC. At a very early stage it was recognized that the complexity of the energy problem required sophisticated analytical approaches if the policy options that were to be presented to decision-makers were to be based on sound analysis.

Because so much of energy planning in developing countries has been attempted with formal models originally implemented in the 1970s on mainframes, and more recently on successively more powerful generations of mini- and microcomputers, the lessons of this past experience is central to the development of our own framework. Much of this experience mirrors that of energy policy analysis and planning generally – indeed it can be said that the grand failures of computer modeling match the grand failures of energy planning, a correlation perhaps nowhere better illustrated than in the United States, where a vast expenditure on energy models in the late 1970s contributed very little to the resolution of the fundamental policy debates, such as that concerning the relationship between the so-called shortages (notably that of natural gas) and price controls.