Appendix J. Models Used To Generate the IEO2009 Projections 

The IEO2009 projections of world energy consumption and supply were generated from EIA’s World Energy Projections Plus (WEPS+) model. WEPS+ consists of a system of individual sectoral energy models, using an integrated iterative solution process that allows for convergence of consumption and prices to an equilibrium solution. It is used primarily to provide alternative energy projections based on different assumptions for GDP growth and fossil fuel prices and can also be used to perform other analyses. 

WEPS+ produces projections for 16 regions or countries of the world, including North America (United States, Canada, and Mexico), OECD Europe, OECD Asia (Japan, South Korea, and Australia/New Zealand), Russia, other non-OECD Europe and Eurasia, China, India, other non-OECD Asia, Brazil, and other Central and South America. Currently, the projections extend to 2030. 

The WEPS+ platform allows the various individual models to communicate with each other through a common, shared database and provides a comprehensive, central series of output reports for analysis. In the individual models, the detail also extends to the subsector level. In WEPS+, the end-use demand models (residential, commercial, industrial, and transportation) project consumption of the key primary energy sources: several petroleum products, other liquids, natural gas, coal, nuclear power, hydropower, wind, geothermal, and other renewable sources. These models also provide intermediate consumption projections for electricity in the end-use demand sectors. 

The end use model projections generally depend on retail supply prices, economic activity as represented by GDP, and population. The transformation models (power generation and district heat) satisfy electricity and heat requirements and also project consumption of primary energy sources at resulting price levels. The supply models (petroleum, natural gas, and coal) make supply projections for the key supply sources corresponding to the primary consumption sources. The main model in the WEPS+ system monitors the convergence sequence for all the models and projects carbon dioxide emissions from the combustion of fossil fuels at a regional level. 

Several model enhancements were implemented in this year’s version of the WEPS+ model, including an improved modeling platform and improvements in the individual models. The transportation sector model includes an extensive level of detail for modes and vehicle types. The other end use demand models are now dynamic simulations with additional product detail. The new electric power generation model is a technology-based stock/flow model using a least-cost solution technique. There is a distinct district heat model, and the supply models now provide retail price feedback. The natural gas supply model interfaces with the International Natural Gas Model (INGM) to provide supply prices. 

WEPS+ includes a detailed model of the world’s transportation sector, which provides projections by four transport modes: road, rail, water, and air. A variety of services are represented for each mode, such as light-duty vehicles, two/three-wheel vehicles, heavy trucks, passenger rail, and freight rail. WEPS+ separates service demand (e.g., road travel by cars, commercial trucks, and heavy trucks) from vehicle efficiency and bases the projections on economic growth (as measured by GDP) and fuel prices. 

A new detailed regional power generation model has also been incorporated into WEPS+. This model uses a stock/flow approach, keeping track of electricity generating capacity, generation, and consumption within remaining, new, and added vintages. The model is technology-based, with a wide variety of technologies for fossil fuels along with their characteristics, such as costs and heat rates. The model solves for new capacity and generation in each year, based on the new generation requirements from the end use demand models, after accounting for transmission and distribution losses. The solution technique is a least-cost market share, using levelized costs for each technology within various load segments based on the system load shape. The overall system load shape is built from sectoral load shapes that are fitted to annual loads from each of the demand models. 

The other demand models in WEPS+ (residential, commercial, and industrial) are now represented in a dynamic simulation, in which the projections are built up over the projection horizon based on changes in GDP, retail prices, consumption in the previous year, and a trend. These core sections of WEPS+ are based on a dynamic microeconomic model and are used primarily to provide a reference case and alternative case energy projections under different assumptions about GDP growth and fossil fuel prices. The reference case reflects accumulated knowledge from the results of other complex models that focus on specific supply or demand series; reflects the behavioral expectations as represented in the elasticities and trends; and incorporates the analysts’ judgments on the potential for demand by end-use sector and fuel type on a regional basis. After the reference case is established, WEPS+ is used to run alternative cases that reflect different assumptions about future economic growth and energy prices. WEPS+ also can be used for other analyses, such as the effects of carbon prices. 

The Generate World Oil Balance Model (GWOB) is used to create a "bottom up" projection of world liquids supply—based on current production capacity, planned future additions to capacity, resource data, geopolitical constraints, and prices—and is used to generate conventional crude oil production cases. The scenarios (oil price cases) are developed through an iterative process of examining demand levels at given prices and 

considering the price and income sensitivity on both the demand and supply sides of the equation. Projections of conventional liquids production for 2009 through 2015 are based on analysis of investment and development trends around the globe. Data from EIA’s Short-Term Energy Outlook are integrated to ensure consistency between short- and long-term modeling efforts. Projections of unconventional liquids production are based on exogenous analysis. 

Ten major streams of liquids production are tracked on a volume basis: (1) crude oil and lease condensate, (2) natural gas plant liquids, (3) refinery gains, (4) Canadian oil sands, (5) extra-heavy oils, (6) coal-to-liquids, (7) gas-to-liquids, (8) shale oils, (9) ethanol, and (10) biodiesel. Biofuels are tracked on both a volume basis and an oil equivalent basis. All liquid fuels are reported in physical volumes, unless otherwise stated.