Colin J. Axon, UK

Nigel H. Goddard, Scotland

Barney D. Foran, Australia

Benjamin S. Warr, France

The Energy-Economy System - extending NEA to the policy-testing framework of 7see

(see www.arup.com/gdp for the Sankey diagram booklet)

March 31st, 2015, Net Energy Analysis Workshop, Stanford Simon H. Roberts Foresight + Research + Innovation, Arup, London

2

7see for direct energy

A slightly different way of looking at NEA: the 7see approach

Net Energy Analysis (NEA)

3

Direct Energy for UK oil & gas extraction: 2.8% rising to 5.5%

0.00

0.01

0.02

0.03

0.04

0.05

0.06

1990 2000 2010 2020 2030D

irect

ene

rgy

to o

utpu

t ene

rgy

(rat

io)

year

Direct Energy use for oil & gas extraction

historical

4

4. Source of Gross Fixed Capital Formation (GFCF)

5. Calibrate from historical data

6. Configure dynamical system

Key aspects of the 7see approach (references to the Sankey diagram booklet)

1. Fixed Capital (FC) basis of economy

2. Inputs and outputs for each FC

3. Supply shortfall feedback to FC

Vensim

5

1. The boxes: Fixed Capital (FC) basis of economy (booklet page 10)

6

2. Boxes and their arrows: inputs and output for each type of Fixed Capital (FC)

(Not using prices; only energy, jobs, and economic volume flows.)

7

3. Supply shortfall is the feedback (a dynamic system) via Fixed Capital Formation (FCF) to FC, and thus supply

Vensim

8

4. Source of Gross Fixed Capital Formation (GFCF) and hence its energy footprint (booklet page 17)

9

5. Calibrate relationships (time-dependent coefficients) according to historical data: 1990-2012

0

1

2

3

4

5

6

1990 2000 2010 2020 2030

Jobs

(m)

year

Jobs in manufacturing

historical

0

20

40

60

80

100

120

140

1990 2000 2010 2020 2030

Volu

me

outp

ut (

b[19

90]/y

at

basi

c pr

ices

)

year

Volume output of manufacturing

historical

0

5

10

15

20

25

30

35

40

45

50

1990 2000 2010 2020 2030

Jobs

pro

duct

ion

coef

ficie

nt

(jobs

/m

[199

0] a

t bas

ic p

rices

)

year

Jobs per unit output

historical

extrapolation

asymptote

10

6. Configure dynamic system and run forward for BAU scenario (business-as-usual; exploratory rather than normative)

1. Extrapolate all time-dependent coefficients. 2. Final demand for services adjusted for an unemployment level of 6%.

0

2

4

6

8

10

12

1990 2000 2010 2020 2030

Rat

e (%

)

year

Unemployment

historical

model - BAU

-6

-4

-2

0

2

4

6

1990 2000 2010 2020 2030

Gro

wth

(pro

porti

on p

er y

ear)

year

Growth in GDP

historical

model - BAU

11

Indirect Energy example: testing a policy of accelerated installation of offshore wind over 2016-2035

Photo: Nysted Offshore Wind Farm

0

10

20

30

40

50

60

1990 2000 2010 2020 2030

Gen

erat

ing

capa

city

(TW

)

year

Generating capacity of offshore wind

model - BAU

3,000 MW/y in 2025 a highly feasible scenario (Pyry Report)

0

10

20

30

40

50

60

1990 2000 2010 2020 2030

Gen

erat

ing

capa

city

(TW

)

year

Generating capacity of offshore wind

model - policy

model - BAU

12

Accelerated installation requires more GFCF, which is diverted from final consumption (booklet p17)

100

110

120

130

140

150

160

170

180

190

200

1990 2000 2010 2020 2030

Annu

al e

cono

mic

vol

ume

flow

(

1000

m[1

990]

/y)

year

Investment (GFCF)

model - BAU

100

110

120

130

140

150

160

170

180

190

200

1990 2000 2010 2020 2030

Annu

al e

cono

mic

vol

ume

flow

(

1000

m[1

990]

/y)

year

Investment (GFCF)

model - policy

model - BAU

13

Indirect Energy example: consumed, output and payback period

Turquoise line annual increase in output of offshore wind generation

Grey dashed line energy payback

Purple line - energy consumed in construction (derived from tracing GFCF back via intermediate consumption to industries use of energy)

-2.0

-1.6

-1.2

-0.8

-0.4

0.0

0.4

0.8

1.2

1.6

-100

-80

-60

-40

-20

0

20

40

60

80

100

1990 2000 2010 2020 2030

Ener

gy p

ayba

ck p

erio

d (y

)

Wei

ghte

d en

ergy

(PJ/

y o

r PJ/

y)

year

Investment energy required for energy output from offshore wind

output change (PJ/y)energy consumed (PJ/y)payback period (y)

14

Sub-year energy payback means total weighted energy is barely changed, while CO2 emissions are reduced

0

2

4

6

8

10

12

1990 2000 2010 2020 2030

Wei

ghte

d en

ergy

(EJ/

y)

year

Total weighted energy

model - BAU

model - policy

0

100

200

300

400

500

600

1990 2000 2010 2020 2030

CO

2 em

issi

ons

(MtC

O2/

y)

year

CO2 emissions

model - BAU

model - policy

15

Messages

1. For Indirect Energy, can use the (weighted) energy footprint of Gross Fixed Capital Formation (GFCF).

2. The 7see model enables proposals to be set in an economic context, familiar to national policy and decision makers.

3. Explore the 7see-GB model in Vensim by requesting a copy from simon.roberts@arup.com, +44 (0)20 7755 2906.

Vensim

The Energy-Economy System- extending NEA to the policy-testing framework of 7see(see www.arup.com/gdp for the Sankey diagram booklet)A slightly different way of looking at NEA: the 7see approachDirect Energy for UK oil & gas extraction: 2.8% rising to 5.5%Key aspects of the 7see approach (references to the Sankey diagram booklet)1. The boxes:Fixed Capital (FC) basis of economy (booklet page 10)2. Boxes and their arrows:inputs and output for each type of Fixed Capital (FC)3. Supply shortfall is the feedback (a dynamic system) via Fixed Capital Formation (FCF) to FC, and thus supply4. Source of Gross Fixed Capital Formation (GFCF) and hence its energy footprint (booklet page 17)5. Calibrate relationships (time-dependent coefficients) according to historical data: 1990-20126. Configure dynamic system and run forward for BAU scenario (business-as-usual; exploratory rather than normative)Indirect Energy example: testing a policy of accelerated installation of offshore wind over 2016-2035Accelerated installation requires more GFCF, which is diverted from final consumption (booklet p17)Indirect Energy example: consumed, output and payback periodSub-year energy payback means total weighted energy is barely changed, while CO2 emissions are reducedMessages