Adapting for uncertainty : a scenario analysis of U.S. technology energy futures

The pattern of future evolution for United States (US) energy markets is highly uncertain at this time. This article provided details of a study using a scenario analysis technique to investigate key energy issues affecting decision-making processes in the United States. Four scenarios were used to examine the driving forces and critical uncertainties that may shape United States energy markets and the economy for the next 50 years: (1) a reference scenario benchmarked to the 2002 annual energy outlook forecast, (2) abundant and inexpensive supplies of oil and gas, (3) a chaotic future beset with international conflict, faltering new technologies, environmental policy difficulties and slowed economic growth, and (4) a technology-driven market in which a variety of forces converge to reshape the energy sector. Each of the scenarios was quantified using a computable general equilibrium model known as the All Modular Industry Growth Assessment (AMIGA) model. Results suggested that the range of different outcomes for the US is broad. However, energy use is expected to increase in all 4 scenarios. It was observed that the introduction of policies to encourage capital stock turnover and accelerate the commercialization of high efficiency, low-emissions technologies may reduce future primary energy demand. The analysis also showed that lower energy prices may lead to higher economic growth. Policies introduced to improve energy efficiency and accelerate the introduction of new technologies did not appreciably reduce the prospects for economic growth. Results also suggested that lower fossil fuel prices discourage investments in energy efficiency or new technologies and may mask the task of responding to future surprises. It was concluded that an investment path that emphasizes both energy efficiency improvements and advanced energy supply technologies will provide economic growth conditions similar to the implementation of lower energy prices. 11 refs., 1 tab., 2 figs