Trends, Investment Behaviour and Policy Design
Edited by Raymond J.G.M. Florax, Henri L.F. de Groot and Peter Mulder
Chapter 11: Energy Model and Policy Advice: The Effect of Model Choice
Willem J.H. van Groenendaal 1 INTRODUCTION Models play an important role in policy evaluation and preparation. This chapter discusses if and what effects model formulation can have on the results of energy policy analysis. Reviewing the literature shows that a wide variety of models is used to evaluate energy policies. The type of model used for policy analysis normally depends of the type of question one wants to answer. However, energy policy problems, as most policy problems, are often complex and do not necessarily correspond to the variables used in a particular type of model. For example, the question on what pricing policy best promotes the use of particular energy-saving technologies is difficult to answer with an economic top-down model that utilizes price elasticities but does not identify these technologies. Bottom-up or engineering models that distinguish separate technologies, however, often lack the economic rigour to evaluate the economic implications of changes in prices appropriately. If each analysis leads to similar results there is no problem. However, if the results differ considerably we do have a problem. For the formulation of its energy policy the Dutch national government may ask three institutes for advice: the Netherlands Bureau for Economic Policy Analysis (CPB), the Energy Research Centre of the Netherlands (ECN) and the National Institute of Public Health and Environment (RIVM). Each of these uses (among others) an energy model to formulate an advice. The CPB uses the Netherlands Energy demand MOdel (NEMO), a top-down model based on bottom-up information (Koopmans and...
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