Energy Modelling in the UK: Decision making in government and industry

Energy models are a great short-hand way to combine different methods from different disciplines to address the complexity of the energy system. Over the last decade, the legislation of long-term decarbonisation targets (to net zero emissions by 2050) has substantially boosted the need for modelling. Hence, energy models provide the underpinning evidence to support decision makers across policy, industry and civil society. Decision-makers need to understand what is in any given model, how it deals with space and time, its inputs and outputs and external drivers. A key part of enabling this understanding is the transparency of energy models, so both technical and senior decision makers can understand a model, have confidence in its outputs, recognise its limitations and appropriately apply its insights to specific questions. This policy brief (#4) completes the findings from the first iteration of the UKERC survey of UK energy models. It focuses on how energy models provide the underpinning evidence to support decision makers across policy, industry and civil society to help understand strategies and trade-offs in the energy transition. It looks specifically at model inputs and outputs, the diversity of policy options that models aim to address, their application to policy issues, their use to support key policy and industrial decisions, the frequency of application, model ‘customers’, and academic outputs. The first brief explored the UK energy modelling landscape, the second brief looked at the strengths and weaknesses of UK energy models and the third brief considered the construction, maintenance and transparency of energy models. This policy brief therefore completes the findings from this first iteration of the UKERC survey of UK models

Energy Modelling in the UK: The modelling landscape

Analysis of the energy transition has drawn heavily on energy modelling, which has been taking place since the oil shocks of the 1970s. The topic lends itself well to quantification due to a number of factors including the physical flows of energy, costs and benefits, different technology characteristics and environmental impacts. Alongside this, as energy is a truly interdisciplinary subject, models are a great short-hand way to combine different methods from different disciplines

Energy Modelling in the UK: Strengths and weaknesses

The energy transition is a huge challenge, encompassing many different economic sectors, a wide variety of fuels and technologies, a host of different actors, a range of environment impacts, and a plethora of possible policy responses. The energy transition therefore needs to be considered across a variety of geographical scales – from neighbourhoods to the world, and across different time-frames – from sub-hourly operation of technologies, to decadal turnovers in both infrastructures and societal attitudes. Energy models provide the underpinning evidence to support decision makers across policy, industry and civil society, helping them to understand strategies and trade-offs in the energy transition. No single model can therefore cover all the elements required to understand the energy transition. To investigate this critical issue and gain an understanding of the energy models in use in the UK, UKERC’s Energy Modelling Hub coordinated a ground-breaking survey of all UK energy models. This policy brief (#2) is the second of four exploring the models captured in the survey. The first brief on the UK energy modelling landscape, detailed the breadth of modelling in the UK. In this second brief we focus on the findings that shed light on the various strengths and weaknesses of UK energy models. In considering this we focus on four key areas: How the models deal with time, in terms of temporal detail and overall time horizon How the models deal with space, in terms of geographical detail and capturing infrastructures How the models deal with technologies, in terms of technology learning and inclusion of key mitigation options How the models deal with behaviour, in terms of consumer responses and broader societal trend

Energy Modelling in the UK: The construction, maintenance and transparency of models

Energy models provide the underpinning evidence to support decision makers across policy, industry and civil society to understand strategies and trade-offs in the energy transition. However modelling exists in the “real” world where funding is limited, modellers’ time is scarce, and decision makers often need insights delivered quickly. As a result, the construction of models can be an uneven development process with an incumbency advantage, and potential silos to new approaches. The subsequent maintenance of models usually suffers from lack of incentives for quality assurance, version control and documentation. Trust in energy models is essential to encourage both stakeholder participation and wider public engagement for the success of the energy transition. Model transparency is the key to gain public trust as only transparent models can be reviewed and verified. However, energy modellers – certainly in academia but perhaps even more so in Government and consulting – have often struggled to make their models open and accessible. The Modelling Hub survey and outputs To investigate these and other critical interlinked issues, UKERC’s Energy Modelling Hub coordinated a ground-breaking survey of all the energy models in use in the UK. As of 1st April 2021, there are 76 UK energy models reported into our database. This paper (#3) is the third of four from UKERC’s Modelling Hub survey, and focuses on the construction, maintenance and transparency of the models captured in the survey. In considering these issues, the brief focused on three key areas: How the models are constructed; in terms of costs, funding sources, and resulting impacts; How the models are maintained; in terms of costs, number of users, and the process of updating models; How the models are made open to stakeholders and other modellers; in terms of different transparency levels The first of the four outputs focused on the UK energy modelling landscape, detailing the diversity of who hosts and runs models. The second focused on the strengths and weaknesses of UK energy, considering time, space and the treatment of societal trends. A fourth and final output will focus on the application of UK energy models to decision making in government and industry

Purchasing power parity in G-7 countries: Further evidence based on ADL test for threshold cointegration

This study applies a newly-developed Autoregressive Distributed Lag (ADL) test for threshold cointegration, proposed by Li and Lee (2010) to test the validity of long-run purchasing power parity (PPP) for G-7 countries over the January 1994 to April 2010. The empirical results indicate that PPP only holds true for Canada and France two countries. Our results have important policy implications for the G-7 countries under study.Purchasing Power Parity; G-7 Countries; ADL Test; Threshold Cointegration