within the Department and from appropriate organizations in both the public and private sectors. President Bush articulated three primary areas of interest for energy policy in his introduction to the 1991 National Energy Strategy (NES): economic prosperity, environmental quality, and national security. The NES represents a new national effort, he said, to achieve “balance among our increasing need for energy at reasonable prices, our commitment to a safer, healthier environment, our determination to maintain an economy second to none, and our goal to reduce dependency by ourselves and our friends and allies on potentially unreliable energy supplies” (DOE, 1991a).

These aims are all widely accepted. Yet despite such general agreement, federal energy policy making has been marked by deep disagreements among different interests and little movement forward on significant issues. The disagreements have concerned the means of achieving desired ends, the precise nature of the goals, and the forms of acceptable tradeoffs among sometimes conflicting objectives.

High quality energy modeling can help bound these debates and move policy forward in two ways. First, modeling can provide insights to decision makers about the likely results of different policies. Second, it can help focus debates on scientific rather than ideological questions. Thus, energy modeling can help policy makers achieve greater consensus on proposed solutions and increase the likelihood of their adoption. Such model-assisted decision making has been used effectively in state and regional contexts over the last ten years.

One important kind of energy decision is whether to invest in new supply-side energy resources, such as oil wells, coal mines, and power plants, or in end-use efficiency measures, such as better insulation for refrigerators. Models can provide quantitative measures to help guide the understanding of the economic, environmental, and security implications of alternative energy investments. They also can help to estimate the results of different types of public policies (such as tax incentives to producers, transporters, and consumers, or payments to utilities for improving end-use efficiency). Some of the policy options that DOE and others considered in the 1991 NES activity are covered later in this chapter to further illustrate this point.

In considering the types of energy issues that models can help address, the committee distinguished three time horizons relevant to policy making: the short-term (up to about 2 years), the medium-term (up to about 25 years), and the long-term (beyond 25 years). For each time horizon a different modeling approach is needed.

Policy actions directed at short-term issues are likely to be more reactive than proactive. Short-term models therefore must address such problems as disequilibrium phenomena and the macroeconomic effects of energy disruptions (e.g., embargoes of energy supplies or sudden price hikes).

As explained below, most energy policy issues of national concern involve the medium term (up to about 25 years), such as the evaluation of alternative energy investments whose effects will not materialize in the short term. The emphasis in these cases is on market



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