World Energy Model

Scenario analysis of future energy trends

Documentation

Since 1993, the International Energy Agency (IEA) has provided medium- to long-term energy projections using the World Energy Model (WEM). The model is a large-scale simulation model designed to replicate how energy markets function and is the principal tool used to generate detailed sector-by-sector and region-by region projections for the World Energy Outlook (WEO) scenarios. Updated every year and developed over many years, the model consists of three main modules: final energy consumption (covering residential, services, agriculture, industry, transport and non-energy use); energy transformation including power generation and heat, refinery and other transformation; and energy supply. Outputs from the model include energy flows by fuel, investment needs and costs, CO2 emissions and end-user pricing.

The WEM is a very data-intensive model covering the whole global energy system. Much of the data on energy supply, transformation and demand, as well as energy prices is obtained from the IEA’s own databases of energy and economic statistics. Additional data from a wide range of external sources is also used. These sources are indicated in the relevant sections of this document. The WEM is constantly reviewed and updated to ensure its completeness and relevancy. The development of the WEM benefits from expert review within the IEA and beyond and the IEA works closely with colleagues in the modelling community, for example, by participating in and hosting the annual International Energy Workshop.

The current version of WEM covers energy developments up to 2040 (2050 for the Sustainable Development Scenario) in 25 regions. Depending on the specific module of the WEM, individual countries are also modelled: 12 in demand; 101 in oil and gas supply; and 19 in coal supply. The WEM is designed to analyse:

  • Global and regional energy prospects: These include trends in demand, supply availability and constraints, international trade and energy balances by sector and by fuel.
  • Environmental impact of energy use: CO2 emissions from fuel combustion are derived from the projections of energy consumption. Other greenhouse gases and local pollutants are also estimated linking WEM with other models.
  • Effects of policy actions and technological changes: Alternative scenarios analyse the impact of policy actions and technological developments on energy demand, supply, trade, investments and emissions.
  • Investment in the energy sector: The model evaluates investment requirements in the fuel supply chain needed to satisfy projected energy demand. It also evaluates demand-side investment requirements, including energy efficiency, electric vehicles and industrial carbon capture and storage.
  • Modern energy access prospects: These include trends in access to electricity and clean cooking facilities. It also evaluates additional energy demand, investments and CO2 emissions due to increased energy access.

The WEM is a simulation model covering energy supply, energy transformation and energy demand. The majority of the end-use sectors use stock models to characterise the energy infrastructure. In addition, energy-related CO2 emissions and investments related to energy developments are specified. Though the general model is built up as a simulation model, specific costs play an important role in determining the share of technologies in satisfying an energy service demand. In different parts of the model, Logit and Weibull functions are used to determine the share of technologies based upon their specific costs. This includes investment costs, operating and maintenance costs, fuel costs and in some cases costs for emitting CO2.

The main exogenous assumptions concern economic growth, demographics and technological developments. Electricity consumption and electricity prices dynamically link the final energy demand and transformation sector. Consumption of the main oil products is modelled individually in each end-use sector and the refinery model links the demand for individual products to the different types of oil. Demand for primary energy serves as input for the supply modules. Complete energy balances are compiled at a regional level and the CO2 emissions of each region are then calculated using derived CO2 factors. The model is each year recalibrated to the latest available data point (for WEO 2019, this is typically 2017 although 2018 data is included wherever available).