Climate Action Programme

Addressing the effects of climate change for business and society

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Energy Transition Dynamics

The ongoing energy transition is certain, but its exact speed and impact is not. 

The Energy Transition Dynamics project team combines expertise in public policy, economics, engineering and behavioral science and encapsulates its own insights, and that of colleagues into a flexible simulation model.  The methodology used, System Dynamics, enables to reflect the interconnections and feedbacks between and within various parts of the global and regional energy system.  Depicting ten regions, driven by in-house analyses of productivity and thus economic growth, energy demand and its transition to alternative fuels is forecasted by deep understanding of underlying technologies and corresponding cost learning curves on the demand side.  Similarly, differential learning cost curves for various fossil and renewable energies – frequently supported and/or hindered by public policy generates a race towards ever cheaper extraction and production of energy.

Our approach is distinguished by several features, not commonly seen in global energy projections.  With respect to content, we include also how ships, such as crude and products carriers, coal bulk, LPG and LNG ships will be affected when oil and gas extraction changes as a function of new technologies and a changing demand. Our method also ensures that expert views are reflected on par with empirical and econometric forecasting.  This ensured that our model’s decision making reflects real world:  When real decision making is cost optimized – so is our model’s.  When real world decision makers use simple decision heuristics, so does our model. In line with the System Dynamics modelling tradition, the approach is one with the endogenous view – most of the energy transition is internally driven through a web of self-correcting and – amplifying forces.  Even public policy not only influences the energy system dynamics, but it also responds to it. 

In close cooperation with DNV GL Business Areas, this project refines the Energy Source Mix Explorer (EMSX) suite of simulation models.  This suite enables to better understand how any organization, such as a company or a nation, will be affected by the changes in the energy system.  Typical key metrics are revenues, taxes, employment and market shares.  The Energy Transition Outlook model (se under the ETO project) is also developed by the ESMX team and is its core energy system tool.  ESMX simulations take different forms, including computer games, often embedded in tailormade learning sessions.

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