Norwegian Residential Energy Demand: Coordinated use of a System Engineering and a Macroeconomic Model

In Norway, the system engineering model MARKAL and the macroeconomic model MSG-EE are both used in studies of national CO2 controlling strategies. MARKAL is a linear programming model that calculates a composite set of technologies necessary to meet demand and environmental constraints at minimised total energy expenditure. MSG-EE is an applied general equilibrium model including the link between economic activity, energy demand and emissions to air. MSG-EE has a theory consistent description of the link between income, prices and energy demand, but the representation of technological improvements is simple. MARKAL has a sophisticated description of future energy technology options, but includes no feedback to the general economy. A project for studying the potential for a coordinated use of these two models was initiated and funded by the Norwegian Research Council (NFR). This paper gives a brief presentation of the two models. Results from independent model calculations show that MARKAL gives a signficant lower residential energy demand than MSG-EE does. This is explained by major differences in modelling approach. A first attempt of coordinating the residential energy demand in the models is reported. This attempt shows that implementing results from MARKAL, in MSG-EE for the residential sector alone gives little impact on the general economy. A further development of an iteration procedure between the models should include all energy using sectors