Revisiting the long-run energy mix with the global energy market model (GEM)

Abstract

The objective of this paper is to estimate the long-run energy mix—i.e., the combination of resources including solids, liquids, and gases that will satisfy energy demand to the year 2040—with a Global Energy Market model (GEM). The GEM first provides a close match of the historical energy mix dating back to 1850 and is then used to make forecasts for the future. Originally developed in 2007, the model was used at that time to project the energy mix to the year 2030. The original findings from 2007 introduced a “2030 1/3 forecast,” indicating that solids, liquids, and gases would each occupy a third of the energy market in 2030. After further disaggregating the categories, it was found that liquids, mostly oil, would experience a declining market share by 2030 while natural gas would see a rapid rise. The solids’ share, mostly coal, was relatively flat by that time. This paper uses the most recent statistics of the last 10 years on consumption of different energy sources to verify the accuracy of the original GEM baseline scenario carried out in 2007. Once the results are proven reasonable, the scenario’s time horizon is extended to the year 2040—a limit in which outcomes can be reasonably conceptualized and quantified. Our findings show continued penetration of natural gas in the energy mix—a result consistent with efforts to reduce carbon emissions. In reality, that outcome will be contingent on the enactment of policies that encourage the development, transportation, and consumption of gas.