# Presentation: 302233

## REMI®-E3TMwith MARKAL/TIMES Example

- Presented by George I. Treyz
- Regional Economic Models, Inc.
- Acknowledgements:
- Gary Goldstein’s (IRG) presentation to IEA-ETSAP Semi-Annual Workshop at St. Anne’s College in Oxford, U.K.

## Presentation Outline

- Short Description of REMI Economic and Demographic Forecasting and Simulation Model and Its Use
- Environmental and Energy Uses
- The REMI-E3TM-MARKAL/TIMES Product

## REMI Key Model Features

-  Includes all inter-industry linkages
-  Is based on Economic Theory
-  Includes New Economic Geography Theory
-  Is calibrated and estimated using data
-     for the region(s) being modeled
-  Is dynamic and predicts when the results will occur
-  Is the leading Policy Analysis model in the U.S.

## Short Description of REMI

- The REMI model integrates key aspects of several economic modeling tools:

| Model | Aspect |
| --- | --- |
| I/O | Inter-industry processing sector |
| Based on Microeconomic Economic Assumptions | Equilibrium tendencies in markets and demographic components are time dependent |
| Econometric | Estimates derived from panel data |
| Economic Geography | Labor and product agglomeration |

## REMI Model Linkages

*REMI Model Linkages*

## REMI Model Linkages (Cont.)

*REMI Model Linkages (Cont.)*

## REMI Applications - Environment

- What will be the effect of proposed air pollution control regulations on the Los Angeles area?

**Policy Variables Used**
- Cost of equipment
- Spending
- Non-pecuniary benefits of better health

**Key REMI Results**
- Economic effects of costs,   spending, and amenities
- Employment and measured real income per capita

## 1. Environmental Rules Changes – Inputs to REMI

- Output

- Market Shares

- Labor & Capital Demand

- Population & Labor Supply

- Wages, Costs & Prices

- Pollution Control Equipment
- Investment and Construction

- Maintenance Employment

- Costs for Pollution ControlEquipment and Maintenance

- Health Improvements Due to Reduced Air Pollution (Amenity Change)

## REMI-E3 Main Issues Addressed

*Established the mapping of REMI economic output to MARKAL demands*
*Identified what portion of the MARKAL outputs are the most effective inputs to REMI*
*Determined mechanisms for conveying said MARKAL results to REMI (Policy variables)*
*Established strategies to avoid or reduce double-counting by REMI (e.g. if MARKAL calculates investments in energy techs, REMI should not further modify these investments)*
*Developed conceptual design of semi-automatic interfaces between the two models*

## Linking MARKAL/TIMES to REMI for the Power Sector

- Output

- Market Shares

- Labor & Capital Demand

- Population & Labor Supply

- Wages, Costs & Prices

- Investment for:
- Power Plants
- Pollution Control
- Demand-side actions
- (ee, dsm, fuel switching)

- Resources Activity

- Changes in electricity consumption

- Consumer Electric Rates

- Industrial & Commercial Electric Cost Changes

- Costs for Pollution ControlEquipment and Maintenance

- Emissions

- Maintenance
- Employment

## MARKAL/TIMES Links to REMI Model Inputs

- Output

- Market Shares

- Labor & Capital Demand

- Population & Labor Supply

- Wages, Costs & Prices

- Cost of fuel, operations, maintenance, and investment (annualized) for purchasing industries

- Direct consumption changes due to new technologies (reallocation of total shifts)

- Direct demand changes by industry for investment, operation, changes in fuel use, and maintenance from service industry

- International imports and exports

## MARKAL Energy Perspective 

_**Industry, **_**e.g.**
**-Process steam**
**-Motive power**
_**Services, **_**e.g.**
**-Cooling**
**-Lighting**
_**Households, **_**e.g.**
**-Space heat**
**-Refrigeration**
_**Agriculture, **_**e.g.**
**-Water supply**
_**Transport, **_**e.g.**
**-Person-km**

**Demand for **
**Energy Service**

_**Industry, **_**e.g.**
**-Steam boilers**
**-Machinery**
_**Services, **_**e.g.**
**-Air conditioners**
**-Light bulbs**
_**Households, **_**e.g.**
**-Space heaters**
**-Refrigerators**
_**Agriculture, **_**e.g.**
**-Irrigation pumps**
_**Transport, **_**e.g.**
**-Gasoline Car**
**-Fuel Cell Bus**

**End-Use**
**Technologies**

**Conversion**
**Technologies**

**Primary Energy **
**Supply**

_**Fuel processing**__ _
_**Plants**_** e.g.**
**-Oil refineries**
**-Hydrogen prod.**
**-Ethanol prod.**
_**Power plants**_** e.g.**
**-Conventional**
**  ****Fossil Fueled **
**-Solar**
**-Wind**
**-Nuclear**
**-CCGT**
**-Fuel Cells**
**-Combined Heat**
**    ****and Power**

_**Renewables**_** e.g. **
**-Biomass**
**-Hydro**
_**Mining**_** e.g.**
**-Crude oil**
**-Natural gas**
**-Coal**
_**Imports**_** e.g.**
**-crude oil **
**-oil products**
_**Exports**_** e.g.**
**-oil products**
**-coal**
_**Stock changes**_

**       ****(Primary Energy)                             (Final Energy)                           (Useful Energy)**

## Model Characteristics (Cont.)

- Evaluates all options within context of entire energy / materials system by:
- balancing all supply/demand requirements
- ensuring proper process/operation
- monitoring in detail each process’s capital stock turnover
- adhering to user defined environmental & policy restrictions.
- Computes an equilibrium on energy markets that takes into account impact of policies on:
- energy and product prices
- technological development
- energy security (trade)
- attaining environmental goals
- consumer behavior (e.g., miles driven, warming/cooling homes)
- industrial output and profitability.

## Model Characteristics (Cont.)

- Provides framework for exploring and evaluating alternative futures, and role of various technologies, trade and policy options.
- Able to interact with other models used to assess regional issues, most notably dispersion and environmental impacts models, forestry/agriculture models and more detailed econometric models.
- Employs an open and well understood approach to both data assumptions and modeling technique.
- Facilitates stakeholder buy-in and participation by promoting communication between the various decision-making bodies.

## Producer/Consumer Equilibrium for each Commodity w/ Technology Detail

*Producer/Consumer Equilibrium for each Commodity w/ Technology Detail*

*Courtesy GianCarlo Tosato*

## MARKAL/TIMES Results to REMI-PI - Details

**MARKAL **
**Model Run**

- INVEST.COST

- AC.O&M

- AC.FuelExp

- AC.INVEST

- REMI-Energy
- M2R

- REMI Policy Variables
-  and Other Inputs

- M2R
- Mapping Sheet

- AC.RESOURCE
- &
- L.RESOURCE

**VEDA BE**
**Tables**

- M2R Scenario
- Results file

- M2R
- Reference Case
- Results file

## Slide 17

## MARKAL/TIMES-2-REMI Workbook – Technology Grouping Table

## MARKAL/TIMES-2-REMI Workbook – Scenario Results

## Slide 20

## Slide 21

## An Example of The REMI Results in a multi-area U.S model using Only Exogenous Cost Changes 

- Output

- Market Shares

- Labor & Capital Demand

- Population & Labor Supply

- Wages, Costs & Prices

- Cost increases in natural gas, electricity, and residual fuel

- Price changes in energy that is directly purchased by the consumer (i.e. gas and fuel oil)

## Slide 23

## Slide 24

## Slide 25

## Slide 26

## Slide 27

## Slide 28

## REMI-E3TMwith MARKAL/TIMES

*REMI-E3TM**with MARKAL/TIMES*

**REMI Model**
**169**

**REMI-E3**
**R-to-M**
**Model**

**3. Economic inputs**
**required by**
**MARKAL/TIMES**
**for Control**
**Forecast**

**MARKAL/**
**TIMES**

**4. MARKAL/TIMES**
**Control**
**Forecast**

**5. New**
**Policy**
**Assumptions**

**MARKAL/**
**TIMES**

**6. MARKAL/TIMES**
**Alternative Forecast**

**7. MARKAL/TIMES**
**Difference**

**REMI-E3**
**M-to-R**
**Model**

**2. REMI Control **
**Forecast**

**8. REMI Policy **
**Variable **
**Changes**

**REMI Model**
**169**

**9. REMI**
**Alternative**
**Forecast**

**10. Economic Effects**
**of New Policy**

## Slide 30

## REMI’s objective

**Policy Application**

**Economic**
** ****Theory**