chapter  5
19 Pages

Global policy scenarios and economic scenarios as tools for energy policy

ByJAVIER GARCÍA - VERDUGO

The type of scen ario we are most familiar with is the ref er ence scen ario of the forecasting type, which as sumes the con tinua tion of his tor ical trends into the future and that the structure of the sys tem remains unchanged or responds in pre­ determined ways. This type of scen ario is often referred to as business-as-usual (BAU). Taking into account the inertia of many of the eco nomic and energy sys­ tems under investigation, a short­ to mid­ term forecast often views a BAU scen­ ario as presenting a high prob abil ity; how ever, when the trends are pro jected over a longer time horizon they turn out to be quite unlikely. Some of the under lying factors that drive an eco nomic or energy sys tem (techno­ lo gical de velopment, openness of markets, social structures, envir on mental values and so on) are not very predictable. However, over long periods of time – 30 to 50 years or more – it is precisely these factors that are the most im port ant. Therefore, over the long run it is risky to base one’s strat egy solely on BAU scen arios.2 Exploratory scen arios, on the other hand, are designed to ex plore several future­ configurations­ of­ the­world.­ The­ purpose­ is­ to­ identi­fy­ the­most­ robust­ strat egies across those scen arios. From the point of view of designing stra tegic action, it is often plaus ible scen arios running counter to conventional wisdom that are the most use ful. The main value added in exploratory scen arios lies in the fact that they help prepare for turns of those events that are plaus ible and entirely pos sible without representing a con tinua tion of past and present trends. Lastly, norm ative scen arios can be designed on the basis of a set of desir able features that the future world should possess. This type of scen ario is inherently

pol icy oriented and prescriptive: such scen arios as sume that pol icy actions can shape a future as wished, and they are designed to identi fy the pol icy actions required. What is con sidered ‘desir able’ clearly depends on the gen eral ob ject­ ives of the indi vidual or group elaborating the scen ario. Normative scen arios introduce a crit ical change of per spect ive, focusing on several crucial elements – actions that must be taken and con ditions that must be created at certain points in time – in order to make achievable the goals of each scen ario. The emphasis is on planning to achieve a certain result rather than on readiness to tackle un cer­ tain events. In practice, norm ative scen arios are rarely found in isolation and are usually accompanied by a previous ana lysis – via exploratory scen arios – of what the future might bring.3 Other scen arios that are increasingly pop ular are pol icy scen arios, designed to ana lyse the impact of introducing a new pol icy in a con text that in every other respect­reflects­the­con­tinua­tion­of­present­trends.­Scenarios­of­this­type­can­be­ con sidered as a more restrictive subcat egory in the class of norm ative scenarios. Another common distinction – that could be applied to the previous tax onomy – is between qualit at ive and quantitative scen arios. The former are pure nar rat­ ive stories describing how the future might unfold or the relationships in ternal to the­sys­tem­ana­lysed,­without­the­help­of­figures.­The­latter­also­give­a­numerical­ illustration of the evolution of key vari ables or indic ators. Quantitative scen arios are often repres ented through the use of a model, but may be also illus trated through much simpler tools. Narrative scen arios can more easily accommodate an interdisciplinary per­ spect ive and the complex interrelationships present in a sys tem than quantitative models. However, pol icy makers are likely to be more inter ested in scen arios offering­ quantified,­ cred­ible­ repres­enta­tions­ of­ pol­icy­ meas­ures­ and­ their­ impacts.­Since­a­min­imum­level­of­quantification­is­use­ful­to­test­the­validity­and­ consistency of the scen ario, scen arios are often simulated with the use of model­ ling tools. Nonetheless, it is im port ant to remember that the main function of scen arios is to help ex plore the un cer tainties lying ahead by making them more expli cit. Model quantification­of­scen­arios,­by­giving­a­more­precise­repres­enta­tion­of­a­scen­ario,­ may induce – espe cially in lay people – the illusion of accuracy, which is counter­ productive with respect to the purpose of a scen ario exercise (Tossato, 2007).