This submodel simulates the supply and demand for fuels- and electricity, given a certain level of economic activity. It is linked to other submodels, for example through investment flows, population sizes and emissions. The energy model consists of five modules: Energy Demand, Electric Power Generation, and Solid, Liquid and Gaseous Fuel supply. Effects such as those of depletion, conservation, fuel substitution, technological innovation, and energy efficiency are incorporated in an integrated way, with prices as important signals. Renewable sources are included as a non-thermal electricity option and as commercial biofuels.
Modern societies as they have developed over the last two centuries require a continuous flow of processed fuels and materials. Until some 200 years ago energy needs were largely met by renewable fluxes such as water and biomass. Since then energy has increasingly been derived from the fossil fuels coal, oil and gas. To be useful these fuels have to be extracted, processed and converted to heat and chemicals. For all these steps the production factors labour, land, capital, and energy and material inputs, are required. All three steps are also accompanied by waste flows, the largest being the emission of carbon dioxide (CO2) during combustion. Figure 5.1 shows the use of fossil fuels in million tonnes of oil equivalents over the period 1800–1990. The graph shows an increase in the use of coal, followed by the penetration of oil and later natural gas.