Analysis of the industrial sector representation in the Fossil2 energy-economic model

The Fossil2 energy-economic model is used by the US Department of Energy (DOE) for a variety of energy and environmental policy analyses. A number of improvements to the model are under way or are being considered. This report was prepared by the Pacific Northwest Laboratory (PNL) to provide a clearer understanding of the current industrial sector module of Fossil2 and to explore strategies for improving it. The report includes a detailed description of the structure and decision logic of the industrial sector module, along with results from several simulation exercises to demonstrate the behavior of the module in different policy scenarios and under different values of key model parameters. The cases were run with the Fossil2 model at PNL using the National Energy Strategy Actions Case of 1991 as the point of departure. The report also includes a discussion of suggested industrial sector module improvements. These improvements include changes in the way the current model is used; on- and off-line adjustments to some of the model`s parameters; and significant changes to include more detail on the industrial processes, technologies, and regions of the country being modeled. The potential benefits and costs of these changes are also discussed.