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UBC Theses and Dissertations

A long term energy policy model for Canada Fuller, John David


The construction of a dynamic, long term model of the Canadian energy sector is discussed, with examples of policy analysis done with the model. A linear process model of energy supply, conversion, distribution and end-use is linked to a model of the demands for services provided by energy in combination with other inputs. Nonlinear programming is used to find the supply-demand equilibrium by maximizing the discounted sum of consumers' plus producers' surplus over all periods — three five-year periods followed by three ten-year periods, from 1975 to 2020. Long-run marginal cost curves for coal, oil and natural gas are approximated by limiting the total amounts available at different cost levels. Upper limits on exports represent current policies and bring about a two price system (domestic and international) in the model. Two regions are distinguished throughout the model: the west, west of the Ontario-Manitoba border, is the main producer of coal, oil and gas; the east, with the larger energy demands, may import coal,, oil and gas from the west, or coal and oil from other countries, if necessary. The model may be used to analyze issues of energy pricing, the timing of the introduction of frontier resources and new technologies, the competitiveness and impacts of some new technologies, the impacts of various levels of energy exports, and the impacts of various potential policy constraints. A base case is developed, with the best estimates of all parameters. In addition, low demand and high demand cases are developed to test the sensitivity of conclusions to base case assumptions about economic and population growth. Some important conclusions are as follows. Frontier natural gas will not be needed until after the year 2000. Coal liquefaction will probably not be competitive, but coal gasification may play an important role after the year 2000. Nuclear power will be important in the east. However, a "no-new-nuclear" policy after 1985 would have negligible cost, but would force a switch in the east from electricity to oil with the tar sands playing an important role after the turn of the century. District heating by cogeneration with nuclear electricity in the east may increase nuclear safety by reducing reliance on nuclear power through the partial displacement of electric resistance heating. The electric automobile will probably not be competitive unless there are technical breakthroughs which lower the initial cost difference between the conventional and electric automobiles, or the road tax burden is less for electric than for conventional cars.

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