NSF Research Proposal

Problem
The availability of affordable energy is crucial to all aspects of life. However, it is urgent for the United States to move away from fossil fuel energy not only because its usage undermines national security because of reliance on foreign oil but also because of the wide implications of releasing more carbon into the atmosphere. Obama said, “The system of energy that powers our economy also undermines our security and endangers our planet.” To minimize foreign oil use and carbon emissions, there are two strategies: finding alternative supplies and reducing energy usage. I am particularly interested in reducing the carbon footprint by reducing energy usage.

Government programs and the private investors are funding research and development of many promising technologies and business models. Some claim that companies are voluntarily adopting sustainability practices because it is profitable, implying those companies that do not reform will eventually be run out of business. However, many costs incurred on the environment and securing foreign oil supply are not paid up front, so the market is not optimized to develop the most energy efficient technologies and business models.

Meanwhile, the government will attempt to invest tax dollars to meet this national priority that the market is not optimized to meet. At an energy speech at MIT, Obama explains that the Recovery Act, which “includes $80 billion to … modernize the electric grid; make our homes and businesses more energy efficient, etc.” It is unclear that the government can use tax dollars efficiently to develop the best technology, especially since the energy sector is so complex. The government and the market share the problem that even after a new technology is implemented it can be hard to gauge its effectiveness.

Research Proposal
Creating system dynamics models of the effects of new technology and programs on energy consumption and carbon footprint can help identify priorities. System dynamics is a field where interactions between socioeconomic elements are modeled by aggregate totals (stocks) and rates of change (flows). The biggest advantages to system dynamics are that simple rules can model a very complex system, effects of exponential is better represented, and delays in the system can be accounted for.

Sterman has demonstrated the importance of including interactions with the economy when modeling the energy sector. Fiddaman modeled climate-economy interactions with oil and gas depletion as a source constraint. These models contribute to a better understanding of the energy-climate-economy system to inform some high level policy decisions such as carbon pricing. They cannot help with more detailed policy and investment options in new technologies or programs, which is why I want to focus on residential energy consumption and efficiency technology. Dyner et al made a model of residential energy consumption in Columbia examining the promotion of gas and efficient appliances (Dyner 1995). However, many factors were not included such as delays in implementation, service continuity, and operational risks. Also, the model did not integrate the performance of the surrounding economic landscape.

I want to study residential energy consumption and efforts to reduce it. The stocks of interest are energy demand, energy supply capacity, material standard of living, quality of life, carbon footprint, and GDP. Energy supply and demand would be split into foreign sources and domestic sources to track how well programs do to minimize energy use from foreign sources. The material standard of living is to represent the number of appliances per household. Then energy efficiency would be material standard of living divided by energy demand. Quality of life, on the other hand, would be a gauge of how many socioeconomic needs are being met, which may not be directly correlated with the material standard of living. Carbon footprint will be calculated from energy demand, and I want to include energy used to manufacture consumer goods, which is correlated with the material standard of living. Carbon footprint from producing renewable energy should also be included to examine how much acquiring new consumer goods and appliances offset the benefits of efficient appliances and renewable energy.

With this basic model in place, I primarily want to examine the effects of implementing energy efficient technologies. I want to compare different technologies such as CFL lights, light management, efficient entertainment systems, and HVAC systems. I want to incorporate interactions with the rest of the economy as well to study the impact of interest rates and GDP. In order for it to be most useful to me and others, I want to make it easy to add complexities such as transportation energy consumption in the form of modules. I envision having a core model of residential energy consumption with the economy and new energy efficient appliances as modules.

Expected Results
Jay W. Forrester made World2, which is the basis for the model in Limits to Growth, which was lasted updated in 2004. According to World2, efficient technologies will only delay depletion of resources, pollution, and crowding if capital investment is still exponential. I would expect results on residential energy consumption to corroborate this view.

Steven Chu gave a talk at MIT earlier this year promoting energy efficiency technology. However, new energy efficient technology can only reduce total energy consumption if the total number of appliances does not increase. Furthermore, Michael Shellenberger and Ted Nordhaus from the BreakThrough Institute claim that widespread motivation for environmentalism is only possible if environmentalist goals are aligned with improving standard of living. As standard of living of Americans has improved over the past century, successfully implementing environmental legislation to reduce pollution, it has not reduced energy consumption or carbon footprint. In addition, much of the reduction in pollution has been a result of moving heavy industry overseas.

I expect to find that efficiency improvements to HVAC (heating, ventilation, air conditioning) and lighting management technologies cause a net reduction in residential energy consumption. Gains from energy efficient devices themselves may simply be offset by using an increased number of appliances and the carbon footprint of producing more products. At the same time, production and consumer spending is needed for economic growth. I may find that new business models are required to reducing the carbon footprint.

Moving away from fossil fuel is critical to economic recovery. Evaluating new technology using system dynamics would make it possible for humans to be effective stewards of the environment while maintaining a high standard of living. I hope to create a platform for evaluating energy efficient technologies that can be expanded to evaluate new business models and other technologies like renewable energy.