A Description of the ECCO Model
The ECCO modelling approach was originally developed by Jane King & Malcolm Slesser (Slesser & King 1993; Slesser et al, 1994, 1997). It provides a broad-brush sketch of the entire economy which allowed us not only to calculate the direct impacts of renewables on the electricity-generating sector, but also the synergies that may exist between renewable generation of electricity and other technologies and economic activities. ECCO has a number of characteristic features – physical, dynamic and holistic:
ECCO is primarily a physical account of the economy. Energy analysis theory, as defined in the proceedings of the IFIAS workshop of 1975 (IFIAS, 1975) underpins the model, and is explained in the primer which follows this article. It explicitly recognises the importance of the second law of thermodynamics in limiting the options available to the economy. According to this law, any transformation to a system incurs a net dissipation of energy and an overall increase in the entropy (which can be thought of as a measure of disorder) of the system. Within a system, the entropy of a local region can decrease if it is able to export the entropy increase elsewhere.
In industrialised economies, we generally order our built environment by exporting huge volumes of disorder to natural ecosystems, as dissipation of energy resources and as pollution. This behaviour was first formally described in these terms by Ilya Prigogine and colleagues as ‘open systems’ (Prigogine & Stengers, 1984). National economies such as the Republic of Ireland are very much open systems, interacting not only with natural environments, but with the global political environment through trading goods, services and financial flows. (Financial flows have no direct physical presence themselves but determine the direction in which physical effort is expended).
By describing the economy in such physical terms we get a direct handle on some of the key interactions with nature, such as rates of fossil fuel extraction, use of materials and emission of atmospheric pollutants, as well as many interactions that occur within the economy.
ECCO is a dynamic model. It does not describe the state of the economy at a single point in time, but the unfolding of events in the economy over a period of decades. It is suited for describing long-term economic patterns over such timescales, but less suited for explaining short-term fluctuations over periods of months or quarters. The computational techniques used to describe these dynamic relationships are classical system dynamics, as developed by Jay Forrester & colleagues in the 1960s at MIT (Forrester 1968, 1971; Meadows et al, 1973).
The dynamic nature of the model is important in deeper ways than simply allowing us to describe key indicators as time series rather than snapshot values. A simple linear programming model can accomplish this. System dynamics, however, excels at describing complicated feedback interactions between many factors, and the ECCO model contains many feedback loops. These often lead to counterintuitive behaviour in the model, that is, behaviour that may seem to be unexpected at first glance, but, when its causes are traced back through the model structure, does make sense.
When we engage with the model in this way, we are encountering questions about the way our economy operates, and gaining insights that are qualitative as much as they are quantitative. Qualitative insight is often as important as the numerical time series data that the model generates.
ECCO is a holistic model. Rather than covering one part of the economy in fine detail, the entire economy is described in coarse detail. Specific sectors may be developed to a greater level of detail than others (electricity generation and energy conservation, for example), but all sectors are represented at some level of detail. Because the model determines its own growth rate it is important that we know the demands and supplies associated with all parts of the economy in order to assess the overall growth potential.
A sector described at the lowest level of detail can be thought of as a placeholder. It is unlikely to do anything surprising during a simulation. When developing a model for specific purposes, we need to evaluate where we wish to apply detailed policy options, and from there, what level of detail is appropriate for the other major sectors. For example, if we were to develop a model with the aim of studying water usage, we would need a high level of detail in the industrial, domestic, agricultural and possibly electricity generation sectors. Services and transport sectors could be simpler, taking their cues from the ups and downs of the more detailed sectors. In some studies, the broad overview offered by ECCO has been usefully combined with more detailed static analysis (Crane & Foran, 2000).
Development of the ECCO Model during the Project
Feasta developed a pilot ECCO model of the Republic of Ireland in 2002 (See Before the Wells Run Dry, Feasta, 2003, or visit http://www.feasta.org/documents/wells/contents.html?sitemap.html) which provides a complete simulation of the Irish economy at a broad-brush level. Business-as-usual policies were explored out to 2050, along with a range of moderate scenarios based around renewable electricity and energy efficiency technologies. Although the baseline conditions for these studies imposed an assumption about decreasing world’s fuel reserves, the assumptions made were very conservative, and the study did not address in detail the structural impact of such changes. Nonetheless, the existing model describes the interconnections between economic sectors, providing the groundwork for such a study.
The model on its own can only provide a very simple characterisation of how each sector might respond to increased fuel prices. By combining this analysis with the detailed consultations with representatives of each sector, we hope to get the best of both approaches; the detail and expertise of the sectoral studies, and the insight into the holistic interlinkages offered by ECCO. We expect to adopt an iterative approach to combining the two studies, offering preliminary ECCO findings as a source of input to the sectoral studies, and feeding the results of these back into subsequent model runs.
We expect that the model will become considerably more sophisticated as a result of being used for the project. Besides changing some of the assumptions built into the present version (such as the availability of imports of fossil energy and the flow of investment funds into Ireland) we also expect to be able to include more linkages between the sectors of the economy. This should make the model a better guide to the effects that changes in policies and external circumstances might have.
We also hope that the use of the model for the project will lead to its being used more generally in Ireland. A one-day training course in the use of the model was offered by Feasta and taught by David Crane during one of his visits to Ireland for the project.