Modelling energy system using three-dimensional input-output analysis

Input-output (I-O) analysis is frequently applied to the energy-environmental area, because not only the direct but also the indirect environmental repercussions of different patterns of final demand can be explored. I-O analysis has a structural deficiency in evaluating the system, including the production of by-products, since joint production is not assumed to appear in the theory of I-O analysis. Although several methods were developed so as to overcome this drawback, this problem has not been fundamentally solved. In this study, a three-dimensional input-output table (3DIO) is suggested in order to deal with joint production. 3DIO is an extension of the I-O table. It shows the interrelations between all of the activities and consists of I-O tables which are made for each commodity. The structure is described in the simple equations corresponding to the conventional I-O equations. The amount of produced commodities is correctly counted in 3DIO although the amount of by-products is not accurately counted in conventional methods. As an application of 3DIO analysis, we developed an energy-economic model and evaluated CO2 emissions as well as economic growth, taking several measures for CO2 abatement into account. One of the main characteristics of the model is that the measures involving joint production can be evaluated in the framework of I-O analysis. Computed results indicate that fuel switching in the power generation sector is the most cost-effective in the measures evaluated in this study. Then, fuel switching in industry heat, utilization of exhaust heat and CO2 recycling follow in order of cost-effectiveness.