Deepened structural modeling: The case of energy

Conventional economic analysis of energy systems is just not sufficient or even misleading in understanding the implications of the emerging energy innovations and the challenges for the design of energy and climate policies. We stress that it is essential to move from the usual black-box approach of energy modeling to deepened structural specifications which are based on the full value chain of an energy system. We explain this argument by looking at conventional approaches to energy modeling, in particular in the context of econometrics. We then demonstrate by using data for China, the United States, and the European Union, how an appropriate energy data analysis can provide insights into the structure of energy systems. Finally, we explain in a nutshell the building blocks of a deepened structural modeling approach which enables to tackle the new challenges; radical technological innovations, a very long time horizon, and the accompanying new designs for business and regulation.