Discussion of Kenichi Matsui's paper "Global Demand Growth of Power Generation, Input Choices and Supply Security." (response to article by Kenichi Matsui in this issue, p. 93)

The author proceeds from a "mainstream" projection of the USDOE/EIA, published in the International Energy Outlook 1997 (IEO'97). This is admittedly a shaky base for speculation, which Matsui also concedes. To quote from his introduction "the performance of mainstream, long term projections has been poor in terms of forecasting in the past." This is next to an understatement.

In this context "long term" means 20 years which is the time-frame considered in IEO'97 and also by the author. For reasons given below, I would rather prefer to call this short to medium term, reserving the concept "long term" for the more distant future 20 to 100 years.

Matsui suggests that mainstream projections have been "used as a base for energy policy decision making." In such a role they should have served as self-fulfilling prophecies. Against this background it is surprising that they have performed so badly.

Decision makers have, since long, been fully aware of the shortcomings of the projections. I therefore venture to suggest that such projections have played only a minor role in the policy making process, in particular since other, short term determinants, have presented more compelling forces in shaping energy policy.

The reason for the failure of the mainstream projections seems to be that they are the product of two separate factors, future GDP and future energy intensity (energy/GDP), both of which are characterized by large uncertainties. Economic growth, i.e., Gross Domestic Product as a function of time, is treated as an exogenous parameter. Different assumptions lead to different "scenarios." But economic performance is hard to predict. The uncertainties are large, in particular in the long run. There is plenty of room for wishful thinking. The second factor, the energy intensity is a weird concept. It is an incomprehensible combination of physics and…