BASE CASE UNCERTAINTY

IDEAS projections of energy sector carbon emissions lie near the middle of
the range of estimates from other widely used models. These estimates span
a range of more than 100 million metric tons in the year 2000.

All projections, however, depend heavily on assumptions made regarding
economic growth and energy price trends. Differences between actual and
assumed trends can have a major impact in emissions levels.

Earlier sensitivity analyses using IDEAS showed that projected
carbon emissions in 2000 might be higher/lower by:

65 MMT (about a 50 percent increase/decrease in pro-
jected carbon emissions growth over the decade) if the
annual economic growth projection is increased/de-
creased by 0.75 percent;

18 MMT if oil prices decline/rise 1 percent annually
instead of increasing/decreasing 4 percent annually.

These uncertainties complicate the task of developing a plan that meets the
President's pledge. Periodic review and updating will be needed over time.

IDEAS

Divergence in economic growth and energy price trends from projected values.

Administration emission projections reflect the first two types of uncertainty, but not the third.

2000

GROUPING OPTIONS TO CAPTURE INTERRACTIVE EFFECTS

Offsetting Options: Options that partially cancel out each other when implemented jointly.

IDEAS