So&-Econ. Plann. Sci. Vol. 23, No. l/2, pp. 55-66, 1989 0038-0121/89 $3.00 + 0.

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Printed in Great Britain. All rights reserved Copyright 0 1989 Maxwell Pergamon Macmillan plc

Environmental-Economic Models for

Energy Resource Development
C. GREGORY KNIGHT
Department of Geography, The Pennsylvania State University, University Park, PA 16802, U.S.A.

(Received May 1988)

Abstract-Within the broad goals of modeling, the purpose, scope, spatial dimensionality and resolu-
tion, temporal dimensionality and resolution, and methodology are used to characterize energy
models. Examples are provided for a number of intersecting model categories, including energy models
developed by American geographers. The Pennsylvania Coal Model (PCM) illustrates some of the
potentials and difficulties of energy modeling with a high degree of spatial and sectoral resolution.
Development, applications, and limitations of the PCM are noted. Particular challenges to energy
modeling are outlined.

INTRODUCTION
Energy models have been extensively reviewed and compared in both the technical and social
science literature [l-5]. The fundamental purpose of an energy model, like any model, is to apply
theoretical constructs to real-world data with the intention of creating a simplified, controlled image
of reality. This structure then can be manipulated by changes in data, model operation, or other
factors to explore consequences of causal relations, often in a context where controlled or
real-world experimentation would be costly, scientifically impossible, or socially unacceptable.
In this paper, we will briefly outline the dimensions of a typology of energy models which will
provide a framework in which a multitude of energy models can be systematically viewed. Some
of the issues in energy modeling can be illustrated through this framework. The Pennsylvania Coal
Model, a project begun in 1975 and concluded in 1985, is briefly described as one example of
state-level energy modeling in the United States for the purpose of illustrating some of the
opportunities and challenges of energy modeling for geographers.
The modeling process itself can be described in eight steps [6, p. 511. First, objectives for the
model must be specified and incorporated in model design. For example, the purpose of the model
might be to assess the impacts of environmental regulations on energy resource extraction to meet
electric utility energy needs in the U.S. A decision could be made to develop a model to simulate
the utility energy delivery system, subject to varying constraints on resource availability and costs
imposed by environmental regulations, using a national model with regional resolution. An
appropriate methodology would be selected, and system boundaries specified. Second, the various
submodels and subobjectives that will comprise the model are developed. In this example, these
would include, among many others, specification of the relationship between resource type and
extraction method in relation to critical environmental parameters, such as air and water pollution.
Then, third, these submodels would be constructed and validated. Often, comprehensive energy
models draw upon existing studies and literature, and do not attempt basic research related to the
submodels used. The submodels are assembled in the fourth step, and results validated often using
the ability of the model to replicate a known system state as a fundamental test. In the hypothetical
example, does the model assign extraction of coal, natural gas, petroleum, and nuclear fuels to
various regions in close approximation to reality? Are these resources delivered to utility markets
in patterns matching actual energy shipments?
In the fifth step, the model can then be used to derive answers to the questions for which the
model was developed. In the hypothetical case, do more stringent air pollution regulations
result in regional shifts in coal production, fuel shifting, use of new technologies, or some or
all of these alternatives? Then, sixth, the model behavior can be ascertained under varying
55
56 C. GREGORY KNIGHT

Table 1. Selected models cited

Model Full title Reference(s)
BESOM Brookhaven Energy System Optimization Model WI
COALI - 1491
E” Mitre E3 Modeling System WI
FOSSIL1 - [501
LORENDAS Long Range Energy Developments and Supplies [311
MEFS Midrange Energy Forecasting Systems (successor to PIES) ~51
NCM National Coal Model [511
OILNET Crude Oil Distribution Model [401
PCM Pennsylvania Coal Model 1521
PES Port Expansion System [431
PIES Project Independence Evaluation System [531
RESPONS Regional Energy System for The Planning and Optimization [541
of National Scenarios
SEAS Strategic Environmental Assessment System W 551
TESOM Brookhaven Time-Stepped Energy System Optimization Model [22,271

assumptions; and, seventh, model sensitivity can be explored. Both might result in generation of
scenarios useful in exploring policy alternatives, such as the impact of new air pollution regulations.
Finally, the suggested relationships between causal factors in the model can be explored and
validated.
The development of models for exploration of energy issues most often focuses on energy as a
resource (e.g. mine simulation models or models dealing with regional resource development
potentials [7,8]); on energy-economy interactions [e.g. input-output models or econometric models
for forecasting energy demands-PIES or SEAS (see Table l)]; or on energyenvironment issues
(e.g. environmental impacts of energy extraction or conversion [9, lo]). Energy models may be
descriptive (quantitative, graphic), normative (suggesting system optimization), or forecasting
(energy demands in relation to economic growth) in nature [l]. Many models include two or more
of these alternatives.
An energy model may be evaluated on several bases. First, the model may be assessed in terms
of assumptions underlying real-world processes, a theoretical validation. Second, the model
should be subjected to empirical validation, and then, third, be explored in relation to the region
of reasonable prediction in time and space. Fourth, the model may be evaluated in terms of its
ability to define, perhaps through sensitivity analysis, critical data needs not evident in initial data
development. Finally, the model must be evaluated in terms of the utility of its results-how helpful
are its applications in meeting the initial objectives?
Within this brief discussion of the purpose and process of modeling in the energy context, let
us turn to the nature of energy models as they have developed over the last two decades.

ENERGY MODELS
Energy models can be distinguished in terms of purpose, scope, spatial and temporal dimensions
and resolution, and modeling methodology. Each will be discussed in turn, using major examples
and other citations from the modeling literature (Table 1).
In general, energy models have been developed for one (or more) of four purposes [l]. First,
regulatory planning requires insight into the consequences of proposed regulations, including the
economic and environmental impacts of a changing regulatory environment, particularly with
respect to government control of public (monopoly) utilities. Second, models can be used
for industrial planning, ranging from site selection to fuel procurement and transportation.
Third, models are useful for research and development activities, including a near- or longer-term
look at alternative energy futures using technologies not yet on-line. Finally, energy models
have been developed for strategic and policy analysis, concerning such issues as disruptions in
fuel imports or relationships between energy supply and cost in relation to social and economic
policy [3].
 Environmental-economic models for energy resource development 57

The scope of existing energy models varies considerably [l]. Many models deal with either
the supply or demand for specific energy types. Some models focus on a specific energy
sector, often the system involving a specific fuel or a specific market 111-151. Gordon [8]
provided a useful critique of coal-oriented models. Models of potentially greater complexity
seek to describe an entire energy system, from sources through extraction, transportation,
conversion, transmission or delivery, to end uses (e.g. RESPONS, BESOM, TESOM). Many
models have been developed with specific attention to energy-economy interactions, investi-
gating such issues as the role of energy price in economic development (e.g. PIES). Critical
questions on environmental quality have led to energy-environment models which explore
relationships between energy resources and use and environmental quality parameters
[9, 10, 16, 17, 181. Finally, there is a class of energy models that encompass aspects of energy,
economy, and environment [ 19-221.
Just as the scope of energy models varies widely, so too do the spatial and temporal
dimensions and resolution of models. The spatial dimension of models ranges from global
through national and regional models, to state and even county or local models. Global
energy models have been developed ([23]; LORENDAS), while others have focused on the
U.S. (PIES, SEAS; [I 11) or individual states [24]. Within each level of dimensionality, various
levels of spatial resolution may be developed-from no spatial resolution (strictly sectoral
models) to a high degree of spatial resolution. Often, spatial resolution is related in a hierarchical
fashion to model dimensionality. Global models have a continental or national resolution,
whereas national or state models have state or county resolution, respectively [25, 181. PIES,
for example, incorporates regional areas in a national model, SEAS addresses environmental
impacts of energy use at state, metropolitan, air quality control region, hydrologic area, or river
basin levels 125, 261.
In a parallel way, models may have a temporal dimension ranging from historical through
current and short-term future to a distant future. Many models deal with multiple as opposed
to single time periods [13,27], and a hierarchical potential is also obvious-short-term
models stepping by annual periods (SEAS), with longer term models progressing by decade or
larger steps.
Just as models vary in purpose, scope, and spatial and temporal characteristics, modeling
methodologies or strategies vary widely in relation to the specific questions and objectives being
addressed [l]. Most energy models incorporate one (and, less commonly, several) of the following
approaches:
(1) simulation, in which specific simulation techniques are used to replicate the real-world
process [28-301;
(2) engineering or process methods, which focus on the specific technical relationships in the
energy system [9,31,73];
(3) econometric and related behavioral or equilibrium approaches, which deal with the energy
market and producer and consumer decisions affecting and affected by energy prices
(PIES; E3; [15,25,29, 321);
(4) input-output methods, with particular focus on energy-economic sector relations that help
to trace energy as a component in the economic system (SEAS; [33-361);
(5) network models, with specific attention to the spatial systems for transporting and transmit-
ting energy [38-431;
(6) optimization or programming techniques (including linear, quadratic, and multiobjective
programming), with normative description and prescription of energy system behavior (PIES;
BESOM; TESOM; PCM; LORENDAS; PES; [l 1,13,39,41,44,45,46]);
(7) entropy maximization, describing energy delivery systems in terms of most likely states in
relation to overall system costs [47]; or
(8) system dynamics approaches, using specific methods for capturing nonlinear relations
between system components interacting through time (COALl; FOSSILl).
Each energy model can thus be characterized in terms of its purpose, scope, spatial and temporal
resolution and dimensionality, and modeling methodology. By looking at one model in detail, we
will examine some issues related to the contribution of geography to energy modeling.
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58 C. GREGORYKNIGHT

THE PENNSYLVANIA COAL MODEL

Within the context of the preceding discussion, the Pennsylvania Coal Model (PCM) [14, 521 is
a mathematical programming model that addresses energy-economy-environmental issues at a
state level with a high degree of spatial resolution. Here, we describe briefly the development,
application, and critique of the PCM, focusing specifically at the challenge of capturing a complex
private-public-utility resource management system in an econometric-optimization framework
within the American economic system.

Development of the PCM

The Pennsylvania Coal Model was a collaborative research effort (19751985) of state and
federal government, planning agencies, and university to help in the evaluation of policies involving
Pennsylvania’s coal resources. Several objectives were defined for the PCM: (1) to increase our
understanding of the components of Pennsylvania’s coal energy system and their relationships to
one another; (2) to develop scenarios for policy analysis and planning; (3) to forecast impacts of
policy alternatives; (4) to identify critical data and modeling issues; and (5) to enhance govern-
ment-industry-university interaction in energy research and planning. A fundamental purpose was
to provide decision makers with information of sufficient detail to enable them to make educated
judgments about the consequences of proposed actions and alternatives. In structuring the PCM,
careful consideration was given to determining the significant features of Pennsylvania’s coal supply
system and to investigating the potential use of this mathematical model for policy analysis related
to resource management. Many existing state energy models share the common feature of
incorporating the total energy system with little or no spatial dimensionality. Here, the focus was
on coal production and utilization with high spatial and sectoral resolution.
The Pennsylvania Coal Model can be seen as a compromise among methodologies, potential
model features, replication of real-world energy system structure, and computational constraints.
As the sophistication of simulated system complexity increases, operational sacrifices must be made
by using generalized data on production, transportation, and markets. By focusing on a high degree
of spatial resolution, the PCM had two potential advantages: the ability to ask the critically
important geographical question, “where?” and the ability to use the kinds of detailed data sources
that had already been developed at a fine spatial scale, typically the Pennsylvania county.
What the PCM does is in fact quite simple. It suggests, by simulating alternative coal-economy
futures, what flows of coal could occur under the impact of demands and other constraints. To
do this, various sets of data have been assembled in tandem with computer modeling procedures.
The model operates as three separable components which were built from a number of submodels
and simulation procedures: (1) a user input system, (2) a mathematical programming system,
and (3) a report generator. The submodel COALSORT also allows rapid access to the detailed
input data bases for single users of coal as opposed to a system-wide simulation.
The core question of the model is: how might coal be mined, processed, and transported to meet
annual coal demands in future years, taking into consideration constraints imposed by production
limits, atmospheric sulfur emission standards, and transportation capacities. Optimality here is
measured in dollars-the least expensive way to meet system-wide demands subject to constraints,
for the coal production and utilization system as a whole. As such, the PCM represents a regional
supply-demand equilibrium. Some of the assumptions, weaknesses, and strengths of the linear
programming approach we have used are considered at the end of this discussion.
The PCM data bases consist of a number of information sets concerning Pennsylvania’s coal
economy. These data bases contain detailed information on coal supply, transportation, and
demand for each of Pennsylvania’s 67 counties. In addition, seven outside regions have been
defined. Reserve estimates, production figures, coal characteristics and costs are specified for ten
bituminous coal seams and anthracite within Pennsylvania counties; consumption data are included
for nine market categories; and transportation networks, linking county and out-of-state nodes,
are defined for three modes of shipment.
In the model’s formulation as a broad regional simulation, coal is blended to meet overall BTU
demands and sulfur emission constraints. County coal source and markets are selectively
aggregated for model efficiency. However, each coal source is screened for its cokability, and BTU,
 Environmental-economic
modelsfor energyresourcedevelopment 59

ash, moisture, sulfur, and fixed carbon levels for specific markets. Only coals falling between upper
and lower limits on each characteristic are considered as potential sources for a given market.
Potential coal transportation by road, rail, barge and other means were specified as the networks
connecting county nodes, and optimal routing techniques derive distances between nodes for each
potential transportation mode. The user may add or delete linkages from the existing system, and
thus instruct the model to recalculate optimal routings. Using default or user-supplied cost
parameters, the model will calculate costs to ship each ton of coal between all pairs of nodes. The
user also controls parameters regulating the need for transport rolling stock, and specifies
alternatives to model-provided limits of available hopper cars and barges.
County coal sources are specified by seam, mine types (deep, surface), age (old, new), and
ownership. “Old” mine production limits are specified beyond the base year as determined from
a survey of mining concerns. New production limits are derived from available reserves in relation
to minimum desirable production levels for new mines and recovery rates. Most important in the
production data bases are coal characteristics and price data.
Coal characteristics, which can be user modified if desired, are specified for three levels of coal
preparation: run-of-mine, utility-grade cleaning, and primary-metal grade cleaning. With each coal
type are associated production costs as related to mine type, age of mine, and cleaning level.
Production costs, freight on board (FOB) the mine, were derived from underground and surface
mine simulation submodels applied to specific seam geology and mine characteristics. Also specified
are production in tons-per-machine shift (from which employment needs can be estimated) and
capital needed to develop new mines based on annual ton production. An annual limit is specified
on capital available for new mine development, with a model-provided default value.
Finally, the user may alter sulfur emission standards applicable to coal use. First, default or
alternative sulfur emission limits for each region can be specified, working from existing emission
standards for Pennsylvania air basins. These limits govern the amount of sulfur that may flow to
a given county market group as an expression of sulfur per thermal unit (BTU) consumed. Second,
flue-gas desulfurization may be specified for all or a proportion of a coal market, which results
in a potential for coal of higher sulfur content to move to that market.
An input program processes these instructions from the user and creates a series of data files
for mathematical modeling. These data files may be useful in themselves, since they present
calculations of future production limits and potential costs of coal of varying characteristics; also,
they may represent county-by-county values for a given seam designation, or county-by-county
values for average county production, depending on user input instructions. Optimal transpor-
tation distance and cost parameters are similarly specified, as well as coal characteristics.
The strategy of the PCM is to derive optimal flows of coal to meet user-specified market
demands, subject to production, air quality, and transportation constraints. Linear programming
(LP) assigns values to activities in the model which meet this goal, balancing coal supply and
demand for each source, such that the solution is optimal for the coal system as a whole; that is,
demands are met in the least expensive way for the total system, An activity in the model is the
flow of coal from a single county, mine type, and cleaning level, via one transportation mode to
a specified market in a single destination county. Linear programming derives the values of each
of the thousands of potential activities so defined, with most potential activities having a zero value,
but those which contribute to optimality having values assigned according to annual flow.
In the mathematical programming system, production limits are set for each county and type
of mine. Production may not exceed these limits for areas within Pennsylvania. However,
production outside Pennsylvania is left unlimited (as is coal haul by road) to be sure that a run
of the model does not prove mathematically infeasible. Demands are set as equalities expressed
in annual BTU consumption; for each market, only those production sources meeting various
market characteristics are defined as potential activities. Each activity contributes to the flow of
coal to meet each demand and to sulfur emissions in each market group and country. Additionally,
each potential activity used by railroads or waterways requires hopper cars or barges according
to parameters of transportation system operation. Finally, each activity involving a new mine
contributes to the need for capital to open new mines,
For each seam in each county a supply curve is defined based on available reserves and
production costs for surface and underground mines. Thus, the overall supply curve for a single
60 C. GREGORY KNIGHT

county could consist of up to 40 steps (10 seams; old/new, deep/strip mines). In one regional
formulation of the PCM, single supply curves were derived for each coal type (bituminous, coking,
anthracite) and county, with production-weighted average price and coal characteristics. For each
county, the supply curve had four steps (one for each mine type), the height of each was the
production cost, while the width was the annual production limit derived for a given scenario year.
For old mines, the width of the step was determined by mine production trajectories over the
remaining life of the mine, whereas for new mines the width was determined by reserves not
allocated to old mines, mine lifetime, and recovery ratios. Since the model operates over multiple
time periods, supply curves are dynamically created for each time period.
Similarly, the PCM dynamically derives for each county and coal type a demand curve which is
conditioned by the quality of the coal in meeting model constraints, accessibility to market
locations, and prices of alternative coals for meeting fixed market demands. The intersection of the
coal supply curve for each region with the demand curve provides a prediction of the quantity of
coal production withdrawn from the region, and the linear programming algorithm specifies the coal
quantities allocated to various cleaning levels, transportation modes, market types, and market sites.
Although the Pennsylvania Coal Model does have a fixed aggregate coal demand, the model is
sensitive to supply-demand interactions both at the county level within the state and between the
state and out-of-state regions. In this way, the PCM parallels more complete models of the national
energy system in which total fixed energy demands can be met by various fuels from various
regions. Thus, the model was intended to suggest, within limitations of its formulation, coal
production and transportation from each source region, and to predict for each market the
assignment of sources that contributes most to overall system optimality.
The model has the potential of defining tens-of-thousands of possible activities, but a series of
screening techniques (e.g. for market restrictions on coal characteristics, for existence of transporta-
tion connectivity for a given mode, and for road haulage beyond relatively short distances) made
operation of the model less cumbersome. Using the Mathematical Programming System Extended
(MPSX) on Pennsylvania State University’s IBM computer, an optimal solution is derived.
The results of the mathematical programming model are written in files ready for input to the
report generator. At this stage, tables and maps are provided that analyze the results of the user’s
input instructions. Among the data provided are: coal production and value, including employment
estimates for each destination county; atmospheric sulfur emissions; coal reserve status at the end
of the scenario; and-for user-selected counties-details on the sources, transportation modes,
costs, and characteristics of coal supplied to each market. Capital required to pen new mines is
specified, as are the required machine sections and rolling stock requirements of the rail and barge
systems.
COALSORT is a special computer program package that provides quick, inexpensive access to
the PCM data inventories while maintaining the full detail of coal resources that could meet the
needs of a particular market at a specified location [48]. COALSORT searches PCM data bases
for coal to meet user needs, evaluating both the coal and its costs, plus transportation costs to the
market location.

Applications
The PCM was used in addressing several coal resource-economy-environment issues, including
coal transportation impacts, regional resource development, utility fuel supply, analysis of
bituminous coal reserves, utilization of Pennsylvania anthracite, and environmental restrictions on
mining. The latter two applications are described here [65].

Mining Prohibition in Sensitive Watersheds

Some of the most critical issues concerning the extraction and utilization of coal are the effects
on the physical environment. One application of the PCM focused on the extraction of coal since
the Federal Surface Mining Control and Reclamation Act of 1977 required that states develop an
objective planning process to designate areas unsuitable for mining and to assess the economic
impacts on the coal economy of restricting such areas from mining. The PCM lends itself to such
a task by generating coal flows based on known resources. For the state as a whole, therefore, the
PCM can offer some insight into the impacts of constraining reserves.
 Environmental-economic
modelsfor energy resourcedevelopment 61

The identification and designation of ecologically sensitive watersheds is one of many environ-
mental concerns. Both the Pennsylvania Fish Commission and Department of Environmental
Resources were involved in this process. Coal mining can be a disruptive and often damaging
activity to these areas. By limiting mining iti watersheds where the physical and ecological habitats
appear to be particularly sensitive, the disruptive nature of mining (especially strip mining) may
be controlled and possibly eliminated. Simple designation of physically sensitive areas, however,
without regard for the effects of regulations on the coal economy, ignores another crucial issue,
coal availability. The PCM, therefore, was used in determining some possible effects on the coal
economy brought about by constraining coal reserves in environmentally sensitive areas.
The Pennsylvania Bureau of Environmental Master Planning selected two watershed desig-
nations to represent environmentally sensitive areas for the PCM application. First, the Restricted
Area designation defined streams of an inherent environmental value and/or sensitivity to coal
mining. The second group, Wilderness Trout Streams, was chosen for the ecological, aesthetic, and
fishery values of the streams included. Other sensitive streams could have been identified; however,
these two categories were representative of areas of immediate concern.
These two watershed designations were subsequently used in calculating constraints on the
Pennsylvania reserve coal base. The constraints represent the effects of hypothetically prohibiting
mining in the sensitive watersheds: (1) the counties with designated watershed acreage underlain
by coal were determined; (2) watershed acreage underlain by coal was then aggregated within each
affected county; (3) aggregated watershed acreage was then expressed as an area1 percentage of a
county underlain by coal. There were 15 bituminous coal counties where sensitive areas were
identified. The percentages of coal reserves to be constrained by county represent estimates of the
amount of documented coal reserves that occur in or near potentially sensitive stream areas. The
total percentage of coal reserve to be constrained amounted to approx. 4.4% of Pennsylvania’s
currently recoverable reserves.
Three PCM scenarios were used in this application to determine the significance of the coal
reserve constraints derived by the procedure described. On average, constraining the reserves
reduced new mine definition by one mine. In a few instances where only one mine type was listed
in the unconstrained case, the constrained case eliminated the mine. Constraining coal reserves had
little effect on the coal supply system through 1985. Naturally, the results presented can be easily
changed by varying some operational definitions, for instance, threshold values for new mines.
More precise constraining of percentages could also be introduced on a seam-by-seam basis.
The general findings suggest that proposed constraints on the reserve coal base in environmen-
tally sensitive watersheds would have a relatively minor impact on the PCM defined coal supply
system. This conclusion is certainly conditional, however, on the data and operational definitions
employed in the study. The usefulness of the PCM in suggesting potential avenues for more intense
investigation was demonstrated. For example, if it were determined that reserve constraints were
sufficiently large to perturb the coal system modeled in PCM scenarios, running the PCM would
enable the user to determine where the new mines might be opened to satisfy demands formerly
satisfied by counties with constrained reserves. Moreover, the loss of employment and revenues in
deleted areas could be specified.

Development of Anthracite Resources

Anthracite is a hard, high fixed carbon, low volatile, low sulfur coal. Anthracite coal measures
underlie a surface area of about 484 square miles in parts of ten counties in eastern Pennsylvania.
Unlike the bituminous coal fields of western Pennsylvania, the anthracite region is an area of
complex, sinuous, asymmetric folding in which thrust faulting is common. The anthracite region
is separated into four distinct coal fields: the Northern Field with an area of about 176 square miles;
the Eastern Middle Field with an area of 33 square miles; the Western Middle Field of 94 square
miles; and the Southern Field with 181 square miles.
Anthracite has been mined for more than 150 years and was the dominant home heating fuel
for much of the northeastern United States and southeastern Canada until the middle of the
twentieth century, when it succumbed to competition from oil, natural gas and electricity. The use
of anthracite to heat homes has continued to decline in recent years despite the increasing cost of
alternative energy sources. Institutional space heating remains a viable market for the fuel and has
62 C. GREGORYKNIGHT

a potential for limited expansion. The export of anthracite to U.S. installations abroad has been
one of the main markets in the past 10 years.
There are many varied industrial uses for anthracite; for example, as an industrial carbon, as
a substitute foundry fuel, and in the iron and steel industry. There is also potential for conversion
of anthracite in industrial gas production. However, the main potential lies in the use of anthracite
as a fuel source for electric power generation, and it is this market that has influenced data
collection for the Pennsylvania Coal Model. Although anthracite has been used to fire generators
in the past, this market has been limited by problems with anthracite supply and by the higher costs
inherent in anthracite use. The higher ignition temperature and longer burning time mandate large
boilers and equipment with specifications different and more costly than those used by bituminous-
fired plants. Since anthracite is much harder than bituminous coal, the grinding process is also more
costly and the control of particulate emission necessitates expensive bag house equipment.
Despite these problems, the incentive to utilize anthracite for electric power generation has been
increased by the 1979 exemption of the fuel from most sulfur emission regulation, and by political
encouragement to use local fossil fuels whenever possible. There has been wide interest in
revitalizing Pennsylvania’s anthracite industry to provide the large sustained production required
by electric generators.
With the existing fragmented pattern of mining and the preponderance of shallow strip and small
deep mines, it would be difficult or impossible to meet sustained demand. Strip mine reserves are
limited and production from deep mines is hampered by underground conditions in which
abandoned flooded workings are frequently divided by ineffective barrier pillars. Ensuring safe
working conditions in new underground mines would be both difficult and costly.
As a result, increased attention has been focused on deep open pit mining as a means of obtaining
the large, sustained production required by electric power plants. The open pit mine is similar to
stripping operations in that heavy excavating equipment is employed to remove material, extract
the resource, replace the burden and reclaim the surface. The difference lies in the scale of the
operation, for here valley-wide pits could reach depths at or below sea level. An advantage of open
pit mining is that in the course of extraction all abandoned workings within the mine area would
be removed and existing acid drainage problems alleviated.
A major application of the PCM involved development and implementation of improved data
bases concerning Pennsylvania’s anthracite resources, including production, characteristics,
reserves, distribution, and future potentials for open pit mines. Mining engineering simulation
methods were used to develop anthracite data bases for potential open pit mines. Five previously
selected sites represent prime candidates for large-scale surface mines which would provide
adequate utility resources and, simultaneously, would address existing problems of mine flooding,
acid drainage, and unreclaimed land areas. From the five sites, seven potential mining areas have
recoverable anthracite ranging from 221 to 779 million tons. Anticipated costs vary with
assumptions regarding return on investment, but range from $30.13 to 75.79 per ton (1980) or
approx. $1.01-2.49 per million BTU [69].
The principal application of the derived anthracite open pit data bases was in assessing the
potentials for these resources as an electric utility fuel in the northeastern U.S. The PCM research
team collaborated in a study by SEDA Council of Governments to suggest the potential utility
markets for anthracite. This study found that there is substantial opportunity for anthracite in
competition with bituminous coal or as an alternative to fuel oil. Anthracite appears attractive in
relationship to bituminous coal due to the costs of flue gas desulfurization required by the provision
requiring use of the Best Available Control Technologies in the Clean Air Act Amendments of
1977, a provision for which anthracite was largely exempted.
Unfortunately, despite continued state efforts, no potential anthracite using utility seems to have
sustained its initial enthusiasm. This is due in part to declining projections for future growth in
electricity consumption, excess generating capacity once two nuclear power projects come on line
and the huge investments of capital by these utilities in the two nuclear power projects. Utilities
outside Pennsylvania not familiar with anthracite are unlikely to commit themselves to using it
unless a Pennsylvania utility can demonstrate its cost effectiveness. It is critical to the anthracite
industry that a Pennsylvania utility lead the way by making a commitment to electrical power
generation from anthracite.
 Environmental+conomicmodelsfor energyresourcedevelopment 63

PCM limitations
Understanding what a model can and cannot do is perhaps most important in evaluating its
usefulness for specific purposes. At the simplest level, the PCM can provide the optimum coal
source for one individual market demand through use of COALSORT. The output from
COALSORT must be used critically and carefully. The results are limited by a number of factors:
(1) accuracy of data on coal reserves, production, characteristics and production costs;
(2) use of county average characteristics and production costs for various coal seams and mine
types;
(3) assumptions of a single coal resource body for each seam and county which may, in fact, be
separated into smaller bodies, some or all of which are insufficient for mine development;
(4) assignment of reserves by ownership category;
(5) limitations of output from potential new mine sources; and
(6) uncertainties and/or changes in transportation networks and costs.
Thus, COALSORT results were seen to be a guide to search for further information rather than
a definitive answer to a query. For example, the user could refer to the Pennsylvania Department
of Environmental Resources’ Annual Report on Mining for a list of coal production for the various
county and seam categories listed by COALSORT to obtain more detailed coal characteristics and
current market price information.
The full PCM model formulation allows the coal economy to be treated as a whole interacting
system (only partially true of the real world). The PCM cannot predict overall coal demand or
consumption for future dates, but it does suggest the location of coal production to meet demands,
as well as the likely costs in doing so. Thus, the model provides some insight for prognostication
by asking the basic question, “What if. . . ?” The model can suggest future consequences of
alternative policies and actions, but it cannot make or specify policy. Optimality in the model means
minimizing prices subject to constraints, and should not be interpreted as socially or environmen-
tally optimum practice. The model can suggest the magnitude of changes in costs brought about
by potential policy alternatives. It may be felt, for example, that higher costs are warranted to meet
goals other than minimizing prices, such as maintaining environmental quality.
Finally, the advantages and limitations of linear programming as one mechanism for articulating
the various data bases and concerns relevant to Pennsylvania’s coal as well as to state energy
modeling in general must be recognized. Its limitations include a linearity of price with coal
quantity for a given source county, seam, mine type, and cleaning level; fixed transportation costs
per ton of coal from a given origin via a specified mode to a given destination; the implicit
assumption of complete knowledge and simultaneous decisions by actors in the coal system; and,
in the PCM, delivery of coal to its first market, such as a power plant or other conversion facility,
rather than as ultimate energy to the consumer. Additionally, the linear programming formulation
simplifies a much more complex coal distribution system. These limitations are important, but must
be tolerated to maintain the spatial and sectoral specificity of the model.
Linear programming in general offers the opportunity for systematic numerical formulation of
a problem and relevant constraints; the means of achieving a solution to the problem; and a
straightforward structure which is understandable to laymen. Computer solution algorithms
capable of efficiently solving very large problems already exist. Moreover, linear programming has
a robust ability to explore a wide range of alternative policy formulations and their ramifications.
In summary, the PCM has thus been able to:
(1) demonstrate development of detailed energy resource data bases of high spatial resolution;
(2) replicate the aggregate structure of the coal production, transportation and utilization system;
(3) maintain great versatility for addressing implications of federal energy modeling and state
policy alternatives;
(4) attract interest of industry, government, educational institutions, and citizen organizations
in focusing on geographical modeling as part of overall policy and planning activities; and
(5) address specific policy and resource management issues.
In related work, former PCM-staff member Gregory Elmes [47] focused on the utility coal
market in Pennsylvania, with specific attention to coal transportation. Elmes selected an entropy
64 C. GREGORY
KNIGHT

maximizing approach, rather than mathematical programming. In his model, coal flows were
specified as ton demands supplied under transport costs between potential sources and sinks.
Although Elmes achieved a better replication of specific utility coal shipment patterns than did the
LP model of the PCM, he noted several problems even in this approach: underestimation of
short-haul (intracounty and adjoining county) coal flows, coal allocation between large sources and
markets, and coal moving past intervening opportunities [47]. Interestingly, Elmes also found that
neither coal costs nor supply of BTU vs ton demands improved his model, in contrast to
consideration of specific contractual relationships, such as mine-mouth utility locations.
In both the PCM activities and in Elmes’ work, there exists the functioning of highly diverse
markets, with incremental decisions being made over time, a high-bulk, low value commodity
moved over an economically- and physically-imperfect transportation system, and regulatory and
other terms of uncertainty not captured well at a high degree of spatial and temporal resolution
by the kinds of models utilized.
In developing the applications of the Pennsylvania Coal Model, we became aware of the
advantages and disadvantages of our modeling strategy. Our evaluation suggested that there
remain major deficiencies in the data sets used in the PCM, particularly those related to coal supply.
It also suggests that the assumptions of a linear programming model are significant simplifications
of real-world behavior in the coal economy. Solutions derived from the PCM do not replicate actual
coal flows for known periods at the level of spatial resolution incorporated in the model. However,
broad patterns of regional coal flows are captured in model scenarios. Finally, it is suggested that
state-level coal models might usefully incorporate:
(1) an econometric model linking final energy demand to developments in the economy as a
whole;
(2) an energy delivery system driven by final energy demands in all sectors;
(3) conversion facilities for converting fuels or substituting alternatives;
(4) amortized capital costs of fuel conversion and/or substitution in the demand sector;
(5) spatial resolution at least as fine as the state’s multicounty uniform planning regions, perhaps
recognizing the designated air basins as distinct spatial elements;
(6) transshipment of energy materials; and
(7) a modeling strategy for capturing the real-world complexity of the Pennsylvania energy
system at a regional level.

CONCLUSION
In this paper, we have briefly reviewed a typology of energy models based on purpose, scope,
spatial and temporal resolution, and methodology in relation to energy as a resource, energy in
relation to economic development, and energy in relation to environmental impacts. The
Pennsylvania Coal Model provides one example of the objectives, structure, application, and
limitations of energy models. It is unfortunately the case that far more energy models are described
in the literature at a development stage than in terms of real-world policy or regulatory
applications.
A number of factors contribute to the difficulty of energy modeling in the United States.
First, the energy system is extremely complex-sectorally, geographically, and in terms of economic
markets and the regulatory environment. There is no single methodology that can begin
to comprehend this complexity in its entirety. Models by their very nature are simplifications.
In addition, the high degree of spatial resolution that would be desirable for many policy
applications of an energy model introduces both conceptual and practical challenges. Conceptually,
we have seen that the implied simultaneity of decision-making in a programming model does
not reflect the activities of the multitude of real-world actors making decisions based on
limited information through time. In practicality, the development of data bases and model
structure, along with computational constraints, increases virtually exponentially with higher
degrees of spatial resolution, costs virtually negated by model simplifications of real-world
complexity. Furthermore, model application continues in a milieu of policy and economic
uncertainty, which may be only implicitly addressed by the model, if at all. Moreover, there is no
 Environmentaleconomic models for energy resource development 65

unanimity in the scientific community concerning adverse environmental impacts of energy

extraction, conversion, transportation, and end use, making incorporation of environmental
parameters disputable.
The above considerations notwithstanding, the role of geography both as a parameter and as
a profession in energy modeling is apparent. Energy resources and energy needs are not coincident
in space, and there are real energy and environmental as well as monetary costs in extracting,
transporting, converting, and using energy. Geography’s basic question, “where?” is critical in
energy modeling, and geographers have an equally crucial role in contributing their expertise to
this effort.

Acknowledgements-The author thanks Davindra Ramphall for his assistance in developing the second section of this paper.
The contributions of the members of the staff of the Pennsylvania Coal Model were crucial in completion of that project,
with a special debt owed to the late Charles B. Manula of the Department of Mineral Engineering at the Pennsylvania
State University.

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