Improving the way we think about projecting future energy use and emissions of carbon dioxide

Abstract

A variety of decision makers need projections of future energy demand, CO₂ emissions and similar factors that extend many decades into the future. The past performance of such projections has been systematically overconfident. Analysts have often used scenarios based on detailed story lines that spell out “plausible alternative futures” as a central tool for evaluating uncertainty. No probabilities are typically assigned to such scenarios. We argue that this practice is often ineffective. Rather than expanding people’s judgment about the range of uncertainty about the future, scenario-based analysis is more likely to lead to systematic overconfidence, to an underestimate of the range of possible future outcomes. We review relevant findings from the literature on human judgment under uncertainty and discuss their relevance to the task of making probabilistic projections. The more detail that one adds to the story line of a scenario, the more probable it will appear to most people, and the greater the difficulty they likely will have in imagining other, equally or more likely, ways in which the same outcome could be reached. We suggest that scenario based approaches make analysts particularly prone to such cognitive biases, and then outline a strategy by which improved projections, tailored to the needs of specific decision makers, might be developed.