• Initiative -
  • Type KAPSARC journal article
  • Date 1 April 2017
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Abstract

In Saudi Arabia, industrial fuel prices are administered below international prices and firms make decisions based on low energy prices, increasing domestic energy demand. This analysis explores alternative policies designed to induce a transition to a more efficient energy system by immediately deregulating industrial fuel prices, gradually deregulating fuel prices, and introducing investment credits or feed-in tariffs. It uses a dynamic multi-sector, mixed-complementarity model. Continuing existing policies results in a power system still fueled completely by hydrocarbons. The alternative policies result in a transition to a more efficient energy system where nuclear and renewable technologies become cost-effective and produce 70% of the electricity in 2032. Introducing the alternative policies can reduce the consumption of oil and natural gas by up to 2 million barrels of oil equivalent per day in 2032, with cumulative savings between 6.3 and 9.6 billion barrels of oil equivalent. The energy system sees a net economic gain up to half a trillion 2014 USD from increased oil exports, even with investments in nuclear and renewables. The results are robust to alternative assumptions regarding the value of oil saved and the growth in end-use energy demand. © 2017 The Authors

https://www.kapsarc.org/wp-content/uploads/2017/02/Energy-Policy-105_2017.pdf

Energy Policy

Authors

Walid Matar

Research Fellow Walid works on modeling energy systems. He is developing or has developed the following components of the KAPSARC Energy Model… Walid works on modeling energy systems. He is developing or has developed the following components of the KAPSARC Energy Model (KEM): electric power generation, oil refining, petrochemicals and fertilizers, cement production, and iron and steel. He is also working on a bottom-up residential electricity use framework that merges microeconomics with the physical laws governing electricity use.

Expertise

  • Energy Systems Modeling
  • Optimization
  • Electricity Prices
  • Energy Efficiency and the Interdisciplinary Connection Between Energy Economics and Engineering

Publications See all Walid Matar’s publications

Frederic Murphy

Frederic Murphy

Visiting Researcher Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He was a visiting… Frederic is professor emeritus, Fox School of Business, Temple University, where he taught for 30 years. He was a visiting researcher fellow at KAPSARC where he is participating in the development of energy models and writing policy analyses in a range of areas, including domestic energy use in Saudi Arabia, market power in world oil markets, designing and managing income stabilization funds, and China's and India's energy economies. He works mainly in the area of energy-market forecasting and energy policy analysis. Prior to joining Temple, he was at the Energy Information Administration (EIA) of the U.S. Department of Energy and its predecessor, the Federal Energy Administration, where he headed the group that did the economic impact analyses of the bills and laws passed during the Carter administration and developed and ran the forecasting models then used for policy analyses and the forecasts in the EIA Annual Report. He has authored over 100 refereed articles. In one study he was ranked in the 20 most published researchers in his field over a fifty-year span. He was the editor in chief of the journal Interfaces, an area editor for Operations Research, and the Informs Journal on computing, and the Vice President of Publications for INFORMS and its predecessor society, Operations Research Society of America. He has been involved in studying local economic policy issues, including advising the Tax Reform Commission of the City of Philadelphia, estimating the impact on jobs of building casinos in Philadelphia, and political redistricting. He also did a queueing study oil tank vessels on the Delaware River.

Axel Pierru

Program Director Axel is the director of KAPSARC’s Energy and Macroeconomics program. From October 2018 to March 2019, he was KAPSARC’s interim… Axel is the director of KAPSARC's Energy and Macroeconomics program. From October 2018 to March 2019, he was KAPSARC's interim vice president of research. Axel joined KAPSARC in 2011, after spending 15 years at IFP Energies Nouvelles in France, where he led research, consulting and training projects. Axel received his Ph.D. in economics from the Pantheon-Sorbonne University in Paris. He undertakes applied research that combines methodological innovation with practical relevance for policymaking. His research is focused on energy economics, policy, finance, oil pricing, and energy-exporting economies. Axel has been published extensively, with over 40 peer-reviewed journal papers to his name.

Expertise

  • Energy modelling
  • Energy economics
  • Energy policy
  • Oil pricing and finance

Publications See all Axel Pierru’s publications

Bertrand Rioux

Bertrand Rioux

Bertrand is a research fellow focusing on the impact of market regulation and liberalization in energy markets. An experienced energy systems… Bertrand is a research fellow focusing on the impact of market regulation and liberalization in energy markets. An experienced energy systems model developer (linear optimization and mixed complementary problems), he is working on developing the KAPSARC Energy Model (KEM) as a decision support tool for analyzing price regulation in energy economies. Bertrand has contributed to the development of KEM Saudi Arabia and is the lead developer of KEM China, studying the impact of government regulation in the coal, power and natural gas markets. He was previously employed as a research assistant at the Canadian Space Agency.

David Wogan

David Wogan

Former Research Associate David is a former research associate who centered on modeling the economics of integrated energy systems, with a focus on Saudi… David is a former research associate who centered on modeling the economics of integrated energy systems, with a focus on Saudi Arabia and the surrounding Gulf countries. His recent studies have focused on the impact of energy price reform on the technology and fuel mix of the Saudi energy sector and the nexus of water, energy, and agriculture. Prior to joining KAPSARC, David led energy efficiency efforts at the municipally-owned electric utility in Austin, Texas and served the White House Council on Environmental Quality.

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