• Focus Area Models, Data and Tools Models, Data and Tools
  • Type Discussion paper
  • Date 30 November 2023
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Abstract

This paper presents possible net zero emissions (NZE) trajectories for Saudi Arabia at horizon 2060 and analyzes their possible economic consequences. We use an in-house hybrid forward-looking general equilibrium model of the Saudi economy. We construct a baseline scenario where the Saudi energy sector continues its current trends and where the domestic energy prices, which are administered by the government, remain at their 2019 level. Then, we simulate a price reform scenario where energy prices are deregulated and adjust to match supply and demand. This price reform scenario helps us understand how much domestic price deregulation can contribute to saving energy and reducing CO2 emissions. Finally, we simulate NZE scenarios where we impose annual caps on CO2 emissions that ramp down to zero by 2060. We let the model find the least-cost mix of technologies, as well as the implicit price of carbon that is needed to incentivize investments compatible with net zero. Saudi Arabia’s journey to NZEs is paved with uncertainties, not least regarding the future of the global oil market. To assess how oil market transformations may influence Saudi Arabia’s pathway to decarbonization, we simulate each scenario (baseline, price deregulation, and NZE) under three different international oil price assumptions.

Authors

Olivier Durand-Lasserve

Fellow Olivier is a research fellow in the Energy Systems and Macroeconomics program. Previously, he was an economist at the Organisation… Olivier is a research fellow in the Energy Systems and Macroeconomics program. Previously, he was an economist at the Organisation for Economic Co-operation and Development (OECD) and at the International Energy Agency (IEA) in Paris where his activities covered macroeconomic policy analysis and applied general equilibrium modeling. He contributed to various modeling studies on the assessment of the macroeconomic, environmental and distributional consequences of energy and environmental policies. He also worked on the land-water-energy nexus and on the economic consequences of air pollution. Before he joined the OECD, Olivier worked at ENGIE, in Paris, where he developed an in-house modeling framework for quantifying global long-term energy-economy scenarios. While completing his Ph.D., he was a research assistant at the Center for Operations Research and Econometrics (CORE) in Louvain-la-Neuve, Belgium.

Expertise

  • Macroeconomic consquences of energy policies

Publications See all Olivier Durand-Lasserve’s publications

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