Bollino, Carlo Andrea

How Total Factor Productivity Drives Long-Run Energy Consumption in Saudi Arabia

In this study, we investigate how total factor productivity (TFP), alongside income, price, and population, shapes energy consumption in the long-run in Saudi Arabia, the world’s number one oil exporter. To do so, we first estimate a production function and construct the associated TFP series, and then assess TFP’s impact on energy consumption. To take into consideration the stochastic properties of the variables, we employ unit root and cointegration methods. We also correct estimations and test results for potential small sample bias. Our main finding is that TFP has a statistically significant impact on energy consumption in the long-run. https://link.springer.com/chapter/10.1007%2F978-3-030-06001-5_8

21st May 2019

Sectoral Investment Analysis for Saudi Arabia

This study aims to investigate the determinants of short- and long-run investment behavior in Saudi Arabia for eight non-oil sectors. Saudi Arabia is currently proceeding with its historic Vision 2030 reform plan, which aims to significantly increase the private sector’s contribution to the country’s gross domestic product. Thus, analyzing investments at the sectoral level is important for Saudi Arabia. Such an analysis can provide policymakers with a deeper understanding of potential opportunities for boosting private sector growth.

24th August 2021

Energy Security and Portfolio Diversification: The Exporter’s Perspective

Despite the increasing attention paid to energy security and the continuously broadening scope of the field, the perspective of energy importing countries (i.e., supply security) has overshadowed that of exporters, who seek to ensure demand security. As official statements and policy documents illustrate, major energy exporters and relevant international organizations realize the significance of energy demand security for their economies and global markets.

25th November 2020

Balancing Energy Security Priorities: A Portfolio Optimization Approach to Oil Imports

The idea of energy security emerged after the energy crises of the 1970s. It has evolved from the initial paradigm of assuring sufficient energy supplies to include a price affordability perspective and, eventually, many other energy-related issues, such as infrastructure, environmental impacts, societal effects, energy efficiency and governance. However, security of physical supply and price affordability remain the paradigm’s two key pillars. This study applies financial portfolio theory to the energy security issues of East Asia’s four major energy importers: China, Japan, South Korea and Taiwan. The authors calculate the relative risks associated with the dynamics of oil imports, and the import prices paid, and estimate the efficient frontiers for corresponding import portfolios. Lastly, the study runs several scenarios that simulate the effects of restructuring the four countries’ oil import portfolios and of external disruptions, notably US sanctions on Iranian oil sales. The paper’s key findings include: The short-run impact of a fully enforced Iranian oil export embargo would increase portfolio risk across the board, within a 3% to 15% range. However, the subsequent substitution of Iranian oil imports by other suppliers would prove beneficial for Japan and Taiwan. The risk premium associated with passing through the Malacca Straits would result in a 27.5% increase in price volatility for China’s oil imports, although the negative impact on its average import price level would be less pronounced, at 2.6% compared to between 5.2% and 5.8% for the other three importers.

28th May 2019

Estimating the Household Consumption Function in Saudi Arabia

This research is part of a joint project between the Saudi Arabian Monetary Authority (SAMA) and the King Abdullah Petroleum Studies and Research Center (KAPSARC). This paper estimates a micro-based life cycle consumption model for Saudi Arabia over the period 1970-2017 The estimate of consumption behavior in this paper is identified as centering on the income effect and the wealth effect: The income effect is defined as the direct impact on consumption of a variation in income. The wealth effect is defined as a consumer’s perception of a change in his or her wealth and a concomitant decision either to liquidate some of that wealth to enable an increase in consumption (in the case of a positive wealth change) or to decrease consumption in order to restore the consumer’s desired level of wealth (in the case of a negative wealth change). The wealth effect on consumption can be substantially different from the income effect because it is more closely related to consumers’ expectations of, and fluctuations in, the value of real and financial assets. The authors’ estimation shows that both income and wealth have significant effects on household consumption in Saudi Arabia, with a long-run marginal propensity to consume (MPC) out of income of around 0.73-0.95, and out of wealth of around 0.06. The sensitivity of consumption to income and wealth in Saudi Arabia appears to be consistent with the growth of the Saudi economy.

5th February 2019

A Comparison of Alternative Programs for Climate Policies

This research paper compares the relative welfare impact of different options for allocating the financing burden of climate change mitigation policies. Focusing on efficient ways to finance policies aimed at climate change mitigation, not only at direct carbon reduction, could delink the issue of carbon taxation from carbon emissions. A Pigouvian tax is the traditional way of correcting for negative externalities, or the undesirable consequences for society arising from the actions of a company or industry sector, by levying additional taxes on that activity. Pigouvian taxation corrects society’s welfare loss, however, from the viewpoint of the private sector, such taxation imposes a deadweight economic loss with respect to the original private equilibrium. As an alternative, we evaluate a methodology that could fund investments to reduce carbon dioxide (CO2) emissions, and we show that the policy we consider to be optimal from a tax standpoint – Ramsey pricing can both improve world welfare and be politically more acceptable than other pricing options. Rather than focus directly on emissions reduction by taxing energy, a Ramsey pricing solution can be designed to minimize distortions while raising funds for investment in climate change mitigation.

30th December 2018

Potential Effects of Trade Liberalization on China’s Imports of Plastics From the GCC

Petrochemical products, particularly plastics, contribute to a significant share of expanding and increasingly diverse trade flows between the Gulf Cooperation Council (GCC) countries and China. The petrochemical sector could benefit from a preferential bilateral trade regime between China and the GCC, but has been a bone of contention in the GCC-China Free Trade Agreement (FTA) negotiation process. This study applies a dual-stage model of import demand functions to estimate the impact of trade liberalization scenarios, within an FTA framework, on China’s imports of major plastics from the GCC and the rest of the world. It assesses the implications of these scenarios for all parties.

4th June 2018

Estimating the Learning Curve of Solar PV Balance-of-Systems for Over 20 Countries

The capital cost of a solar photovoltaic (PV) system comprises the module and balance-of-systems (BOS). The latter refers to everything else that is needed to make the solar system functional including cables, mounts, labor, etc. While modules are priced internationally, the BOS is countryspecific. Price developments of modules, which have been thoroughly studied in literature, followed an 80 percent learning curve (LC). On the other hand, research on the LC for BOS has not been as extensive.

15th June 2017

The Effect of Preferential Trade Agreements on Energy Trade from Chinese and Exporters’ Perspectives

During periods of supply abundance that lead to lower prices, commodity exporters strive to secure their market share with major importing economies. This paper seeks to cast light on what drives an exporter’s share of Chinese imports of oil, gas and coal – and we find that the strategy behind achieving this goal need not rely on pricing policies alone. China has been promoting a trade agenda that seeks to strengthen economic ties in the Asia-Pacific region and has been extending negotiations aimed at developing relationships worldwide. The country is a major energy import powerhouse; its trade deals have significant impact on the international energy trade and global energy markets. We explore the role of energy in China’s preferential trade agreements (PTAs) and extend the trade gravity model to disaggregated trade flows, estimating the impact these agreements have on Chinese energy imports.

16th April 2017

The Renewable Energy Policy Paradox

One major avenue for policymakers to meet climate targets is by decarbonizing the power sector, one component of which is raising the share of renewable energy sources (renewables) in electricity generation. However, promoting renewables in liberalized power markets creates a paradox.

8th September 2016

Quantifying Worldwide Demand Elasticities as a Policy Tool

This paper provides a comprehensive worldwide database of estimated elasticities for electricity and natural gas for households as a function of income, price, capital stocks and weather conditions.

10th August 2016

Gasoline and Diesel Prices in the OECD, China, and India: How Do They Behave During Volatile Times?

The collapse of crude oil prices in 2020, driven by the effects of COVID-19, the recovery packages implemented in 2021 to overcome the crisis, and the recent geopolitical conflicts in 2022, have marked a distinctive three-year period in the oil market. Furthermore, the public discontent regarding high record prices has spurred collaboration between KAPSARC, the Institute of Energy Economics, Japan (IEEJ), and the Italian Association of Energy Economics (AIEE). Together, they have compiled a dataset aimed at elucidating how the prices of gasoline and diesel evolved during this three-year span and which factors played a more significant role in determining the prices. Presented at a country level on a monthly basis, the data facilitates the identification of structural variations in gasoline and diesel prices across different OECD regions, as well as in China and India.

22nd November 2023

The G7 Pricing Scheme, an Exercise in Monopsony Power

High in the Bavarian Alps, at a special security session, G7 leaders set out to devise an ambitious plan to sanction Russian energy sales. The intent was to reduce Russian profits from oil and gas sales, while minimizing the damage to developed economies caused by rising fuel prices and inflation. The proposed solution, a ceiling on the price of oil and gas, is a new, untried method, which will be carefully constructed to allow oil to continue to flow to low- and middle-income countries, while limiting the economic benefit to Russia.

17th January 2023

Iran Sanctions: Implications for the Oil Market

United States (U.S.) Iran energy sanction waivers expired May 2, 2019. The waivers permitted eight economies (China, Greece, India, Italy, Japan, South Korea, Taiwan, and Turkey) to temporarily continue buying oil from Iran. Based on KAPSARC modeling of the political decision-making process, this Instant Insight – the first such KAPSARC publication – finds that the international community, and indeed some of the waiver economies, will at best partially comply with reinstated sanctions. China, India and Turkey are particularly unlikely to comply with U.S. sanctions and will maintain much of their current oil trade with Iran, the modeling shows. The paper also simulates the likely impact on the global oil price of ending the waivers in four scenarios which show: i) no oil price rise if the sanctions don’t work at all, ii) an oil price rise of up to 12% by Q2 2020 if Iranian oil exports drop by an average 42%, iii) a 30%-plus price increase if the sanctions are 100% effective, and iv) no significant price change if Saudi Arabia offsets reduced Iranian crude oil exports by increasing its output and exports. The analysis in the paper is based on two in-house models: the KAPSARC Toolkit for Behavioral Analysis (KTAB) and the KAPSARC Global Energy Macroeconometric Model (KGEMM).

9th May 2019

Estimating the learning curve of solar PV balance–of–system for over 20 countries: Implications and policy recommendations

Journal of Cleaner Production

Oxford Energy Forum

2014

Integrated Policies to Improve the Energy–Water– Food System Nexus to Achieve the SDGs

Bollino, Carlo Andrea

Analyzing renewable energy and climate conditions effects on societal welfare worldwide

Residential Energy demand elasticities and weather worldwide

The Economics of Solar PV Energy

Revealed and stated preferences for CO2 emissions reduction: the missing link

Renewable energy scenarios for costs reductions in the European Union

Revealed and stated preferences for CO2 emissions reduction: the missing link

Market Power and Transmission Congestion in the Italian Electricity Market

Renewables diffusion and contagion effect in the Italian regional electricity markets: assessments and policy implications

Socio-economic acceptability for smart grid development – A comprehensive review

Italian youngsters’ perceptions of alternative fuel vehicles: a fuzzy-set approach

Demand Market Power and Renewables in the Italian Electricity Market

A System of Hourly Demand In The Italian Electricity Market

Ramsey Prices in the Italian Electricity Market, Special Issue “Energy markets and policy implications”

Marginal cost and congestion in the Italian electricity market: an indirect estimation approach

Costs assessments of European Environmental Policies, Special Issue: “OR in Energy Modeling and Management”

Regional coordination of European environmental policies

Electricity Demand in Wholesale Italian Market

Future Business Models for Power Markets: What can We Learn from the ‘Sharing Economy’?

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