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Hard-linking a top-down economic model with a bottom-up energy system for an oil-exporting country with price controls

Durand-Lasserve, Olivier
; 
Almutairi, Hossa
; 
Aljarboua, Abdullah
; 
Pierru, Axel
; 
Pradhan, Shreekar
; 
Murphy, Frederic
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Genre
Journal article
Date
2022-12-23
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Committee member
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Department
Statistics, Operations and Data Science
Subject
Energy model
 General equilibrium
 Hard-link
 Mixed complementarity problem
 Price controls
 Saudi Arabia
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http://hdl.handle.net/20.500.12613/10802
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MurphyEtAl-JournalArticle-2022-12.pdf
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https://doi.org/10.1016/j.energy.2022.126450
Abstract
This paper presents the hard-linking between a bottom-up model of energy sectors and a top-down Computable General Equilibrium (CGE) model, for an oil-exporting country - Saudi Arabia - where domestic energy prices are set by the government. The integrated model is solved with a Jacobi algorithm where the bottom-up and the top-down model are formulated separately and solved iteratively until convergence. The model is used to assess the sectoral and economy-wide consequences of domestic energy price reforms. Removing energy price controls triggers fuel switching and energy efficiency gains, increases crude oil exports and leads to a massive deployment of solar photovoltaic. As a result of price reforms, at the 2030 horizon, Saudi Arabia's Gross Domestic Product (GDP) increases by 3 to 6% and energy-related CO2 emissions are reduced by one third.
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Olivier Durand-Lasserve, Hossa Almutairi, Abdullah Aljarboua, Axel Pierru, Shreekar Pradhan, Frederic Murphy, Hard-linking a top-down economic model with a bottom-up energy system for an oil-exporting country with price controls, Energy, Volume 266, 2023, 126450, ISSN 0360-5442, https://doi.org/10.1016/j.energy.2022.126450.
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Elsevier
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Energy, Vol. 266
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