King Abdullah Petroleum Studies and Research Center

Riyadh, Saudi Arabia

King Abdullah Petroleum Studies and Research Center

Riyadh, Saudi Arabia
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King Abdullah Petroleum Studies And Research Center | Date: 2016-08-04

A system and method for ex post counterfactual simulation to identify and estimate the non-members who could counterfactually be categorized in a specific group of interest, based on probabilistically matching nearest non-members to the group of interest.

Matar W.,King Abdullah Petroleum Studies and Research Center
Energy Strategy Reviews | Year: 2017

Households in Saudi Arabia account for about half of domestic electricity demand. This high level of consumption is partly due to historically low prices. These prices have also been flat throughout the day. Policymakers are exploring different pricing policies to help reduce this share. Time-of-use (TOU) pricing is one such option. This paper assesses the potential effects TOU pricing will have on households and the wider economy. We quantify how households may react to a price change by focusing on two of the biggest electricity-consuming household items: appliances and air-conditioners. Price response features that deal with the usage of these items are incorporated in a modeling framework that we have developed. Based on an assumed TOU price that the power utility may charge during peak summer hours, the main findings of our analysis for the year 2011 are: © 2017 Elsevier Ltd

Matar W.,King Abdullah Petroleum Studies and Research Center | Elshurafa A.M.,King Abdullah Petroleum Studies and Research Center
International Journal of Greenhouse Gas Control | Year: 2017

Cement manufacturing is a major industry in Saudi Arabia. As a highly polluting sector, it may be part of CO2 abatement policy for the country. This paper presents a multi-criteria analysis to examine how two competing objectives affect the performance of the cement industry in Saudi Arabia. Namely, these criteria are profit and CO2 emissions. We examine the joint effects of economic costs and biases of the industry's senior management on decisions. Relevant decisions include fuel use, and investment in carbon capture and storage and more energy efficient kilns. The analysis adopts an operational model that we have developed for the industry, where 2015–2020 is the period of interest. It allows us to account for events that are not anticipated by the industry, such as the rise in energy prices that took place in 2016. Allowing imports and deeming the reduction of CO2 emissions as highly important, the industry would choose to import clinker and bypass the pyroprocessing stage in manufacturing; however, the country has broader local content and economic diversification requirements that make this infeasible. By not permitting imports to observe the actual operation of the industry at all levels, we find: ● In environmental regulations and depending on the CO2 price, behavioral considerations have a major impact on the decision-making process of cement manufacturers. ● For a low carbon price of up to 1 $/ton, the industry would have to care for emissions considerably in order to mitigate it. At 45 $/ton or above, behavioral considerations have a limited impact in the wake of profits. ● An example of a policy that could induce a reaction is one that consists of a carbon price of 27 $/ton. At that price, the industry's decision-makers do not have to weigh pollutants highly relative to the industry's profits. The policy would garner $4.9 billion in government revenue and reduce emissions by 181 million tons in the six-year period. The deal would generate $1.3 billion in profit in 2020, compared to $2.5 billion without government intervention. © 2017 The Authors

Matar W.,King Abdullah Petroleum Studies and Research Center | Anwer M.,Saudi Electricity Company SEC
Energy Policy | Year: 2017

The Saudi electricity sector currently buys fuel and sells electricity at prices administered by the government. In this analysis, we illustratively explore combining the reform of the fuel prices used in power plants with the implementation of alternative electricity pricing schemes for the households. Compared to the scenario replicating the year 2015, we find: ● The aggregate gain to the energy system could reach nearly $12 billion per year by raising both electricity prices to households and industrial fuels to reflect the cost of supply or international markets.● Households would pay an additional $3 billion in electricity costs without any mitigation for the low-income households. However, Lifeline prices would halve this burden, while maintaining greater gains than deregulating fuel prices alone.● The average electricity price paid under the lifeline scenario would be a more manageable 4.0 cents/kWh, versus an average marginal-cost price of 7.1 cents/kWh.In the alternative electricity pricing scenarios we study, natural gas usage by the power utilities falls, allowing gas to flow to other industries, which would consume it to reduce their costs. We find the marginal values of natural gas falling at higher electricity prices, indicating that the supply of gas is becoming less constraining. © 2017 The Authors

Filippini M.,ETH Zurich | Filippini M.,University Svizzera Italiana | Hunt L.C.,University of Surrey | Hunt L.C.,King Abdullah Petroleum Studies and Research Center
Energy Economics | Year: 2015

Energy efficiency policy is seen as a very important activity by almost all policy makers. In practical energy policy analysis, the typical indicator used as a proxy for energy efficiency is energy intensity. However, this simple indicator is not necessarily an accurate measure given changes in energy intensity are a function of changes in several factors as well as 'true' energy efficiency; hence, it is difficult to make conclusions for energy policy based upon simple energy intensity measures. Related to this, some published academic papers over the last few years have attempted to use empirical methods to measure the efficient use of energy based on the economic theory of production. However, these studies do not generally provide a systematic discussion of the theoretical basis nor the possible parametric empirical approaches that are available for estimating the level of energy efficiency. The objective of this paper, therefore, is to sketch out and explain from an economic perspective the theoretical framework as well as the empirical methods for measuring the level of energy efficiency. Additionally, in the second part of the paper, some of the empirical studies that have attempted to measure energy efficiency using such an economics approach are summarized and discussed. © 2015 Elsevier B.V.

Pierru A.,King Abdullah Petroleum Studies and Research Center | Roussanaly S.,Sintef | Sabathier J.,French Institute of Petroleum
Energy Policy | Year: 2013

This paper provides new empirical insights on the capital structure of project-financed LNG infrastructures and gas pipeline projects, by using data relating to projects whose financial close occurred between June 2004 and March 2011. Most results are consistent with the basic view of risk-averse funds suppliers. Especially, the projects located in risky countries and larger projects tend to exhibit lower debt ratios and less-concentrated equity ownerships. In addition, regasification projects appear to have a more diluted equity ownership. Methodological issues raised by the financing of these projects are also examined from a capital-budgeting perspective. In particular, the equity residual method, usually used by industrial practitioners to value these projects, should be adjusted. © 2013 Elsevier Ltd.

Gasim A.A.,King Abdullah Petroleum Studies and Research Center
Energy Policy | Year: 2015

Many industrialized countries are net importers of embodied energy and emissions, while many developing countries are net exporters. We examine the role of specialization in driving these trade patterns by conducting a spatial index decomposition analysis on the embodied energy in net exports for 41 economies. The results reveal that industrialized countries have generally offshored energy intensive production, which many developing countries specialize in. We find that specialization, on average, makes the biggest contribution, accounting for roughly 50% of a country's embodied energy in net exports. However, other factors, namely energy intensity and the trade balance, combine to make an equally important contribution. In summary, specialization, despite its significant role, is not the only cause of the embodied energy trade patterns observed between industrialized and developing countries. © 2015 Elsevier Ltd.

Howarth N.A.A.,University of Oxford | Howarth N.A.A.,King Abdullah Petroleum Studies and Research Center | Rosenow J.,University of Oxford
Energy Policy | Year: 2014

Much academic attention has been directed at analysing energy efficiency investments through the lens of 'behavioural failure'. These studies have challenged the neoclassical framing of regulation which emphasises the efficiency benefits of price based policy, underpinned by the notion of rational individual self-mastery. The increasing use of a regulatory ban on electric lamps in many countries is one of the most recent and high profile flash points in this dialectic of 'freedom-versus-the-state' in the public policy discourse. This paper interrogates this debate through a study of electric lamp diffusion in Germany. It is argued that neoclassical theory and equilibrium analysis is inadequate as a tool for policy analysis as it takes the formation of market institutions, such as existing regulations, for granted. Further still, it may be prone to encourage idealistic debates around such grand narratives which may in practice simply serve those who benefit most from the status quo. Instead we argue for an evolutionary approach which we suggest offers a more pragmatic framing tool which focuses on the formation of market institutions in light of shifting social norms and political goals-in our case, progress towards energy efficiency and environmental goals. © 2013 Elsevier Ltd.

Pierru A.,King Abdullah Petroleum Studies and Research Center | Matar W.,King Abdullah Petroleum Studies and Research Center
Energy Journal | Year: 2014

Since real oil price is positively correlated with real consumption and domesticincome in Saudi Arabia, a risk premium needs to be considered when assessingthe net present value of oil-related public investment projects. For projects generatingadditional oil exports, this risk premium quantifies the cost of increaseddependence on oil revenues. For projects transforming oil into products whoseprices are less correlated with the Saudi economy, it quantifies the benefit fromreducing the aggregate risk. The value of this risk premium depends on expectationsabout future consumption and oil price. By considering alternative assumptions,we show that over a one-year horizon this risk premium could rangebetween 1.3% and 5% of the expected oil-related cash flow, with higher premiafor longer planning horizons. We discuss the implications of these calculationsfor energy-related public projects in Saudi Arabia and, more generally, for publicdecision-making in resource-rich countries. © 2014 by the IAEE. All rights reserved.

Matar W.,King Abdullah Petroleum Studies and Research Center
Energy Efficiency | Year: 2015

Energy efficiency in buildings has garnered significant attention in Saudi Arabia. This paper outlines the potential effects of higher residential efficiency on electricity load profiles in the Kingdom. It further presents the associated benefits that could have been realized by the local utilities in 2011. To perform the analysis, we designed an integrated methodology in which an engineering-based residential electricity demand model is used within an economic equilibrium framework. The modeling approach allows us to capture the physical interactions arising from higher efficiency and the structural changes that could occur in the economy beyond the end-consumers. Raising the average air-conditioner energy efficiency ratio (EER) to 11 British thermal unit (BTU)/(Wh) from its 2011 average would have saved 225,000 barrels/day of crude oil in electricity generation. Alternatively, increasing the share of insulated homes from 27 to 64 % would have allowed the power sector to lower its use of the fuel by 158,000 barrels/day. Combining both measures in a single simulation yields incremental yet not additive reductions. All alternative scenarios reduce costs to the utilities and improve the average thermal efficiency for the electricity generated. The studied efficiency options shift the load curve downward during the peak load segment when the least efficient turbines would be used. We additionally show how efficiency improvements in end-uses can affect the decisions of other sectors in the economy. © 2015 Springer Science+Business Media Dordrecht

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