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Final SUSTOIL ConferenceFinal SUSTOIL ConferenceDüsseldorf, 7-9 June 2010Düsseldorf, 7-9 June 2010

The Sustoil model for Europe: The Sustoil model for Europe:

macroeconomic and policy viewsmacroeconomic and policy views

Dr Caterina De Lucia University of York

WP6 Modelling Stackeholders Interplay and Policy Scenarios for Biorefineries and Biodiesel Production

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Contents of the talk

Part I Aims and objectives of the WP6 Schematic view of the CGE (UoY) Interactions between WP5 and WP6-CGE modelling

Part II Production struction without and with biorefineries Database and software info Policies Main results Conclusions - highlights

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Part I: Aims and objectives of the WP6

Social network interactions

across stakeholders

Macroeconomic and policy analysis

Policy simulation analysis for bio-

refineries

Agent Based Model (ABM)

Computable General

Equilibrium (CGE) Model

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Part I: Schematic view of the CGE (UoY)

Theoretical model

Definition of behavioural relationships for: • production • consumption• trade• government• emissions

Applied model

• Calibration analysis (for the EU-27)

• Benchmark case: current state of technology and consumption (fossil fuel use, biofuels as energy factors to production, current land use, current emission levels)• Policy options (Bio-based economy, EU targets of biofuels share in total energy)• Model’s validation (sensitivity analysis)

Macroeconomic CGE model for bio-refineries

(deals with the inter-relationships between different markets and sectors of the economy)

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Interactions between WP5 and WP6-CGE modelling

Input factors

Gov’t

Households

Bio-Refiner

ies

PollutionCO2

HOME

ABROAD

Trade

Other firms

WP5

Optimal Biodiesel

Optimal Biogas for bio-electricity

WP6-CGE modelling a biorefinery economy

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The production structure with no biorefineries

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The production structure with biorefineries

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Database used

Global Trade Analysis Project (GTAP) v6.1. https://www.gtap.agecon.purdue.edu/

Macroeconomic information given in Social Accounting

Matrix (SAM) form. This provides a conceptual and

behavioural framework to link the components of an economy

to each other.

A SAM is a square matrix where each account is a row and a

colum entry (see next slide).

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To

From

Firm

Household

Government

Rest of the World

Net Investments

Total (Income)

Emissions

Firm Consump. Consump. Exports Investments

Total inc. firm

Emissions

Household

Wages

Consump. Exports Total inc. household

Government

Taxes

Taxes Total incomes government

Rest of the World

Imports

Imports Total inc. Row

Net Investment

Savings Savings Total savings

Total (expenditure)

Total exp. firms

Total exp. household

Total exp. government

Total exp. Row

Total exp. Investments

Total

Environmental extended SAM

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Database

The current database is the Global Trade Analysis Project v6.0

at the URL: www.gtap.agecon.purdue.edu/Description GTAP

6.0 (2001 base year)

SUSTOIL model

Commodities 57 12

Activities 57 12

Factors 5 5

Regions 87 5

Margin Commodities

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Domestic Institutions

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Added information from WP5 on Biodiesel and Electricity from Biogas using oil seeds

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Main added information

Input and output data (including prices) on biodiesel and electricity from biogas refinery – WP5

Country prices on labour data for biorefineries Country prices on feed-in tariffs for electricity Country tax exemptions on biodiesel (in 2007) Sectoral CO2 equivalent emission factors

(taken from DEFRA and WP5) Elastities values for production with

biorefineries (taken from various recent sources)

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Policies considered in the model

Policy objective: 20 % reduction in CO2 using 20% renewables by 2020

Policy experiments: Change from a EU no-biobased economy to one

with:

A EU biorefinery economy Biofuels targets share in total energy by

5.75% by 2010 Biodiesel tax exemptions

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Main policy results

SectorsGDP % change

North EU

South EU

West EU

EU 10 All EU

oth_agr -12.75 -4.76 -2.87 -43.84 -13.36osd 203.90 -22.53 223.10 6278.00 689.69

en_int_ind -11.47 -13.48 -4.68 -41.65 -11.53

oth_ind -7.53 -6.88 1.73 -37.82 -4.88gas 5.73 -30.35 -11.00 28.95 -9.09coa -8.81 7.95 -5.21 -1.87 -3.58oil -21.83 -23.78 -13.42 -61.28 -22.32

oil_pcts -21.21 -23.94 -12.41 -63.99 -19.46transp -12.16 -13.74 -2.10 -51.25 -11.44

ely 6.28 12.18 10.24 42.28 12.96

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Main policy results

NorthEu

SouthEu

WestEU EU10

CO2 equivalent emissions (% change)

-12.63 -14.82 -8.81 2.70

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Main policy results

NorthEu

SouthEu

WestEU EU10

Land used by osd (% of osd)

181.33 -20.15 187.6 3992

Land used by osd (% of total land)

13.00 -1.96 14.38 96.31

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Main policy results

NorthEu

SouthEu

WestEU EU10

Electricity price (% change )

-2.25 -3.13 0.038 -8.46

Oil price (% change)

-15.48 -14.56 -14.41 -24.26

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Concluding remarks - highlights

Biorefineries working from Oil Seeds and their by-products will lead to a large increase in the amount of this crop grown – particularly in Eastern Europe

This will be accompanied by decreases in sectoral GDP in several other areas

There will be a decrease in CO2 emissions, but insufficient to meet the EU’s target of 20 %. Other environmental measures could be used to fill this gap

Oil and electricity prices will generally fall in across the EU, with a particularly notable trend in Eastern Europe