1 Final SUSTOIL Conference Düsseldorf, 7-9 June 2010 The Sustoil model for Europe: macroeconomic and policy views Dr Caterina De Lucia University of York WP6 Modelling Stackeholders Interplay and Policy Scenarios for Biorefineries and Biodiesel Production

2 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

3 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

4 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)

5 Interactions between WP5 and WP6-CGE modelling Input factors Gov’t Households Bio- Refineries Pollution CO2 HOME ABROAD Trade Other firms WP5 Optimal Bio-schemes Optimal Biodiesel Optimal Biogas for bio-electricity WP6-CGE modelling a biorefinery economy

6 The production structure with no biorefineries

7 The production structure with biorefineries

8 Database used Global Trade Analysis Project (GTAP) v 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).

9 To From FirmHouseholdGovernmentRest of the World Net Investments Total (Income) Emissions FirmConsump. ExportsInvestmentsTotal inc. firm Emissions HouseholdWagesConsump.ExportsTotal inc. household GovernmentTaxes Total incomes governme nt Rest of the World Impor ts Total inc. Row Net Investment Savings Total savings Total (expenditure) Total exp. firms Total exp. household Total exp. government Total exp. Row Total exp. Investments Total Environmental extended SAM

10 Database The current database is the Global Trade Analysis Project v6.0 at the URL: DescriptionGTAP 6.0 (2001 base year) SUSTOIL model Commodities5712 Activities5712 Factors55 Regions875 Margin Commodities 33 Domestic Institutions 44 Added information from WP5 on Biodiesel and Electricity from Biogas using oil seeds

11 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)

12 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

13 Main policy results Sectors GDP % change North EUSouth EUWest EUEU 10All EU oth_agr osd en_int_ind oth_ind gas coa oil oil_pcts transp ely

14 Main policy results NorthEuSouthEuWestEUEU10 CO2 equivalent emissions (% change)

15 Main policy results NorthEuSouthEuWestEUEU10 Land used by osd (% of osd) Land used by osd (% of total land)

16 Main policy results NorthEuSouthEuWestEUEU10 Electricity price (% change ) Oil price (% change)

17 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