Electricity and Water Policy for a Better Environment-An Analysis on Utility Pricing to Promote Renewable Energy in Abu Dhabi

Abstract

The UAE was ranked the second highest emitter of CO2 per capita in the world in 2006. In Abu Dhabi, the power and water sectors represent two key contributors of carbon emissions and their emissions are expected to grow faster than the economic growth rate of the emirate. Power generation in particular has been a focus of concern as electricity is used in both desalination and in meeting power demands. According to Abu Dhabi Water and Electricity Authority, currently electricity demand is rising by 11% per year and is expected to reach 14,000 MW/year in 2020. In light of these developments, it is vital to develop policy instruments for these two sectors to reduce carbon emissions in Abu Dhabi. In this study, a Computable General Equilibrium (CGE) Model calibrated with Abu Dhabi's 2007 Social Accounting Matrix (SAM) is developed to characterize the economic structure of the Abu Dhabi economy. A set of simulation analyses are performed to examine the consequences of varying utilities subsidies and oil price regimes on the industrial outputs of the economy and the resulting carbon emissions. To capture the long term behavior of electricity market, the thesis extends the analysis to study the effects of renewable energy development, as an alternative source of power generation, on carbon emissions. The simulation result shows that reduction of utilities subsidy has negative effects on the production of both water and electricity and the magnitude of effects is strongest among all sectors. The outputs from utility-intensive sectors such as agriculture and manufacture sectors also reduce substantially so the corresponding CO2 emission drops. Meanwhile, increase in international oil price has heterogeneous impacts on economic sectors. Most specifically, the manufacture and petrochemical sectors lose their competitiveness to importing goods due to high input prices. On the other side, the development of renewable energy profile following the Abu Dhabi Economic Vision 2030 scenario is expected to reduce 4.71% of CO2 emissions by 2030 comparing to the business as usual scenario.

Date of Award	Dec 2011
Original language	American English
Supervisor	I-tsung Tsai (Supervisor)