The Cost of Improving Gas Supply Security in the Baltic States
AbstractThe Baltic States (Estonia, Latvia and Lithuania) are three amongst the smallest gas markets in Europe. They import all the gas they consume from Russia, with whom they have difficult political relationships. A disruption of their supply from Russia, whatever the cause, would have severe consequences as a large share of their peak winter consumption could not be replaced by alternative gas or other fuels. The three governments want to invest in improving gas supply security and the European Commission pushes in the same direction. But what should they do? We present an assessment of the cost of various national and regional options – dual-fuel for heat plants and CHPs; strategic gas storage; strategic LNG terminals – to increase gas supply security. The cost is calculated over thirty years for different scenarios of supply disruptions. Uncertainty in commodity prices and interest rates is taken into account through Monte Carlo simulations. We draw the policy conclusions, taking into account the regional political context.
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Bibliographic InfoPaper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1204.
Date of creation: 23 Jan 2012
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Find related papers by JEL classification:
- O13 - Economic Development, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
- P28 - Economic Systems - - Socialist Systems and Transition Economies - - - Natural Resources; Environment
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-02-01 (All new papers)
- NEP-CIS-2012-02-01 (Confederation of Independent States)
- NEP-EEC-2012-02-01 (European Economics)
- NEP-ENE-2012-02-01 (Energy Economics)
- NEP-EUR-2012-02-01 (Microeconomic European Issues)
- NEP-TRA-2012-02-01 (Transition Economics)
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- repec:reg:rpubli:33 is not listed on IDEAS
- Damigos, D. & Tourkolias, C. & Diakoulaki, D., 2009. "Households' willingness to pay for safeguarding security of natural gas supply in electricity generation," Energy Policy, Elsevier, vol. 37(5), pages 2008-2017, May.
- Winzer, C., 2011.
"Conceptualizing Energy Security,"
Cambridge Working Papers in Economics
1151, Faculty of Economics, University of Cambridge.
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