A CGE Approach to the Analysis of Biofuels for Promoting Energy Self Sufficiency and Security Policy in Thailand-Methodology

Given the rising price of crude oil, some developing countries including Thailand are looking towards developing their domestic renewable energy resources, in particular biofuels. However, there are concerns about the possible adverse effects such a policy strategy would have on key variables such as sectoral output, land allocation and the effects of prices, particularly food prices. This study develops a computable general equilibrium (CGE) model of the Thailand economy that features enhancements of the energy sector and uses it to analyse the government's recent renewable energy development plan. This plan aims to increase domestic energy use from renewable sources to replace fossil fuel imports. This paper discusses the methodology used in the analysis.